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                                                                   EXHIBIT 10.24

                           PURCHASE AND SALE AGREEMENT

                                 BY AND BETWEEN

                       CMS OIL AND GAS COMPANY, AS SELLER

                                       AND

                     QUICKSILVER RESOURCES INC, AS PURCHASER

                            EFFECTIVE JANUARY 1, 2000

                               MICHIGAN PROPERTIES

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                   <C>
RECITALS.................................................................................................1
ARTICLE I - SALE AND PURCHASE............................................................................1
   1.1.       Description of Assets......................................................................1
   1.2        Excluded Assets............................................................................4
   1.3        Effective Date and Transfer................................................................4
ARTICLE II - DEFINITIONS.................................................................................5
ARTICLE III - PURCHASE PRICE.............................................................................8
   3.1        Purchase Price.............................................................................8
   3.2        Net Cash Payment to CMS....................................................................8
   3.3        Adjustments to Purchase Price..............................................................8
   3.4        Payment of Adjusted Purchase..............................................................11
   3.5        Over and Under Production.................................................................11
   3.6        Purchase Price Allocation.................................................................12
ARTICLE IV - REPRESENTATIONS OF CMS.....................................................................12
   4.1        Existence.................................................................................12
   4.2        Authorization.............................................................................12
   4.3        Brokers...................................................................................13
   4.4        Noncontravention..........................................................................13
   4.5        Terra Shares..............................................................................13
   4.6        Legal Compliance..........................................................................13
   4.7        Excluded Assets...........................................................................13
   4.8        Environmental, Health and Safety Matters..................................................14
   4.9        Litigation................................................................................14
   4.10       Compliance With Contracts.................................................................14
   4.11       Tax Matters...............................................................................14
   4.12       Compliance With Permits and Licenses......................................................16
   4.13       Title.....................................................................................16
   4.14       Consents, Approvals and Rights to Acquire.................................................16
   4.15       Gas Contracts.............................................................................16
   4.16       Securities Disclosure/Representation......................................................16
ARTICLE V - REPRESENTATIONS OF PURCHASER................................................................17
   5.1        Existence.................................................................................17
   5.2        Execution.................................................................................17
   5.3        Authorization.............................................................................17
   5.4        Brokers...................................................................................17
   5.5        Noncontravention..........................................................................17
   5.6        Independent Evaluation and Title Review...................................................18
   5.7        Securities Disclosure/Representation......................................................18
   5.8        Bonds and Permits.........................................................................18
   5.9        Section 29 Tax Credits....................................................................19
ARTICLE VI - REPRESENTATIONS CONCERNING TERRA...........................................................19
   6.1        Organization, Qualification and Corporate Power...........................................19
   6.2        Capitalization............................................................................19
   6.3        Noncontravention..........................................................................20
   6.4        Subsidiaries and Affiliates...............................................................20
   6.5        Financial Statements......................................................................20
   6.6        Events Subsequent to Most Recent Fiscal Month End.........................................21
   6.7        Legal Compliance..........................................................................21
   6.8        Tax Matters...............................................................................21
   6.9        Powers of Attorney........................................................................24
   6.10       Litigation................................................................................24
   6.11       Employees and Employee Benefits...........................................................25
   6.12       Environmental, Health and Safety Matters..................................................25
   6.13       No Guaranties; Extension of Credit........................................................25
   6.14       Permits...................................................................................25
   6.15       Compliance With Contracts.................................................................26
   6.16       Title.....................................................................................26
   6.17       Consents, Approvals and Rights to Acquire.................................................26
</TABLE>

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<TABLE>
<S>                                                                                                  <C>
   6.18       Gas Contracts.............................................................................26
   6.19       Material Contracts........................................................................26
   6.20       Disclaimer of All Other Representations and Warranties....................................27
ARTICLE VII - OPERATIONS AND CASUALTY LOSS..............................................................27
   7.1        Revenues and Expenses.....................................................................27
   7.2        Operations and Loss of Assets and Terra Assets............................................27
ARTICLE VIII - PRE-CLOSING OBLIGATIONS OF CMS...........................................................30
   8.1        Encumbrances..............................................................................30
   8.2        Approvals/Consents........................................................................30
   8.3        Notices and Consents......................................................................30
   8.4        Operation of Business.....................................................................31
   8.5        Full Access...............................................................................31
   8.6        Notice of Developments....................................................................31
ARTICLE IX - PRE-CLOSING OBLIGATIONS OF PURCHASER.......................................................32
   9.1        Approvals/Consents........................................................................32
   9.2        Bonds and Permits.........................................................................32
   9.3        Corporate Documentation...................................................................33
   9.4        Notices and Consents......................................................................33
   9.5        Notice of Developments....................................................................33
   9.6        Notice of Misrepresentation or Breach of Warranty.........................................33
ARTICLE X - CMS'S CONDITIONS OF CLOSING.................................................................34
   10.1       Representations...........................................................................34
   10.2       Performance...............................................................................34
   10.3       Pending Matters...........................................................................34
   10.4       Waiting Periods...........................................................................34
   10.5       Opinion of Counsel........................................................................34
   10.6       Payment of Purchase Price or Adjusted Purchase Price......................................34
ARTICLE XI - PURCHASER'S CONDITIONS OF CLOSING..........................................................35
   11.1       Representations...........................................................................35
   11.2       Performance...............................................................................35
   11.3       Pending Matters...........................................................................35
   11.4       Waiting Periods...........................................................................35
   11.5       Opinion of Counsel........................................................................35
ARTICLE XII - ENVIRONMENTAL CONDITION...................................................................35
   12.1       Existing Condition........................................................................35
   12.2       Environmental Assessment and Access.......................................................36
   12.3       Release and Indemnity for Environmental Conditions........................................37
   12.4       Confidentiality, Release and Indemnity For Environmental Assessment.......................38
   12.5       Insurance for Environmental Assessment....................................................38
   12.6       Indemnity Regarding Access................................................................39
ARTICLE XIII - TITLE EXAMINATION........................................................................39
   13.1       Title Examination Period..................................................................39
   13.2       Cure of Title.............................................................................40
   13.3       Title Adjustments.........................................................................40
   13.4       Value of Title Adjustments................................................................41
   13.5       Limits on Title Adjustments...............................................................42
   13.6       Definition of Defensible Title............................................................42
   13.7       Definition of Permitted Encumbrances......................................................42
   13.8       Definition of Title Defect................................................................43
   13.9       Back-In Interest Adjustments..............................................................44
   13.10      Representations, Warranties or Covenants, and Indemnity...................................45
   13.11      Arbitration...............................................................................46
ARTICLE XIV - RETAINED LIABILITIES......................................................................46
ARTICLE XV -  CLOSING...................................................................................46
   15.1.      Time and Place of Closing.................................................................46
   15.2       Closing Obligations.......................................................................46
   15.3       Suspended Accounts........................................................................48
   15.4       Termination of Guarantees and Other Commitments...........................................49
ARTICLE XVI - CONTINUING OBLIGATIONS....................................................................49
   16.1       Post-Closing Reconciliation...............................................................49
   16.2       Receipts and Credits......................................................................49
   16.3       Assumption of Obligations and Indemnities.................................................51
</TABLE>

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<TABLE>
<S>                                                                                                    <C>
   16.4       Recording.................................................................................53
   16.5       State of Michigan Oil and Gas Leases......................................................53
   16.6       Further Assurances........................................................................53
   16.7       Records...................................................................................54
   16.8       Access to Records.........................................................................54
   16.9       Litigation Support........................................................................54
   16.10      CMS Employees.............................................................................54
   16.11      Transition................................................................................54
   16.12      Plan B....................................................................................55
ARTICLE XVII - TERMINATION..............................................................................55
   17.1       Right of Termination......................................................................55
   17.2       Liabilities Upon Termination or Failure to Close..........................................56
   17.3       Deposit...................................................................................57
   17.4       Effect of Termination.....................................................................57
ARTICLE XVIII - REMEDIES FOR BREACHES OF THIS AGREEMENT.................................................58
   18.1       Survival of Representations and Warranties................................................58
   18.2       Indemnification Provisions for Benefit of the Purchaser...................................58
   18.3       Indemnification Provisions for Benefit of CMS.............................................59
   18.4       Matters Involving Third Parties...........................................................59
   18.5       Determination of Adverse Consequences.....................................................60
   18.6       Exclusive Remedy..........................................................................60
ARTICLE XIX - TAXES.....................................................................................60
   19.1       Liability for Taxes.......................................................................60
   19.2       Tax Returns...............................................................................61
   19.3       Contest Provisions........................................................................62
   19.4       Assistance and Cooperation................................................................62
   19.5       Adjustment to Purchase Price For Taxes....................................................63
   19.6       Treatment of the Terra Shares.............................................................63
   19.7       CMS Tax Allocation Agreement..............................................................63
   19.8       Books and Records.........................................................................63
   19.9       Sales Taxes...............................................................................64
   19.10      Other Taxes...............................................................................64
ARTICLE XX - EXERCISE OF PREFERENTIAL PURCHASE RIGHTS...................................................64
ARTICLE XXI - INDEPENDENT INVESTIGATION AND DISCLAIMER..................................................65
   21.1       Disclaimer as to Warranties...............................................................65
   21.2       Disclaimer As To Year 2000 Compliance.....................................................65
ARTICLE XXII - MISCELLANEOUS............................................................................66
   22.1       Like-Kind Exchange........................................................................66
   22.2       Governing Law.............................................................................66
   22.3       Entire Agreement..........................................................................66
   22.4       Amendments and Waivers....................................................................66
   22.5       Captions..................................................................................67
   22.6       Assignment................................................................................67
   22.7       Notices...................................................................................67
   22.8       Expenses..................................................................................68
   22.9       Severability..............................................................................68
   22.10      Confidentiality, Publicity and Retention of Data..........................................68
   22.11      Use of CMS's Name.........................................................................69
   22.12      Conditions................................................................................69
   22.13      No Third-Party Beneficiaries..............................................................69
   22.14      Succession and Assignment.................................................................69
   22.15      Construction..............................................................................69
   22.16      Attachments...............................................................................69
   22.17      Counterparts..............................................................................69
   22.18      Execution Deadline........................................................................70
ATTACHMENT A1
ATTACHMENT A2
ATTACHMENT A3
ATTACHMENT A4
ATTACHMENT A5
ATTACHMENT B1
ATTACHMENT B2
</TABLE>

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ATTACHMENT B3
ATTACHMENT C
ATTACHMENT D
ATTACHMENT E
ATTACHMENT F
ATTACHMENT G
ATTACHMENT H
ATTACHMENT I
ATTACHMENT J
ATTACHMENT K
ATTACHMENT L
ATTACHMENT M
ATTACHMENT N
ATTACHMENT O
ATTACHMENT P
ATTACHMENT Q
ATTACHMENT R
ATTACHMENT S
ATTACHMENT T

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                           PURCHASE AND SALE AGREEMENT

         THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the
4th day of March, 2000, by and between CMS OIL AND GAS COMPANY, a Michigan
corporation ("CMS"), whose address is 1021 Main Street, Suite 2800, Houston,
Texas 77002, and QUICKSILVER RESOURCES INC., a Delaware corporation
("Purchaser"), whose address is 1619 Pennsylvania Avenue, Fort Worth, Texas
76104. CMS and the Purchaser may hereinafter be referred to collectively as the
"Parties" and individually as a "Party".

                                    RECITALS

         WHEREAS, CMS desires to sell and Purchase desires to purchase the
Assets, as hereinafter defined, on the terms and conditions provided in this
Agreement;

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged by both Parties, CMS and Purchaser hereby
agree as follows:

                          ARTICLE I - SALE AND PURCHASE

1.1.     DESCRIPTION OF ASSETS

         At the Closing (as defined in Section 15.1, below), CMS shall sell and
Purchaser shall purchase, as hereinafter provided, as of the Effective Date, the
following assets (the "Assets"):

         (a)      All of CMS's right, title and interest in and to all of the
                  issued and outstanding capital stock of Terra Energy Ltd., a
                  Michigan corporation ("Terra");

         (b)      All of CMS's and Terra's right, title and interest in and to
                  the wells and units described at Attachment A1, the oil and
                  gas leases described at Attachment A2, the overriding
                  royalties described at Attachment A3 and the fee mineral, fee
                  surface and real property interests and right of ways
                  described at Attachment A4, all of which Attachments are
                  attached hereto and made a part hereof and are hereinafter
                  collectively referred to as Attachment A (including, but not
                  limited to any working interest, leasehold rights, royalty
                  interests, overriding royalty interests and reversionary
                  rights held as of the Effective Date) but excepting, however,
                  the Excluded Assets as defined below;

         (c)      All of CMS's and Terra's corresponding right, title and
                  interest in and to all oil and gas wells, injection wells,
                  disposal wells, water wells, surface and downhole equipment,
                  personal property, structures, fixtures, flowlines, pipelines
                  and pumps to the extent used or held for use in connection
                  with the exploration, development, operation or maintenance of
                  the assets described at Attachment A1, Attachment A2,
                  Attachment A3 and Attachment A4, including, but not limited
                  to, the gas plants, compressors, facilities, systems and
                  pipelines described at Attachment A5 hereto, but excepting,
                  however, the Excluded Assets as defined below;

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         (d)      All of CMS's and Terra's corresponding right, title and
                  interest in easements, rights-of-way, permits, licenses,
                  surface leases and use agreements, servitudes and other
                  surface rights appurtenant to the assets, to the extent the
                  same are assignable, and to the extent now being used or held
                  for use in connection with the exploration, development,
                  operation and maintenance of the assets, but excepting,
                  however, the Excluded Assets as defined below, (the interest
                  of CMS in all of the items listed in Section 1.1(b) and
                  Section 1.1(c), above, this Section 1.1(d), and at Attachment
                  A, shall occasionally be hereinafter collectively referred to
                  as the "Subject Property");

         (e)      All of CMS's corresponding right, title and interest in and to
                  and under or derived from all presently existing and currently
                  effective unitization, pooling and communitization agreements,
                  declarations and orders (including, but not limited to, all
                  units formed under orders, regulations, rules or other
                  official actions of any federal, state or other governmental
                  agency having jurisdiction) to which the Subject Property (or
                  any part thereof) are committed, and all privileges, benefits
                  and powers, appurtenant thereto;

         (f)      All of CMS's corresponding right, title and interest in all
                  oil and gas and other hydrocarbons produced from or (if
                  unitized, pooled or communitized with other leases or lands)
                  allocable to the Subject Property after the Effective Date;

         (g)      All of CMS's corresponding right, title and interest in and to
                  or derived from all presently existing and effective oil,
                  natural gas and gas liquid purchase, processing and sales
                  contracts, (but specifically excepting and excluding the
                  Natural Gas Purchase Agreement effective May 1, 1989, by and
                  between Midland Cogeneration Venture Limited Partnership and
                  Northern Michigan Exploration Company and CMS Energy
                  Corporation), operating agreements, farmin or farmout
                  agreements, and other contracts (but not including any bonds
                  held by CMS or its parent, subsidiary or affiliate entities
                  for CMS's benefit), agreements and instruments to the extent
                  directly related to the Subject Property and the exploration
                  or development of oil and gas (or either of them) from or
                  attributable to the Subject Property, only to the extent the
                  same are assignable, but excepting, however, the Excluded
                  Assets as defined below; and

         (h)      Subject to Section 16.7, originals, or in the sole discretion
                  of CMS, copies of the following files, records and data of
                  CMS, to the extent directly related to the Subject Property:
                  lease files, well files, unit files, division order files,
                  lease contract files, geological and geophysical data, legal
                  files, and tax records and FERC filings related to section 29
                  non-conventional fuels tax credits, and subject to Section
                  16.7 and Section 19.8, all of the files, records and data of
                  Terra. This agreement by CMS to convey and deliver the
                  aforementioned files, records and data is granted by CMS to
                  the extent that CMS or Terra has authority to do so without
                  violating any confidentiality obligation to a third party, and
                  is without warranty as to the accuracy or completeness of the
                  information delivered. Any other provision of this Agreement
                  to the contrary notwithstanding, CMS shall not provide
                  Purchaser with any files, records or data or access to any
                  files, records or data which (i) are not in the possession or
                  control of CMS or Terra, (ii) CMS considers to be

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                  privileged, proprietary or confidential to it and which are
                  not directly related to the condition, quantity and quality of
                  the Assets, (iii) CMS or Terra cannot legally provide
                  Purchaser because of third party restrictions on CMS or Terra,
                  or disclosure of which will violate any agreement to which CMS
                  or Terra is a party, (iv) are a part of or relate solely to
                  the Excluded Assets, or (v) relate exclusively to Retained
                  Liabilities (as defined below).

              It is CMS's intent to sell to Purchaser, and it is Purchaser's
              intent to purchase from CMS, all of CMS's right, title and
              interest in and to the Assets, regardless of whether the Assets
              are incompletely or incorrectly described on the Attachments
              hereto, but specifically excepting, however, the Excluded Assets
              as defined below. In order to fully and completely effectuate the
              intent of the Parties, CMS further agrees to assign and convey,
              and Purchaser further agrees to accept and assume, at any time
              whether at Closing or post-Closing, any and all assets,
              obligations and liabilities of CMS related thereto, of CMS of the
              kind described in (a) - (h), above, which are located in the state
              of Michigan, and which are not included at Attachment A, saving
              and excepting the Excluded Assets.

              The Parties further acknowledge that the references to "Terra",
              and its right, title and interest in and to the assets referenced
              in Section 1.1(b), Section 1.1(c) and Section 1.1(d), above, are
              included in those sections, and at Attachment A, for
              identification purposes only. For purposes of this Agreement the
              right, title and interest of Terra in and to these assets shall
              not be deemed to be Assets, except insofar as ownership of these
              items follows the ownership of all of the outstanding capital
              stock of Terra as referenced in Section 1.1(a), above.

              All of the right, title and interest of Terra in and to all assets
              described at Attachment A, shall cumulatively hereinafter be
              referred to as the "Terra Property". The Terra Property, as well
              as Terra's corresponding right, title and interest (i) in and to
              and under or derived from all presently existing or currently
              effective unitization, pooling and communitization agreements,
              declarations and orders (including, but not limited to, all units
              formed under orders, regulations, rules or other official actions
              of any federal, state or other governmental agency having
              jurisdiction) to which the Terra Assets (or any part thereof) are
              committed and all privileges, benefits and powers appurtenant
              thereto, (ii) in all oil and gas and other hydrocarbons produced
              from or (if unitized, pooled or communitized with other leases or
              lands) allocable to the Terra Property, after the Effective Date,
              (iii) in all presently existing and effective oil, natural gas and
              gas liquid purchase, processing and sales contracts, operating
              agreements, farmin or farmout agreements and other contracts,
              agreements and instruments directly related to the Terra Property,
              and the exploration or development of oil and gas (or either of
              them) from or attributable to the Terra Property, above, and (iv)
              subject to Section 16.7 and Section 19.8, and further subject to
              the limitations set forth in Section 1.1(h), above, in all lease
              files, well files, unit files, lease contract files, geophysical
              data, financial records, corporate records, legal files, computer
              programs, general tax records, samples, test data or any other
              records, samples, information, data or documents of Terra, but
              excepting, however, the Excluded Assets as defined below, shall
              cumulatively hereinafter be referred to as the "Terra Assets".

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              Purchaser shall accept and assume all burdens and liabilities
              past, present and future with respect to the Assets and the Terra
              Assets, excepting, however, the Retained Liabilities, as defined
              and identified below.

              The Parties acknowledge that certain of the Assets and the Terra
              Assets may be subject to third party preferential rights to
              purchase, rights of reconveyance, consents to sell or assign or
              confidentiality agreements, and nothing in this Section 1.1 shall
              be deemed to constitute a representation or warranty that the
              Assets or the Terra Assets are free and clear of any preferential
              rights, rights of reconveyance, consents or confidentiality
              agreements.

1.2      EXCLUDED ASSETS

         This Agreement does not cover, and any instrument of conveyance or
assignment made pursuant to Section 15.2, below, of this Agreement shall except
and exclude the Excluded Assets. Excluded Assets shall include: (i) the items
that are described at Attachment B1, (ii) the real property, building and
appurtenances commonly known as, and located at 1475 Terra Road, Traverse City,
Michigan as described at Attachment B2, and all fixtures and personal property
located thereon which is not specifically covered in Section 1.1, above, (iii)
the wells, units and leases described at Attachment B3 and all Assets or Terra
Assets insofar as they are used or held for use in connection therewith, (iv)
the Natural Gas Purchase Agreement (effective May 1, 1989) between Midland
Cogeneration Venture Limited Partnership and Northern Michigan Exploration
Company and CMS Energy Corporation and (v) Terra's interest in Thunder Bay
Pipeline Co., LLC. The term Excluded Assets shall also be deemed to include all
items of property, including but not limited to vehicles, tools, machines,
warehouse stock, equipment, materials, pipelines, fixtures, facilities and
interests which are leased by CMS, or as to which CMS has only a license or
other right of use, and any items of property, including but not limited to
vehicles, tools, machines, warehouse stock, equipment, materials, pipelines,
fixtures, facilities and interests which are owned by third parties, such as
employees, contractors or agents, even if such items of property are used or
held for use in connection with the Assets or the Terra Assets.

1.3      EFFECTIVE DATE AND TRANSFER

         For the purposes of this Agreement, the phrase "Effective Date" shall
mean 7:00 o'clock, A.M. local time (where the Assets and the Terra Assets are
located) on January 1, 2000. Unless otherwise provided within this Agreement for
a specific property(s), the phrase "Transfer Date" shall mean 7:00 o'clock A.M.
local time on the next ensuing day after Closing. On the Transfer Date CMS,
subject to Section 7.2, Section 13.10, and Section 15.2(k) hereof, shall
transfer to Purchaser, and Purchaser shall accept the physical, possession,
control, responsibility and, subject to Section 7.2, operations of the portions
of the Assets and the Terra Assets which are operated by CMS or Terra. Nothing
contained in this Section 1.3, or in this Agreement generally, shall be deemed
to be a representation or warranty of CMS that Purchaser is entitled to, nor
that Purchaser will succeed CMS or Terra as operator, nor that Terra shall be
entitled to remain as operator of all or any portion of the Subject Property or
the Terra Property now operated by CMS or Terra.

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                            ARTICLE II - DEFINITIONS

2.1 "Accredited Investor" has the meaning set forth in Regulation D promulgated
under the Securities Act.

2.2 "Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.

2.3 "Affiliate" or "Affiliates" means any entity, including any corporation or
limited liability company with respect to which a specified Person owns less
than a majority of the common stock or less than a majority of the ownership
interest of the entity.

2.4 "Assets" has the meaning set forth in Section 1.1, above.

2.5 "CMS Disclosure Schedule" has the meaning set forth in Article IV, below.

2.6 "Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements.

2.7 "Claim of Title Defect" has the meaning set forth in Section 13.1, below.

2.8 "Claims" means, with respect to the agreement of any Party to defend,
indemnify and hold harmless another Party, any and all claims, suits, causes of
action, demands, liabilities, judgments, fines, penalties, damages, losses,
expenses or costs, including without limitation court costs and legal and
accounting fees and expenses, arising out of, in respect of or in any manner
related to the subject of such agreement.

2.9 "Closing" has the meaning set forth in Section 15.1, below.

2.10 "Closing Date" has the meaning set forth in Section 15.1, below.

2.11 "Closing Statement" has the meaning set forth in Section 15.2(e), below.

2.12 "Code" means the Internal Revenue Code of 1986, as amended.

2.13 "Confidential Information" means any information concerning the businesses
and affairs of CMS and Terra, and their Subsidiaries and Affiliates that is not
already generally available to the public.

2.14 "Defensible Title" has the meaning set forth in Section 13.6, below.

2.15 "Effective Date" has the meaning set forth in Section 1.3, above.

2.16 "Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan),

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or (d) Employee Welfare Benefit Plan or material fringe benefit or other
retirement, bonus, or incentive plan or program.

2.17 "Employee Pension Benefit Plan" has the meaning set forth in ERISAss.3 (2).

2.18 "Employee Welfare Benefit Plan" has the meaning set forth in ERISAss.3 (1).

2.19 "Environmental Assessment" has the meaning set forth in Section 12.2,
below.

2.20 "Environmental, Health, and Safety Requirements" shall mean all federal,
state and local statutes, regulations, and ordinances concerning public health
and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, as such requirements are enacted and in effect on or prior to the
Effective Date.

2.21 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

2.22 "Excluded Assets" has the meaning set forth in Section 1.2, above.

2.23 "Extended Due Diligence Period" has the meaning set forth in Section 13.1,
below.

2.24 "Financial Statements" has the meaning set forth in Section 6.5, below.

2.25 "GAAP" means United States generally accepted accounting principles as in
effect from time to time.

2.26 "Income Tax" means any federal, state or local income tax, including any
interest, penalty, or addition thereto, whether disputed or not.

2.27 "Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.

2.28 "Indemnified Party" has the meaning set forth in Section 18.4(a), below.

2.29 "Indemnifying Party" has the meaning set forth in Section 18.4(a), below.

2.30 "Interim Period" has the meaning set forth in Section 3.3(b), below.

2.31 "Knowledge" means actual knowledge without independent investigation; and
when used in connection with CMS or Terra shall mean actual knowledge of an
officer of CMS without independent investigation.

2.32 "Most Recent Financial Statements" has the meaning set forth in Section
6.5, below.

2.33 "Most Recent Fiscal Month End" has the meaning set forth in Section 6.5,
below.

                                       6
<PAGE>   12

2.34 "Multiemployer Plan" has the meaning set forth in ERISA ss.3 (37).

2.35 "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).

2.36 "Over and Under Production" has the meaning set forth in Section 3.5,
below.

2.37 "Party" or "Parties" has the meaning set forth in the preface above.

2.38 "Permits" has the meaning set forth in Section 6.14, below.

2.39 "Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).

2.40 "Purchase Price" has the meaning set forth in Section 3.1, below.

2.41 "Qualifying Wells" means those wells whose production qualifies for the
credit for producing fuel from nonconventional sources under section 29 of the
Code. The CMS and Terra Qualifying Wells are listed at Attachment C.

2.42 "QRI Stock" has the meaning set forth in Section 3.4(a), below.

2.43 "Retained Liabilities" means those liabilities relating to the Assets or
the Terra Assets, which arise out of events which occurred prior to the
Effective Date and as to which CMS expressly agrees to retain all liability or
to indemnify Purchaser as to all liability. All Retained Liabilities are
identified at Attachment D to this Agreement.

2.44 "Securities Act" means the Securities Act of 1933, as amended.

2.45 "Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.

2.46 "Subject Property" has the meaning set forth in Section 1.1(d), above.

2.47 "Subsidiary" or "Subsidiaries" means any entity, including any corporation
or limited liability company with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the common stock or has the power to vote
or direct the voting of sufficient securities or ownership interest in the
entity to elect or appoint a majority of the directors, or managers.

2.48 "Tax" (and, with correlative meaning, "Taxes" and "Taxable") shall mean (i)
any federal, state or local net income, gross income, single business tax, gross
receipts, windfall profits, severance, property, production sales, use, value
added, license, excise, franchise, employment, payroll, withholding, alternative
or add-on minimum, ad valorem, transfer, excise, stamp, or environmental tax, or
any other tax, custom, duty, governmental fee or import or export duty or other
like assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to

                                       7

<PAGE>   13

tax or additional amount imposed by any governmental authority, and (ii)
liability of CMS, Terra or its Subsidiaries for the payment of amounts with
respect to payments of a type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or as a result
of any obligation of CMS, Terra or its Subsidiaries under any tax sharing
arrangement or Tax indemnity arrangement.

2.49 "Tax Return" shall mean any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.

2.50 "Terra Assets" has the meaning set forth in Section 1.1, above.

2.51 "Terra Disclosure Schedule" has the meaning set forth in Article VI, below.

2.52 "Terra Property" has the meaning set forth in Section 1.1, above.

2.53 "Terra Shares" means all of the issued and outstanding shares of Common
Stock of Terra.

2.54 "Third Party Claim" has the meaning set forth in Section 18.4(a), below.

2.55 "Title Defect" has the meaning set forth in Section 13.8, below.

2.56 "Transfer Date" has the meaning set forth in Section 1.3, above.

                          ARTICLE III - PURCHASE PRICE

3.1     PURCHASE PRICE

         CMS and Purchaser agree that on and subject to the terms of this
Agreement, the purchase price for the Assets shall be the sum of one hundred
sixty-three million seven hundred ten thousand six hundred twenty-five United
States dollars ($163,710,625) (the "Purchase Price"), plus or minus the
adjustments provided for in Section 3.3,below.

3.2     NET CASH PAYMENT TO CMS

         Immediately prior to the Closing, CMS will cause Terra to pay CMS an
aggregate amount (and may cause each Subsidiary and Affiliate of Terra to pay to
Terra any necessary component thereof) equal to the consolidated Cash of Terra
and its Subsidiaries and Affiliates as of the Closing Date. CMS may cause (i)
Terra to make any such payment to CMS in the form of a dividend or a redemption
and (ii) any Subsidiary or Affiliate of Terra to make any such payment to Terra
in the form of a dividend, a redemption, or an intercompany loan.

3.3     ADJUSTMENTS TO PURCHASE PRICE

        The Purchase Price for the Assets shall be adjusted at Closing as
follows (the "Adjusted Purchase Price"):

         (a)      an adjustment will be made based on the difference between the
                  average bid and offer for a five (5) year term for wholesale
                  natural gas delivered to the Michigan City gate as quoted by
                  Amerex, (the "five-year strip price"), as of January 7, 2000

                                       8
<PAGE>   14

                  (being $2.625/MMBtu), and the average five-year strip price
                  for the five (5) business days ending March 24, 2000 ("Average
                  Five-Year Strip Price"). If the Average Five-Year Strip Price
                  is $2.70/MMBtu or less, or is $2.55/MMBtu or more, then there
                  shall be no adjustment to the Purchase Price. If the Average
                  Five-Year Strip Price is greater than $2.70/MMBtu, or is less
                  than $2.55/MMBtu, the Purchase Price shall be ratably adjusted
                  in proportion to the respective increase over $2.70/MMBtu or
                  decrease under $2.55/MMBtu against $2.625/MMBtu. By way of
                  example, if the Average Five-Year Strip Price is $2.75/MMBtu,
                  assuming a Purchase Price of $163,000,000, then the Purchase
                  Price would be approximately $166,000,000.00 ($2.675 divided
                  by $2.625 multiplied by $163,000,000.00). If the Average
                  Five-Year Strip Price is $2.50/MMBtu, assuming a Purchase
                  Price of $163,000,000, then the Purchase Price would be
                  approximately $159,900,000.00 ($2.575 divided by $2.625
                  multiplied by $163,000,000.00). Notwithstanding the foregoing,
                  in no event shall the Purchase Price be adjusted by more than
                  $7,000,000 as a result of an increase or decrease in the
                  Average Five-Year Strip Price. The foregoing shall be the
                  first adjustment made to the Purchase Price;

         (b)      by adding the amount (based on CMS's good faith estimate) of
                  all expenditures made by CMS or Terra that are attributable to
                  the Assets transferred to Purchaser, and the Terra Assets, for
                  the period between the Effective Date and the Closing Date
                  (the "Interim Period"), including, without limitation,
                  royalties, rentals, operating expenses, overhead charges
                  (which, except as expressly provided in this Agreement, shall
                  not exceed the overhead charges provided for in any applicable
                  operating agreement), all charges billed under operating
                  agreements (such as, but not limited to, CMS's and Terra's
                  share of overhead charges), and all prepaid expenses. All
                  amounts so added to the Purchase Price pursuant to this
                  Section 3.3(b), shall be further adjusted to reflect the
                  actual amount of all such charges and expenses, as part of,
                  and in accordance with the post-closing reconciliation
                  provided for in Section 16.1, below;

         (c)      by adding the value of all merchantable oil in storage above
                  the pipeline connection at the Effective Date that is credited
                  to the Subject Property transferred to Purchaser and the Terra
                  Property. The value of such oil shall be the most current
                  price received by CMS or Terra as of the Effective Date, less
                  taxes deducted by the purchaser of oil, adjusted for BS&W,
                  temperature and quality per the most current sample
                  measurement for the applicable storage tank, to the extent not
                  accounted for in Section 3.3(p), below;

         (d)      by adding the value of all gas produced for which the proceeds
                  have not been received, attributable to production from the
                  Subject Property and the Terra Property for all periods prior
                  to the Effective Date. The value of such gas shall be the most
                  current price received by CMS or Terra as of the Effective
                  Date, less all third party costs deducted by the transporter
                  or purchaser of such gas, to the extent not accounted for in
                  Section 3.3(p), below;

         (e)      by adding the value of all receivables and all other net
                  income of any kind or nature (including but not limited to
                  overhead charges) attributable to the Terra Assets, relating
                  to all periods prior to the Effective Date, whether from or
                  attributable

                                       9
<PAGE>   15

                  to hydrocarbon production, or otherwise, and regardless of
                  when invoiced, collected and received, to the extent not
                  accounted for in Section 3.3(p), below;

         (f)      by subtracting the amount of proceeds received by CMS or Terra
                  that are attributable to hydrocarbon production from the
                  Subject Property and the Terra Property after the Effective
                  Date, net of any royalties, overriding royalties and other
                  payments out of production, and of any production, severance
                  or sales taxes, and all third party costs not reimbursed to
                  CMS or Terra by the transporter or purchaser of production;

         (g)      by adding the value of all pre-paid royalties and severance
                  tax relating to production attributable to the Assets and the
                  Terra Assets, from and after the Effective Date;

         (h)      by subtracting an amount equal to the value of that portion of
                  the Subject Property and the Terra Property, determined
                  pursuant to Article XX ("Exercise of Preferential Purchase
                  Rights") with respect to which preferential purchase rights
                  have been properly and timely exercised by third parties;

         (i)      by adding the amount of accrued interest on the Deposit
                  pursuant to Section 3.4(a), below;

         (j)      an adjustment may also be made to the Purchase Price pursuant
                  to Section 3.5 ("Over and Under Production");

         (k)      an adjustment may also be made to the Purchase Price pursuant
                  to Article VII ("Operations and Casualty Loss");

         (l)      an adjustment may also be made to the Purchase Price pursuant
                  to Section 12.2(d) ("Environmental Assessment and Access");

         (m)      an adjustment may also be made to the Purchase Price pursuant
                  to Article XIII ("Title Examination");

         (n)      an adjustment may also be made to the Purchase Price pursuant
                  to Section 18.5 ("Determination of Adverse Consequences");

         (o)      an adjustment may also be made to the Purchase Price pursuant
                  to Section 19.5 ("Adjustment to Purchase Price for Taxes"), to
                  the extent not accounted for in Section 3.3(q), below;

         (p)      an adjustment will be made to the Purchase Price to account
                  for Terra's consolidated net working capital as of the
                  Effective Date, determined in accordance with Attachment E;

         (q)      by subtracting the dollar amount which is the product of (i)
                  the amount of section 29 tax credit qualified gas (expressed
                  in MMBtus) that constitutes Assets or Terra Assets and which
                  is produced within the Interim Period; and (ii) the tax credit
                  rate (expressed in dollars per MMBtu), as adjusted by
                  inflation for the year 2000 based upon the same percentage
                  increase in inflation for the calendar year 1999 as determined
                  by the Internal Revenue Service, all as provided for by
                  section 29 of the Code; and

         (r)      by adding or subtracting any other amounts mutually agreed
                  upon in writing by the Parties.

                                       10
<PAGE>   16

3.4      PAYMENT OF ADJUSTED PURCHASE

         The Adjusted Purchase Price shall be paid as follows:

         (a)      Unless previously tendered, upon execution and return of this
                  Agreement to CMS, Purchaser shall contemporaneously tender to
                  CMS an earnest money performance deposit (the "Deposit"),
                  consisting of: (i) three million six hundred fifty thousand
                  (3,650,000) fully non-assessable shares of unregistered
                  Quicksilver Resources Inc. common stock, free and clear of any
                  and all claims, liens and encumbrances of any kind,
                  whatsoever, newly and validly issued in the name of CMS ("QRI
                  Stock"), valued at $4.00 per share, and (ii) the sum of one
                  million four hundred thousand dollars ($1,400,000.00) in
                  United States currency. Subject to receipt of the prior
                  written consent of Joint Energy Development Investments
                  Limited Partnership, a Delaware limited partnership ("JEDI"),
                  as required by the terms of a Registration Rights Agreement,
                  dated as of April 9, 1998, between Purchaser and JEDI,
                  Purchaser and CMS shall enter into a Registration Rights
                  Agreement substantially in the form of Attachment F hereto
                  pursuant to which Purchaser shall agree to register the QRI
                  Stock on the terms and subject to the conditions set forth
                  therein. Purchaser agrees to use its commercially reasonable
                  best efforts to obtain the consent of JEDI referred to above
                  as soon as possible following the execution and return of this
                  Agreement. At Closing, CMS shall return the QRI Stock to
                  Purchaser in exchange for United States currency equal to
                  fourteen million six hundred thousand dollars ($14,600,000.00)
                  in United States currency, plus interest thereon at the rate
                  of eight percent (8%) per annum computed from and after
                  February 15, 2000, to the Closing Date, and in no event shall
                  such interest be credited against the Purchase Price or the
                  Adjusted Purchase Price. In the event that the transaction
                  contemplated by this Agreement does not close, then and in
                  that event the ultimate disposition of the Deposit, and the
                  terms and conditions thereof, shall be governed by the
                  provisions of Section 17.3, below;

         (b)      At Closing, Purchaser shall pay to CMS, by bank wire transfer
                  in United States currency either the Purchase Price or
                  Adjusted Purchase Price as reflected on the Closing Statement
                  referenced in Section 15.2(e), to be mutually agreed upon at
                  least one (1) business day prior to the Closing Date, or
                  failing such mutual agreement, the Adjusted Purchase Price, in
                  a manner specified by CMS prior to Closing. In either event
                  all further adjustments to the Purchase Price will be
                  reconciled in accordance with Section 16.1, below.

3.5      OVER AND UNDER PRODUCTION

         For purposes of this Agreement, the term "Over and Under Production"
shall mean as of the Effective Date the difference between the volume of
produced gas that CMS or Terra took from any portion of the Subject Property or
the Terra Property, and the volume of CMS's or Terra's gas entitlement for such
Property or Terra Property, and shall also include all gas plant and pipeline
imbalances.

         (a)      CMS's current estimate of all Over and Under Production are
                  set forth at Attachment G hereto (as of the dates set forth
                  therein).

                                       11
<PAGE>   17

         (b)      At Closing, CMS will furnish Purchaser with a statement
                  showing the most current estimate of the Over or Under
                  Production as of the most recent date available. From and
                  after the Effective Date any and all benefits, obligations and
                  liabilities associated with Over and Under Production shall
                  accrue to and be the responsibility of Purchaser. Purchaser
                  shall assume CMS's and Terra's overproduced and underproduced
                  positions as of the Effective Date, including but not limited
                  to the responsibility for the payment of royalties and other
                  burdens, and all Taxes on the volume of such gas which CMS or
                  Terra took in excess of its entitlement and any obligation to
                  balance, whether in cash or in kind. The Section 3.3
                  Adjustments to the Purchase Price, and/or the Section 16.1
                  Final Settlement Statement shall include an adjustment for any
                  Over and Under Production existing as of the Effective Date.
                  All production imbalances shall be calculated employing a
                  settlement price of $2.75 per Mcf. All plant and pipeline
                  imbalances shall be calculated in accordance with applicable
                  contracts, or if there are no applicable contracts, by the
                  mutual agreement of the Parties.

         (c)      In the event CMS or Terra are overproduced as to any well(s)
                  or unit(s) located on or appurtenant to the Subject Property
                  or the Terra Property, Purchaser acknowledges and agrees that
                  Purchaser's share of production from any such overproduced
                  well(s) or unit(s) acquired may at some point be curtailed by
                  an underproduced working interest owner(s), or that Purchaser
                  may be required to cash balance the amount of overproduction.
                  The Parties agree that CMS shall not be liable to the
                  Purchaser or any third party in the event curtailment or such
                  cash balancing occurs.

3.6      PURCHASE PRICE ALLOCATION

         Attached to this Agreement as Attachment H is a schedule setting forth
the agreed allocation of the Purchase Price among the portions of the Assets and
the Terra Assets.

                       ARTICLE IV - REPRESENTATIONS OF CMS

         CMS represents and warrants to Purchaser that, except as set forth in
the CMS Disclosure Schedule delivered by CMS to Purchaser on the date hereof and
initialed by the Parties, a copy of which is attached hereto as Attachment I,
each of the statements and representations contained in this Article IV are
true, correct and complete as of the date of this Agreement, and will be true,
correct and complete as of the Closing Date.

4.1      EXISTENCE

         CMS is incorporated under the business corporation statute of the State
of Michigan and is in good standing in the state.

4.2      AUTHORIZATION

         The execution, delivery and performance of this Agreement and the
transaction contemplated by it have been authorized by the requisite corporate
action on the part of CMS. This Agreement has been executed by a representative
of CMS empowered by CMS to execute this Agreement, and it has

                                       12
<PAGE>   18

been delivered on behalf of CMS. At Closing, all documents and instruments
required to be executed and delivered by CMS shall have been so executed and
delivered. This Agreement does, and the documents and instruments executed and
delivered shall, constitute legal, valid and binding obligations of CMS
enforceable in accordance with their terms, subject to effects of bankruptcy,
insolvency, reorganization, moratorium and similar laws in effect relating to
the rights and remedies of creditors, as well as to general principles of
equity.

4.3      BROKERS

         CMS has not incurred any liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transaction
contemplated by this Agreement for which Purchaser shall have any responsibility
whatsoever.

4.4      NONCONTRAVENTION

          Neither the execution and the delivery of this Agreement, nor the
consummation of the transaction contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which CMS is subject or any provision of its charter or bylaws, or
(ii), except for the third party preferential rights to purchase, rights of
reconveyance, consents to sell or assign or confidentiality agreements, as
referenced in Article XX, conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, any agreement, contract, lease,
license, instrument, or other arrangement to which CMS is a party or by which it
is bound or to which any of the Assets is subject.

4.5      TERRA SHARES

         CMS holds of record and owns beneficially all of the Terra Shares, free
and clear of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), taxes, Security Interest, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. CMS is not a party to any option, warrant, purchase right, or other
contract or commitment that could require CMS to sell, transfer, or otherwise
dispose of any capital stock of Terra (other than this Agreement). CMS is not a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any Terra Shares.

4.6      LEGAL COMPLIANCE

         To the Knowledge of CMS, CMS has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings and charges thereunder) of federal, state and local governments
(and all agencies thereof) relating to or affecting the Subject Property, except
where the failure to comply would not have a material adverse effect upon the
affected Asset.

4.7      EXCLUDED ASSETS

         None of the gas reserves that constitute the Assets or the Terra Assets
will be, as of the Closing Date, dedicated to the Natural Gas Purchase Agreement
(effective May 1, 1989) between Midland Cogeneration Venture Limited Partnership
and Northern Michigan Exploration Company and CMS Energy Corporation, as
referenced in Section 1.2.

                                       13
<PAGE>   19

4.8      ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

         Except as set forth in Section 4.8 of the CMS Disclosure Schedule, CMS
is in compliance with all Environment, Health and Safety Requirements insofar as
the same pertain to the Assets, except where the failure to comply would not
have a material adverse effect upon the Assets, and except as set forth in
Section 4.8 of the Disclosure Schedule, neither CMS nor the Assets is the
subject of any order, ruling, proceeding, hearing or investigation, either
pending or overtly threatened relating to Environmental, Health and Safety
Requirements. Except as set forth in Section 4.8 of the CMS Disclosure Schedule,
CMS has not received any written notice, report or other information regarding
any actual or alleged material violation of any Environmental, Health and Safety
Requirements with respect to the Assets, and as of the Effective Date no
condition exists with respect to the Assets that could give rise to future
liability or obligations under the Environmental, Health and Safety
Requirements.

4.9      LITIGATION

         Except as set forth in Section 4.9 of the CMS Disclosure Schedule,
there is no outstanding injunction, judgment, order, decree, ruling or charge
which could have a material adverse effect on the Assets, nor, except as set
forth in Section 4.9 of the CMS Disclosure Schedule, CMS a party to any action,
suit, proceeding, hearing or investigation, pending or overtly threatened, which
involves the Assets, or CMS's ownership or operation of the Assets.

4.10     COMPLIANCE WITH CONTRACTS

         CMS has performed all of its obligations under the terms of all
contracts and agreements pertaining to the Assets except where the failure to
perform would not have a material adverse effect upon the Assets, and CMS has
not received written notice from any party of an alleged default by CMS under
the terms of any contract or agreement, or that any contract or agreement is not
valid and enforceable in accordance with its terms insofar, and only insofar, as
same relate to the Assets. Anything to the contrary contained herein,
notwithstanding, this Section 4.10 does not, and shall not under any
circumstances be deemed to include or apply to matters constituting a Title
Defect in accordance with Section 13.8, below, whether or not a Claim of Title
Defect has been timely and properly asserted with respect thereto.

4.11     TAX MATTERS

         (a)      To the Knowledge of CMS, except as set forth in Section
                  4.11(a) of the CMS Disclosure Schedule, CMS has paid, or will
                  pay in full all taxes and assessments with respect to the
                  Assets that are due prior to the Effective Date, including all
                  ad valorem, property, production, severance and Other Taxes;
                  to the Knowledge of CMS, except as set forth at Section
                  4.11(a) of the CMS Disclosure Schedule, all tax returns and
                  reports required to be filed prior to the Effective Date have
                  been or will be timely and accurately filed; and to the
                  Knowledge of CMS, except as set forth in Section 4.11(a) of
                  the CMS Disclosure Schedule, no tax deficiencies have been
                  assessed, nor is there any audit in progress or threatened
                  with respect to taxes due on the Assets.

         (b)      (i)      All applications for well determinations for each
                           Qualifying Well have been filed with the applicable
                           state and federal agencies under the Natural Gas
                           Policy Act of 1978, as amended (the "NGPA") and the
                           rules and regulations of the Federal Energy
                           Regulatory Commission (the "FERC") under NGPA (the
                           "NGPA Regulations") requesting a determination that
                           all of the gas produced from each Qualifying Well is
                           produced from "Devonian shale". Each such application
                           has been approved by the applicable state agency and
                           by the FERC and has been finally approved under and
                           in accordance with section 503 of the NGPA (as
                           evidenced by appropriate FERC certification). Such
                           applications comply

                                       14
<PAGE>   20

                           with the requirements of the NGPA and NGPA
                           Regulations. True and correct copies of such
                           certifications have been furnished to Buyer. No
                           further applications are required under the NGPA and
                           the NGPA Regulations to allow the legal sale of all
                           gas produced from the Qualifying Wells at a price
                           equal to the price for such gas currently being
                           received. No production from the Qualifying Wells
                           qualifies for incentive prices under section 107 of
                           the NGPA or the deregulation provisions of the NGPA
                           or Subtitle 13 of Title I of the NGPA.

                  (ii)    A)       Except as set forth at Section 4.11(b) of
                                   the CMS Disclosure Schedule, each Qualifying
                                   Well was drilled (within the meaning of
                                   section 29(f) of the Code) after December 31,
                                   1979 and prior to January 1, 1993, and was
                                   completed as a well capable of producing from
                                   the formation described in section 3.01(x)
                                   (iii) of the NGPA; and

                           B)      All gas (except carbon dioxide) produced from
                                   each Qualifying Well is a "qualified fuel"
                                   under section 29(c) of the Code.

                  (iii)    Except as set forth at Section 4.11(b) of the CMS
                           Disclosure Schedule, the Qualifying Wells are
                           perforated only in the Antrim Formation and the gas
                           produced from each Qualifying Well is not commingled
                           with any gas from that Qualifying Well that is not
                           produced from such formation.

                  (iv)     Prior to January 1, 1980, there was no production of
                           coal seam, Devonian shale, geopressured brine or
                           tight formation gas in marketable quantities from the
                           "property" (as used in section 29 of the Code) on
                           which any Qualifying Well is located.

                  (v)      No oil or gas produced from the Qualifying Wells
                           qualifies or has qualified for the enhanced oil
                           recovery credit or any other credit under section 43
                           of the Code and none has been claimed or taken on
                           such oil or gas.

                  (vi)     No credits referred to in section 29(b)(4) have been
                           claimed with respect to any Qualifying Wells.

                  (vii)    None of the special financing arrangements described
                           in subclauses (I), (II), or (III) of section 29(b)
                           (3)(A)(i) of the Code

                                       15
<PAGE>   21

                           have been provided in connection with any project
                           that includes any of the Qualifying Wells.

4.12     COMPLIANCE WITH PERMITS AND LICENSES

         To the Knowledge of CMS, CMS possesses all material federal, state and
local governmental and regulatory franchises, rights, privileges, permits,
grants, concessions, licenses, certificates, variances, authorizations and
approvals necessary to own and/or operate the Subject Property.

         To the Knowledge of CMS, except as listed at Section 4.12 of the CMS
Disclosure Schedule, all Permits which are to remain in effect after the
Closing, are in full force and effect and will continue in full force and effect
through the Closing Date. To the Knowledge of CMS, except as listed at Section
4.12 of the CMS Disclosure Schedule, CMS is not in default in any material
respect under the terms of any Permit which is to survive the Closing, nor to
the Knowledge of CMS, has it received notice of any material default thereunder
which has not, or will not be resolved as of the Closing Date.

4.13     TITLE

         Subject to Section 18.1, below, and except for the Permitted
Encumbrances, as defined in Section 13.7, below, CMS has Defensible Title, as
defined in Section 13.6, below, to the Assets free and clear of all material
Title Defects, as defined in Section 13.8, below.

4.14     CONSENTS, APPROVALS AND RIGHTS TO ACQUIRE

         Except for consents, required notices to, filings with or other actions
by governmental entities which are customarily obtained subsequent to Closing,
and except as set forth at Section 4.14 of the CMS Disclosure Schedule, to the
Knowledge of CMS, no consent, approval, notice to or filing with any government
or governmental agency, or any other party, is required in connection with the
execution, delivery and performance of this Agreement by CMS, or as a condition
to the validity or enforceability of this Agreement and the consummation of the
transaction contemplated by this Agreement. Subject to the provisions of Article
XX, below, CMS shall identify and properly notify all parties who hold any
preferential right or option to purchase the Assets, or any part thereof, or
whose consent is required to transfer the Assets or any portion thereof.

4.15     GAS CONTRACTS

         Except as set forth at Section 4.15 of the CMS Disclosure Schedule, to
the Knowledge of CMS production from or attributable to the Subject Property is
not dedicated to any gas sales contracts, other than those which are terminable
upon thirty (30) day written notice.

4.16     SECURITIES DISCLOSURE/REPRESENTATION

         CMS is acquiring the QRI Stock for its own account and not with a view
to or for offer or resale in connection with any distribution thereof within the
meaning of the Securities Act and the rules and regulations pertaining to the
Securities Act, or a distribution thereof in violation of the Security Act, or
any other applicable federal or state securities laws. CMS is not acting as an
undisclosed agent for any other party or parties. CMS is an Accredited Investor.

         CMS acknowledges that Purchaser has entered into this Agreement and
will consummate the transaction contemplated by this Agreement, in reliance on
CMS's representations and warranties under this Article IV.

                                       16
<PAGE>   22

                    ARTICLE V - REPRESENTATIONS OF PURCHASER

         Purchaser represents and warrants to CMS that each of the statements
and representations contained in this Article V are true, correct and complete
as of the date of this Agreement, and will be true, correct and complete as of
the Closing Date:

5.1      EXISTENCE

         Purchaser is incorporated under the business corporation statute of the
State of Delaware and is in good standing in the state, and is qualified to
carry on its business in the State of Michigan and is in good standing as a
foreign corporation under the business corporation statute of the State of
Michigan.

5.2      EXECUTION

         The execution, delivery and performance of this Agreement by Purchaser,
and the transaction contemplated by this Agreement, will not violate (i) any
provision of the certificate or articles of incorporation or bylaws of
Purchaser, (ii) any material agreement or instrument to which Purchaser is a
party or by which Purchaser is bound, (iii) any judgment, order, ruling, or
decree applicable to Purchaser as a party in interest, or (iv) any law, rule or
regulation applicable to Purchaser.

5.3      AUTHORIZATION

         The execution, delivery and performance of this Agreement and the
transaction contemplated by it have been authorized by requisite corporate
action on the part of Purchaser. This Agreement has been executed by an officer
or other representative of Purchaser empowered by Purchaser to execute this
Agreement, and it has been delivered by Purchaser. At the Closing, all documents
and instruments required to be executed and delivered by Purchaser shall have
been so executed and delivered. This Agreement does, and the documents and
instruments executed and delivered shall, constitute legal, valid and binding
obligations of Purchaser enforceable in accordance with their terms, subject to
the effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws in effect relating to the rights and remedies of creditors, as well as to
general principles of equity. Purchaser need not give any notice to, make any
filing with, or obtain any authorization, consent or approval of any government
or governmental agency in order to consummate the transaction contemplated by
this Agreement.

5.4      BROKERS

         Purchaser has not incurred any liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transaction
contemplated by this Agreement for which CMS shall have any responsibility
whatsoever.

5.5      NONCONTRAVENTION

         Neither the execution and the delivery of this Agreement, nor the
consummation of the transaction contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Purchaser is subject or any provision of its charter or bylaws,
or (ii) conflict with, result in a breach of, constitute a default

                                       17
<PAGE>   23

under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Purchaser is a party or by which it is bound or to which any of its assets is
subject.

5.6      INDEPENDENT EVALUATION AND TITLE REVIEW

         Purchaser will be afforded the opportunity, at its own cost and risk,
to inspect the Assets and the Terra Assets and to examine copies of data and
records in CMS's and Terra's possession affecting the Assets and the Terra
Assets. Purchaser will be given access to all title, division order files,
contract and lease records and data, and all production, engineering,
environmental and other technical data, insofar as the foregoing relates to the
Assets and the Terra Assets, (but not including data and records which CMS, in
its sole discretion considers to be privileged, proprietary or confidential to
it and which are not directly related to the condition, quality and quantity of
the Assets, or which CMS or Terra cannot legally provide Purchaser because of
third party restriction on CMS or Terra, or disclosure of which will violate any
agreement to which CMS or Terra is a party). PURCHASER ACKNOWLEDGES THAT EXCEPT
AS OTHERWISE SPECIFIALLY PROVIDED IN THIS AGREEMENT, CMS HAS MADE NO
REPRESENTATIONS OR WARRANTIES AS TO THE CONDITION OF THE ASSETS OR THE TERRA
ASSETS, THE ACCURACY OR COMPLETENESS OF ANY DATA AND RECORDS PROVIDED BY CMS OR
TERRA, OR AS TO CMS'S TITLE TO THE ASSETS OR TERRA'S TITLE TO THE TERRA ASSETS.
IN ENTERING INTO AND PERFORMING THIS AGREEMENT, EXCEPT FOR, AND TO THE EXTENT OF
THE REPRESENATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLES IV AND VI,
PURCHASER HAS RELIED AND WILL RELY SOLELY UPON ITS INDEPENDENT INVESTIGATION OF,
AND JUDGMENT WITH RESPECT TO THE ASSETS AND THE TERRA ASSETS, THEIR CONDITION,
VALUE AND CMS'S AND TERRA'S TITLE THERETO. The rights of Purchaser under this
Section 5.6 are expressly subject to the provisions of Article XII and Article
XIII, and except as specifically set forth in Article XII and Article XIII there
shall be no contingency to Purchaser completing the transaction contemplated by
this Agreement, with respect to such review and evaluation of the Assets and the
Terra Assets.

5.7      SECURITIES DISCLOSURE/REPRESENTATION

         Purchaser is acquiring the Assets for its own account and not with a
view to or for offer or resale in connection with any distribution thereof
within the meaning of the Securities Act and the rules and regulations
pertaining to the Securities Act, or a distribution thereof in violation of the
Security Act, or any other applicable federal or state securities laws.
Purchaser is not acting as an undisclosed agent for any other party or parties.
Purchaser is an Accredited Investor. Purchaser is and has been actively involved
in the business of owning and operating producing oil and gas properties for a
period in excess of five (5) years prior to the Effective Date, is knowledgeable
about the oil and gas exploration and production business, and is not relying on
CMS with regard to any expectations Purchaser may have about any future income
it may receive from the Assets or the Terra Assets.

5.8      BONDS AND PERMITS

         Purchaser or its designated operator, other than Terra, shall, as of
the Closing Date have all bonds which are designated at Attachment J. Purchaser
shall furnish CMS proof that such bonds are in full force and effect with
respect to the Subject Property and the Terra Property. As to those portions of
the Subject Property and Terra

                                       18
<PAGE>   24

Property for which CMS is named operator on the State of Michigan well permit,
Purchaser agrees, if necessary to take an assignment of all such well permits in
its name or in the name of its designee, other than Terra.

5.9      SECTION 29 TAX CREDITS

         Purchaser acknowledges that CMS will take or claim the section 29 tax
credits for production from the Qualifying Wells attributable to the Interim
Period, and Purchaser agrees not to take or claim such tax credits.

         Purchaser acknowledges that CMS has entered into this Agreement, and
will consummate the transaction contemplated by this Agreement, in reliance on
Purchaser's representations and warranties under this Article V.

                  ARTICLE VI - REPRESENTATIONS CONCERNING TERRA

         CMS represents and warrants to Purchaser that except as set forth in
the Terra Disclosure Schedule delivered by CMS to Purchaser on the date hereof
and initialed by the Parties, a copy of which is attached hereto as Attachment
K, each of the statements and representations contained in this Article VI are
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date.

6.1      ORGANIZATION, QUALIFICATION AND CORPORATE POWER

         Each of Terra and its Subsidiaries, and to the Knowledge of CMS,
Terra's Affiliates, is a corporation or limited liability company duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation. Each of Terra and its Subsidiaries, and to the
Knowledge of CMS, Terra's Affiliates, is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not have a
material adverse effect on the financial condition of Terra, its Subsidiaries
and Affiliates, taken as a whole. Each of Terra and its Subsidiaries, and to the
Knowledge of CMS, Terra's Affiliates has full power and authority to carry on
the businesses in which it is presently engaged and to own and use the
properties owned and used by it. The Terra Disclosure Schedule, at Section 6.1
thereof, identifies all of the Subsidiaries and Affiliates of Terra, and also
lists the directors and officers of each of Terra and its Subsidiaries.

6.2      CAPITALIZATION

         The entire authorized capital stock of Terra consists of twenty million
(20,000,000) shares, of which twelve million sixty-five thousand four hundred
and twenty-two (12,065,422) Terra Shares are issued and outstanding. The issued
and outstanding Terra Shares have been duly authorized, are validly issued,
fully paid, and nonassessable, and are held of record by CMS. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require CMS or Terra to issue, sell, or otherwise cause to become
outstanding any of the capital stock of Terra. Except as listed on the Terra
Disclosure Schedule at Section 6.2 thereof, the Terra Shares are free of any
pledge, lien, security interest or other encumbrance, and as of the Closing
Date, the Terra Shares shall be free and clear of any pledge, lien, security
interest or other encumbrance so listed at Section 6.2 of the Terra Disclosure
Schedule. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to Terra.

                                       19
<PAGE>   25

6.3      NONCONTRAVENTION

         To the Knowledge of CMS, neither the execution and the delivery of this
Agreement, nor the consummation of the transaction contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of Terra and its Subsidiaries is
subject, or any provision of the charter, bylaws or operating agreement of any
of Terra and its Subsidiaries or (ii) except as listed on the Terra Disclosure
Schedule at Section 6.3 thereof, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel any agreement, contract,
lease, license, instrument, or other arrangement to which any of Terra and its
Subsidiaries is a party or by which it is bound or to which any of the Terra
Assets is subject (or result in the imposition of any Security Interest upon any
of the Terra Assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the financial
condition of Terra and its Subsidiaries taken as a whole or on the ability of
the Parties to consummate the transaction contemplated by this Agreement. To the
Knowledge of CMS, except as listed on the Terra Disclosure Schedule at Section
6.3 thereof, none of Terra and its Subsidiaries needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transaction contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the financial condition of Terra and its
Subsidiaries taken as a whole or on the ability of CMS to consummate the
transaction contemplated by this Agreement.

6.4      SUBSIDIARIES AND AFFILIATES

         The Terra Disclosure Schedule sets forth at Section 6.4 thereof for
each Subsidiary (i) its name, any assumed name under which it conducts business
and jurisdiction of incorporation, (ii) the number of shares of authorized
capital stock of each class of its capital stock, if any, (iii) the number of
issued and outstanding shares of each class of its capital stock, the names of
the holders thereof, and the number of shares held by each such holder, if any,
and (iv) the number of shares of its capital stock held in treasury, if any. All
of the issued and outstanding shares of capital stock of each Subsidiary of
Terra, have been duly authorized and are validly issued, fully paid, and
nonassessable. Terra holds of record and owns beneficially all of the
outstanding shares of each corporate Subsidiary of Terra.

6.5      FINANCIAL STATEMENTS

         Attached hereto at Attachment L are the following financial statements
(collectively the "Financial Statements"): (i) unaudited balance sheets and
statements of income as of and for the fiscal year ended December 31, 1997, for
Terra and its Subsidiaries consolidated; (ii) unaudited balance sheets and
statements of income as of and for the fiscal year ended December 31, 1998 for
Terra and each of its Subsidiaries; (iii) unaudited balance sheets and
statements of income, (the "Most Recent Financial Statements") as of and for the
twelve (12) months ended December 31, 1999 (the "Most Recent Fiscal Month End")
for Terra and each of its Subsidiaries; and (iv) the Consolidated Terra Energy
Pro Forma Balance Sheet dated December 31, 1999.

                                       20
<PAGE>   26

The Terra consolidated Financial Statements, Terra and each of its Subsidiaries
Financial Statements have been extracted from the CMS audited financial
statements which have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, and accurately,
completely and fairly represent the financial condition of Terra as of December
31, 1999, and Terra has no other liabilities or obligations, except as set forth
at Section 6.5 of the Terra Disclosure Schedule. However, the Most Recent
Financial Statements are subject to normal year-end adjustments.

6.6      EVENTS SUBSEQUENT TO MOST RECENT FISCAL MONTH END

         Since the Most Recent Fiscal Month End, there has not been any material
adverse change in the financial condition of Terra and its Subsidiaries taken as
a whole. Without limiting the generality of the foregoing, since the Most Recent
Fiscal Month End none of Terra and its Subsidiaries has engaged in any practice,
taken any action, or entered into any transaction outside the Ordinary Course of
Business which may have a material adverse effect on the financial condition of
Terra and its Subsidiaries, taken as a whole.

6.7      LEGAL COMPLIANCE

         To the Knowledge of CMS, except as listed on the Terra Disclosure
Schedule at Section 6.7 thereof, each of Terra and its Subsidiaries has complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state and local governments (and all agencies thereof), except where
the failure to comply would not have a material adverse effect upon the
financial condition of Terra and its Subsidiaries taken as a whole, or on the
ability of CMS to consummate the transaction contemplated by this Agreement.

6.8      TAX MATTERS

         (a)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(a) thereof, each of Terra and its Subsidiaries has
                  filed on or before the date hereof (or will timely file) all
                  Tax Returns that are required to be filed on or before the
                  Closing Date, and has paid all Taxes shown thereon as owing,
                  except where the failure to file Tax Returns or to pay Taxes
                  would not have a material adverse effect on the financial
                  condition of Terra and its Subsidiaries taken as a whole.

         (b)      The Terra Disclosure Schedule at Section 6.8(b) thereof, (i)
                  lists all Tax Returns filed with respect to any of Terra and
                  its Subsidiaries for taxable periods commencing on or after
                  August 31, 1995, (ii) indicates those Tax Returns that have
                  been audited, and (iii) indicates those Tax Returns that
                  currently are the subject of audit. CMS has delivered to
                  Purchaser correct and complete copies of all Tax Returns,
                  including Federal Income Tax Returns, examination reports, and
                  statements of deficiencies assessed against or agreed to by
                  any of Terra and its Subsidiaries since August 31, 1995.

         (c)      All such Tax Returns for taxable years or periods ending on or
                  before December 31, 1998 are (or will be) complete and
                  accurate in all material respects and disclose all Taxes
                  required to be paid by Terra and its Subsidiaries for the
                  periods covered

                                       21
<PAGE>   27

                  thereby, except for Taxes for which adequate reserves have
                  been established by Terra or its Subsidiaries and such
                  reserves are reflected in the computation of Terra's
                  consolidated net working capital and all Taxes shown to be due
                  on such Tax Returns have been timely paid or are reflected in
                  the computation of Terra's consolidated net working capital,
                  and further except for any adjustments which may be made to
                  the Tax Return for the period ending December 31, 1998
                  pursuant to an Internal Revenue Service audit.

         (d)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(d) thereof, none of Terra or its Subsidiaries have
                  waived or been requested to waive any statute of limitations
                  in respect of any Taxes.

         (e)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(e) thereof, the Tax Returns for taxable years or
                  periods ending on or before December 31, 1998 have been
                  examined by the Internal Revenue Service, or the period for
                  assessment of Taxes in respect of which such Tax Returns were
                  required to be filed has expired.

         (f)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(f) thereof, there is no action, suit,
                  investigation, audit, claim or assessment pending or, to the
                  Knowledge of CMS, proposed or threatened with respect to Taxes
                  of Terra or its Subsidiaries for taxable years or periods
                  ending on or before December 31, 1998 and, to the Knowledge of
                  CMS, no basis exists therefor for which adequate reserves have
                  not been established and such reserves are reflected in the
                  computation of Terra's consolidated net working capital.

         (g)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(g) thereof, all deficiencies asserted or
                  assessments made as a result of any examination of the Tax
                  Returns for taxable years or periods ending on or before
                  December 31, 1998 have been paid in full or are reflected in
                  the computation of Terra's consolidated net working capital.

         (h)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(h) thereof, there are no Tax indemnity agreements
                  to which Terra or its Subsidiaries are a party or are bound.

         (i)      There are no liens for Taxes upon the Terra Assets, except
                  liens relating to current Taxes not yet due or which are
                  reflected in the computation of Terra's consolidated net
                  working capital.

         (j)      All Taxes which Terra or its Subsidiaries are required by law
                  to withhold or to collect for payment have been duly withheld
                  and collected, and have been paid or accrued.

         (k)      To the Knowledge of CMS, any accruals for deferred Taxes are
                  adequate to cover any deferred tax liability of Terra and its
                  Subsidiaries determined in accordance with GAAP through the
                  date thereof.

         (l)      There are no Tax rulings, requests for private letter rulings
                  or requests for technical advice, in each case initiated by
                  Terra or its Subsidiaries, or requests for a change in method
                  of

                                       22
<PAGE>   28

                  accounting or closing agreements relating to Terra or its
                  Subsidiaries for Taxes for any period after December 31, 1998.

         (m)      None of Terra or its Subsidiaries has filed a consent under
                  section 341(f) of the Code or any comparable provision of
                  state statutes.

         (n)      Since January 1, 1999, none of Terra or its Subsidiaries have
                  taken any action not in accordance with past practice that
                  would have the effect of deferring any Tax liability for Terra
                  or any Subsidiary from any taxable period ending on or before
                  December 31, 1998 to any taxable period ending after December
                  31, 1998.

         (o)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(o) thereof, no income or gain of Terra or its
                  Subsidiaries has been deferred pursuant to Treasury
                  Regulations ss.ss. 1.1502-13 or -14, or Temporary Treasury
                  Regulation ss.ss. 1.1502-13T or -14T.

         (p)      None of the Terra Assets is required to be treated as owned by
                  another Person pursuant to section 168(f)(8) of the Code (as
                  in effect prior to its amendment by the Tax Equity and Fiscal
                  Responsibility Act of 1982) or is "tax exempt use property"
                  within the meaning of section 168(h) of the Code or is subject
                  to a so-called TRAC lease under section 7701(h) of the Code or
                  any predecessor provision.

         (q)      Terra and its Subsidiaries are the owners for Income Tax
                  purposes of all property which it has leased to any Person.

         (r)      Neither Terra nor its Subsidiaries have participated in or
                  cooperated with an international boycott, within the meaning
                  of section 999 of the Code, and all filing requirements
                  imposed by section 999 of the Code with respect to Terra and
                  its Subsidiaries have been and will be complied with.

         (s)      Neither Terra nor its Subsidiaries have disposed of property
                  in a transaction being accounted for under the installment
                  method pursuant to section 453 or 453A of the Code.

         (t)      Neither Terra nor its Subsidiaries has any corporate
                  acquisition indebtedness, as described in section 279(b) of
                  the Code.

         (u)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(u) thereof, no Taxes with respect to any period
                  ending on or before December 31, 1998 were paid by Terra or
                  its Subsidiaries (or charged to Terra or its Subsidiaries
                  through any intercompany account or payment) after December
                  31, 1998.

         (v)      Except as set forth on the Terra Disclosure Schedule at
                  Section 6.8(v) thereof, no portion of the Terra Assets (i) has
                  been contributed to and is currently owned by a tax
                  partnership; (ii) is subject to any form of agreement (whether
                  formal or informal, written or oral) deemed by any state or
                  federal Tax statute, rule or regulation to be or to have
                  created a tax partnership; or (iii) otherwise constitutes
                  "partnership property" (as that term is used throughout
                  Subchapter K of Chapter 1 of Subtitle A of the Code) of a tax
                  partnership.

                                       23
<PAGE>   29

         (w)      (i)      All applications for well determinations for each
                           Qualifying Well have been filed with the applicable
                           state and federal agencies under the Natural Gas
                           Policy Act of 1978, as amended (the "NGPA") and the
                           rules and regulations of the Federal Energy
                           Regulatory Commission (the "FERC") under the NGPA
                           (the "NGPA Regulations") requesting a determination
                           that all of the gas produced from each Qualifying
                           Well is produced from "Devonian shale". Each such
                           application has been approved by the applicable state
                           agency and by the FERC and has been finally approved
                           under and in accordance with section 503 of the NGPA
                           (as evidenced by appropriate FERC certification).
                           Such applications comply with the requirements of the
                           NGPA and the NGPA Regulations. True and correct
                           copies of such certifications have been furnished to
                           Buyer. No further applications are required under the
                           NGPA and the NGPA Regulations to allow the legal sale
                           of all gas produced from the Qualifying Wells at a
                           price equal to the price for such gas currently being
                           received. No production from the Qualifying Wells
                           qualifies for incentive prices under section 107 of
                           the NGPA or the deregulation provisions of the NGPA
                           or Subtitle 13 of Title I of the NGPA.

                  (ii)     A)      Except as set forth at Section 6.8(w) of the
                                   Terra Disclosure Schedule, each Qualifying
                                   Well was drilled (within the meaning of
                                   section 29(f) of the Code) after December 31,
                                   1979 and prior to January 1, 1993, and was
                                   completed as a well capable of producing from
                                   the formation described in section
                                   3.01(x)(iii) of the NGPA; and

                           B)      All gas (except carbon dioxide) produced from
                                   each Qualifying Well is a "qualified fuel"
                                   under section 29(c) of the Code.

                  (iii)    Except as set forth at Section 6.8(w) of the Terra
                           Disclosure Schedule, the Qualifying Wells are
                           perforated only in the Antrim formation and the gas
                           produced from each Qualifying Well is not commingled
                           with any gas from that Qualifying Well that is not
                           produced from such formation.

                  (iv)     Prior to January 1, 1980, there was no production of
                           coal seam, Devonian shale, geopressured brine or
                           tight formation gas in marketable quantities from the
                           "property" (as used in section 29 of the Code) on
                           which any Qualifying Well is located.

                  (v)      No oil or gas produced from the Qualifying Wells
                           qualifies or has qualified for the enhanced oil
                           recovery credit or any other credit under section 43
                           of the Code and none has been claimed or taken on
                           such oil or gas.

                  (vi)     No credits referred to in section 29(b)(4) have been
                           claimed with respect to any Qualifying Wells.

                  (vii)    None of the special financing arrangements described
                           in subclauses (I), (II), or (III) of section
                           29(b)(3)(A)(i) of the Code have been provided in
                           connection with any project that includes any of the
                           Qualifying Wells.

6.9      POWERS OF ATTORNEY

         To the Knowledge of CMS, there are no outstanding powers of attorney
executed on behalf of any of Terra and its Subsidiaries.

6.10     LITIGATION

         Except as set forth in Section 6.10 of the Terra Disclosure Schedule
there is no outstanding injunction, judgment, order, decree, ruling or charge
which could have a material adverse effect on the Terra Assets, nor, except as
set forth in Section 6.10 of the Terra Disclosure Schedule is CMS or Terra a
party to any action, suit, proceeding, hearing or investigation, pending or
overtly threatened which involves the Terra Assets, or Terra's ownership or
operation of the Terra Assets.

                                       24
<PAGE>   30

6.11     EMPLOYEES AND EMPLOYEE BENEFITS

         (a)      As of the Effective Date, Terra has no employees or any
                  continuing obligations to any former employee(s) of Terra.

         (b)      Neither Terra nor its Subsidiaries maintains or contributes to
                  any Employee Benefit Plan, Employee Pension Benefit Plan,
                  Employee Welfare Benefit Plan or Multiemployer Plan.

         (c)      There are no claims or actions pending against Terra or its
                  Subsidiaries asserted by any Person or former employee, or any
                  governmental agency or body with respect to any employee
                  matter, and to the Knowledge of CMS there are no claims or
                  actions relating to any employment matter threatened against
                  Terra or its Subsidiaries.

6.12     ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

         Except as set forth in Section 6.12 of the Terra Disclosure Schedule,
Terra is in compliance with all Environmental, Health and Safety Requirements
insofar as the same pertain to the Terra Assets, except where the failure to
comply would not have a material adverse effect upon the Terra Assets; and
except as set forth in Section 6.12 of the Terra Disclosure Schedule, neither
Terra nor the Terra Assets is the subject of any order, ruling, proceeding,
hearing or investigation, either pending or overtly threatened relating to
Environmental, Health and Safety Requirements. Except as set forth in Section
6.12 of the Terra Disclosure Schedule, neither CMS nor Terra has received any
written notice, report or other information regarding any actual or alleged
material violation of any Environmental, Health and Safety Requirements with
respect to the Terra Assets, and as of the Effective Date no condition exists
with respect to the Terra Assets that could give rise to future liability or
obligations under the Environmental, Health and Safety Requirements.

6.13     NO GUARANTIES; EXTENSION OF CREDIT

         Except as set forth in the Terra Disclosure Schedule at Section 6.13
thereof, and further except for customary indemnification and guaranty
provisions contained in any operating agreement or other commonly employed oil
and gas agreements, and further except for extensions of credit made in the
Ordinary Course of Business, no material obligations or liabilities of Terra or
its Subsidiaries are guaranteed by or subject to a similar contingent obligation
of any other Person, nor has Terra or its Subsidiaries guaranteed or become
subject to a similar contingent obligation in respect of the obligations or
liabilities of, or extended credit to any other Person. With respect to the CMS
Oil and Gas Company Credit Agreement referenced at Section 6.13 of the Terra
Disclosure Schedule, CMS represents that it will obtain a release of Terra as
guarantor thereunder at or prior to the Closing Date.

6.14     PERMITS

         To the Knowledge of CMS, each of Terra and its Subsidiaries and
Affiliates possesses all material federal, state and local governmental and
regulatory franchises, rights, privileges, permits, grants, concessions,
licenses, certificates, variances, authorizations, approvals, and other material
authorizations (including any amendments to any thereof) necessary

                                       25
<PAGE>   31

to own or lease and operate the Terra Assets and to conduct its business as now
conducted (collectively, the "Permits").

         To the Knowledge of CMS, except as listed on the Terra Disclosure
Schedule at Section 6.14 thereof, all Permits are in full force and effect and
will continue in full force and effect through the Closing Date. To the
Knowledge of CMS, except as listed on the Terra Disclosure Schedule at Section
6.14 thereof, neither Terra nor its Subsidiaries and Affiliates is in default in
any material respect under the terms of any Permit nor to the Knowledge of CMS
has Terra or its Subsidiaries and Affiliates received notice of any material
default thereunder which has not, or will not be resolved as of the Closing
Date.

6.15     COMPLIANCE WITH CONTRACTS

         Terra has performed all of its obligations under the terms of all
contracts and agreements pertaining to the Terra Assets, except where the
failure to perform would not have a material adverse effect upon the Terra
Assets, and neither CMS nor Terra has received written notice from any party of
an alleged default by Terra under the terms of any contract or agreement, or
that any contract or agreement is not valid and enforceable in accordance with
its terms insofar, and only insofar, as same relate to the Terra Assets.
Anything to the contrary contained herein, notwithstanding, this Section 6.15
does not, and shall not under any circumstances be deemed to include or apply to
matters constituting Title Defects in accordance with Section 13.8, below,
whether or not a Claim of Title Defect has been timely and properly asserted
with respect thereto.

6.16     TITLE

         Subject to Section 18.1, below, and except for the Permitted
Encumbrances, as defined in Section 13.7, below, Terra has Defensible Title, as
defined in Section 13.6, below, to the Terra Assets free and clear of all
material Title Defects, as defined in Section 13.8, below.

6.17     CONSENTS, APPROVALS AND RIGHTS TO ACQUIRE

         Subject to the provisions of Article XX, below, CMS shall identify and
properly notify all parties who hold any preferential right or option to
purchase the Terra Assets, or any part thereof, or whose consent is required to
consummate the transaction contemplated by this Agreement.

6.18     GAS CONTRACTS

         Except as set forth at Section 6.18 of the Terra Disclosure Schedule,
to the Knowledge of CMS, production from or attributable to the Terra Property
is not dedicated to any gas sales contracts, other than those which are
terminable upon thirty (30) day written notice.

6.19     MATERIAL CONTRACTS

         Except as contemplated by this Agreement, and except as set forth in a
schedule of material contracts to be furnished by CMS to Purchaser on or before
March 27, 2000, or in any Attachment to this Agreement, and except for those
agreements, instruments or documents included in subpart (b) below, to the
extent contained in the files and records, including without limitation computer
files and records, located either at Terra's offices in Traverse City, Michigan
or CMS's offices in Houston, Texas, and made fully available to Purchaser,
neither Terra nor any of its Subsidiaries is a party to or is bound by any
material written or oral contract, agreement, commitment or instrument or
amendment to any of the foregoing (excluding any of the foregoing which has been
fully performed by all parties) of the type or in the nature of those enumerated
below:

         (a)      for the purchase, sale or lease (except if the scheduled lease
                  payments are less than $10,000 per year) of real property;

         (b)      relating to oil and gas leases, licenses, permits and similar
                  arrangements, operating agreements, farm-out and farm-in
                  agreements, service contracts and similar agreements, option
                  agreements,

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<PAGE>   32

                  pooling and unitization agreements, production marketing
                  agreements, gas balancing agreements, gas purchase and sales
                  contracts, production sales contracts, processing agreements,
                  permits, licenses and orders, easements, rights of way,
                  pipeline agreements, exploration agreements, participation
                  agreements, oil sales contracts, and all agreements or
                  amendments relating to the same, or assignments of rights or
                  obligations under any such agreements, all relating to the
                  exploration for or the development, production, treating,
                  processing, transportation or marketing of hydrocarbons;

         (c)      which provides for, or relates to, the guarantee by Terra or
                  any of its Subsidiaries of any obligation of any customers,
                  suppliers, officers, directors, employees or affiliates of
                  Terra or such Subsidiaries;

         (d)      which provides for, or relates to, the incurrence by Terra or
                  any of its Subsidiaries of debt for borrowed money in excess
                  of $10,000;

         (e)      which provides for, or relates to, any non-competition or
                  confidentiality arrangement with any person, including any
                  current or former director, officer or employee of Terra or
                  any of its Subsidiaries;

         (f)      for capital expenditures in excess of $25,000 for any single
                  project or related series of projects;

         (g)      any partnership, joint venture or other similar arrangements
                  or agreements involving a sharing of profits or losses;

         (h)      which (other than contracts, agreements, commitments and
                  instruments of the nature described in clauses (a) through (g)
                  above) involve payments or receipts by Terra or any of its
                  Subsidiaries of more than $10,000; and

         (i)      for any purpose which is material to the business of Terra and
                  its Subsidiaries taken as a whole.

6.20     DISCLAIMER OF ALL OTHER REPRESENTATIONS AND WARRANTIES

         Except as expressly set forth in Article IV and this Article VI, CMS
makes no representation or warranty, express or implied, at law or in equity, in
respect of the Assets, the Terra Assets, or the assets of any of Terra's
Subsidiaries or Affiliates, including, without limitation, with respect to
merchantability or fitness for any particular purpose of the Assets, the Terra
Assets or the assets of any of Terra's Subsidiaries or Affiliates, and any such
other representations or warranties are hereby expressly disclaimed.

                   ARTICLE VII - OPERATIONS AND CASUALTY LOSS

7.1      REVENUES AND EXPENSES

         During the Interim Period, CMS shall continue to receive proceeds from
the sale of hydrocarbons produced from or allocated to the Subject Property and
the Terra Property and all other proceeds attributable to the Assets and the
Terra Assets. CMS and Terra will continue to pay expenses attributable to the
Assets and the Terra Assets in the same manner as before the Effective Date. At
Closing, the Purchase Price shall be adjusted for such proceeds and expenses in
the manner set forth in Section 3.3, above.

7.2      OPERATIONS AND LOSS OF ASSETS AND TERRA ASSETS

         (a)      Purchaser acknowledges that portions of the Subject Property
                  and the Terra Property may be producing oil and/or gas
                  properties, or

                                       27
<PAGE>   33

                  may be pooled with producing oil and/or gas properties.
                  Purchaser agrees that until Closing, the Assets and the Terra
                  Assets may continue to be operated and hydrocarbons will
                  continue to be produced from the Subject Property and the
                  Terra Property or properties pooled therewith. CMS and Terra,
                  as to the portions of the Subject Property and the Terra
                  Property which CMS or Terra now operates, shall continue to
                  operate the same in a good and workmanlike manner until the
                  Transfer Date, when such operations, to the extent permitted
                  by applicable contracts and agreements, shall be turned over
                  to and become the responsibility of Purchaser; unless an
                  applicable unit, pooling, communitization or operating
                  agreement otherwise requires, in which case (unless Purchaser
                  and CMS otherwise agree) CMS or Terra shall continue the
                  physical operation of such portions of the Subject Property
                  and the Terra Property, if permitted by, and pursuant to and
                  under the terms of such applicable contract(s) and
                  agreement(s), until such time after Closing as such applicable
                  contract(s) and agreement(s) may require; provided, however,
                  if the transaction contemplated by this Agreement proceeds to
                  Closing, then Purchaser shall assume all risk of, and CMS
                  shall have no liability to Purchaser for, losses or damages
                  sustained, or liabilities incurred, except as may result
                  directly from CMS's gross negligence or willful misconduct in
                  conducting the operation of the Subject Property and the Terra
                  Property (or portions thereof) after the Effective Date. Any
                  such loss, damage or liability which Purchaser seeks to impose
                  on CMS, shall be limited to the rights and remedies provided a
                  non-operator under the applicable contract(s) or agreement(s).
                  Purchaser shall have no recourse against CMS if the applicable
                  contract(s) or agreement(s) delay or prevent Purchaser from
                  assuming operation of the operated portions of the Subject
                  Property and the Terra Property. In no event shall CMS be
                  required to operate the operated portions of the Subject
                  Property or the Terra Property for a period longer than two
                  (2) months after the Closing Date. In the event that Purchaser
                  is unable, for any reason, to assume operatorship of any of
                  the Subject Properties or the Terra Properties which CMS
                  continues to operate as of that date, then CMS will appoint
                  Purchaser as its contract operator, and Purchaser shall, and
                  does hereby agree to assume all operations on the operated
                  portions of the Subject Property and the Terra Property.
                  Purchaser shall thereafter assume and be responsible for, and
                  shall defend, indemnify, and hold CMS, its parents, affiliates
                  and subsidiary corporations, as well as CMS's and their
                  officers, directors, shareholders, employees, and agents,
                  harmless from, against and in respect of any and all Claims
                  based upon, arising out of or related to operation of the
                  operated portions of the Subject Property and the Terra
                  Property, including but not limited to accounting,
                  disbursement of revenues and other general administrative
                  matters relating thereto. Purchaser shall be entitled to all
                  applicable fees and charges relating to such operations which
                  are attributable to periods from and after the date on which
                  Purchaser assumes operatorship of each of the wells and units
                  comprising the operated portions of the Subject Property and
                  the Terra Property. Operation of any portion of the Subject
                  Property or the Terra Property from and after the Effective
                  Date by CMS shall be for and on behalf of Purchaser, and CMS
                  shall make appropriate charges to Purchaser, including
                  overhead charges, for the share of all such charges
                  attributable to the Subject Property and the Terra Property,
                  and to all other working interest owners, which charges shall
                  be

                                       28
<PAGE>   34

                  retained by CMS and not paid or credited to Purchaser
                  regardless of when invoiced and received. Except as otherwise
                  provided in Sections 8.4 and 15.2(k),below, all such charges
                  shall be made in accordance with the applicable operating
                  agreement for each such property, or the applicable contract
                  which otherwise controls. If there are no presently effective
                  operating agreements or contracts, then such charges will be
                  in accordance with the applicable COPAS rate for the area and
                  type of well to which the charges apply, as determined by CMS.
                  Any such charges and expenses due from Purchaser or which are
                  due from third parties and are received by Purchaser,
                  regardless of when invoiced and received, may be recovered by
                  CMS as part of the Closing or Post-Closing Adjustments
                  (pursuant to Sections 15.2(e) and 16.2, below), as
                  appropriate. Purchaser, its heirs, successors, and affiliates
                  shall assume the risk of, and shall defend, indemnify, and
                  hold CMS, its parents, affiliates, and subsidiary
                  corporations, as well as CMS's and their officers, directors,
                  shareholders, employees and agents, harmless from, against and
                  in respect of any and all Claims, based upon, arising out of,
                  or attributable to personal injury, loss of life or damage to
                  property suffered or sustained as the result of any action or
                  activity related to operation of the Subject Property and the
                  Terra Property on or after the Effective Date, except to the
                  extent that such personal injury, loss of life or damage to
                  property was exclusively and directly caused by CMS's gross
                  negligence or willful misconduct.

         (b)      Purchaser acknowledges and agrees that CMS cannot and does not
                  covenant or warrant that Purchaser shall become successor
                  operator of all or any part of the portion of the Subject
                  Property which CMS currently operates, nor that Terra shall be
                  allowed to continue as operator of all or any part of the
                  portions of the Terra Property which it operates, since the
                  Subject Property and the Terra Property may be subject to
                  unit, pooling, communitization or operating agreements or
                  other agreements which control the appointment of a successor
                  operator. Purchaser will take the necessary action to attempt
                  to succeed CMS, or to allow Terra to continue as operator as
                  to all properties operated by CMS or Terra as of the Effective
                  Date. CMS agrees, however, that as to the portion of the
                  Subject Property which it operates, where it will assist to
                  facilitate the appointment of a successor operator, CMS will,
                  upon Purchaser's written request, resign as operator at
                  Closing. Purchaser will act expeditiously to take all
                  reasonable measures, including, but not limited to, taking
                  action prior to Closing if the Parties mutually agree that
                  such action is appropriate, to have Purchaser appointed
                  successor operator of those portions of the Subject Property
                  which CMS operates, or, if the necessary votes under the
                  applicable agreement(s) cannot be obtained to appoint
                  Purchaser as successor operator, to have another working
                  interest owner of such properties appointed successor
                  operator, per the terms of any applicable operating or other
                  agreement(s).

         (c)      If the transaction contemplated by this Agreement proceeds to
                  closing, then the risk of casualty loss of the Assets and the
                  Terra Assets shall pass to Purchaser as of the Effective Date.
                  CMS shall maintain its current insurance on the Assets and the
                  Terra Assets through the Transfer Date, and the Purchase Price
                  shall be adjusted upward to reflect a prorata share of the
                  paid premiums of all such insurance attributable to periods
                  after the

                                       29
<PAGE>   35

                  Effective Date. Attached hereto as Attachment M is a schedule
                  of the insurance coverages which CMS presently maintains with
                  respect to the Assets and the Terra Assets. CMS shall be
                  entitled to receive any and all insurance proceeds relating to
                  the Assets and the Terra Assets attributable to events which
                  occurred prior to the Effective Date, and if the transaction
                  contemplated by this Agreement proceeds to Closing, then
                  Purchaser shall be entitled to receive any and all insurance
                  proceeds attributable to events which occur on or after the
                  Effective Date. In addition, Purchaser shall assume all risk
                  of any change in condition of the Assets and the Terra Assets
                  which occurs during the Interim Period, except to the extent
                  any change in condition is exclusively and directly caused by
                  the gross negligence or willful misconduct of CMS or Terra.

                  ARTICLE VIII - PRE-CLOSING OBLIGATIONS OF CMS

8.1      ENCUMBRANCES

         During the Interim Period, except as otherwise approved by Purchaser
and except for the operation of the Subject Property and the Terra Property and
the production and sale of hydrocarbons from or allocable to the Subject
Property and the Terra Property in the Ordinary Course of Business as otherwise
provided in this Agreement, CMS and Terra shall not transfer, sell, hypothecate,
encumber or otherwise dispose of any of the Assets or the Terra Assets (other
than as required in connection with the exercise by third parties of
preferential rights to purchase or rights of reconveyance or similar rights,
applicable to any portion of the Assets or the Terra Assets as provided in
Article XX).

8.2      APPROVALS/CONSENTS

         During the Interim Period, CMS covenants and agrees that it will use
reasonable efforts to identify and obtain all permissions, approvals and
consents by any governmental authorities or agencies as may be required to
consummate the transaction contemplated hereunder (excluding governmental
permissions, approvals and consents which are customarily obtained after the
assignment of an oil and gas lease or interest). Consistent with Section 9.1,
below, Purchaser shall assist CMS in timely identifying and obtaining all such
items. The Parties shall cooperate to identify all such permissions, approvals
and consents in a timely manner so as to permit the Closing to occur on or
before the Closing Date. Except for an appropriate adjustment to the Purchase
Price, consistent with Attachment H, Purchaser shall have no recourse against
CMS with regard to any loss occasioned by the failure to properly identify or
timely notify any such permission, approval or consent. CMS shall promptly
notify Purchaser of any written claim received by CMS from any third party
relating to such permissions, approvals or consents.

8.3      NOTICES AND CONSENTS

         CMS shall, and will cause each of Terra and its Subsidiaries to give
any notices to, make any filings with, and use commercially reasonable efforts
to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section 4.4
and Section 6.3, above, if any.

                                       30
<PAGE>   36

8.4      OPERATION OF BUSINESS

         CMS will not cause or permit any of Terra and its Subsidiaries to
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business, which may have a material adverse effect on the
financial condition of Terra and its Subsidiaries taken as a whole. Without
limiting the generality of the foregoing, CMS will not cause or permit any of
Terra and its Subsidiaries to engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business the primary purpose
or effect of which will be to generate or preserve Cash. From and after the date
of this Agreement, neither CMS nor Terra shall incur or consent to any
extraordinary or unusual expense with respect to the Assets or the Terra Assets
in excess of $50,000.00 without first obtaining Purchaser's written consent.

8.5      FULL ACCESS

         CMS will permit, and CMS will cause each of Terra and its Subsidiaries
to permit representatives of the Purchaser to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of CMS, Terra and its Subsidiaries, to all premises, properties,
personnel, books, financial and other records (including without limitation tax
records and to the extent prepared, net operating statements for the years 1997,
1998 and 1999), contracts, and documents of or pertaining to each of the Assets
and the Terra Assets. CMS shall also permit representatives of the Purchaser to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal operations of the Assets and the Terra Assets, to the Subject
Property and the Terra Property. Purchaser shall defend, indemnify and hold CMS,
and its successors and assigns, harmless from, against and in respect of any and
all Claims incurred by CMS by reason of damage or injury to any person or
property caused directly or indirectly as a result of Purchaser's inspection of
the Assets and the Terra Assets. Purchaser will treat and maintain as such any
Confidential Information it receives from CMS, Terra, or its Subsidiaries and
Affiliates in the course of the review contemplated by this Section 8.5, and
will not use any of the materials received from CMS, Terra, and its Subsidiaries
and Affiliates, or any information derived pursuant to this Section 8.5,
including, but not limited to, any Confidential Information, except in
connection with this Agreement. All materials reviewed and the results of all
tests, reviews, data and evaluations shall be maintained confidential through
the Closing Date. In the event the transaction contemplated by this Agreement is
not consummated for any reason whatsoever, then Purchaser shall immediately
provide all such tests, reviews, data and evaluations, and all written
materials, computer materials and other tangible embodiments related thereto to
CMS, and shall not maintain copies thereof, and shall maintain such materials,
tests, reviews, data and evaluations as Confidential Information, all in
accordance and consistent with Section 22.10. Purchaser will treat and hold as
such any Confidential Information it receives from CMS, Terra, or its
Subsidiaries in the course of the reviews contemplated by this Section 8.5, will
not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever, will
return to the CMS, Terra, and its Subsidiaries all tangible embodiments (and all
copies) of the Confidential Information which are in its possession, all in
accordance with Section 22.10, below.

8.6     NOTICE OF DEVELOPMENTS

                                       31
<PAGE>   37

         CMS will give prompt written notice to Purchaser of any matter which
CMS discovers, or of which CMS is made aware, which causes, or with the passage
of time or the giving of notice, may cause any of the representations or
warranties set forth in Article IV and Article VI to be untrue, incorrect or
incomplete. Subject to the provisions of Sections 9.6 and 17.1(d), below, no
disclosures by CMS pursuant to this Section 8.6, however, shall be deemed to
prevent or cure any misrepresentation or breach of warranty.

                ARTICLE IX - PRE-CLOSING OBLIGATIONS OF PURCHASER

9.1      APPROVALS/CONSENTS

         During the Interim Period, Purchaser covenants and agrees it will
assist CMS in identifying and obtaining all permissions, approvals and consents,
of any governmental authorities or agencies as may be required to consummate the
transaction contemplated hereunder (excluding governmental permissions,
approvals and consents which are customarily obtained after the assignment of an
oil and gas lease or interest). The Parties shall cooperate to identify all such
permissions, approvals and consents in a timely manner so as to permit the
Closing to occur on or before the Closing Date. Except for an appropriate
adjustment to the Purchase Price, consistent with Attachment H, Purchaser shall
have no recourse against CMS with regard to any loss occasioned by the failure
to properly identify or timely notify any such permission, approval or consent.
Purchaser shall promptly notify CMS of any written claim received by Purchaser
from any third party relating to such permissions, approvals or consents.

9.2      BONDS AND PERMITS

         (a)      Attached hereto as Attachment J is a list of all bonds held by
                  CMS, or held by Terra and backed by CMS, relating to the
                  Assets and the Terra Assets. Purchaser has represented to CMS
                  that it or its designated operator, other than Terra, shall,
                  as of the Closing Date have all required federal, state and
                  local lease and operating bonds. Purchaser shall provide CMS
                  with satisfactory proof that the bonds are in full force and
                  effect for the Assets and the Terra Assets as of the Closing
                  Date or as soon thereafter as is reasonably possible.
                  Purchaser hereby covenants and agrees to defend, indemnify and
                  hold CMS, Terra, its parent, subsidiary and affiliate
                  entities, and CMS's and their officers, directors, employees
                  and agents, harmless from and against any and all Claims in
                  connection with any loss under or claims relating to any of
                  the bonds listed on Attachment J from and after the Effective
                  Date.

         (b)      Purchaser shall be responsible, and shall use its reasonable
                  best efforts to the extent that it has the ability, to confirm
                  or do all things necessary so that the transaction
                  contemplated by this Agreement does not cause the breach of
                  any terms or conditions of the Permits or the forfeiture or
                  impairment of any rights thereunder and that no consents,
                  approvals or acts of, or the making of any filing with, any
                  governmental body, regulatory commission or other party will
                  be required to be obtained in respect of any Permit as a
                  result of the consummation of the transaction

                                       32
<PAGE>   38

                  contemplated by this Agreement. CMS agrees to use its
                  reasonable commercial best efforts to cooperate with Purchaser
                  and to assist Purchaser to effectuate the foregoing.

9.3      CORPORATE DOCUMENTATION

         On or before the Closing Date, Purchaser shall provide CMS the
documents set forth in this Section 9.3. All documents shall be dated no earlier
than thirty (30) days before Closing.

         (a)      Certificate of Good Standing certified by the Secretary of
                  State for the state in which Purchaser is incorporated.

         (b)      A current statement, certified by the Secretary of State for
                  the State of Michigan, that Purchaser is authorized to do
                  business in the State of Michigan and is in good standing as a
                  foreign corporation.

         (c)      A copy of a resolution by the board of directors of Purchaser
                  authorizing the transaction intended by this Agreement and
                  authorizing the individual who executes this Agreement and any
                  conveyance instrument on behalf of the corporation to do so,
                  certified by the corporate secretary or assistant secretary of
                  Purchaser.

         (d)      A certificate of the secretary or assistant secretary of
                  Purchaser certifying the incumbency and specimen signature of
                  the officer of Purchaser who executes this Agreement and any
                  assignments or other documents required to be executed by
                  Purchaser, pursuant to the terms of this Agreement.

         (e)      If Purchaser is a partnership or other entity, Purchaser
                  agrees to provide CMS such documentation, as CMS requires to
                  verify Purchaser's status and the authority of its agent prior
                  to Closing.

9.4      NOTICES AND CONSENTS

         Purchaser will give any notice to, make any filings with, and use
commercially reasonable efforts to obtain any authorizations, consents and
approvals of governments and governmental agencies in connection with the
matters referred to in Sections 3.4(a) and 5.3, above, or required pursuant to
Section 5.7, above, if any.

9.5      NOTICE OF DEVELOPMENTS

         Purchaser will give prompt written notice to CMS of any material
adverse development causing a breach of any of its representations and
warranties contained in Article V, above. No disclosure by Purchaser pursuant to
this Section 9.5, however, shall be deemed to prevent or cure any
misrepresentation or breach of warranty.

9.6      NOTICE OF MISREPRESENTATION OR BREACH OF WARRANTY

         Purchaser will give prompt written notice to CMS of any matter which
Purchaser discovers, or of which Purchaser is made aware, which causes, or with
the passage of time or the giving of notice, may cause any of the

                                       33
<PAGE>   39

representations or warranties set forth in Article IV or Article VI to be
untrue, incorrect or incomplete. No disclosure by Purchaser pursuant to this
Section 9.6, however, shall be deemed to prevent or cure any misrepresentation
or breach of warranty, unless Purchaser fails to give CMS written notice of any
such matter known, discovered or disclosed to Purchaser within four (4) business
days after such matter becomes known by, discovered by or disclosed to
Purchaser, in which case any such misrepresentation or breach of warranty shall
be deemed waived or cured.

                     ARTICLE X - CMS'S CONDITIONS OF CLOSING

         CMS's obligation to consummate the transaction provided for herein is
subject to the satisfaction by Purchaser or waiver by CMS of the following
conditions set forth in Section 10.1 through Section 10.6, inclusive:

10.1     REPRESENTATIONS

         The representations and warranties of Purchaser contained in Article V
shall be true and correct in all material respects on the Closing Date as though
made on and as of that date.

10.2     PERFORMANCE

         Purchaser shall have performed in all material respects the
obligations, covenants and agreements to be performed by Purchaser at or prior
to the Closing.

10.3     PENDING MATTERS

         No suit, action or other proceeding by a third party or a governmental
authority shall be pending or threatened which seeks substantial damages from
CMS in connection with, or seeks to restrain, enjoin or otherwise prohibit, the
consummation of the transaction contemplated by this Agreement.

10.4     WAITING PERIODS

         All applicable waiting periods (and any extensions thereof) under any
applicable act shall have expired or otherwise been terminated and the Parties,
Terra, and its Subsidiaries shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
Sections 4.4, 5.5 and 6.3, above.

10.5     OPINION OF COUNSEL

         CMS shall have received an Opinion of Counsel, dated as of Closing,
from Purchaser's counsel, in form and substance as set forth at Attachment N.

10.6     PAYMENT OF PURCHASE PRICE OR ADJUSTED PURCHASE PRICE

         Purchaser shall have wire transferred to CMS the Purchase Price or
Adjusted Purchase Price due at Closing as described in Section 3.4(b), above,
pursuant to written instructions delivered by CMS.

         CMS may waive any condition specified in this Article X, by executing a
statement to that effect at or prior to Closing.

                                       34
<PAGE>   40

                 ARTICLE XI - PURCHASER'S CONDITIONS OF CLOSING

                  Purchaser's obligation to consummate the transaction provided
for herein is subject to the satisfaction by CMS or waiver by Purchaser of the
following conditions set forth in Sections 11.1 through 11.5, inclusive:

11.1     REPRESENTATIONS

         The representations and warranties of CMS contained in Article IV,
except Section 4.13, and in Sections 6.2, 6.3, 6.5, 6.7, 6.8(w), 6.10, 6.12,
6.14, 6.15, 6.18, and 6.19 shall be true and correct in all material respects on
the Closing Date as though made on and as of that date.

11.2     PERFORMANCE

         CMS shall have performed in all material respects the obligations,
covenants and agreements to be performed by it at or prior to the Closing.

11.3     PENDING MATTERS

         No suit, action or other proceeding by a third party or a governmental
authority shall be pending or threatened which seeks substantial damages from
Purchaser in connection with, or seeks to restrain, enjoin or otherwise
prohibit, the consummation of the transaction contemplated by this Agreement.

11.4     WAITING PERIODS

         All applicable waiting periods (and any extensions thereof) under any
applicable act, shall have expired or otherwise been terminated and the Parties,
Terra, and its Subsidiaries shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
Sections 4.4, 5.5 and 6.3, above.

11.5     OPINION OF COUNSEL

         Purchaser shall have received an Opinion of Counsel, dated as of
Closing from CMS's counsel, in form and substance as set forth at Attachment O.

         Purchaser may waive any condition specified in this Article XI, by
executing a statement to that effect at or prior to Closing.

                      ARTICLE XII - ENVIRONMENTAL CONDITION

12.1     EXISTING CONDITION

         The Subject Property and the Terra Property have been utilized by CMS,
Terra and/or its Subsidiaries and possibly others for the purposes of
exploration, development, production and transportation of oil and gas.
Purchaser acknowledges that wastes and products, including, but not limited to,
crude oil, natural gas, natural gas liquids, produced water, and other wastes
associated with oil and gas production and exploration operations, may have been
spilled, released or disposed of on-site by, among other ways, placement in
pits, burial, land farming, land spreading and underground injection, into or
onto the Subject Property and the Terra Property. Purchaser acknowledges that
some oilfield production equipment located on the Subject Property and the Terra
Property may contain asbestos or naturally-

                                       35
<PAGE>   41

occurring radioactive material ("NORM"). Purchaser expressly understands that
NORM may affix or attach itself to the inside of wells, materials and equipment
as scale or in other forms, and that wells, materials and equipment located on
the Subject Property and the Terra Property may contain NORM and that
NORM-containing materials may be buried or have been otherwise disposed of on
the Subject Property and the Terra Property. Purchaser also expressly
understands that special procedures may be required for the removal and disposal
of asbestos and NORM from the equipment and the Subject Property and the Terra
Property where it may be found.

         Attachment P contains a list of those portions of the Subject Property,
the Terra Property and other properties for which CMS has responsibility or
liability which, to the Knowledge of CMS constitute a "Facility", as defined in
1994 PA No. 451, Sec. 20101(o), and discloses the general nature and extent of
any release. Attachment P is intended to, and shall constitute notice to
Purchaser of the existence of any such Facility, as may be required by 1994 PA
No. 451, Sec. 20116. In the event the transaction contemplated by this Agreement
proceeds to closing, then as of the Effective Date Purchaser shall assume all
responsibility and all liability of CMS with respect to all Environmental,
Health and Safety Requirements relating to the Facilities listed at Attachment
P, and Purchaser agrees to release, defend, indemnify and hold CMS, its parent,
affiliate and subsidiary corporations, as well as CMS's and their officers,
directors, shareholders, employees and agents, harmless from and against any and
all Claims and Adverse Consequences of whatsoever kind and nature arising out of
the matters identified at Attachment P.

12.2     ENVIRONMENTAL ASSESSMENT AND ACCESS

         (a)      For the purposes of this Agreement, an "Environmental
                  Assessment" shall mean the right to enter upon and within the
                  Subject Property and the Terra Property, and to inspect the
                  structures and improvements thereon. An Environmental
                  Assessment shall be a Phase I environmental review only, which
                  shall only consist of (i) a review and assessment of the
                  adequacy of CMS's or Terra's existing permits for the Subject
                  Property and the Terra Property; (ii) a review of historic
                  data to determine prior land uses; (iii) a compilation of
                  pertinent information related to the Subject Property and the
                  Terra Property, including interpretation of analytical data in
                  the files referenced in Section 1.1(h), above, except any such
                  information which CMS considers to be confidential or
                  proprietary or which CMS or Terra is prohibited from
                  disclosing due to third party restrictions unless such
                  information is directly related to the condition, quality or
                  quantity of the Subject Property or the Terra Property; (iv) a
                  physical examination of the Subject Property and the Terra
                  Property to identify potential contaminant sources; and (v)
                  surveys to locate the boundaries of the Subject Property and
                  the Terra Property.

         (b)      Environmental Assessment shall not include soil boring,
                  collection of samples or analysis of any material on the
                  Subject Property and the Terra Property without the express
                  written consent of CMS. If Purchaser performs any borings,
                  collects samples or performs analysis of material, Purchaser
                  shall assume all liability of the results, generation of
                  wastes and disposal of any material generated. Purchaser shall
                  release, defend, indemnify and hold CMS its parent, affiliate
                  and subsidiary corporations, as well as CMS's officers,
                  directors, shareholders,

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<PAGE>   42

                  employees and agents harmless from, against and in respect of
                  any and all Claims created by or associated with boring,
                  sampling or analysis.

         (c)      Following execution of this Agreement, and upon reasonable
                  notice to CMS, Purchaser shall have the right, until fifteen
                  (15) business days preceding the Closing Date, to conduct or
                  have conducted an Environmental Assessment of the Subject
                  Property and the Terra Property at its sole cost, risk and
                  expense. Purchaser shall provide CMS a copy of the
                  Environmental Assessment, including any reports, data and
                  conclusions prior to Closing. CMS agrees to provide Purchaser
                  with reasonable access to the Subject Property and the Terra
                  Property to conduct the Environmental Assessment. CMS shall
                  have the right to require Purchaser to conform to CMS's safety
                  and industrial hygiene procedures in the performance of the
                  Environmental Assessment.

         (d)      In the event Purchaser's Environmental Assessment reveals a
                  demonstrable violation of any Environmental, Health or Safety
                  Requirements (other than those matters disclosed at Attachment
                  P), then Purchaser shall so notify CMS in writing, no later
                  than fifteen (15) business days prior to Closing. In the event
                  that Purchaser timely and properly asserts a violation of any
                  Environmental, Health or Safety Requirements, such violation
                  shall be resolved in accordance with the procedure contained
                  in Section 17.1(d), below, or CMS, at its sole and exclusive
                  option, may elect to exclude the affected portion of the
                  Subject Property or the Terra Property, from the transaction
                  contemplated by this Agreement with a corresponding downward
                  adjustment to the Purchase Price in an amount equal to the
                  allocated value of the affected portion of the Subject
                  Property or the Terra Property, as reflected at Attachment H.
                  In the event a portion of the Terra Property is excluded from
                  the transaction contemplated by this Agreement, CMS shall
                  cause Terra to assign all of its right, title and interest in
                  the affected portion of the Terra Property to CMS, at or prior
                  to Closing.

12.3     RELEASE AND INDEMNITY FOR ENVIRONMENTAL CONDITIONS

         Purchaser understands that upon Closing the conveyance and assignment
of the Subject Property and the Terra Property will be on an "AS IS" and "WHERE
IS" basis, "WITH ALL FAULTS". Purchaser shall assume and discharge any and all
liabilities with respect to Environmental, Health and Safety Requirements
relating to the ownership or operation of the Assets and the Terra Assets
whether arising before or after the Effective Date, except as follows:

         (i)      Purchaser assumes no liability with respect to Environmental
                  Health and Safety Requirements unless and until Closing
                  occurs; and

         (ii)     Except as qualified by Section 18.1, below, Purchaser assumes
                  no liability with respect to any matters which constitute a
                  breach of the representations and warranties of CMS contained
                  in Section 4.8 and Section 6.12 , above.

         Subject to the provisions of Article XVIII below, as to all other
Environmental, Health and Safety Requirements, Purchaser hereby releases and
shall and does hereby covenant and agree to defend, indemnify and hold CMS, its
parent, subsidiary and affiliate corporations, and CMS's and their officers,
directors, employees and agents harmless from and against any and

                                       37
<PAGE>   43

all Claims and Adverse Consequences with respect to or related in any manner to
any and all Environmental, Health and Safety Requirements of, or any other
condition of the Subject Property or the Terra Property existing either before
or after the Effective Date or Closing Date. Purchaser agrees that the indemnity
provision of this Section 12.3 shall apply regardless of whether CMS or Terra
was wholly or partially, actively or passively, negligent or otherwise at fault,
and whether or not the Claim or Adverse Consequence is based on a theory of
negligence, negligence per se, strict liability, willful misconduct, products
liability, premises liability or other theory of liability as to the applicable
indemnitee or others.

12.4     CONFIDENTIALITY, RELEASE AND INDEMNITY FOR ENVIRONMENTAL ASSESSMENT

         Purchaser agrees that any data, the results of any analysis of data or
information acquired pursuant to the Environmental Assessment shall be deemed to
be Confidential Information subject to the provisions of Section 22.10, below.
Purchaser will not disclose the data, analysis or information to any person or
agency without the prior written approval of CMS. Purchaser waives and releases
all Claims against CMS, its parent, subsidiary and affiliate corporations, and
CMS's and their directors, officers, employees and agents, and to the extent CMS
or Terra may have any liability or duty of contribution, CMS's and Terra's
working interest owners, partners or joint venturers in the Subject Property and
the Terra Property, for any injury to, disease of, or death of persons, or
damage to or loss of property arising in any way from the exercise of
Purchaser's right to conduct the Environmental Assessment, or activities of
Purchaser or its employees or agents on the Subject Property and the Terra
Property while conducting the Environmental Assessment. Purchaser shall defend,
indemnify and hold harmless CMS, its parent, subsidiary and affiliate
corporations, and CMS's and their directors, officers, employees and agents, and
to the extent CMS or Terra may have any liability or duty of contribution, CMS's
and Terra's lessors, co-lessees, co-working interest owners, joint venturers and
partners in the Subject Property and the Terra Property (insofar only as CMS or
Terra may be obligated to such lessors, co-lessees, co-working interest owners,
joint venturers and partners), harmless from and against any and all Claims and
Adverse Consequences whatsoever, and any and all statutory or common law liens
or other encumbrances for labor or materials furnished in connection with the
Environmental Assessment, and the disposition of any samples or wastes generated
by the Environmental Assessment. Purchaser agrees that it shall be considered to
be the sole generator of any wastes or samples generated by the Environmental
Assessment, and that it shall comply with all applicable federal, state or local
governmental laws, rules, regulations and ordinances in conducting the
Environmental Assessment.

12.5     INSURANCE FOR ENVIRONMENTAL ASSESSMENT

         Purchaser shall obtain and maintain comprehensive public liability and
property damage insurance for the performance of the Environmental Assessment by
Purchaser or its contractor or other agents, or for purposes of obtaining
physical access to any of the Subject Property and the Terra Property, or for
any other purpose prior to Closing. The insurance shall: (i) be obtained from
and maintained with an insurer acceptable to CMS; (ii) shall have limits of not
less than one million dollars ($1,000,000) per occurrence for death or injury
and property damage, and five hundred thousand dollars ($500,000) for workers
compensation; (iii) cover Purchaser's obligations under the indemnity provisions
of this Article XII and Section 16.3; (iv) shall be occurrence-based insurance;
(v) shall name CMS as an additional insured; (vi) shall contain a waiver of
subrogation rights as to CMS; and (vii) shall contain a provision pursuant to
which the insurer agrees not to cancel or modify the

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<PAGE>   44
insurance coverage without furnishing at least thirty (30) days' prior written
notice to CMS. Prior to the exercise of any right to gain access to the Subject
Property and the Terra Property, Purchaser shall furnish CMS a certificate
evidencing the existence of the insurance required pursuant to this Section
12.5.

12.6 INDEMNITY REGARDING ACCESS

         Purchaser hereby releases and shall and does hereby covenant and agree
to defend, indemnify and hold CMS, Terra and its Subsidiaries, its parent,
subsidiary and affiliate corporations, and CMS's and their officers, directors,
employees and agents, and to the extent CMS or Terra may have any liability or
duty of contribution, CMS's and Terra's lessors, co-lessees, co-working interest
owners, partners and co-venturers (insofar only as CMS or Terra may be obligated
to such lessors, co-lessees, co-working interest owners, joint venturers or
partners) in the Subject Property and the Terra Property, harmless from and
against any and all Claims and Adverse Consequences in connection with personal
injuries, including death, or property damage or loss arising out of or relating
to access to the Subject Property or the Terra Property by Purchaser, its
officers, directors, employees, agents and representatives to inspect the
Subject Property and the Terra Property, including access to the Subject
Property and the Terra Property for performing an Environmental Assessment. This
indemnity obligation includes any access to the Subject Property and the Terra
Property prior to Purchaser's execution of this Agreement, up through the later
of the Closing Date and the date upon which CMS relinquishes operatorship of any
of the Assets or the Terra Assets, for any purpose relating to the acquisition
or proposed acquisition by Purchaser of the Assets and the Terra Assets. The
indemnity obligations of Purchaser under this Section 12.6 shall survive the
Closing or termination of this Agreement.

                        ARTICLE XIII - TITLE EXAMINATION

13.1 TITLE EXAMINATION PERIOD

         Following execution of this Agreement, Purchaser shall have until July
31, 2000 (the "Extended Due Diligence Period") to complete, at Purchaser's sole
cost, risk and expense, all title examinations of the Subject Property and the
Terra Property. On or before the expiration of the Extended Due Diligence
Period, Purchaser shall deliver written notice to CMS ("Claim of Title Defect")
of any claim that CMS's or Terra's title within the presently producing
formations of the Subject Property and the Terra Property is less than
"Defensible Title," as defined in Section 13.6, below. The Claim of Title Defect
shall detail the specific portion(s) of the Subject Property or the Terra
Property affected, and specify any "Title Defect" (as defined at Section 13.8)
which causes title to the specific portion of the Subject Property or the Terra
Property to be less than Defensible Title. Such written notice shall specify all
available information, including but not limited to the action Purchaser deems
necessary for CMS, if it so elects, to cure title so as to allow CMS to deliver
Defensible Title. Any Title Defect as to which Purchaser does not assert a Claim
of Title Defect to CMS within the Extended Due Diligence Period, shall be deemed
waived for all purposes. Purchaser shall be solely responsible for any costs of
title examination, title curative actions (other than those referenced in
Section 13.2, below), landman or broker fees, document preparation and of any
inspections it undertakes, and CMS shall not have to create, update or
supplement any title documents, such as abstracts of title or title opinions, in
its possession. Purchaser will not be given access to data and records which CMS
considers to be proprietary or confidential to it, or which CMS or Terra cannot
legally

                                       39
<PAGE>   45

provide Purchaser because of third party restriction on CMS or Terra, unless
such data or records are directly related to the condition, quality or quantity
of the Subject Property or the Terra Property. During the Extended Due Diligence
Period CMS may deliver written notice to Purchaser claiming upward adjustments,
in accordance with Section 3.3(b), below, as the result of the interest of CMS
in a specific portion of the Subject Property or the Terra Property being
greater than that set forth at Attachment A.

13.2 CURE OF TITLE

         CMS shall review any Claim of Title Defect submitted in accordance with
Section 13.1, above, with the option (at CMS's sole cost and expense) of curing
any Title Defect properly identified in the Claim of Title Defect. CMS shall
also have the option, but not the obligation to indemnify Purchaser or bond over
any alleged Title Defect, in an amount equal to the diminishment in value of the
affected portion of the Subject Property or the Terra Property caused by such
Title Defect determined in accordance with Section 13.4. If CMS so elects to
indemnify Purchaser or bond over a Title Defect, then Purchaser shall take or
retain title to the affected portion of the Subject Property or the Terra
Property, subject to the Title Defect, without any downward adjustment to the
Purchase Price.

13.3 TITLE ADJUSTMENTS

         (a)      Downward Adjustment. If on or before September 30, 2000, CMS
                  shall not have cured any Title Defect affecting the Subject
                  Property or the Terra Property for which a Claim of Title
                  Defect was properly and timely made, and CMS has elected not
                  to indemnify Purchaser against or bond over the alleged Title
                  Defect, then subject to Section 13.5, below, CMS shall pay to
                  Purchaser an amount equal to the diminishment in value
                  represented by such Title Defect, determined in accordance
                  with Section 13.4,below.

         (b)      Upward Adjustment. If on or before September 30, 2000, the
                  Parties shall determine that, (i) CMS or Terra owns a greater
                  net revenue interest than is set forth at Attachment A as to
                  the oil and gas produced, saved and marketed from the
                  presently producing formations in any of the individual
                  producing well(s) or unit(s) described at Attachment A, (ii)
                  CMS or Terra owns a greater net revenue interest, as to all
                  unitized, pooled or communitized substances presently
                  producing from the applicable unitized, pooled, or
                  communitized formation(s) within the applicable unitized,
                  pooled or communitized area(s) allocated to any of the
                  interest(s) set forth at Attachment A, or (iii) CMS's or
                  Terra's share of expenses or burdens attributable to the oil
                  and gas produced, saved and marketed from the presently
                  producing formations in any of the individual producing
                  well(s) or unit(s) described at Attachment A is less than
                  shown at Attachment A, without a corresponding reduction in
                  CMS's or Terra's net revenue interest, then CMS shall send
                  written notice thereof to Purchaser prior to September 30,
                  2000. The notice shall state the specific interest(s) affected
                  and indicate the amount of increase to the net revenue
                  interest, or decrease in the expenses or burdens, and specify
                  the reason(s) for the upward adjustment. The Purchase Price
                  shall be adjusted upward by, or Purchaser shall pay to CMS,
                  the increased value of the Assets and the Terra Assets as a
                  result of the increased net revenue interest, or decreased
                  expenses or burdens, determined consistent with Section 13.4,

                                       40
<PAGE>   46

                  below. In determining whether an upward adjustment is called
                  for under this Section 13.3(b), neither CMS nor Terra shall be
                  deemed to own an interest that such party holds for the
                  benefit of a third party.

         Any downward or upward adjustment may be accounted for in the Final
Settlement Statement, in the manner provided in Section 16.1, below.

13.4 VALUE OF TITLE ADJUSTMENTS

         The diminishment in value of the Assets or the Terra Assets resulting
from an asserted Title Defect, as well as the amount of any and all upward
adjustments provided for by Section 13.3(b), above, shall be consistent with the
following:

         (a)      If a Title Defect is a valid and enforceable lien, encumbrance
                  or other charge, which is liquidated in amount, the value of
                  the downward adjustment in the Purchase Price shall be the sum
                  necessary to be paid to the lienholder to remove the Title
                  Defect from the portion of the Subject Property or the Terra
                  Property affected by the Title Defect.

         (b)      If a Title Defect represents an obligation or burden upon the
                  Subject Property or the Terra Property for which the economic
                  detriment to Purchaser is not liquidated but can be estimated
                  with reasonable certainty, the value of the downward
                  adjustment in the Purchase Price shall be a sum necessary to
                  compensate Purchaser for the present value of the adverse
                  economic effect which the Title Defect will have on the
                  Subject Property or the Terra Property.

         (c)      A lien or encumbrance in the form of a judgment secured by a
                  supersedeas bond or other security approved by the court
                  issuing the judgment shall not be considered a Title Defect
                  and no adjustment to the Purchase Price will be made.

         (d)      If the Title Defect proves CMS or Terra owns a lesser net
                  revenue interest than that shown at Attachment A, or a greater
                  working interest than that shown at Attachment A, without a
                  corresponding proportionate increase in the net revenue
                  interest attributable to an interest in an oil and gas lease,
                  the amount of the downward adjustment to the Purchase Price
                  shall be the value of the decrease in the net revenue interest
                  or increase in the working interest, consistent with the
                  allocations of value set forth at Attachment H, which is
                  allocated to the applicable interest in an oil and gas
                  lease(s) affected by the Title Defect.

         (e)      Subject to Section 13.5, below, in no event shall the value of
                  any Title Defect alleged by Purchaser exceed the value
                  attributed to the interest affected, as set forth on
                  Attachment H.

         (f)      If it is determined that there is an upward adjustment in
                  accordance with Section 13.3(b), above, the amount of the
                  upward adjustment to the Purchase Price shall be the value of
                  the increase in the net revenue interest or decrease in the
                  working interest, consistent with the allocations of value set
                  forth at Attachment H, which is allocated to the applicable
                  interest in an oil and gas lease(s) affected.

                                       41
<PAGE>   47

13.5 LIMITS ON TITLE ADJUSTMENTS

         Any other provisions of this Agreement to the contrary notwithstanding
in the event the total cumulative title adjustments do not exceed the sum of
three hundred thousand dollars ($300,000.00), there shall be no adjustment to
the Purchase Price for Title Defects, and in no event shall any adjustment be
made for the first $300,000.00 in Title Defects alleged by Purchaser, or upward
adjustment due CMS, regardless of whether the cumulative downward or upward
adjustment exceeds that amount. Further, neither CMS nor Purchaser shall assert
any Title Defects or upward adjustments provided for in this Article XIII, the
value of which, determined in accordance with Section 13.4, above, and
Attachment H, is ten thousand dollars ($10,000.00) or less.

13.6 DEFINITION OF DEFENSIBLE TITLE

         The term "Defensible Title" shall have the meaning as follows: (i) as
to each interest in an oil and gas lease, (or if any such lease is included in a
production unit, then as to such unit) comprising the Assets or the Terra
Assets, Defensible Title is that which entitles CMS or Terra on a leasehold
basis to receive not less than the net revenue interest set forth at Attachment
A for all oil and gas produced, saved and marketed from the presently producing
formations in the Subject Property and the Terra Property as of the Effective
Date; (ii) as to each interest in an oil and gas lease (or if any such lease is
included in a production unit, then as to such unit) comprising the Assets or
the Terra Assets, Defensible Title is that which obligates CMS or Terra on a
leasehold basis to bear costs and expenses relating to the maintenance,
development and operation of the producing wells and units on leased lands and
depths not exceeding the working interest described at Attachment A as of the
Effective Date; and (iii) as to the Assets and the Terra Assets, Defensible
Title is that which as of the Effective Date is marketable title, and as to
those portions of the Assets and Terra Assets which constitute interests in real
property, marketable record title, free and clear of material encumbrances,
liens and defects, other than Permitted Encumbrances, as defined below.

13.7 DEFINITION OF PERMITTED ENCUMBRANCES

         The term "Permitted Encumbrances" shall include all of the conditions
of title contained in this Section 13.7 as follows:

         (a)      Permitted Encumbrances include lessors' royalties, overriding
                  royalties, reversionary interests and similar burdens on any
                  leasehold working interests described at Attachment A, if the
                  net cumulative effect of the burdens does not operate to
                  reduce CMS's or Terra's interest in all oil and gas produced
                  from the leasehold interests below the net revenue interest on
                  a leasehold basis as set forth at Attachment A;

         (b)      Permitted Encumbrances include division orders and sales
                  contracts terminable without penalty upon no more than ninety
                  (90) days' notice to the purchaser;

         (c)      Permitted Encumbrances include unexercised preferential rights
                  to purchase, which have been waived or for which the time to
                  exercise has expired, required third party consents to
                  assignments, which have been waived or obtained, and similar
                  agreements;

                                       42
<PAGE>   48

         (d)      Permitted Encumbrances include materialmen's, mechanics',
                  operators', co-working interest owners', repairmen's,
                  employees', contractors', tax and other liens and charges,
                  arising in the Ordinary Course of Business, which have not
                  been filed in compliance with statutes, or, if filed, have not
                  become delinquent or payment is being withheld as provided by
                  law or agreement or the validity of which is being contested
                  in good faith by appropriate action, encumbrances, contracts,
                  agreements, instruments, and obligations, affecting the Assets
                  or the Terra Assets arising in the Ordinary Course of
                  Business;

         (e)      Permitted Encumbrances include 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 which are
                  customarily obtained subsequent to the sale or conveyance;

         (f)      Permitted Encumbrances include easements, rights-of-way,
                  servitudes, permits, surface leases and other rights for
                  surface operations, pipelines, grazing, logging, canals,
                  ditches, reservoirs or similar surface uses, conditions,
                  covenants or other restrictions, easements for streets,
                  alleys, highways, pipelines, telephone lines, power lines,
                  railways and other easements and rights-of-way, on, over or in
                  respect of any of the Subject Property or the Terra Property;

         (g)      Permitted Encumbrances include all rights reserved to or
                  vested in any governmental, statutory or public authority to
                  control or regulate any of the Assets or the Terra Assets in
                  any manner, and all applicable laws, rules and orders of
                  governmental authority;

         (h)      Permitted Encumbrances include any Title Defects which
                  Purchaser may have expressly waived in writing or which are
                  deemed to have been waived under this Agreement;

         (i)      Permitted Encumbrances include any production imbalances and
                  pipeline imbalances;

         (j)      Permitted Encumbrances include (whether or not recorded), all
                  leases, unit agreements, communitization agreements, pooling
                  agreements, governmental orders and other contracts and
                  agreements, to which CMS or Terra is a party, or to which CMS
                  or Terra or the Assets or the Terra Assets are subject, and
                  all assignments of the Subject Property or the Terra Property,
                  and all required consents or rights of reassignment provided
                  for by any of the foregoing, to the extent the same do not
                  operate to reduce CMS's or Terra's net revenue interest below
                  that specified at Attachment A, or to increase the obligations
                  of CMS or Terra to bear costs and expenses in excess of the
                  working interest specified at Attachment A, without a
                  corresponding increase in the net revenue interest. Permitted
                  Encumbrances does not include mortgages, liens or encumbrances
                  other than those that are the subject of Section 13.7(d),
                  above.

13.8 DEFINITION OF TITLE DEFECT

         The term "Title Defect" means any material encumbrance, encroachment,
irregularity, defect in or objection to CMS's or Terra's title to the Subject
Property and the Terra Property listed at Attachment A which, alone or in

                                       43
<PAGE>   49

combination with other defects, renders CMS's or Terra's title to the Subject
Property or the Terra Property less than Defensible Title. In determining
whether an encumbrance, encroachment, irregularity, defect in or objection to
title is material, due consideration shall be given to the length of time that
the interest involved has been, is or is considered to be in "Pay Status" and
whether the Title Defect is of the type expected to be encountered in the area
involved and is customarily acceptable to prudent operators and interest owners.
An interest shall be considered to be in Pay Status when payment is being made,
whether by CMS, Terra or its Subsidiaries or by a third party, for the
production from or that is otherwise allocated to the Subject Property or the
Terra Property without indemnity from CMS or Terra, except indemnity customarily
made in division orders, transfer orders, product purchase agreements and
similar documents governing the payment of proceeds from production. Title
Defects, which are not material, include, without limitation, defects that have
been cured by possession under applicable statutes of limitation, defects in the
early chain of title such as failure to recite marital status in documents,
omission of heirship or succession proceedings, lack of survey, failure to
record releases of oil and gas leases, failure to obtain subordination of a
lessor mortgage to an oil and gas lease, liens, production payments or mortgages
that have expired of their own terms, matters which are deemed remedied, cured
or otherwise satisfied by the remedial effects of the Michigan Forty Year
Marketable Title Act (MCL 565.101 to 565.109, inclusive; MSA 26.1271 to 26.1279,
inclusive), and matters that are not reasonably expected to result in claims
adversely affecting CMS's or Terra's title to the Subject Property or the Terra
Property. The term Title Defects does not include Permitted Encumbrances.
Matters which occur during the Interim Period and which result in a reduction in
the net revenue, or an increase in the working interest without a corresponding
increase in net revenue interest of CMS or Terra in and to a portion of the
Assets or Terra Assets from that which is shown at Attachment A shall not form
the basis for the assertion of a Title Defect, and shall be deemed Defensible
Title to the affected Asset or Terra Assets, if such matter is the result of an
event or occurrence which is in the Ordinary Course of Business, or is beyond
the control of CMS or Terra.

13.9 BACK-IN INTEREST ADJUSTMENTS

         For purposes of this Section 13.9 the term "Reserve Report" means the
report entitled "Estimated Future Reserves And Income Attributable To Certain
Leasehold And Royalty Interests Beginning January 1, 2000", bearing date of
October 25, 1999, prepared by Ryder Scott Company for CMS, which was made
available to Purchaser. Among other things, the Reserve Report specifies the
Expense Interest (working interest) and the Revenue Interests (net revenue
interests) of CMS and/or Terra in the various individual producing wells and
units, and the various unitized, pooled or communitized areas or units that
comprise the Assets and the Terra Assets, these being the same wells, units and
areas described at Attachment A1 ("Constituent Property or Properties"). The
Reserve Report reflects the Expense Interest and Revenue Interests of CMS and/or
Terra in each Constituent Property at two points in time. The "Initial" interest
is that owned as of January 1, 2000. The "Final" interest, if different than the
Initial interest, reflects an increase or decrease that will occur at an
unspecified time in the future as the result of the provisions of applicable
contracts. The Parties acknowledge and agree that the Reserve Report valuation
is a function of both the Initial and Final Interests.

         For purposes of this Section 13.9, the term "Back-In Interests" means,
with respect to a particular Constituent Property, the working and net revenue
interests actually owned by CMS and/or Terra which correlate to the Final
interests shown on the Reserve Report. Notwithstanding anything in Article XIII
to the contrary, the Parties acknowledge and agree that if it is determined by
either Party, within the Extended Due Diligence Period, that the Back-In
Interests owned by CMS and/or Terra in a given Constituent Property vary from
the Final interests as represented in the Reserve Report, such variance shall
constitute a Title Defect if the Reserve Report reflects a larger Final Revenue
Interest than the amount of the Back-In Interests) or the basis for an upward
adjustment in accordance with Section 13.3(b), above, (if the Reserve Report
reflects a smaller Final Revenue Interest than the

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<PAGE>   50

amount of the Back-In Interest) for which a corresponding title adjustment will
be made, whether upwards or downwards, in accordance with the remaining
provisions of this Section 13.9.

         A Title Defect asserted under this Section 13.9 with respect to a
Back-In Interest, shall be subject to the same limitations and requirements
imposed by Section 13.1, above, shall be subject to the right of CMS to cure,
indemnify against or bond over, in accordance with Section 13.2, above, and both
Title Defect adjustments and upward adjustment shall be subject to the same
limitations as imposed by Section 13.5, above; provided, however, that in the
event of conflict this Section 13.9 shall govern and control. The value of any
title adjustment, for any Title Defect or upward adjustment asserted under this
Section 13.9 with regard to a Back-In Interest, shall be negotiated by the
Parties in good faith. In negotiating the value of any resulting title
adjustment, among other things, the Parties shall consider and take into account
the provisions of Sections 13.3 and 13.4, above; provided, however, that the
basis for any title adjustment made with respect to a Back-In Interest, in
accordance with this Section 13.9, shall be the value attributed to the
particular Constituent Property by the Reserve Report, reduced by applying a
fraction having a numerator of 161,241,694 and a denominator of 177,337,178.

13.10 REPRESENTATIONS, WARRANTIES OR COVENANTS, AND INDEMNITY

         The provisions of this Article XIII shall be deemed to be, and shall
constitute representations, warranties and covenants of title by CMS that will
continue until the expiration of the Extended Due Diligence Period and as to
Title Defects timely and properly asserted, thereafter as provided below.
Subject to the limitations contained in Section 13.5, above, CMS hereby
covenants and agrees to defend, indemnify and hold Purchaser harmless from and
against any and all Claims with respect to or related in any manner to any and
all Title Defects for which Purchaser has timely and properly delivered a Claim
of Title Defect to CMS, consistent with Sections 4.13, 6.16 and 13.9, above, as
qualified by Section 18.1, below. Any and all such representations and
warranties of CMS relating to any and all title matters shall expire and be of
no further force and effect from and after the later of (i) the end of the
Extended Due Diligence Period or (ii) such time as a Title Defect for which a
Claim of Title Defect is properly and timely asserted, is cured, CMS indemnifies
Purchaser, CMS bonds over the Title Defect or a title adjustment is made in
accordance with Section 13.3(a), above. If a Title Defect adjustment is made
pursuant to Section 13.3(a), above, or CMS indemnifies or bonds over a Title
Defect, pursuant to this Article XIII, it shall be Purchaser's sole remedy for
any such Title Defect. All of the Assets and the Terra Assets for which CMS
indemnifies Purchaser or bonds over, shall be transferred to Purchaser at
Closing, and shall be retained by Purchaser after the expiration of the Extended
Due Diligence Period. As to all Assets or Terra Assets for which a Title Defect
adjustment is made, CMS shall be entitled to a conveyance from Purchaser, and
Purchaser hereby agrees to convey to CMS, in recordable form, free and clear of
any liens or claims of Purchaser, or any Person claiming through Purchaser, the
Asset(s) or Terra Asset(s), or portion of either affected by the asserted Title
Defect if the asserted Title Defect consists of failure of title to the Asset or
the Terra Asset, or a portion thereof. CMS shall not be entitled to a conveyance
of the affected Asset or Terra Asset if the asserted Title Defect is in the
nature of a mortgage, lien or other encumbrance which may be cured by the
payment of a determinable sum of money. The instruments of conveyance (to be
recorded in the applicable county records) shall not include references to the
specific working interest, overriding royalty or the net revenue interest
conveyed or assigned per the terms of this Agreement, nor shall such instrument
or conveyance contain any warranty of title, but they shall reference and be
made subject to the terms of this Agreement, and the terms of the letter
agreement referenced in Section 15.2(b), below. Anything to the contrary
contained herein notwithstanding, all Title Defects not timely raised by
Purchaser shall be deemed waived for all purposes, and Purchaser shall have no
recourse as against CMS from and

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<PAGE>   51

after the expiration of the Extended Due Diligence Period. In the event an
adjustment to the Purchase Price is made in the Final Settlement Statement
pursuant to this Article XIII, or a Title Defect is otherwise deemed waived,
Purchaser shall have no further rights or remedies against CMS with respect to
any Title Defect, other than a claim pursuant to an indemnity or bond of CMS.

13.11 ARBITRATION

         In the event that the Parties are unable, after good faith
negotiations, to resolve any disagreement with respect to any asserted Title
Defect, or any proposed adjustment provided for in this Article XIII, then the
Parties agree to resolve all such disagreements through binding arbitration.
Each Party shall select an arbitrator with experience evaluating oil and gas
title matters, and the arbitrators shall select a third such arbitrator, to
arbitrate any such unresolved disputes in accordance with the rules of the
American Arbitration Association. The decision of the arbitrators shall be
binding on the Parties, and their successors and assigns.

                       ARTICLE XIV - RETAINED LIABILITIES

         Attachment D lists all wells, litigation and other matters relating to
the Assets and the Terra Assets which constitute the Retained Liabilities. CMS
shall retain responsibility and liability for, and authority and control over
the Retained Liabilities and all actions, which, in its sole discretion are
necessary or desirable related to the Retained Liabilities, including but not
limited to the prosecution, defense, settlement or other resolution of those
matters constituting litigation, and shall be solely responsible for all costs
associated therewith. Purchaser shall and does hereby grant CMS, its officers,
directors, employees, agents and attorneys, access to and use of the Assets and
Terra Assets, including, but not limited to the Subject Property and the Terra
Property, and the records referenced in Section 1.1(h), above, for any and all
purposes related to the Retained Liabilities.

         CMS hereby covenants and agrees to defend, indemnify and hold Purchaser
harmless from and against any and all Claims and Adverse Consequences with
respect to the Retained Liabilities, insofar only as the event that forms the
basis of the Claims or Adverse Consequences arose or occurred prior to the
Effective Date. Notwithstanding the foregoing, the preceding indemnity provision
shall survive until the event giving rise to the Claim or Adverse Consequences
is resolved.

                              ARTICLE XV - CLOSING

15.1. TIME AND PLACE OF CLOSING

         If the conditions of Closing referenced in Article X and Article XI,
have been satisfied or waived, the consummation of the transaction contemplated
hereby (the "Closing") shall be held on or before the 31st day of March, 2000
(the "Closing Date") at CMS's offices in Houston, Texas, unless otherwise
mutually agreed in writing between the parties.

15.2 CLOSING OBLIGATIONS

         CMS and Purchaser shall each be required to perform the various
activities described in this Section 15.2 as follows:

         (a)      CMS shall execute, acknowledge and deliver an assignment and
                  such other instruments as may be necessary to convey title to
                  the Subject Property to Purchaser, without warranty or
                  covenant of title (in sufficient counterparts to facilitate
                  recording and governmental consents and filings), in
                  substantially the form of Attachment Q attached hereto and
                  made a part hereof, and shall

                                       46
<PAGE>   52

                  execute and deliver any applicable official federal and state
                  assignment forms in sufficient numbers to meet applicable
                  governmental requirements;

         (b)      The Parties shall execute an agreement in substantially the
                  form of Attachment R, setting forth their agreement as to
                  CMS's limited warranty of title consistent with Section 13.10,
                  above;

         (c)      CMS shall endorse and deliver to Purchaser the Terra Shares;

         (d)      CMS shall execute such other instruments and take such other
                  actions as may be necessary to carry out its obligations under
                  this Agreement;

         (e)      CMS, in conjunction with and after reasonable consultation
                  with Purchaser, shall prepare and present to Purchaser within
                  four (4) business days prior to Closing, a closing statement
                  in accordance with GAAP containing all of the adjustments to
                  the Purchase Price called for by this Agreement (the "Closing
                  Statement"). The final Closing Statement shall fairly
                  represent adjustments proposed in good faith by both Parties;

         (f)      Purchaser shall pay CMS the Purchase Price or Adjusted
                  Purchase Price, as the case may be, as set forth in the
                  Closing Statement, by wire transfer of funds in United States
                  dollars, pursuant to written instructions delivered by CMS;

         (g)      CMS shall endorse and deliver the QRI Stock to Purchaser;

         (h)      CMS shall deliver to Purchaser the Opinion of Counsel
                  referenced in Section 11.5, above;

         (i)      Purchaser shall deliver to CMS the Opinion of Counsel
                  referenced in Section 10.5, above;

         (j)      Purchaser shall execute and acknowledge the assignment, and
                  any and all official federal and state assignment forms, and
                  shall execute such other instruments and take such other
                  actions as may be necessary to carry out its obligations under
                  this Agreement;

         (k)      If Purchaser assumes operatorship of any of the Subject
                  Properties, and to the extent required for the continued
                  operations by Terra of the Terra Property, Purchaser shall
                  execute the necessary documents, such as change of
                  operatorship forms and sundry notices, and shall post all
                  requisite bonds, in sufficient numbers and amounts for filing
                  with government officials. During the period of time between
                  Closing and receipt of all approvals by the State of Michigan
                  Geological Survey Division-Department of Environmental Quality
                  (GSD-DEQ) and others, necessary to complete the change of
                  operatorship, Purchaser agrees to execute any required
                  documentation and to perform and be responsible for any
                  environmental remediation or other action required by the
                  GSD-DEQ to obtain such approval. This provision shall exclude
                  any Environmental, Health and Safety Requirements addressed in
                  accordance with Article XII. Purchaser shall bear the risk of
                  loss, and shall be responsible for all loss, cost, damage and
                  expense which result from operations during the period prior
                  to receipt of all approvals necessary to effectuate a change
                  in operatorship of the Subject Property and responsibility for
                  Terra's continued operation of the Terra

                                       47
<PAGE>   53

                  Property. Purchaser shall defend, indemnify and hold CMS, its
                  parent, affiliate and subsidiary corporations, as well as
                  CMS's and their officers, directors, shareholders, employees
                  and agents, harmless from and against any and all Claims
                  arising out of or in any manner related to operations during
                  the period from the Effective Date to CMS's relinquishment of,
                  and Purchaser's actual assumption of operatorship. Purchaser
                  agrees to take assignments of State of Michigan well permits
                  for those portions of the Subject Property and the Terra
                  Property which are operated by CMS, in the name of Purchaser
                  or its designee, other than Terra;

         (l)      CMS and Purchaser shall execute, acknowledge and deliver any
                  transfer orders or letters in lieu thereof directing all
                  purchasers of production to pay Purchaser all proceeds
                  attributable to production from or allocable to the Subject
                  Property;

         (m)      If CMS is responsible for the disbursement of proceeds of
                  production from or allocable to the Subject Property to third
                  parties after the Transfer Date (or is so responsible on
                  behalf of Terra with respect to the Terra Property), and if
                  Purchaser requires additional time after the Closing to assume
                  this responsibility from CMS, CMS and Purchaser shall enter
                  into a letter agreement in the form of Attachment S to avoid
                  any interruption in the payments to third parties and the
                  filing of any governmental reports as the result of the sale
                  of the Assets. The terms of the letter agreement will provide
                  for CMS to retain responsibility for disbursement of proceeds
                  for a period not to exceed sixty (60) days from the first day
                  of the month following the Closing Date. The letter agreement
                  shall provide for a rate of $50,000.00 per month to be paid to
                  CMS by Purchaser for CMS's services and shall provide that CMS
                  shall not be liable for any errors made. Purchaser shall
                  defend, indemnify and hold CMS harmless from and against any
                  and all Claims, even though caused by CMS's active or passive,
                  sole or concurrent, negligence arising from or relating to the
                  services provided by CMS in making the disbursements per the
                  terms of the letter agreement;

         (n)      CMS shall cause the board of directors and officers of Terra
                  to resign, effective as of April 1, 2000, and shall deliver
                  such documents as may be required to evidence the
                  resignations;

         (o)      At least seven (7) days prior to Closing, the Parties will use
                  their reasonable best efforts to deliver to each other a draft
                  of their proposed press releases to be issued immediately
                  subsequent to Closing. The Parties will use their reasonable
                  best efforts to review and approve, in writing, the other
                  Party's press release prior to Closing; and

         (p)      The Parties shall execute an agreement, in substantially the
                  form of Attachment T, setting forth their agreement as to the
                  terms and conditions of Purchaser's assumption of the
                  Environmental, Health and Safety Requirements with respect to
                  the Facilities identified at Attachment P.

15.3 SUSPENDED ACCOUNTS

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<PAGE>   54

         CMS shall transfer to Purchaser all suspended royalty, overriding
royalty and other payments out of production relating to the Subject Property
and the Terra Property which are held by CMS, and attributable to the period
prior to the Effective Date. Included in the Assets described in Section 1.1(h)
will be all files and records documenting and directly relating to all such
suspended accounts. Purchaser shall defend, indemnify and hold CMS harmless from
and against any and all Claims relating to those suspended accounts.

15.4 TERMINATION OF GUARANTEES AND OTHER COMMITMENTS

         Subject to applicable laws, as of the Closing Date, CMS shall terminate
or cancel the following: (i) all undertakings, guarantees, comfort letters by
CMS for itself or on behalf of Terra insofar as they relate to the Assets or the
Terra Assets, except for any undertaking with respect to the Assets or the Terra
Assets set forth in a letter agreement dated February 24, 1992 by and between
CMS and Midland Cogeneration Venture, which undertakings shall be a Retained
Liability; (ii) letters of credit, surety bonds and related indemnity agreements
insofar as they relate to the Assets or the Terra Assets; and (iii) all credit
card accounts, lines of credit and open accounts insofar as they relate to the
Assets or the Terra Assets.

                      ARTICLE XVI - CONTINUING OBLIGATIONS

16.1 POST-CLOSING RECONCILIATION

         Not later than one hundred twenty (120) days after Closing, or at such
other date as CMS and Purchaser shall mutually agree upon in writing, CMS shall
issue a "Final Settlement Statement" for the Assets conveyed and assigned to
Purchaser, and for the Terra Assets. The Final Settlement Statement will net
actual revenues against royalties and other lease burdens, operating expenses,
taxes and overhead for the period subsequent to the Effective Date, and such
other adjustments as set forth in this Agreement. The Final Settlement Statement
will include a summary with appropriate supporting documentation. CMS will
accept only written inquiries regarding the Final Settlement Statement. Within
sixty (60) days of its receipt of the Final Settlement Statement, Purchaser
shall either make payment of all amounts due CMS, provide a written request of
payment from CMS of all amounts due Purchaser, or provide a written statement
setting forth those adjustments to which Purchaser objects. Any such written
statement will detail the specific reasons for such objection. In this regard
CMS agrees to provide Purchaser reasonable access to its personnel, files and
records, insofar as they relate to the matters addressed in the Final Settlement
Statement, subject to the limitations expressed in Section 6.11, below. CMS
shall have thirty (30) days from and after its receipt of Purchaser's written
list of objections to rebut same, in writing. If the Parties are unable to
resolve any disagreement with respect to any disputed adjustment, after good
faith negotiations, then the Parties agree to resolve any disputed adjustment
through binding arbitration. Each Party shall select an arbitrator with a joint
interest audit accounting background, and the arbitrators shall select a third
such arbitrator, to arbitrate any such unresolved disputes in accordance with
the rules of the American Arbitration Association, with respect to the Final
Settlement Statement.

16.2 RECEIPTS AND CREDITS

         (a)      All monies, proceeds, receipts, credits and income
                  attributable to hydrocarbon production, and other net income
                  attributable to

                                       49
<PAGE>   55

                  ownership of the Assets and the Terra Assets for all periods
                  of time from and after the Effective Date, regardless of when
                  collected, shall be the sole property and entitlement of the
                  Purchaser. To the extent received by CMS after the Closing,
                  CMS shall fully disclose, account for and promptly transmit
                  same to Purchaser;

         (b)      All monies, proceeds, receipts, credits and income
                  attributable to hydrocarbon production from the Subject
                  Property and the Terra Property for all periods of time prior
                  to the Effective Date, regardless of when collected shall be
                  the sole property and entitlement of CMS. To the extent
                  received by Purchaser after the Closing, Purchaser shall fully
                  disclose, account for and promptly transmit same to CMS;

         (c)      All of CMS's and Terra's proportionate share of operating
                  costs and expenses, for goods delivered and services rendered
                  attributable to the Assets and the Terra Assets for the period
                  of time prior to the Effective Date, regardless of when due or
                  payable, shall be the sole obligation of CMS. CMS shall
                  promptly pay, or if paid by Purchaser, promptly reimburse
                  Purchaser for such operating costs and expenses incurred prior
                  to the Effective Date.

         (d)      All of the proportionate share of operating costs and
                  expenses, for goods delivered and services rendered
                  attributable to the Subject Property and the Terra Property
                  for the period of time from and after the Effective Date,
                  regardless of when due or payable, shall be the sole
                  obligation of Purchaser. Purchaser shall promptly pay, or if
                  paid by CMS, promptly reimburse CMS for such operating costs
                  and expenses incurred by CMS on or after the Effective Date;

         (e)      CMS shall be entitled to retain all overhead charges and any
                  and all other fees, charges or reimbursements related to
                  operations it has collected, billed or which shall be billed
                  or collected at any time, for the operated portions of the
                  Subject Property or the Terra Property relating to the period
                  from and after the Effective Date, to the date on which CMS
                  relinquishes operatorship, or responsibility for Terra's
                  operation of the Subject Property and the Terra Property, even
                  if after the Closing Date. Purchaser shall immediately
                  transfer to CMS any third party overhead charges and other
                  fees, charges or reimbursements related to operations, which
                  are collected by Purchaser, attributable to the operated
                  portions of the Subject Property and the Terra Property, for
                  all periods prior to the date on which CMS relinquishes
                  operatorship;

         (f)      Costs or expenses attributable to non-consent penalties under
                  any contract, law, rule or regulation affecting the Assets or
                  the Terra Assets are deemed transferred with the Assets and
                  are the sole responsibility of the Purchaser.

The obligations of the Parties to disclose, account for, transmit or reimburse
pursuant to subsections (a) - (e), above, shall be limited to the extent that
such items were not previously accounted for as an adjustment to the Purchase
Price.

                                       50
<PAGE>   56

16.3 ASSUMPTION OF OBLIGATIONS AND INDEMNITIES

         If Closing occurs, Purchaser shall, from and after the expiration of
CMS's obligations with respect to any applicable representation or warranty of
CMS, assume and be solely responsible for the obligations and indemnities set
forth in this Section 16.3, which obligations and indemnities shall survive the
Closing.

         (a)      Purchaser hereby agrees and shall agree in the instruments
                  assigning or conveying the Assets, to take the Assets and the
                  Terra Assets subject to, and to assume, perform, pay for, and
                  comply with all of the express or implied duties, liabilities,
                  and obligations, except for the Retained Liabilities, binding
                  upon CMS or Terra that relate to or are attributable to the
                  Assets and the Terra Assets, whether existing before or after
                  the Effective Date, including, but not limited to, all of the
                  following: all of the terms and conditions of all applicable
                  and valid recorded and unrecorded agreements, contracts and
                  instruments relating to the Assets and the Terra Assets
                  (including, but not limited to, those described at Attachment
                  A); all non-consent penalties under any contract, law, rule or
                  regulation affecting the Assets and the Terra Assets; all
                  valid unit, pooling, communitization and operating agreements;
                  all easements and rights-of-way; paying and accounting for and
                  reporting all lease rentals and all royalties, overriding
                  royalties and other oil and gas lease burdens; subject to
                  Article XX, all reassignment rights held by third parties;
                  subject to Article XX all preferential purchase rights held by
                  third parties; and all duties imposed by all valid
                  governmental laws, rules, regulations and orders. Without
                  limiting the generality of the scope of the foregoing, except
                  as to wells which form a part of the Retained Liabilities,
                  Purchaser agrees to and shall assume, perform, pay for and
                  comply with the obligations (if any) of CMS to properly and
                  timely plug and abandon all wells now or hereafter located on
                  or appurtenant to the Subject Property and the Terra Property
                  whether or not such wells are producing, or are capable of
                  producing hydrocarbons as of the Effective Date, to properly
                  and timely remove all buildings, equipment and materials from
                  the Subject Property and the Terra Property upon cessation of
                  use thereof, and to properly and timely restore the surface of
                  the Subject Property and the Terra Property in accordance with
                  all applicable governmental requirements and agreements with
                  third parties.

         (b)      Purchaser, and its heirs, successors, principals, officers,
                  directors and affiliates, shall defend, indemnify and hold
                  CMS, its parent, affiliate and subsidiary corporations, as
                  well as CMS's and their officers, directors, shareholders,
                  employees and agents, harmless from and against any and all
                  Claims and Adverse Consequences of whatsoever kind or nature,
                  that relate to or are attributable to ownership or operation
                  of the Assets and the Terra Assets, except as to the Retained
                  Liabilities, whether the Claims arose before or after the
                  Effective Date, and whether or not the Claims have been
                  specifically disclosed by CMS to Purchaser prior to Closing,
                  including, without limitation in any manner by way of
                  enumeration, Claims and Adverse Consequences relating to the
                  obligations assumed by Purchaser in Section 16.3(a), above,
                  and Claims and Adverse Consequences relating to

                                       51
<PAGE>   57
                  the operations and activities contemplated by Section 16.3(a),
                  above.

         (c)      Purchaser, and its heirs, successors, principals, officers,
                  directors and affiliates, shall defend, indemnify and hold
                  CMS, its parent, affiliate and subsidiary corporations, as
                  well as CMS's and their officers, directors, shareholders,
                  employees and agents, harmless from and against any and all
                  Claims and Adverse Consequences, caused by, relating to or
                  arising out of the following: (i) any condition of or
                  condition on the Assets or the Terra Assets, whether or not
                  the condition existed before the Effective Date, and whether
                  or not caused by CMS or its employees or agents, including,
                  without limitation by way of enumeration, any condition which
                  may be considered to be a nuisance or which in any way
                  adversely affects or threatens to adversely affect natural
                  resources, the environment, or the health and safety of any
                  person or animal; and (ii) Environmental, Health and Safety
                  Requirements applicable to any waste material or Hazardous
                  Substances on or included with the Assets or the Terra Assets,
                  or the presence, disposal, release or threatened release of
                  waste material or Hazardous Substances from the Assets or the
                  Terra Assets into the atmosphere or into or upon land,
                  subsurface strata or any surface or subsurface waters, whether
                  or not attributable to CMS's or Terra's activities or the
                  activities of CMS's officers, employees or agents, or to the
                  activities of third parties (regardless of whether or not CMS
                  or Terra was or is aware of such activities) prior to, during,
                  or after the period of CMS's ownership of the Assets.
                  Purchaser expressly agrees to assume all liability for any
                  condition of or upon the Assets and the Terra Assets,
                  including those which may have been created prior to the
                  Effective Date, and expressly agrees that the preceding
                  indemnification and agreement to hold harmless shall apply to
                  liability for voluntary environmental response actions
                  undertaken pursuant to the federal Comprehensive Environmental
                  Response, Compensation and Liability Act ("CERCLA"), or any
                  other federal, state or local law.

         (d)      Purchaser, its heirs, successors, principals, officers,
                  directors and affiliates shall defend, indemnify and hold CMS,
                  its parent, affiliate and subsidiary corporations, as well as
                  CMS's and their officers, directors, shareholders, employees
                  and agents harmless from and against any and all Claims and
                  Adverse Consequences arising out of a violation or alleged
                  violation of sections 61503A, 61503B or 61503C of Part 615 of
                  the Michigan Natural Resources and Environmental Protection
                  Act, which occur or are alleged to have occurred from or after
                  the Effective Date.

         (e)      The parties agree that, to the extent allowed by applicable
                  law, the indemnity provisions of this Section 16.3 shall apply
                  regardless of whether CMS was wholly or partially, actively or
                  passively, negligent or otherwise at fault, and whether or not
                  the Claims are based on a theory of negligence, negligence per
                  se, strict liability, willful misconduct, products liability,
                  premises liability, liability based on statute, or other
                  theory of liability as to the applicable indemnitee or others,
                  and regardless of by whom the Claims are made or brought,
                  including, without limitation, CMS's, Terra's or Purchaser's
                  employees, agents or representatives, private citizens,
                  persons or organizations, or any representatives of federal,
                  state or local government.

                                       52
<PAGE>   58

         (f)      The Parties agree that, except with regard to the Retained
                  Liabilities, and upon the expiration of CMS's obligation with
                  respect to any applicable representation or warranty of CMS,
                  to the extent the provisions of any instrument conveying or
                  assigning the Assets to Purchaser conflict with or appear to
                  limit the provisions of this Section 16.3, the provisions of
                  this Section 16.3 shall control.

16.4 RECORDING

         After Closing, Purchaser, at its sole cost and expense shall promptly
record the assignment(s) and all other instruments of conveyance, in the
appropriate offices of the states and/or counties in which the Subject Property
is located. After Closing, Purchaser shall also forward to the applicable
governmental agencies for approval any applicable federal or state assignment
form(s). When available, Purchaser shall thereafter promptly forward to CMS
copies of any recorded or filed instruments which are returned to Purchaser.
After Closing, Purchaser shall forward to the applicable governmental agencies
for approval of any forms, requisite bonds and permit transfers, relating to the
change of operatorship to Purchaser which have not been previously filed, and
Purchaser shall be responsible for all costs associated therewith, if any. After
Closing, Purchaser shall promptly make all necessary governmental notifications
(if any) which have not been previously made concerning the transfer of all or
any part of the Assets.

16.5 STATE OF MICHIGAN OIL AND GAS LEASES

         Purchaser shall take all actions and file all documents which may be
required to cause the records of the State of Michigan to reflect the transfer
of all State of Michigan oil and gas leases comprising a portion of the Subject
Property, from CMS to Purchaser, and for CMS to be relieved of all
responsibility and liability thereunder. Such actions shall include, but are not
limited to: (i) request of change in lease status with the appropriate
department of the State of Michigan, (ii) the written acceptance and assumption
of responsibility of the lessee under all such leases and post the appropriate
lease performance bond, and (iii) obtain the written approval of the State of
Michigan, and provide same to CMS. Purchaser, and its heirs, successor,
principals, officers, directors and affiliates, shall defend, indemnify and hold
CMS, its parent, affiliate and subsidiary corporations, as well as CMS's and
their officers, directors, shareholders, employees and agents harmless from and
against any and all Claims relating to ownership of an interest in any State of
Michigan oil and gas leases comprising a portion of the Subject Property or the
Terra Property, arising from and after the Effective Date. As to the State of
Michigan oil and gas leases held by Terra, the existing lease performance bond
shall be canceled, and Purchaser's lease performance bond substituted therefore;
or Purchaser shall otherwise assume responsibility for Terra's bond, in a manner
acceptable to CMS, as soon as is reasonably possible. Purchaser, and its heirs,
successor, principals, officers, directors and affiliates, shall defend,
indemnify and hold CMS, its parent, affiliate and subsidiary corporations, as
well as CMS's and their officers, directors, shareholders, employees and agents
harmless from and against any and all Claims relating to CMS's responsibility
with respect to events relating to the foregoing which occur after the Effective
Date.

16.6 FURTHER ASSURANCES

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<PAGE>   59

         After Closing, CMS and Purchaser agree to take such further actions and
execute, acknowledge and deliver all such further documents that are reasonably
necessary or useful in carrying out the purposes of this Agreement or of any
document delivered pursuant to this Agreement.

16.7 RECORDS

         After Closing, CMS will provide the originals, or in CMS's sole
discretion, copies of its files and all files relating to the Terra Assets to
Purchaser pursuant to Section 1.1(h) hereof. If CMS retains any original files,
it shall provide a copy of all such files to Purchaser at CMS's expense, and
shall further provide Purchaser and explanation of the reasons for CMS's
retention of the original file. CMS may retain, at CMS's expense, copies of its
original files so transferred. CMS will return any retained original files upon
its determination that it no longer is required to retain such originals.
Purchaser shall reimburse CMS for all reasonable shipping costs.

16.8 ACCESS TO RECORDS

         Purchaser, its heirs, successors and assigns, shall, at Purchaser's
expense, preserve and retain all files and records relating to the Assets for
the period required by all applicable laws and regulations or seven (7) years,
whichever is longer. Purchaser agrees to provide CMS and its duly designated
representatives with access to and the right to copy and inspect any of the
files and records relating to the Assets, at all reasonable time, upon
reasonable advance written notice.

16.9 LITIGATION SUPPORT

         In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving any of
CMS, Terra and its Subsidiaries or the Assets and the Terra Assets, the other
Party shall cooperate with it and its counsel in the defense or contest, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the defense or contest, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under the
provisions of this Agreement).

16.10 CMS EMPLOYEES

         Purchaser agrees (which agreement shall survive the termination of this
Agreement), to refrain from employing, either directly or indirectly, whether as
a salaried or contract employee, or otherwise, or from utilizing in any manner
the services, knowledge or expertise of any person employed by CMS other than
those based out of CMS's Traverse City, Michigan office as of January 14, 2000,
for a period of one (1) year from and after the Closing Date.

16.11 TRANSITION

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         CMS will not take any action that is designed or intended to have the
effect of discouraging any lessor, licensor, customer, supplier, or other
business associate of any of Terra and its Subsidiaries from maintaining the
same business relationships with Terra and its Subsidiaries after the Closing as
it maintained with Terra and its Subsidiaries prior to the Closing.

         After Closing, CMS will permit representatives of Purchaser reasonable
access, during normal business days and hours, and in a manner so as not to
interfere with the normal business operations of CMS, to personnel and financial
books and records of CMS (including, without limitation, tax records, and to the
extent prepared, net operating statements for the years 1997, 1998 and 1999),
insofar only as they relate to the Assets, and are required for Purchaser's
preparation of financial statements required by the Securities Exchange
Commission. CMS shall not be required to provide access to any such books,
records or information which it deems, in its sole discretion to be proprietary
or confidential, or which it may not divulge without violating agreements with
third parties. Purchaser for itself and its representatives, agrees to keep all
information obtained pursuant to its review of such books and records, strictly
confidential in accordance with the provisions of Section 22.10, below, except
for such Securities Exchange Commission filing purposes. Purchaser agrees to and
shall defend, indemnify and hold CMS, and its parent, affiliate and subsidiary
corporations, as well as CMS's and their officers, directors, employees and
agents, harmless from and against any and all Claims and Adverse Consequences
arising out of or in any manner related to Purchaser's access to and use of such
materials, including, without limitation by reason of damage or injury to any
person or property caused thereby.

16.12 PLAN B

         (a)      With respect to Northern Michigan Exploration Company
                  (predecessor to CMS) Employee Well Participation Plans A and
                  B, dated April 1, 1980, and amended as of April 1, 1985 and
                  April 1, 1990, Purchaser hereby agrees that:

                  (i)      from and after the Effective Date, the Subject
                           Property which are affected thereby, are and shall
                           remain subject to "Employee Participation Interests",
                           as defined in Plan B;

                  (ii)     from and after the Closing Date, Purchaser will
                           discharge all obligations in connection with such
                           Employee Participation Interests under Plan B,
                           including distribution of revenue attributable to
                           production from the Subject Property, from and after
                           the Effective Date; and

                  (iii)    from and after the Closing Date, Purchaser will cause
                           any subsequent transferees of the Subject Property to
                           agree in writing to comply with the provisions of
                           Plan B.

         (b)      Within ninety (90) days after the Closing Date, Purchaser
                  agrees to make good faith offers to purchase the Employee
                  Participation Interests from all owners thereof, for a price
                  substantially equivalent to the price for the applicable
                  portion of the Subject Property in accordance with Attachment
                  H, taking into account the size and nature of the Plan B
                  interests, and commensurate with the applicable terms of this
                  Agreement.

                           ARTICLE XVII - TERMINATION

17.1 RIGHT OF TERMINATION

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

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<PAGE>   61

         (a)      If the conditions set forth at Article X are not satisfied by
                  Purchaser or waived by CMS as of the Closing Date, CMS may
                  terminate this Agreement;

         (b)      If the conditions set forth at Sections 11.2 through 11.5,
                  inclusive are not satisfied by CMS or waived by Purchaser as
                  of the Closing Date, Purchaser may terminate this Agreement;

         (c)      At any time by mutual written agreement of CMS and Purchaser,
                  and in accordance with any other express provision of this
                  Agreement, CMS and Purchaser may mutually terminate this
                  Agreement;

         (d)      If there has been a material breach of any of the
                  representations and warranties of CMS which are specified in
                  Section 11.1, above, Purchaser may terminate this Agreement
                  unless CMS agrees to indemnify Purchaser with regard to such
                  breach as provided in this Section 17.1(d). Within four (4)
                  business days after any such breach becomes known, discovered
                  or disclosed to Purchaser (whether by CMS pursuant to Section
                  8.6 or otherwise consistent with Section 9.6), Purchaser shall
                  provide to CMS written notice of Purchaser's intent to
                  terminate this Agreement due to such breach. CMS shall within
                  two (2) business days of its receipt of any such notice from
                  Purchaser, provide Purchaser with written notice of CMS's
                  decision of whether or not CMS will indemnify Purchaser from
                  and against all Adverse Consequences arising from such breach,
                  without limitation. In the event CMS elects to indemnify
                  Purchaser, such indemnity shall terminate upon the cure or
                  satisfaction of the matter, event or occurrence giving rise to
                  such breach. In the event CMS elects not to indemnify
                  Purchaser as to the Adverse Consequence arising from such
                  breach, then Purchaser shall within two (2) business days of
                  its receipt of written notice of CMS's election, either agree
                  in writing to consummate the transaction contemplated by this
                  Agreement, or terminate this Agreement by written notice to
                  CMS. Failure of Purchaser to respond within two (2) business
                  days of receipt of CMS's election shall be deemed a waiver of
                  Purchaser's right to terminate this Agreement on account of
                  such breach. If Purchaser waives, or is deemed to have waived
                  such breach, the Parties shall consummate the transaction
                  contemplated herein. Subject to the provisions of Sections
                  18.1 and 18.2, no waiver by Purchaser of its right to
                  terminate this Agreement under this Section 17.1(d) shall
                  preclude Purchaser from any post-Closing remedy provided in
                  this Agreement to Purchaser on account of any breach of the
                  representations and warranties of CMS that are specified in
                  Section 11.1. Regardless of when any such breach becomes
                  known, discovered or disclosed to Purchaser, CMS may prevent
                  Purchaser from asserting the breach as a basis for termination
                  of this Agreement by agreeing to indemnify Purchaser as
                  provided above.

         (e)      By either Party if the Closing shall not have occurred on or
                  before March 31, 2000, unless the failure to close results
                  from a material breach or default of this Agreement by the
                  Party seeking termination.

17.2 LIABILITIES UPON TERMINATION OR FAILURE TO CLOSE

         In the event this Agreement is terminated by either Party for any
reason set forth in Section 17.1, then neither Party shall be liable to the

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other for any indirect, incidental or consequential damages, except as provided
in Section 17.3 as to Purchaser's interference with CMS's rights in the Assets
or the Terra Assets after termination.

17.3 DEPOSIT

         (a)      If this Agreement is terminated by CMS pursuant to Sections
                  10.1, 10.2, or 10.6, not having been satisfied by Purchaser or
                  not having been waived by CMS; or Purchaser's failure to
                  close, as provided in Section 17.1(e), CMS shall have the
                  right, in addition to all other rights set forth herein, to
                  retain the Deposit as partial liquidated damages, and to seek
                  any additional amount of actual damages which CMS may suffer
                  in excess of the amount of the Deposit. If this Agreement is
                  terminated for any reason, CMS shall immediately enjoy all
                  rights of ownership of the Assets and the Terra Assets and to
                  sell, transfer, encumber or otherwise dispose of the Assets
                  and the Terra Assets to any party without any restriction
                  under this Agreement, and Purchaser shall be liable for all
                  damages, including, but not limited to, direct, indirect,
                  incidental and consequential damages, if Purchaser attempts to
                  interfere in any way with CMS's assertion or enjoyment of
                  CMS's rights in the Assets and the Terra Assets after
                  termination. If this Agreement is terminated for any other
                  reason, CMS shall return the Deposit to Purchaser, without
                  interest.

         (b)      In the event the transaction contemplated by this Agreement
                  does not close, and CMS is entitled to retain the Deposit, as
                  provided in Section 17.3(a), above, then and in that event,
                  CMS shall be entitled to retain the cash component of the
                  Deposit. In this event CMS shall also have a put option with
                  respect to twenty-five percent (25%) of the QRI Stock on each
                  of June 30, 2000, September 30, 2000, December 31, 2000 and
                  March 30, 2001 at $4 1/8 per share, $4 1/4 per share, $4 3/8
                  per share and $4 1/2 per share, respectively. The Parties
                  hereby agree that within fifteen (15) days of delivery of
                  written notice of CMS's election to exercise a put option, CMS
                  will deliver the shares of QRI Stock which are the subject of
                  the put option to Purchaser, and Purchaser will concurrently
                  pay CMS an amount equal to the number of shares of QRI Stock
                  which are put, multiplied by the applicable put option share
                  price. Purchaser shall have a call option on not less than
                  twenty-five percent (25%) of the QRI Stock, at any time and
                  from time to time, at a price that is the sum of $4 per share
                  plus interest at the rate of twelve and one-half percent
                  (12.5%) per annum computed from the Closing Date to the date
                  the call option is exercised. CMS agrees to immediately
                  transfer the affected QRI Stock if Purchaser timely and
                  properly exercises one or more of its call options.

17.4 EFFECT OF TERMINATION

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         If any Party terminates this Agreement pursuant to Section 17.1, above,
then except as provided in Section 17.3., above, all rights and obligations of
the Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 22.10, below,
shall survive any such termination.

             ARTICLE XVIII - REMEDIES FOR BREACHES OF THIS AGREEMENT

18.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES

         The representations and warranties of CMS which are contained in
Sections 4.1, 4.2, 4.3, 4.4, 4.16, 6.1, 6.3, 6.4, 6.6, 6.9, 6.11 and 6.13,
above, will expire at, and shall not survive the Closing. In the event that the
transaction contemplated by this Agreement does not proceed to closing, and CMS
is entitled to retain the Deposit in accordance with Section 17.3, above, then
the representation and warranty contained in Section 4.16, above, will survive
until all of the QRI Stock is put or called as provided in Section 17.3(b),
above. The representations and warranties of CMS set forth in Sections 4.13 and
6.16, above, will survive the Closing for a period of four (4) months (until
July 31, 2000), and shall thereafter expire and be of no further force and
effect in accordance with the indemnity provisions of Section 13.10, above, and
subject to the limitations imposed in Sections 13.3(b) and 13.5, above. The
representations and warranties of CMS which are set forth in Sections 4.5, 4.6,
4.7, 4.11, 4.12, 4.14, 4.15, 6.2, 6.5, 6.7, 6.8, 6.14, 6.17, 6.18 and 6.19,
above shall survive the Closing for a period of one (1) year and shall
thereafter expire and be of no further force and effect. The representations and
warranties of CMS set forth in Sections 4.8, 4.9, 4.10, 6.10, 6.12 and 6.15,
above, shall survive the Closing for a period of two (2) years and shall
thereafter expire and be of no further force and effect.

18.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE PURCHASER

         (a)      In the event CMS breaches any of its representations,
                  warranties, and covenants contained herein, and, if there is
                  an applicable survival period pursuant to Section 18.1, above,
                  provided that Purchaser makes a written claim for
                  indemnification against CMS pursuant to Section 22.7, below
                  within such survival period, then CMS agrees to indemnify
                  Purchaser from and against any Claims and Adverse Consequences
                  Purchaser shall suffer through and after the date of the claim
                  for indemnification (but excluding any Claims and Adverse
                  Consequences Purchaser shall suffer as to any matter, event or
                  occurrence which Purchaser does not timely and properly raise
                  prior to the end of any applicable survival period) caused
                  proximately by the breach. Purchaser shall not be entitled to
                  any indemnification for those representations and warranties
                  contained in Sections 4.5 through 4.12, inclusive [except
                  4.11(b)], Sections 4.14 and 4.15, Sections 6.2, 6.7, 6.8
                  [except 6.8(w)], 6.10, 6.12, 6.14, 6.15, 6.17 and 6.18 (the
                  "Limited Representations"), unless the aggregate amount of the
                  loss or damage to Purchaser resulting from a breach or
                  breaches exceeds $300,000.00, and anything contained herein to
                  the contrary notwithstanding, the total aggregate
                  indemnification of Purchaser by CMS as a result of any and all
                  such breaches of the Limited Representations shall be limited
                  to the sum of $5,000,000.00. In no event shall CMS indemnify
                  Purchaser for any Claims relating to the first $300,000.00 of
                  claims alleged by Purchaser relating to the Limited
                  Representations, whether or not the cumulative net

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<PAGE>   64

                  amount of all such Claims exceeds that sum. With respect to
                  any such breach of the representations and warranties
                  contained in Sections 4.11(b) and 6.8(w), above, the total
                  aggregate indemnification of Purchaser by CMS shall be limited
                  to the amount of the tax credit valuation for each of the
                  wells comprising the Subject Property and the Terra Property.

         (b)      CMS also agrees to indemnify Purchaser from and against any
                  Adverse Consequences Purchaser shall suffer as a result of any
                  breach of the representations and warranties of CMS contained
                  in Sections 6.5 and 6.19, above, provided, however, that
                  Purchaser shall not be entitled to any indemnification under
                  this Section 18.2(b) unless the aggregate amount of the loss
                  or damage to Purchaser exceeds $1,000,000.00, but in no event
                  shall the total aggregate indemnification of Purchaser by CMS
                  under this Section 18.2(b) exceed $20,000,000.00.

         (c)      CMS also agrees to indemnify Purchaser from and against any
                  Adverse Consequences Purchaser shall suffer as a result of any
                  action, suit, proceeding, hearing or investigation relating
                  directly to the Assets or Terra Assets, the basis for which is
                  an event which occurred prior to the Effective Date, and as to
                  which Purchaser has asserted a written claim pursuant to
                  Section 22.7, below, within two (2) years of the Closing Date.
                  The obligations of CMS under this Section 18.2(c) shall be
                  subject to the same limitations expressed in Section 18.2(a),
                  above, with regard to the Limited Representations.

18.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF CMS

         In the event Purchaser breaches any of its representations, warranties,
and covenants contained herein, provided that CMS makes a written claim for
indemnification against Purchaser pursuant to Section 22.7, below, within such
survival period, then Purchaser agrees to indemnify CMS from and against the
entirety of any Claims and Adverse Consequences CMS shall suffer through and
after the date of the claim for indemnification (but excluding any Claims and
Adverse Consequences CMS shall suffer after the end of any applicable survival
period) caused proximately by the breach.

18.4 MATTERS INVOLVING THIRD PARTIES

         (a)      If any third party shall notify any Party (the "Indemnified
                  Party") with respect to any matter (a "Third Party Claim")
                  which notification may give rise to a claim for
                  indemnification against any other Party (the "Indemnifying
                  Party") under this Article XVIII, then the Indemnified Party
                  shall promptly and in any event within five (5) business days
                  after receiving notice of the Third Party Claim notify the
                  Indemnifying Party thereof in writing. Notwithstanding the
                  foregoing, the provisions of this Section 18.4 shall apply to
                  any notice delivered later than five (5) business days
                  subsequent to receipt of any Third Party Claim, so long as the
                  Indemnifying Party is not materially prejudiced by the fact
                  that such notice is delivered after five (5) business days
                  from receipt of the Third Party Claim.

         (b)      The Indemnifying Party will have the right at any time to
                  assume and thereafter conduct the defense of the Third Party
                  Claim with counsel of its choice reasonably satisfactory to
                  the Indemnified Party; provided, however, that the
                  Indemnifying Party will not

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<PAGE>   65

                  consent to the entry of any judgment or enter into any
                  settlement with respect to the Third Party Claim without the
                  prior written consent of the Indemnified Party (not to be
                  withheld unreasonably) unless the judgment or proposed
                  settlement involves only the payment of money damages and does
                  not impose an injunction or other equitable relief upon the
                  Indemnified Party.

         (c)      Unless and until the Indemnifying Party assumes the defense of
                  the Third Party Claim as provided in Section 18.4(b), above,
                  however, the Indemnified Party may defend against the Third
                  Party Claim in any manner it reasonably may deem appropriate.

         (d)      In no event will the Indemnified Party consent to the entry of
                  any judgment or enter into any settlement with respect to the
                  Third Party Claim without the prior written consent of the
                  Indemnifying Parties (not to be withheld unreasonably).

18.5 DETERMINATION OF ADVERSE CONSEQUENCES

         The Parties shall make appropriate adjustments for tax benefits and
insurance coverage and take into account the time cost of money (using the prime
interest rate quoted in the Wall Street Journal as the discount rate) in
determining Adverse Consequences for purposes of this Article XVIII. All
indemnification payments under this Article XVIII shall be deemed adjustments to
the Purchase Price.

18.6 EXCLUSIVE REMEDY

         The Parties acknowledge and agree that except as otherwise specifically
provided in this Agreement, the foregoing indemnification provisions in this
Article XVIII shall be the exclusive remedy of Purchaser with respect to CMS,
Terra, its Subsidiaries, and the transaction contemplated by this Agreement.

                               ARTICLE XIX - TAXES

19.1 LIABILITY FOR TAXES

         (a)      Except for taxes which are specifically to be reimbursed by
                  Purchaser pursuant to Sections 19.5 and 19.9, below, CMS shall
                  be liable for and indemnify Purchaser for all Taxes imposed on
                  Purchaser and Terra (or for which Purchaser may otherwise be
                  liable) arising from the Assets, the Terra Assets or
                  activities of Terra and its Subsidiaries for any taxable year
                  or period of Terra or its Subsidiaries that ends as of the end
                  of the day on the Closing Date and, with respect to any
                  taxable year or period beginning before and ending after the
                  Closing Date, the portion of such taxable year ending at the
                  end of the day on the Closing Date.

         (b)      Purchaser and Terra shall be liable for and indemnify CMS for
                  the Taxes imposed on the Assets, the Terra Assets or
                  activities of Terra and its Subsidiaries for any taxable year
                  or period that begins after the Closing Date and, with respect
                  to any taxable year or period beginning before and ending
                  after the Closing Date, the portion of such taxable year or
                  period beginning after the Closing Date.

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<PAGE>   66

         (c)      For purposes of Sections 19.1(a) and 19.1(b), above, whenever
                  it is necessary to determine the liability of the Parties for
                  Taxes for a portion of a taxable year or period that begins
                  before and ends after the Closing Date, the determination of
                  the Taxes for the portion of the year or period ending before,
                  and the portion of the year or period beginning on, and
                  continuing after the Closing Date shall be determined by
                  assuming a taxable year or period which ended at the close of
                  the Closing Date, except that exemptions, allowances or
                  deductions that are calculated on an annual basis, such as the
                  deduction for depreciation, shall be apportioned on a daily
                  basis.

         (d)      After the execution of this Agreement, Purchaser or its
                  designee shall have the right to inspect, at all reasonable
                  times, and upon forty-eight (48) hours prior written request
                  delivered to CMS, the following: (i) all Income Tax Returns of
                  Terra and its Subsidiaries requested by Purchaser; (ii) any
                  other Tax Returns of Terra and its Subsidiaries requested by
                  Purchaser, as may be relevant to Terra and its Subsidiaries,
                  and which relate to the Terra Assets and operation of the
                  Terra Property; and (iii) any work papers or other supporting
                  data requested by Purchaser relating to Tax Returns made
                  available pursuant to (i) or (ii), or relating to Tax Returns
                  referred to in (i) or (ii) not yet filed, to the extent copies
                  of such Tax Returns, work papers or other data are in
                  existence and in the possession of CMS at the time of such
                  request.

         (e)      CMS shall be entitled to receive any refund or credit of Taxes
                  (and interest thereon) attributable to a carryback of losses,
                  credits or other similar items from a taxable year or period
                  that ends on or before the Closing Date, and Purchaser shall
                  be entitled to such items attributable to a taxable year or
                  period that ends after the Closing Date.

         (f)      CMS shall be entitled to any Tax refunds due Terra or its
                  Subsidiaries for and attributable to all periods prior to the
                  Closing Date, and if received by Purchaser, Purchaser shall
                  immediately deliver all such refunds to CMS.

19.2 TAX RETURNS

         CMS shall file when due (after taking into account all extensions
properly obtained) all Tax Returns that are required to be filed by or with
respect to Terra and its Subsidiaries for the taxable year ending on or before
the Closing Date and shall remit or cause to be remitted any Taxes shown to be
due on such Tax Returns; and Purchaser shall file when due (after taking into
account all extensions properly obtained) all Tax Returns that are required to
be filed by Terra and its Subsidiaries for taxable years beginning after the
Closing Date, and shall remit or cause to be remitted any Taxes due in respect
of such Tax Returns. CMS agrees to file those Tax Returns for periods on or
before the end of the day of Closing Date which CMS is required to file under
applicable rules relating to when the Assets are actually transferred. All Tax
Returns which Purchaser, Terra or CMS are required to file in accordance with
this Section 19.2 shall be prepared and filed in a manner consistent with past
practice and, on such Tax Returns no position shall be taken or method adopted
that is inconsistent with positions taken or methods used in preparing and
filing similar Tax Returns in prior periods except for changes required by law
or changes in facts, or as the Parties otherwise agree.

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19.3 CONTEST PROVISIONS

         Purchaser shall notify CMS in writing upon receipt of notice of any
pending or threatened federal, state or local Tax audit or assessment (including
any revenue agent report or notice of proposed adjustment) which may materially
affect the Tax liabilities of Terra or its Subsidiaries for which CMS would be
required to indemnify Purchaser pursuant to Section 19.1(a), above.

         CMS shall have the sole right to represent the interests of Terra and
its Subsidiaries in any Tax audit or administrative or court proceeding relating
to taxable periods ending on or before the Closing Date, and to employ counsel
of their choice at their expense, provided that Purchaser (and their tax
counsel) may, at their own expense, be present at and participate in any such
audit or proceeding. Notwithstanding the foregoing, CMS shall not be entitled to
settle, either administratively or after the commencement of litigation, any
claim for Taxes which would adversely affect the liability for Taxes of
Purchaser for any period after the Closing Date to any extent (including, but
not limited to, the imposition of Income Tax deficiencies, the reduction of
asset basis or cost adjustments, the lengthening of any amortization or
depreciation periods, the denial of amortization, depreciation or depletion
deductions) without the prior written consent of the Purchaser. Such consent
shall not be necessary to the extent that CMS has indemnified Purchaser against
the effects of any such settlement.

         A representative of CMS (and their tax counsel) may, at its own
expense, be present at and participate in any audit or proceeding relating to
the matters covered by this Article XIX. Purchaser shall not settle any dispute
with respect to such matters without the consent of CMS, except that Purchaser
may settle any such dispute without the consent of CMS if it agrees to relieve
CMS of their indemnification obligation hereunder with respect to such
transaction.

19.4 ASSISTANCE AND COOPERATION

         After the Effective Date, each of CMS and the Purchaser shall:

         (a)      Agree to timely sign and deliver such certificates or forms as
                  may be necessary or appropriate to establish an exemption from
                  (or otherwise reduce) or make a report with respect to any
                  Taxes including those described in Section 19.10, below.

         (b)      Assist (and cause their respective affiliates to assist) the
                  other Party in preparing any Tax Returns which such other
                  Party is responsible for preparing and filing in accordance
                  with Section 19.2, above.

         (c)      Cooperate fully in preparing for any audits of, or disputes
                  with taxing authorities regarding, any Tax Returns of Terra
                  and its Subsidiaries.

         (d)      Make available to the other Party and to any taxing authority
                  as reasonably requested, all information, records, and
                  documents relating to Taxes of Terra and its Subsidiaries.

         (e)      Provide timely notice to the other Party in writing of any
                  pending or threatened Tax audits or assessments of Terra and
                  its

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                  Subsidiaries for taxable periods for which the other may have
                  a liability under this Article XIX.

         (f)      Furnish the other Party with copies of all correspondence
                  received from any taxing authority in connection with any Tax
                  audit or information request with respect to any such taxable
                  period.

         CMS and Purchaser shall provide each other with reasonable access to
all relevant documents, data and other information which may be required for the
purpose of preparing Tax Returns and responding to any audit by any taxing
jurisdiction. CMS and Purchaser shall cooperate with all reasonable requests of
the other made in connection with contesting the imposition of Taxes. Neither
CMS nor Purchaser shall be required at any time to disclose to the other any
Income Tax Returns or other confidential Tax information.

19.5 ADJUSTMENT TO PURCHASE PRICE FOR TAXES

         Purchaser shall reimburse CMS for any Taxes (without taking into
account any section 29 tax credits) payable by CMS with respect to the Assets or
attributable to the operation of Terra for the Interim Period. Any payment by
CMS or Purchaser under this Article XIX shall be considered an adjustment to the
Purchase Price paid in connection with the transaction contemplated by this
Agreement, and to the extent that it cannot be so characterized for Tax
purposes, shall be made on an After-Tax Basis. For purposes of this Agreement,
the term After-Tax Basis means, with respect to any amount which is to be paid
hereunder on an "After-Tax Basis", an amount which, after subtraction of the
amount of all federal, state and local Taxes payable by the recipient thereof as
a result of the receipt or accrual of such payment, and after taking into
account (i) the increase in federal, state and local Taxes (including estimated
Taxes) payable by such recipient for all affected taxable years as a result of
the event or occurrence giving rise to such payment, and (ii) the reduction in
federal, state and local Taxes (including estimated Taxes) payable by the
recipient for all applicable taxable years, including the present value (using
the applicable federal rate as the discount rate) of all reasonably anticipated
future tax reduction for taxable years ending on or after the end of the taxable
year in which such payment is made, shall be sufficient as of the date of
payment to compensate the recipient for such event or occurrence giving rise to
such payment.

 19.6 TREATMENT OF THE TERRA SHARES

         The Parties hereby acknowledge and agree that transfer of the Terra
Shares shall not be treated or considered to be an asset purchased for purposes
of Code section 338(h)(10).

19.7 CMS TAX ALLOCATION AGREEMENT

         The participation of Terra and its Subsidiaries in the CMS Energy
Corporation tax allocation agreement shall only relate to periods prior to the
Effective Date.

19.8 BOOKS AND RECORDS

         At Closing, or as soon thereafter as is reasonably practical, CMS shall
deliver to Purchaser all books and records relating to Terra and its
Subsidiaries, except that CMS shall retain originals or copies of all books

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<PAGE>   69

and records necessary or convenient for CMS to prepare the Tax Returns it is
required to file pursuant to Section 19.2, above.

19.9 SALES TAXES

         The Purchase Price is net of any sales taxes or other transfer taxes in
connection with the sale of the Assets. Purchaser shall be liable for any sales
tax or other transfer tax, as well as any applicable conveyance, transfer and
recording fees, and real estate transfer stamps or taxes imposed on the transfer
of the Assets. Purchaser shall indemnify and hold CMS harmless from liability
for payment of any such Taxes, including any interest or penalties assessed
thereon.

19.10 OTHER TAXES

         All severance, production, conservation, excise, windfall profit,
single business and other Taxes, other than Income Taxes and those Taxes covered
by Section 19.9, above, or fees relating to production of oil, gas and
condensate attributable to the Assets assessed prior to the Effective Date shall
be paid by CMS, except to the extent taken into account under Section 3.3,
above. All such Taxes relating to production of oil, gas and condensate
attributable to the Terra Assets assessed on or after the Effective Date shall
be paid by Purchaser, regardless of the method or basis used for calculating the
Tax.

              ARTICLE XX - EXERCISE OF PREFERENTIAL PURCHASE RIGHTS

         CMS agrees to use commercially reasonable best efforts to identify any
and all parties holding a preferential right to purchase, right to reacquire,
consent to transfer and any other contractual right to acquire or consent to the
transfer of the Assets or the Terra Assets, as contemplated by this Agreement.
CMS will provide the required notice to the holders of all such rights which it
has identified and shall provide a copy of all such notifications to Purchaser
and any and all responses thereto. CMS will thereafter provide to Purchaser a
list which identifies the contracts and agreements giving rise to the notices
which CMS has provided pursuant to this Article XX. If during the Interim Period
any holder of a preferential purchase right or right of reassignment affecting
any portion of the Subject Property or the Terra Property notifies CMS or
Purchaser prior to Closing that the holder intends to exercise the holder's
rights and purchase or reacquire a portion of the Subject Property or the Terra
Property to which a preferential purchase right or right of reassignment
applies, those interests shall be excluded from the Assets to be conveyed to
Purchaser, and the Purchase Price shall be reduced in accordance with the
provision of Section 3.3, above. The value of the downward adjustment to the
Purchase Price shall be a proportionate decrease in the portion of the Purchase
Price allocated to the applicable interest in an oil and gas lease affected by
the preferential purchase right or right of reassignment. If the holder of a
preferential purchase right or right of reassignment fails to consummate the
purchase or reacquisition of all or a portion of the Subject Property or the
Terra Property affected by the right, CMS shall so notify Purchaser, and within
fifteen (15) days after Purchaser's receipt of notice from CMS, CMS shall sell
to Purchaser, and Purchaser shall purchase from CMS the applicable interest for
a price equal to the portion of the Purchase Price allocated to the applicable
interest and upon the other terms of this Agreement. All interests comprising
the Subject Property or the Terra Property for which a preferential purchase
right or right of reassignment have not been asserted prior to Closing shall be
sold and conveyed to Purchaser at Closing pursuant to the provisions of this
Agreement. If prior to Closing CMS is unable to timely and properly identify and
notify the holders of any preferential purchase rights, rights to reacquire or
consent rights, CMS shall so notify

                                       64
<PAGE>   70

Purchaser, and CMS will, with reasonable diligence proceed to identify and
notice the holders of such rights. If one or more of the holders of any
preferential purchase rights or rights to reacquire notifies CMS subsequent to
the Closing that it intends to assert its preferential purchase right, CMS shall
give notice thereof to Purchaser. Purchaser shall satisfy all preferential
purchase right and right to reacquire obligations of CMS to the holders thereof.
CMS shall indemnify and hold Purchaser harmless from and against any and all
Claims in connection with any preferential purchase rights, rights to reacquire
or consent rights which are asserted subsequent to Closing, except as to the
value assigned to the affected portion of the Subject Property or the Terra
Property, pursuant to Attachment H. Purchaser agrees to convey any Assets or
Terra Asset to the holder of any preferential purchase right. right to reacquire
or similar contractual rights, which are properly exercised subsequent to
Closing. Purchase shall be entitled to receive, and CMS hereby assigns to
Purchaser all of CMS's rights to all proceeds received from holders of
preferential purchase rights and rights to reacquire which are properly
exercised subsequent to Closing.

             ARTICLE XXI - INDEPENDENT INVESTIGATION AND DISCLAIMER

21.1 DISCLAIMER AS TO WARRANTIES

         The Parties agree that the disclaimer of warranties contained in this
Section 21.1. and in the conveyance instruments to be delivered pursuant to this
Agreement are conspicuous disclaimers for the purposes of any applicable law,
rule or order. PURCHASER ACKNOWLEDGES THAT IN MAKING THE DECISION TO ENTER INTO
THIS AGREEMENT AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY, PURCHASER
HAS RELIED SOLELY ON THE BASIS OF ITS OWN EXPERTISE AND INDEPENDENT
INVESTIGATION OF THE ASSETS AND THE TERRA ASSETS, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS AGREEMENT. PURCHASER ACKNOWLEDGES THAT EXCEPT FOR,
AND TO THE EXTENT OF THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
ARTICLES IV AND VI, ABOVE, CMS HAS NOT MADE, AND CMS HEREBY EXPRESSLY DISCLAIMS
AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT COMMON LAW,
BY STATUTE, OR OTHERWISE RELATING TO (I) TITLE TO OR THE CONDITION OF THE ASSETS
(INCLUDING WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS
OR SAMPLES OF MATERIALS AS TO ANY PERSONAL PROPERTY OR FIXTURES TO BE CONVEYED)
AND (II) ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO
PURCHASER BY OR ON BEHALF OF CMS (INCLUDING, WITHOUT LIMITATION, THE EXISTENCE
OR EXTENT OF OIL, GAS OR OTHER MINERAL RESERVES, THE RECOVERABILITY OF OR THE
COST OF RECOVERING ANY SUCH RESERVES, THE VALUE OF SUCH RESERVES, ANY PRODUCT
PRICING ASSUMPTIONS, PRESENT OR PAST PRODUCTION RATES, COMPLIANCE WITH LEASE
TERMS, THE CONDITION OF ANY WELL, AND THE ABILITY TO SELL OIL OR GAS PRODUCTION
AFTER CLOSING). PURCHASER COVENANTS AND REPRESENTS THAT, SUBJECT TO THE
OBLIGATIONS OF CMS WITH RESPECT TO THE RETAINED LIABILITIES, PURCHASER HAS
INSPECTED OR BEFORE CLOSING WILL INSPECT THE ASSETS AND THE TERRA ASSETS, AND
ACCEPTS THE SAME "AS IS", "WHERE IS" AND "WITH ALL FAULTS".

21.2 DISCLAIMER AS TO YEAR 2000 COMPLIANCE

         Certain of the Assets and the Terra Assets may rely on computer
systems, including embedded chips, to enhance their function. Many of those
systems may have recorded years in a two-digit format. Such computer systems, if
not replaced or modified so as to become "Year 2000 Compliant", may be unable to
properly recognize dates arising in the year 2000 and later. As used herein,
"computer systems" includes, but is not limited to, computer hardware and
software (including macrocode, firmware, embedded chips,

                                       65
<PAGE>   71

application programs, files, databases, and third-party software embedded
therein), and electronic components and systems. As used herein, the term "Year
2000 Compliant" means that the computer systems will provide accurate and
uninterrupted information and calculations unaffected by dates (including the
dates of 9/9/99, 1/1/00 and dates arising in the calendar year 2000 and later,
including leap years), and that the performance and functionality of the
computer systems will not be adversely affected by said dates.

         With regard to this issue, to the Knowledge of CMS, it has encountered
no material problems or difficulties since the Effective Date. CMS expressly
disclaims and negates any and all other representation or warranty, express or
implied, at common law, by statute, or otherwise, as to whether the Assets or
the Terra Assets and/or such systems are, or are not, "Year 2000 Compliant".
Purchaser agrees to purchase the Assets in their "As Is, Where Is, and With Any
and All Faults and Defects" condition, as related to such Assets, the Terra
Assets and such systems being "Year 2000 Compliant", and covenants and agrees
that it will indemnify and hold CMS harmless from and against any and all
Claims, and all actual, indirect, incidental, and consequential damages, if any,
brought or suffered by it or any third party based upon any failure of the
Assets, the Terra Assets or such systems to be "Year 2000 Compliant".

                          ARTICLE XXII - MISCELLANEOUS

22.1 LIKE-KIND EXCHANGE

         CMS shall have the option, at or before Closing, to structure the
Closing of this transaction in such a manner so as to qualify, in whole or in
part, as part of a like-kind exchange pursuant to Section 1031 of the Code.
Purchaser will cooperate with CMS to facilitate a like-kind exchange, including
a three corner or multi-party exchange. In the event CMS desires such an
exchange, CMS shall timely notify Purchaser of its intent within seven (7) days
prior to Closing and CMS shall be responsible for arrangement of the structure
for the exchange, compliance with time limits on like-kind exchanges, the
preparation of appropriate documents to complete the transaction, and all
additional costs directly related thereto.

22.2 GOVERNING LAW

         This Agreement, the validity of the various conveyances made hereunder
affecting title to real property, the indemnities herein and the other documents
delivered pursuant hereto and the legal relations among the Parties shall be
governed by and construed in accordance with the laws of the State of Michigan.

22.3 ENTIRE AGREEMENT

         This Agreement and the Attachments attached hereto constitute the
entire agreement between CMS and Purchaser with respect to the Assets and the
Terra Assets, and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, between CMS and Purchaser. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by both CMS and Purchaser.

22.4 AMENDMENTS AND WAIVERS

         No amendment of any provision of this Agreement shall be valid unless

                                       66
<PAGE>   72

the same shall be in writing and signed by Purchaser and CMS. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.

22.5 CAPTIONS

         The captions in this Agreement are for convenience only and shall not
be considered a part of or affect the construction or interpretation of any
provision of this Agreement.

22.6 ASSIGNMENT

         Purchaser shall not assign this Agreement or any of its rights or
obligations pursuant to this Agreement without CMS's prior written consent. CMS
hereby acknowledges and agrees that in the event Purchaser defaults under the
terms of its purchase money finance obligations with respect to the transaction
contemplated by this Agreement, then upon written notice to CMS, Purchaser's
rights and obligations under this Agreement may be assigned to Purchaser's
primary lending institution. No such assignment shall be effective unless and
until the assignee agrees in writing to accept and assume the rights, duties and
obligations of Purchaser hereunder. Any such assignment shall be at no cost or
expense to CMS, and shall not be deemed to extend any of the time periods set
forth herein. Unless such written consent of CMS so specifies, subsequent to any
assignment of Purchaser's interest hereunder including the assignment provided
for above, Purchaser shall not be released from any responsibility or liability
for the obligations, covenants, representations, warranties or indemnities of
Purchaser under this Agreement. Any assignment made without CMS's consent shall
be void. This Agreement shall be binding upon and inure to the benefit of CMS
and Purchaser and their respective successors, heirs and assigns. CMS may,
without Purchaser's prior approval, assign its interest under this Agreement to
a qualified intermediary in order to pursue a like-kind exchange.

22.7 NOTICES

         Any notice provided or permitted to be given under this Agreement shall
be in writing, and may be served by personal delivery, telefacsimile with
confirmation of receipt or by depositing the notice in the United States mail,
addressed to the Party to be notified, postage prepaid, and registered or
certified with a return receipt requested. Notice may also be given by sending
the written notification by courier service. Notice deposited in the mail in the
manner described by this Section 22.7 shall be deemed to have been given and
received on the date of the delivery as shown on the return receipt. Notice
served in any other manner shall be deemed to have been given and received only
if and when actually received by the addressee. For purposes of notice, the
addresses of the parties shall be as follows:

         CMS's Mailing Address:

               CMS Oil and Gas Company
               1021 Main Street, Suite 2800
               Houston, Texas 77002
               Attention:  Michael J. Killelea, Chief Counsel
               Phone:      713-230-7221
               Fax:        713-651-0622

                                       67
<PAGE>   73

         Purchaser's Mailing Address:

               Quicksilver Resources Inc.
               1619 Pennsylvania Avenue
               Forth Worth, Texas 76104
               Attention:  Houston Kauffman, Vice-President
               Phone:      817-332-9133
               Fax:        817-877-8959

         Each Party shall have the right, upon giving ten (10) days prior
written notice to the other to change its address for purposes of notice.

22.8 EXPENSES

         Except as specifically provided otherwise in this Agreement, CMS and
Purchaser shall each be solely responsible for all expenses incurred by it in
connection with this transaction, including, without limitation, fees and
expenses of their own counsel and accountants.

22.9 SEVERABILITY

         If any term or provision (or portion thereof) of this Agreement is held
invalid, illegal or incapable of being enforced under any rule of law or
regulation, all remaining conditions and provisions of this Agreement shall
survive and remain in full force and effect to conform to the Parties' intent,
so long as the economic or legal substance is not affected in a materially
adverse manner with respect to either Party.

22.10 CONFIDENTIALITY, PUBLICITY AND RETENTION OF DATA

         (a)      Until completion of the Closing, and in the event the
                  transaction contemplated by this Agreement is not consummated
                  for any reason, whatsoever, except as required by law and with
                  prior notice to CMS, Purchaser and its agents and
                  representatives will hold in strict confidence all
                  Confidential Information obtained from CMS, any other Person,
                  or derived from information provided by CMS, or as a result of
                  Section 5.6, Section 8.5, Section 12.2, or Section 13.1,
                  above, whether before or after the execution of this
                  Agreement, except any data or information which (i) at the
                  time of the disclosure to Purchaser by CMS is in the public
                  domain; (ii) after disclosure to Purchaser by CMS becomes part
                  of the public domain by publication or otherwise, except by
                  breach of this commitment by Purchaser; (iii) Purchaser can
                  establish by competent proof it was rightfully in its
                  possession at the time of disclosure to Purchaser by CMS; (iv)
                  Purchaser rightfully receives from any Person free of any
                  obligation of confidence; or (v) is developed independently by
                  Purchaser, provided the Person or Persons developing the
                  information shall not have had reference to data or
                  information obtained from CMS in connection with the
                  transaction contemplated by this Agreement. If this Agreement
                  is terminated for any reason and as to any portion of the
                  Assets or the Terra Assets not assigned or conveyed to
                  Purchaser at Closing, Purchaser shall return to CMS all
                  Confidential Information obtained from CMS related to all or
                  the portion of the Assets or the Terra Assets not conveyed.
                  Purchaser shall not utilize or permit utilization of
                  Confidential Information to compete with CMS or its co-working
                  interest owners in the Assets and the Terra Assets. The terms
                  of this Section 22.10 shall survive any termination of this
                  Agreement.

                                       68
<PAGE>   74

         (b)      CMS and Purchaser shall use their reasonable best efforts to
                  provide one another with drafts of the press releases to be
                  issued immediately subject to Closing. The Parties will use
                  their reasonable best efforts to approve such press releases
                  prior to Closing. Except as required by applicable law or the
                  applicable rules or regulations of any governmental body or
                  stock exchange, neither Party shall issue any publicity or
                  other release without the prior written consent of the other
                  Party, which consent shall not be unreasonably withheld.

22.11 USE OF CMS'S NAME

         No later than ten (10) days after the Closing, Purchaser shall use its
reasonable best efforts to remove or cause to be removed the names and marks
used by CMS and all variations and derivatives and logos from the Assets or the
Terra Assets, if CMS has not already done so. Purchaser shall not make any use
whatsoever of CMS's names, marks and logos after Closing. CMS shall have the
right to enter any premises and remove all signs and logos containing CMS's name
at Purchaser's expense should Purchaser fail to do so in a timely manner.

22.12 CONDITIONS

         The inclusion in this Agreement of conditions to either Party's
obligation to close shall not, in and of itself, constitute a covenant of the
other Party to satisfy the conditions to either Party's obligation to close.

22.13 NO THIRD-PARTY BENEFICIARIES

         This Agreement shall not confer any rights or remedies upon any Person
other than the Parties and their respective successors and permitted assigns.

22.14 SUCCESSION AND ASSIGNMENT

         This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors and permitted assigns.

22.15 CONSTRUCTION

         The Parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state or local statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.

22.16 ATTACHMENTS

         A reference to an Attachment throughout this Agreement shall mean and
be construed as referring to an Attachment attached to this Agreement, and all
Attachments shall be deemed to have been fully incorporated into and made a part
of this Agreement.

22.17 COUNTERPARTS

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<PAGE>   75

         This Agreement maybe executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

22.18 EXECUTION DEADLINE

         This Agreement shall be open for acceptance up to, but not after, 5:00
P.M. Central Standard Time on March 6, 2000, and if not accepted by the
execution and return of one (1) original to CMS by such time, shall be null and
void at CMS's option. Acceptance within the time provided shall constitute a
contract of purchase and sale binding upon the Parties hereto and their
respective successors and assigns.

CMS OIL AND GAS COMPANY                     QUICKSILVER RESOURCES INC.

By: /s/ William H. Stephens III       By: /s/ Houston Kauffman
   ------------------------------        ------------------------------
   Name:  William H. Stephens III        Name:  Houston Kauffman
        -------------------------             -------------------------
   Title: Executive Vice                 Title: Vice President
          President, General                  -------------------------
          Counsel and Secretary
         ------------------------
   Tax I.D. No.:                              Tax I.D. No.:
                -----------------                          ---------------

                                 ACKNOWLEDGMENT

STATE OF                            )
                                    ) ss
COUNTY OF                           )

On this       day of                    , 2000 before me, the undersigned, a
Notary Public, in and for the County and State aforesaid, personally appeared
                    , known to be the identical person who executed the
foregoing instrument as                         of CMS Oil and Gas Company, and
acknowledged to me that he executed the same as his free and voluntary act and
deed and as the free and voluntary act and deed of such corporation, for the
uses and purposes therein set forth.

                                    -------------------------------------------
                                    Notary Public

                                    My Commission Expires:
                                                          -------------

                                 ACKNOWLEDGMENT

STATE OF                            )
                                    ) ss
COUNTY OF                           )

On this       day of                    , 2000 before me, the undersigned, a
Notary Public, in and for the County and State aforesaid, personally appeared
                    , known to be the identical person who executed the

                                       70
<PAGE>   76

foregoing instrument as                    of Quicksilver Resources Inc. and
acknowledged to me that he executed the same as his free and voluntary act and
deed and as the free and voluntary act and deed of such corporation, for the
uses and purposes therein set forth.

                                    -------------------------------------------
                                    Notary Public

                                    My Commission Expires:
                                                          -------------

                                       71<PAGE>   1
                                                                   EXHIBIT 10.25

================================================================================

                            STOCK PURCHASE AGREEMENT

                                      AMONG

                      CMS OIL AND GAS (INTERNATIONAL) LTD.;

                            CMS OIL AND GAS COMPANY;

                          CRESTAR ENERGY HOLDINGS LTD.;

                                       AND

                               CRESTAR ENERGY INC.

                                  JUNE 30, 2000

================================================================================

<PAGE>   2

<TABLE>
<S>                                                                                                              <C>
ARTICLE I      Definitions........................................................................................1

ARTICLE II        Purchase and Sale...............................................................................9
         2.01     Transfer of Shares..............................................................................9
         2.02     Purchase Price..................................................................................9

ARTICLE III       Closing.........................................................................................9
         3.01     Time and Place of Closing.......................................................................9
         3.02     Delivery of Records.............................................................................9

ARTICLE IV        Representations and Warranties of Seller.......................................................10
         4.01     Existence and Qualification....................................................................10
         4.02     Authority, Approval and Enforceability.........................................................10
         4.03     Capitalization of the Company..................................................................11
         4.04     No Conflicts...................................................................................11
         4.05     Financial Information..........................................................................12
         4.06     Material Contracts.............................................................................14
         4.07     Absence of Certain Changes.....................................................................17
         4.08     Employees......................................................................................17
         4.09     Insurance......................................................................................17
         4.10     Litigation.....................................................................................18
         4.11     Liability for Brokers' Fees....................................................................18
         4.12     Compliance with Laws...........................................................................18
         4.13     Consents and Preferential Rights...............................................................18
         4.14     Taxes..........................................................................................19
         4.15     Company Assets.................................................................................19
         4.16     Oil and Gas Matters............................................................................20
         4.17     Loans and Advances.............................................................................21
         4.18     Assumptions, Guaranties, Etc. of Indebtedness of Other Persons.................................21
         4.19     Disclosure.....................................................................................21
         4.20     Officers and Directors.........................................................................21
         4.21     Transactions With Affiliates...................................................................21
         4.22     No Corrupt Practices...........................................................................22
         4.23     Corporate Records..............................................................................22
         4.24     Banking........................................................................................22

ARTICLE V         Representations and Warranties of Crestar and Buyer............................................22
         5.01     Corporate Existence and Qualification..........................................................22
         5.02     Authority, Approval and Enforceability.........................................................22
         5.03     No Default or Consents.........................................................................22
         5.04     Capability.....................................................................................23
         5.05     Liability for Brokers' Fees....................................................................23
         5.06     No Corrupt Practices...........................................................................23
         5.07     Investment.....................................................................................23
</TABLE>

                                       -i-

<PAGE>   3

<TABLE>
<S>                                                                                                              <C>
ARTICLE VI  Deliveries at Closing................................................................................23
         6.01     Deliveries to Seller...........................................................................23
         6.02     Deliveries to Buyer............................................................................24

ARTICLE VII  Tax Matters.........................................................................................26
         7.01     Preparation and Filing of Tax Returns..........................................................26
         7.02     Access to Information..........................................................................26
         7.03     Indemnification by Seller......................................................................27
         7.04     Buyer Indemnification..........................................................................27
         7.05     Indemnification Procedures.....................................................................27
         7.06     Conflict.......................................................................................28

ARTICLE VIII      Additional Agreements of Crestar, Buyer, CMS and Seller........................................28
         8.01     Adjustments to Purchase Price..................................................................28
         8.02     Settlement Statement...........................................................................29
         8.03     Replacement Guarantee..........................................................................30
         8.04     Preservation of Books and Records; Access......................................................30
         8.05     Further Assurances.............................................................................31
         8.06     Change of Name.................................................................................31
         8.07     Press Releases.................................................................................31
         8.08     Insurance......................................................................................31
         8.09     Capacity.......................................................................................31
         8.10     Certain Receivables............................................................................31
         8.11     OCP Project....................................................................................32
         8.12     Amato Interest.................................................................................32
         8.13     Intercompany Accounts..........................................................................33
         8.14     Confidentiality Agreements.....................................................................33
         8.15     Standby Letter of Credit.......................................................................33
         8.16     CMS Financial Information......................................................................35

ARTICLE IX        Indemnification; Scope of Representations; Limitations.........................................35
         9.01     Indemnification................................................................................35
         9.02     Indemnification Procedures.....................................................................38
         9.03     Exclusive Remedy...............................................................................43
         9.04     Scope of Representations.......................................................................43

ARTICLE X         Arbitration....................................................................................43
         10.01    Arbitration....................................................................................43

ARTICLE XI        Miscellaneous..................................................................................45
         11.01    Confidentiality................................................................................45
         11.02    Expenses.......................................................................................45
         11.03    Notices........................................................................................46
         11.04    Governing Law..................................................................................46
         11.05    Entire Agreement; Amendments and Waivers.......................................................47
         11.06    Binding Effect and Assignment..................................................................47
         11.07    Severability...................................................................................47
         11.08    Headings and Schedules.........................................................................47
</TABLE>

                                      -ii-
<PAGE>   4

<TABLE>
<S>                                                                                                          <C>
         11.09    Survival of Representations and Agreements.....................................................47
         11.10    Time of the Essence............................................................................48
         11.11    Counterparts...................................................................................48
         11.12    Signatures.....................................................................................48
</TABLE>

                                      -iii-
<PAGE>   5

                                    SCHEDULES
<TABLE>
<S>               <C>      <C>
2.03              -        Preliminary Purchase Price
4.01              -        Existence and Qualifications
4.03              -        Capitalization
4.04(b)           -        Certain Approvals
4.05(a)           -        United States Financial Statements
4.05(b)           -        Ecuadorian Financial Statements
4.05(c)           -        Pro Forma Balance Sheet
4.05(d)           -        Certain Matters
4.05(e)           -        CMS Financial Statements
4.06(a)           -        Company Material Contracts
4.06(b)           -        Other Material Contracts
4.06(c)           -        Contracts to be Terminated
4.06(d)           -        Certain Exceptions
4.06(e)           -        Exceptions Regarding Other Material Contracts
4.06(f)           -        OCP Agreements
4.07              -        Absence of Certain Changes
4.09              -        Policies of Insurance
4.10              -        Claims and Litigation
4.12              -        Legal Violations
4.13              -        Consents and Preferential Purchase Rights
4.14(h)           -        Tax Benefits
4.15              -        Wells
4.16(a)           -        Certain Exceptions Relating to Oil and Gas Assets
4.16(b)           -        Unfulfilled Work Commitments
4.17              -        Loans and Advances
4.18              -        Assumptions, Guaranties, Etc. of Indebtedness of Other Persons
4.19              -        No Intentional Concealment
4.20              -        Officers and Directors of the Company
4.24              -        Bank Account
6.01(a)           -        Designated Account
6.01(c)           -        Legal Opinions of Counsel for Crestar and Buyer
6.02(d)           -        Legal Opinions of Counsel for CMS, Seller and the Company
8.10              -        Certain Receivables
8.14              -        Confidentiality Agreements
8.15(b)           -        Section 8.15(b) Sworn Statement
8.15(c)           -        Section 8.15(c) Sworn Statement
</TABLE>

<PAGE>   6

                            STOCK PURCHASE AGREEMENT

         This Stock Purchase Agreement (this "Agreement"), executed as of June
30, 2000 (the "Execution Date"), is among CMS Oil and Gas (International) Ltd.,
a company formed under the Laws of the Cayman Islands ("Seller"); CMS Oil and
Gas Company, a Michigan corporation ("CMS"); Crestar Energy Holdings Ltd.; a
company formed under the Laws of Bermuda ("Buyer"); and Crestar Energy Inc., a
company formed under the Laws of Canada ("Crestar"). Seller, CMS, Buyer and
Crestar shall be referred to herein each as a "Party" and collectively as the
"Parties."

                                    RECITALS

         Seller, a wholly owned subsidiary of CMS, is the sole owner of all of
the issued and outstanding share capital of CMS Oil and Gas (Ecuador) LDC, a
limited duration company formed under the Laws of the Cayman Islands (the
"Company").

         Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the outstanding share capital of the Company, upon the terms and
subject to the conditions contained herein. Buyer has requested Crestar, its
parent company, to provide support in connection with the transactions
contemplated by this Agreement.

         NOW, THEREFORE, in consideration of the premises, agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree,
upon the terms and subject to the conditions contained herein, as follows:

                                   ARTICLE I
                                  DEFINITIONS

         Capitalized terms used herein shall have the meaning ascribed to them
in this Article I unless such terms are defined elsewhere in this Agreement. The
words "hereof", "herein", and "hereunder" and words of similar import, when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The terms defined in the singular shall
have a comparable meaning when used in the plural, and vice versa.

         "AAA" shall have the meaning ascribed to such term in Section 10.01(b).

         "Adjusted Purchase Price" shall have the meaning ascribed to such term
in Section 8.02(d).

         "Adjustment Period" shall mean the period from the Effective Date to
the Closing Date.

         "Affiliate" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. The term
"control" as used in the preceding sentence means, with respect to a
corporation, the right to exercise, directly or indirectly, 50% or more of the
voting rights attributable to the shares of the controlled corporation, or with
respect to any Person

                                      -1-
<PAGE>   7

other than a corporation, the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of such Person.

         "Amato Interest" shall mean the .5% net revenue interest burdening
certain of the Company's interests in the Subject Contracts and more
specifically described in that certain Contingent Payment Agreement dated
January 22, 1990 between the Company and Frank L. Amato.

         "Amazon Development Fund" shall mean the Amazon Regional Ecodevelopment
Fund of Ecuador.

         "Applicable Limitations Period" shall have the meaning ascribed to such
term in Section 11.09.

         "Balance Sheet Items" shall mean (i) accounts receivable from Third
Parties as of December 31, 1999, (ii) accounts payable to Third Parties as of
December 31, 1999 and (iii) prepaid expenses to Third Parties as of December 31,
1999.

         "Block 16 Participation Contract" shall mean that certain Modification
of the Service Contract for Exploration and Exploitation of Hydrocarbons in
Block 16 among Empresa Estatal Petroleos del Ecuador (PETROECUADOR) and the
Consortium comprising YPF Ecuador Inc., Overseas Petroleum and Investment
Company, Nomeco Ecuador LDC, Murphy Ecuador Oil Company and Canam Offshore
Limited, dated effective as of January 1, 1997.

         "Bogi-Capiron Agreement" shall mean that certain Operating Agreement
for Unitized Exploitation of the Bogi Capiron Common Reservoirs among
PETROPRODUCCION, YPF Ecuador Inc., Overseas Petroleum and Investment
Corporation, Nomeco Ecuador LDC, Murphy Ecuador Oil Company and Canam Offshore
Limited, dated effective as of January 1, 1997.

         "Business" shall mean the business and operations of the Company,
including, but not limited to, owning and exercising its rights as a participant
in the Subject Contracts and the Joint Operating Agreement.

         "Business Day" shall mean any day other than a Saturday, a Sunday or a
United States federal or Texas state banking holiday.

         "Buyer Indemnified Parties" shall mean Crestar, Buyer, their
Affiliates, and their respective directors, officers, employees, agents and
representatives.

         "Claim Notice" shall have the meaning ascribed to such term in Section
9.01(b)(ii).

         "Claimed Amount" shall have the meaning ascribed to such term in
Section 9.02(d)(i)(A).

         "Closing" shall have the meaning ascribed to such term in Section 3.01.

         "Closing Date" shall have the meaning ascribed to such term in Section
3.01.

         "CMS Financial Statements" shall have the meaning ascribed to such term
in Section 4.05(e).

                                      -2-
<PAGE>   8

         "CMS Guarantee" shall have the meaning ascribed to such term in Section
8.03.

         "Code" shall mean the United States Internal Revenue Code of 1986, as
amended, together with all regulations promulgated thereunder.

         "Company Material Contracts" shall have the meaning ascribed to such
term in Section 4.06(a).

         "Creditor's Rights" shall have the meaning ascribed to such term in
Section 4.02.

         "Crestar Guarantee" shall have the meaning ascribed to such term in
Section 8.03.

         "Data Room" shall mean that data room located in Houston, Texas,
prepared by Seller to assist Persons interested in acquiring the Company with an
evaluation of the Company and/or for the conduct of due diligence with respect
to the Company.

         "Deferred Claimed Amounts" shall have the meaning ascribed to such term
in Section 9.02(d)(i)(B).

         "Designated Account" shall have the meaning ascribed to such term in
Section 6.01(a).

         "Diluent" shall have the meaning ascribed to such term in clause 3.3.11
of the Block 16 Participation Contract.

         "Diluent Availability/K Factor Matters" shall mean any claims arising
from (i) reductions or interruptions of Diluent supply from PETROECUADOR, (ii)
costs resulting from the Operator's proposal to purchase Diluent or (iii)
post-Effective Date adjustments to the K factor set forth in clause 8.4 of any
of the Subject Contracts.

         "Disputes" shall have the meaning ascribed to such term in Section
10.01(a).

         "Dollars," "US$" or "$" shall mean the lawful currency of the United
States of America.

         "Ecuadorian Financial Statements" shall have the meaning ascribed to
such term in Section 4.05(b).

         "Effective Date" shall mean January 1, 2000.

         "Environmental Law" shall mean any Law governing Environmental Matters
in Ecuador as the same have been amended from time to time, and all applicable
judicial and administrative decisions, orders and decrees and generally accepted
practices of the international petroleum industry relating to Environmental
Matters in Ecuador.

         "Environmental Matters" shall mean any matter arising out of, resulting
from or relating to: (i) pollution, or protection of the environment, health,
safety or natural resources; (ii) emissions, discharges, releases or threatened
releases of environmentally deleterious materials; or (iii) the

                                      -3-
<PAGE>   9

presence, production, processing, distribution, use, generation, treatment,
storage, disposal, transportation or handling of or exposure to environmentally
deleterious materials.

         "Environmental Tax Matters" shall mean any Taxes associated with the
(i) Amazon Development Fund, (ii) Law 10-20 or (iii) Law 40.

         "Execution Date" shall have the meaning ascribed thereto in the
introductory paragraph of this Agreement.

         "Expert" shall have the meaning ascribed thereto in Section
9.02(d)(ii).

         "Expert's Amount" shall have the meaning ascribed thereto in Section
9.02(d)(ii)(B).

         "Expert's Decision" shall have the meaning ascribed thereto in Section
9.02(d)(ii)(B).

         "Governmental Authority" means any government or subdivision thereof,
governmental agency, authority, entity or instrumentality or any court thereof.

         "Indemnified Losses" shall mean any and all Losses reduced by the
amount of any insurance proceeds actually recovered from any Person that is not
an Affiliate of any Person entitled to indemnification under this Agreement;
provided that, for the purposes of calculating the Indemnified Losses to be
applied to the threshold described in Section 9.01(b)(v) in connection with a
breach of a representation qualified by the term "Material Adverse Effect," the
Indemnified Losses shall include all of the Losses incurred by the affected
Person associated with such Material Adverse Effect and not only such Losses in
excess of $500,000. For the avoidance of doubt, with respect to any specific
representation qualified by the term "Material Adverse Effect", there shall be
no breach of such representation (and therefore no Indemnified Losses with
regard to such representation) until such time as a Material Adverse Effect, as
defined herein, has occurred (which, inter alia, must be reasonably likely to
result in Losses to the Company, Buyer or Crestar, individually or in the
aggregate, of more than US$500,000), but if the amount of such Losses does
exceed US$500,000 the whole amount of such Losses shall be Indemnified Losses.

         "Indemnified Party" shall have the meaning ascribed thereto in Section
9.02(a).

         "Indemnifying Party" shall have the meaning ascribed thereto in Section
9.02(a).

         "Joint Operating Agreement" shall mean that certain Joint Operating
Agreement among Conoco Ecuador, Ltd., Overseas Petroleum and Investment
Corporation, Diamond Shamrock South America Petroleum B.V. and Nomeco Latin
America, Inc. dated February 7, 1986, as amended from time to time, including as
amended by that certain First Amendment to Joint Operating Agreement, dated
effective as of January 21, 1992.

         "Knowledge" shall mean the actual knowledge of the officers or
employees of the applicable Person or their respective Affiliates.

         "Law" shall mean any constitution, statute, code, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
applicable Governmental Authority.

                                      -4-
<PAGE>   10

         "Law 10-20" shall mean Ecuadorian Law No. 10, published in Official
Register No. 30 of September 21, 1992 as amended by Ecuadorian Law No. 20,
published in Official Register No. 152 dated September 15, 1997.

         "Law 40" shall mean Ecuadorian Law No. 40, published in Official
Register No. 248 of August 7, 1989.

         "Letter of Credit" shall have the meaning ascribed to such term in
Section 8.15(a).

         "Losses" shall mean all losses, costs, and expenses, including without
limitation, attorneys' fees and expenses.

         "Material Adverse Effect" shall mean any change, development, or effect
(individually or in the aggregate) on the Business, financial condition, results
of operations or assets of the Company, which is reasonably likely to result in
Losses to the Company, Buyer or Crestar, individually or in the aggregate, of
more than US$500,000.

         "Murphy-Canam" shall mean Murphy Ecuador Oil Company and Canam Offshore
Limited.

         "Notice" shall have the meaning ascribed to such term in Section 11.03.

         "Notice Period" shall have the meaning ascribed to such term in Section
9.02(b)(i).

         "Notification Letter" shall have the meaning ascribed to such term in
Section 6.01(d).

         "NPV Amount" shall have the meaning ascribed thereto in Section
9.02(b).

         "OCP Agreements" shall mean those certain agreements and guarantees
currently being negotiated in connection with the OCP Project, as more
particularly described on Schedule 4.06(f) hereto.

         "OCP Project" shall mean the efforts of Seller, the Company and other
oil companies doing business in Ecuador to obtain the necessary authorizations
and to construct and operate a crude oil pipeline designed to transport
production from producing areas covered by the Subject Contracts.

         "OECD" shall mean the Organization for Economic Cooperation and
Development.

         "Operator" shall mean YPF Ecuador, Inc.

         "OPIC" means Overseas Petroleum and Investment Corporation.

         "Other Material Contracts" shall have the meaning ascribed to such term
in Section 4.06(b).

         "Permitted Encumbrances" shall mean:

                                      -5-
<PAGE>   11

                  (a) liens for Taxes and assessments not yet delinquent or, if
         delinquent, that are being contested in good faith in the ordinary
         course of the Business;

                  (b) obligations or duties reserved or vested in any
         Governmental Authority to regulate operations under the Company
         Material Contracts in any manner, including all applicable Laws;

                  (c) easements, rights-of-way, servitudes, permits, surface
         leases and other rights of third parties in respect of surface
         operations, to the extent same, individually or in the aggregate, would
         not have a Material Adverse Effect; and

                  (d) liens or charges for services or materials provided in the
         ordinary course of the Business for obligations that are not yet due.

         "Person" shall mean an individual (or group of individuals),
partnership, corporation, limited liability company, joint venture, trust,
estate or an unincorporated organization or association, Governmental Authority,
other authority or other legal entity.

         "Plan B" shall mean the Northern Michigan Exploration Company
(predecessor to CMS) Employee Well Participation Plan B, dated April 1, 1980,
and amended as of April 1, 1985 and April 1, 1990.

         "Preliminary Purchase Price" shall have the meaning ascribed to such
term in Section 2.03.

         "Pro Forma Balance Sheet" shall have the meaning ascribed to such term
in Section 4.05(c).

         "Purchase Price" shall have the meaning ascribed to such term in
Section 2.02.

         "Purchase Price Adjustment Matters" shall mean (i) the Environmental
Tax Matters, (ii) the Quality Differential Matters, (iii) the Diluent
Availability/K Factor Matters or (iv) the adjustments described in Section
8.02(a)(x) and (y).

         "Quality Differential Matters" shall mean the Company's share of any
claims made by any Governmental Authority in connection with the failure to pay
the full quality differential under any of the Subject Contracts with respect to
periods of time prior to the Effective Date.

         "Reasonable Efforts" shall mean the taking by a Party of such action as
would be in accordance with reasonable commercial practices as applied to the
particular matter in question; provided, however, that such action shall not
include a duty to incur unreasonable expense.

         "Records" shall mean and include all originals and copies (except where
the context indicates that only originals or copies are being referred to) of
minute books, Tax records, agreements, documents, computer files and tapes,
electronic data, maps, books, records, accounts and files of the Company
relating to the Company and the Business including, but not limited to, all
materials contained in the Data Room.

         "Response Notice" shall have the meaning ascribed to such term in
Section 9.02(d)(i).

                                      -6-
<PAGE>   12

         "Schedule" shall mean any schedule attached to and made a part of this
Agreement.

         "Seller Indemnified Parties" shall mean CMS, Seller, their Affiliates,
and their respective directors, officers, employees, agents and representatives.

         "Settlement Statement" shall have the meaning ascribed to such term in
Section 8.02(a).

         "Shares" shall have the meaning ascribed to such term in Section 4.03.

         "Shushufindi Agreement" shall mean that certain Mutual Cooperation
Agreement dated August 18, 1999 between PETROPRODUCCION and YPF Ecuador Inc.

         "SOTE II Agreement" shall mean that certain Amendment Agreement of the
Agreement for the Temporary Increase of the SOTE's Pumping Capacity to 25,000
BOPD dated October 21, 1999.

         "SOTE II/Shushufindi Credit" shall mean the amount obtained through the
following forumula:

                  SSC = (A/B) multiplied by C, where

                  SSC = the amount of the SOTE II/Shushufindi Credit,

                  A = the total amount actually paid by, or on behalf of, the
                  Company, Buyer or Crestar to the Operator (with respect to the
                  Company's interest in the Subject Contracts as of the Closing
                  Date) pursuant to the SOTE II Agreement and the Shushufindi
                  Agreement (but not pursuant to any amended terms thereof) on
                  or before 18 February 2002 up to a maximum of $4,760,000,

                  B = the total amount actually paid by, or on behalf of, the
                  Company, Buyer or Crestar to the Operator (with respect to the
                  Company's interest in the Subject Contracts as of the Closing
                  Date) pursuant to the SOTE II Agreement and the Shushufindi
                  Agreement (but not pursuant to any amended terms thereof) on
                  or before 18 February 2002, and

                  C = any amounts paid, credits or offsets given, the value of
                  incremental production or any other value actually received,
                  directly or indirectly, by the Company, Buyer or Crestar
                  pursuant to the SOTE II Agreement and the Shushufindi
                  Agreement from PETROECUADOR, its Affiliates or any
                  Governmental Authority or through the Operator on or before 18
                  February 2002 with respect to the Company's interest in the
                  Subject Contracts as of the Closing Date.

For the avoidance of doubt, (i) in the situation where $4,760,000 or less has
been paid by, or on behalf of, the Company, Buyer or Crestar pursuant to the
SOTE II Agreement and the Shushufindi Agreement, the SSC shall be equal to C;
and (ii) in the situation where, for example, $5,950,000 has been paid by, or on
behalf of, the Company, Buyer or Crestar pursuant to the SOTE II Agreement

                                      -7-
<PAGE>   13

and the Shushufindi Agreement, the SSC shall be equal to 80% (4,760,000 divided
by 5,950,000) of C.

         "SOTE Pipeline" shall have the meaning ascribed to the term "SOTE" in
clause 7.3 of the Block 16 Participation Contract.

         "Special Indemnity Procedures" shall have the meaning ascribed thereto
in Section 9.02(d).

         "Subsidiary" shall mean (i) any corporation, any of the outstanding
securities of which shall at the time, be owned or controlled, directly or
indirectly, by a Person or by one or more of its Subsidiaries or by such Person
and one or more of its Subsidiaries; or (ii) any partnership, limited liability
company, association, joint venture or similar business organization, any of the
ownership interests of which shall at the time be so owned or controlled.

         "Subject Contracts" shall mean the Block 16 Participation Contract, the
Tivacuno Contract and Bogi-Capiron Contract and any amendments, modifications or
supplements thereto.

         "Supplemental Claim Notice" shall have the meaning ascribed to such
term in Section 9.02(b).

         "Tax" or "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance,
premium, windfall profits, environmental, customs duties, capital stock, capital
gain, petroleum profits, value added, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, alternative or add-on minimum,
profit sharing tax, municipal tax, superintendent of companies contribution,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

         "Tax Claim" shall mean any Losses arising out of a breach of the
representations and warranties in Section 4.14 or any of the provisions of
Article VII.

         "Tax Indemnified Party" shall have the meaning ascribed to that term in
Section 7.05(a).

         "Tax Indemnifying Party" shall have the meaning ascribed to that term
in Section 7.05(a).

         "Tax Returns" shall have the meaning ascribed to such term in Section
4.14.

         "Third Party" shall mean any Person who or which is not a Party or an
Affiliate of a Party.

         "Third Party Claim" shall mean any claim, action, or proceeding made or
brought by any Third Party.

         "Tivacuno Contract" shall mean that certain Contract for Specific
Services for the Development and Production of Crude Oil in Tivacuno Area of
Ecuador's Amazon Region among PETROECUADOR, PETROPRODUCCION, Maxus Ecuador Inc.,
Overseas Petroleum and Investment Corporation, Nomeco Ecuador Oil Company,
Murphy Ecuador Oil Company Ltd., and Canam Offshore Limited, dated effective as
of January 1, 1997.

                                      -8-
<PAGE>   14

         "Undisputed Amount" shall have the meaning ascribed thereto in Section
9.02(d)(i)(C).

         "United States Financial Statements" shall have the meaning ascribed to
such term in Section 4.05(a).

         "YPF-Repsol" means YPF Ecuador Inc. and its Affiliates.

                                   ARTICLE II
                                PURCHASE AND SALE

         2.01 Transfer of Shares. Upon the terms and subject to the conditions
of this Agreement, at the Closing, Seller agrees and CMS will cause Seller to
sell, assign and deliver the Shares to Buyer, against receipt of payment for
such Shares as provided in Section 6.01.

         2.02 Purchase Price. The consideration to be paid by Buyer to Seller
for the Shares shall be One Hundred and One Million, Nine Hundred and Ninety
Seven Thousand US Dollars (US$101,997,000), plus simple interest accruing on
such amount from the Effective Date until the Closing Date at a rate of eight
percent (8%) per annum ("Purchase Price"), subject to adjustments thereto that
may be required pursuant to Sections 8.01 and 8.02 of this Agreement.

         2.03 Estimate of Purchase Price. Attached as Schedule 2.03 is an
estimate of the Purchase Price, as adjusted pursuant to Section 8.01 (the
"Preliminary Purchase Price"), setting forth in reasonable detail Seller's
calculations used to determine the Preliminary Purchase Price.

                                  ARTICLE III
                                     CLOSING

         3.01 Time and Place of Closing. Subject to fulfillment or waiver of the
deliveries required by Sections 6.01 and 6.02, the consummation of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Vinson & Elkins L.L.P. in Houston, Texas commencing at 9:00 a.m.
local time on June 30, 2000, or such other date as Buyer and Seller may mutually
agree in writing. The date upon which Closing occurs shall be referred to herein
as the "Closing Date."

         3.02 Delivery of Records. On the Closing Date (or as soon thereafter as
practicable in the case of Records other than the minute books and stock record
books) CMS and Seller will deliver or cause to be delivered to Buyer, originals
of the minute books and stock record books of the Company and the originals of
all Records to the extent same are not already in the possession of the Company,
subject to the following provisions:

                                      -9-
<PAGE>   15

                  (a) CMS and Seller (with Crestar and Buyer to have access
         thereto) may retain the originals of all Records that in the reasonable
         judgment of Buyer contain information relating to the Company but that
         principally relate to CMS, Seller or their Affiliates;

                  (b) CMS and Seller may retain copies of all Records that in
         the reasonable judgment of Seller contain information relating to CMS,
         Seller or their Affiliates but principally relate to the Company;

                  (c) CMS and Seller may retain all Records prepared in
         connection with the sale of the Shares, including, without limitation,
         offers received from prospective purchasers of the Shares and any
         information relating to such offers; and

                  (d) CMS and Seller may retain copies of all consolidating and
         consolidated financial information and all other accounting Records
         prepared or used in connection with (i) the preparation of financial
         statements of CMS, Seller and/or their Affiliates and (ii) the
         preparation and filing of any Tax Returns.

                                   ARTICLE IV
                REPRESENTATIONS AND WARRANTIES OF CMS AND SELLER

         CMS and Seller hereby, jointly and severally, represent and warrant to
Buyer and Crestar as of the Effective Date and as of the Closing Date, except
for representations and warranties that specifically set forth a certain date
(including the Effective Date or the Closing Date) which representations shall
be made only as of such date, as follows:

         4.01 Corporate Existence and Qualification. Each of CMS, Seller and the
Company is a corporation or company duly organized, validly existing, and in
good standing under the Laws of the jurisdiction of its organization. Except as
set forth on Schedule 4.01, the Company is duly licensed, qualified and
authorized to conduct the Business and is in good standing under the Laws of
each jurisdiction where such license, qualification, or authorization is
required. Schedule 4.01 sets forth the jurisdictions where the Company is
licensed, qualified or authorized to conduct the Business and the names under
which the Company conducts its Business. The Company is in full compliance with
all of the terms and provisions of its memorandum and articles of association,
as amended. The Company has all requisite corporate power and authority to own
and operate its properties including, without limitation, its interests in the
Company Material Contracts and to carry on the Business as presently conducted.
Except as set forth on Schedule 4.01, the Company has not conducted the Business
or any other activities under any trade name.

         4.02 Authority, Approval and Enforceability. Each of CMS and Seller has
all requisite corporate power and authority to execute and deliver this
Agreement and any other documents required to be executed by such Party pursuant
to this Agreement, and to perform its respective obligations thereunder. The
execution and delivery of this Agreement by CMS and Seller and the performance
of the transactions contemplated hereby by CMS and Seller have been duly and
validly approved by the Board of Directors of CMS and Seller, respectively and
by all other necessary corporate or shareholder action. This Agreement and the
other documents required to be executed

                                      -10-
<PAGE>   16

by CMS or Seller pursuant to this Agreement have been duly executed and
delivered on behalf of CMS and Seller, and constitute the legal, valid and
binding obligations of CMS and Seller, enforceable against CMS and Seller in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency or other similar Laws relating to or affecting the enforcement of
creditors' rights generally and to general principles of equity ("Creditor's
Rights").

         4.03 Capitalization of the Company.

                  (a) The authorized share capital of the Company is as set
         forth on Schedule 4.03 and Seller owns, beneficially and of record, all
         the issued and outstanding share capital of the Company as set forth in
         Schedule 4.03 (the "Shares"). All of the Shares are duly authorized,
         validly issued, fully paid, and nonassessable. All of the Shares were
         issued in compliance with applicable Law. The Shares are free and clear
         of all mortgages, pledges, security interests, liens or encumbrances of
         any kind and are not subject to any agreements or understandings among
         any Persons with respect to the voting or transfer thereof. There are
         no preemptive or similar rights granted by CMS, Seller, the Company or
         any of their Affiliates to any Person that encumber the Shares. There
         are no outstanding subscriptions, options, convertible securities,
         warrants, calls or other securities granting rights to purchase or
         otherwise acquire any securities of the Company or any commitments or
         agreements of any character obligating CMS, Seller or the Company to
         issue or transfer any such securities. There are no preferred or debt
         securities, or an agreement to issue to any Person such securities,
         which are convertible into share capital of the Company. There is no
         commitment by the Company to issue other share capital of the Company,
         or any subscription, warrants, options, convertible securities or other
         such rights. The Company has no obligations (contingent or otherwise)
         to redeem, or otherwise acquire any of its securities or any interest
         therein or to make or pay any dividend or make any distribution as
         respect thereto.

                  (b) The Company has no Subsidiaries.

         4.04 No Conflicts. Neither the execution and delivery of this Agreement
or any other document required to be executed by CMS, Seller and/or the Company
pursuant to this Agreement, nor the consummation of the transactions
contemplated herein or therein will:

                  (a) conflict with, result in a breach, constitute a default
         (with notice or lapse of time or both) or a violation of the memorandum
         and articles of association of the Seller or the Company;

                  (b) subject to the receipt of any required approvals as set
         forth in Schedule 4.04(b), conflict with or result in a breach, default
         or violation of any applicable Law, or of any agreement, document,
         instrument, judgment, decree, order, governmental permit, certificate
         or license to which CMS, Seller or the Company is a party, which would
         have a Material Adverse Effect; or

                  (c) result in the creation of any lien, charge or other
         encumbrance upon any of the properties or assets of the Company or the
         Shares.

                                      -11-
<PAGE>   17

         4.05 Financial Information.

         (a) Attached hereto as Schedule 4.05(a) are true, correct and complete
copies of the unaudited United States financial statements of the Company for
the years ended December 31, 1997, December 31, 1998 and December 31, 1999 and
for the four month period ended April 30, 2000 (the "United States Financial
Statements"). Such United States Financial Statements shall include, as
applicable, the Statement of Assets and Liabilities and the related Statement of
Revenues and Direct Operating Costs and Statement of Cash Flows Relating to
Revenues and Direct Operating Costs (except for the December 31, 1997 Financial
Statements which do not include a statement of cash flows). The United States
Financial Statements are based solely on information regularly provided to the
Company by the Operator (supplemented by requests from the Company for
information), and the Company has incorporated all such information into the
United States Financial Statements and has used Reasonable Efforts to do so in
accordance with generally accepted accounting principles as used in the United
States, consistently applied, except (i) as otherwise noted in the United States
Financial Statements, and (ii) the December 31, 1997 United States Financial
Statements do not include a Statement of Cash Flows Relating to Revenues and
Direct Operating Costs.

         (b) Attached hereto as Schedule 4.05(b) are true, correct and complete
copies of the audited Ecuadorian financial statements of the Company (also known
as Nomeco Ecuador LDC-Sucursal Ecuador) for the years ended December 31, 1997,
December 31, 1998 and an unaudited draft of the December 31, 1999 statements
(without footnotes) (collectively, the "Ecuadorian Financial Statements"). The
Ecuadorian Financial Statements have been prepared in accordance with generally
accepted accounting principles as used in Ecuador, except as (i) disclosed in
the audit opinion included in Schedule 4.05(b), or (ii) otherwise provided in
Schedule 4.05(b).

         (c) Attached hereto as Schedule 4.05(c) is a pro forma balance sheet of
the Company as of December 31, 1999 prepared in accordance with the assumptions
and qualifications set forth on Schedule 4.05(c) (the "Pro Forma Balance
Sheet"). To the Knowledge of CMS and Seller, all financial information prepared
by Arthur Andersen LLC at the request of Crestar and CMS in connection with (i)
adjustments arising from the SOTE II Agreement or the Shushufindi Agreement,
(ii) the Quality Differential Matters and (iii) the Environmental Tax Matters,
have been accurately incorporated into the Pro Forma Balance Sheet in accordance
with Crestar's instructions to CMS, subject to the assumptions and
qualifications set forth on Schedule 4.05(c).

         (d) Subject to the final sentences of each of Section 4.05(a) and
Section 4.05(b), and to Schedule 4.05(c), (i) the United States Financial
Statements and Ecuadorian Financial Statements fairly present the financial
position of the Company, as of the dates specified therein, and (ii) there is no
debt, guaranty or, to the Knowledge of CMS and Seller (including Knowledge based
on the Operator's written response to a request from CMS for such information in
connection with this Agreement), liability or obligation of the Company of any
nature, and of the type required to be included in the United States Financial
Statements or the Ecuadorian Financial Statements in accordance with generally
accepted accounting principles as used in the United States or Ecuador, as
applicable, except to the extent accurately and adequately set forth or reserved
against in the United States Financial Statements or the Ecuadorian Financial
Statements, as applicable. Except as set

                                      -12-
<PAGE>   18

forth on Schedule 4.05(d), since the date of the most recent United States
Financial Statements and the Ecuadorian Financial Statements of the Company
provided under this Agreement:

                  (x) to the Knowledge of CMS and Seller (including Knowledge
         based on the Operator's written response to a request from CMS for such
         information in connection with this Agreement), there has been no
         change in the assets, liabilities or financial condition of the Company
         from that reflected in the United States Financial Statements except
         for changes in the ordinary course of the Business which in the
         aggregate do not have a Material Adverse Effect; provided that the
         Parties agree that events, conditions, occurrences or changes that
         generally relate to the international or Ecuadorian oil and gas
         industry (such as, without limitation, decreases in the prices received
         by the Company for crude oil), or to the economy or the political
         situation in Ecuador do not and shall not constitute a Material Adverse
         Effect;

                  (y) to the Knowledge of CMS and Seller (including Knowledge
         based on the Operator's written response to a request from CMS for such
         information in connection with this Agreement), none of the Business,
         financial condition, operations, property or affairs of the Company has
         been affected by any occurrence or development, individually or in the
         aggregate, whether or not insured against except for changes in the
         ordinary course of the Business which in the aggregate do not have a
         Material Adverse Effect; provided that the Parties agree that events,
         conditions, occurrences or changes that generally relate to the
         international or Ecuadorian oil and gas industry (such as, without
         limitation, decreases in the prices received by the Company for crude
         oil), or to the economy or the political situation in Ecuador do not
         and shall not constitute a Material Adverse Effect; and

                  (z)      the Company has not:

                           (A)      issued any stock, bond or other security;

                           (B) borrowed any amount or, to the Knowledge of CMS
                  and Seller, incurred or become subject to any liability
                  (absolute, accrued or contingent), except current liabilities
                  incurred and liabilities under contracts entered into in the
                  ordinary course of the Business and except for intercompany
                  obligations with respect to which the Company has no liability
                  as of the Closing Date;

                           (C) discharged or satisfied any lien or encumbrance
                  or incurred or paid any obligation or liability (absolute,
                  accrued or contingent) other than current liabilities shown on
                  either the United States Financial Statements or the
                  Ecuadorian Financial Statements and current liabilities
                  incurred since the date of the United States Financial
                  Statements or the Ecuadorian Financial Statements in the
                  ordinary course of the Business and other than intercompany
                  obligations with respect to which the Company has no liability
                  as of the Closing Date;

                           (D) declared or made any dividend, payment or
                  distribution to security holders or purchased or redeemed any
                  share of its capital stock or other securities, other than
                  distributions to CMS and/or Seller in the ordinary course of
                  the Business;

                                      -13-
<PAGE>   19

                           (E) mortgaged, pledged, encumbered or subjected to
                  lien any of its assets, tangible or intangible, other than
                  liens of current real property Taxes not yet due and payable;

                           (F) sold, assigned or transferred any of its assets
                  except in the ordinary course of the Business, or canceled any
                  debt or claim except for intercompany obligations with respect
                  to which the Company has no liability as of the Closing Date;

                           (G) sold, assigned, transferred or granted any
                  exclusive license with respect to any patent, trademark, trade
                  name, service mark, copyright, trade secret or other
                  intangible asset;

                           (H) waived any right of substantial value or, to the
                  Knowledge of CMS and Seller, suffered any loss of property
                  whether or not in the ordinary course of the Business;

                           (I) made any change in officer compensation except in
                  the ordinary course of the Business and consistent with past
                  practice;

                           (J) made any material change in the Business or
                  manner of operations of the Company;

                           (K) entered into any transaction except in the
                  ordinary course of the Business or in connection with the
                  transactions contemplated by this Agreement;

                           (L) incurred any indebtedness or obligations to CMS,
                  Seller or any Affiliate except for intercompany obligations
                  with respect to which the Company has no liability as of the
                  Closing Date; or

                           (M) entered into any commitment (contingent or
                  otherwise) to do any of the foregoing.

                  (e) Attached hereto as Schedule 4.05(e) are true, correct and
complete copies of the audited financial statements of CMS for the year ended
December 31, 1999 (the "CMS Financial Statements"). The CMS Financial Statements
fairly present the financial position of CMS and the results of its operations
and changes in financial position as of the dates and for the periods indicated
therein and have been prepared in accordance with generally accepted accounting
principles as used in the United States, consistently applied.

         4.06     Material Contracts.

                  (a) Schedule 4.06(a) lists the Subject Contracts, the Joint
         Operating Agreement and any other written agreement or contract of the
         type described below to which the Company is a party (collectively, the
         "Company Material Contracts"):

                                      -14-
<PAGE>   20

                           (i) any guarantees by the Company of any obligation
                  of CMS, Seller, or any of their respective Affiliates or any
                  other Person;

                           (ii) any employment agreement that is not terminable
                  at the will of the Company or any employment agreement between
                  the Company and any expatriates;

                           (iii) any agreement for capital expenditures or the
                  acquisition or construction of fixed assets which requires
                  future payments;

                  (iv) any collective bargaining agreement with any labor union;

                           (v) any agreement granting to any Person a right of
                  first refusal, option, subscription right, or other
                  preferential right to purchase or acquire any of the Shares or
                  any other security or asset of the Company;

                           (vi) agreements, contracts, indentures or other
                  instruments relating to the borrowing, or the guarantee of any
                  borrowing, by the Company;

                           (vii) any agreement for the purchase or sale, or for
                  the transportation, processing, refining, storage and handling
                  of natural gas, natural gas liquids, crude oil or condensate
                  with a term of more than 90 days;

                           (viii) any amendment or novation to, or any agreement
                  for the sale of any interest in any Company Material Contract;

                           (ix) any agreement for the sale of any asset (other
                  than sales of crude oil, natural gas and/or associated
                  products in the ordinary course of the Business with a term of
                  90 days or less), of the Company having a value of more than
                  US $250,000 (or the equivalent in local currency);

                           (x) any agreement which constitutes a lease under
                  which the Company is the lessor or lessee of real or personal
                  property which lease (A) cannot be terminated by the Company
                  without penalty upon not more than 30 days notice and (B)
                  involves an annual base rental in excess of US $100,000 (or
                  equivalent in local currency);

                           (xi) any agreement with CMS, Seller or their
                  respective Affiliates relating to the provision of goods or
                  services or the payment of funds or the advancing or borrowing
                  of money;

                           (xii) any agency, consultancy or similar agreement
                  which requires payment in excess of US $100,000 per annum (or
                  the equivalent in local currency) and which cannot be
                  terminated by the Company without penalty upon not more than
                  30 days notice;

                           (xiii) any agreement which (A) involves future
                  payment by or to the Company in excess of US $500,000 (or
                  equivalent in local currency) and (B) is not an agreement
                  entered into in the ordinary course of owning, operating and

                                      -15-
<PAGE>   21

                  developing oil and gas properties and transporting and
                  marketing production therefrom in connection with any of
                  Company Material Contracts or the OCP Agreements;

                           (xiv) any agreement, which grants or purports to
                  grant an overriding royalty interest, a net profits interest,
                  or other similar non-executory interest, or which establishes
                  an incentive compensation plan, encumbering or burdening the
                  Company's interest in the Company Material Contracts or the
                  OCP Agreements, other than the Amato Interest;

                           (xv) any operating agreements, bidding agreements,
                  areas of mutual interest agreements, confidentiality
                  agreements and areas of exclusion agreements;

                           (xvi) any tax sharing or tax allocation agreement;

                           (xvii) any agreements granting to the Company an
                  interest in a contract, concession, or lease to explore for,
                  develop, produce and export petroleum; or

                           (xviii) any rights of way, easements or other
                  usufructory rights.

                  (b) Based solely on the Operator's written response to a
         request from CMS for information in connection with this Agreement,
         Schedule 4.06(b) lists any written contracts or agreements of the type
         described in Section 4.06(a)(i) through (xviii) inclusive, other than
         Company Material Contracts, to which the Company is not a party but by
         which the Company or its assets are bound (the "Other Material
         Contracts"); provided that in the case of Other Material Contracts of
         the type described in Section 4.06(a)(iii) and (vi), only such
         agreements in excess of US$500,000 (or the equivalent in local
         currency) shall be listed.

                  (c) Schedule 4.06(c) lists the leases, agreements or other
         contracts, to which the Company is a party or by which its assets or
         properties are bound, which will be released or terminated at or prior
         to Closing without liability to the Company.

                  (d) Except as set forth in Schedule 4.06(d), (i) the Company
         Material Contracts and, to the Knowledge of CMS and Seller, the Other
         Material Contracts, are sufficient to allow the Company to conduct the
         Business consistent in all material respects with the Company's past
         practices; (ii) the execution of each of the Company Material Contracts
         was duly authorized by the Company and each of the Company Material
         Contracts was entered into without any default of the Company; (iii) to
         the Knowledge of CMS and Seller, each of the Company Material Contracts
         is a valid and subsisting agreement, duly authorized and in full force
         and effect; (iv) neither the Company nor, to the Knowledge of CMS and
         Seller, any other party to any Company Material Contract, is in default
         (with due notice or lapse of time or both) with respect to such Company
         Material Contract; (v) there is no anticipated default by the Company
         under any Company Material Contract or, to the Knowledge of CMS and
         Seller, any other party to any Company Material Contract; and (vi) to
         the Knowledge of CMS and Seller, no claim has been asserted, or
         threatened to be asserted, adverse to its interests in the Company
         Material Contracts. CMS and Seller have delivered to Buyer true and
         correct copies of all Company Material Contracts.

                                      -16-
<PAGE>   22

                  (e) Except as set forth in Schedule 4.06(e), to the Knowledge
         of CMS and Seller, (i) each of the Other Material Contracts is a valid
         and subsisting agreement, duly authorized and in full force and effect;
         (ii) the Company is, and the Operator is, where applicable, in full
         compliance with the terms of the Other Material Contracts; and (iii)
         with respect to each Other Material Contract neither the Company nor
         any other party is in default (with due notice or lapse of time or
         both).

                  (f) To the Knowledge of CMS and Seller (including Knowledge
         based on the Operator's written response to a request from CMS for such
         information in connection with this Agreement), Schedule 4.06(f) lists
         accurately and completely the most current drafts of the OCP
         Agreements, copies of which have been provided to Buyer or Crestar.
         Except as listed on Schedule 4.06(f), and except in connection with the
         transactions contemplated by this Agreement, the Company is not
         currently engaged in the negotiation of any leases, agreements or other
         contracts which would be a Company Material Contract or Other Material
         Contract if executed by or on behalf of the Company.

         4.07 Absence of Certain Changes. Subject to Schedule 4.05(c), and
except as set forth on Schedule 4.07 or as reflected in either the United States
Financial Statements or the Ecuadorian Financial Statements, and except as a
result of matters relating to or resulting from this Agreement, since the
Effective Date, the Business has been conducted in the ordinary course and
substantially in the manner as previously conducted, and there has not been any
event, condition, occurrence or change in the Business or the financial
condition or results of the operations of the Company that would have a Material
Adverse Effect; provided that the Parties agree that events, conditions,
occurrences or changes that generally relate to the international or Ecuadorian
oil and gas industry (such as, without limitation, decreases in the prices
received by the Company for crude oil), or to the economy or the political
situation in Ecuador do not and shall not constitute a Material Adverse Effect.

         4.08 Employees. The Company currently has no employees nor has it ever
had employees. The Company does not administer or sponsor any employee pension
benefit plan or employee welfare benefit plan. For the purposes of this Section
4.08, an employee pension benefit plan includes any plan, fund, or program
providing either retirement income to employees, former employees or their
beneficiaries or a deferral of income to employees, former employees or their
beneficiaries beyond termination of employment. Also, for purposes of this
Section 4.08, an employee welfare benefit plan includes any plan, fund or
program providing employees, former employees or their beneficiaries with
health, sickness, accident, disability, death, unemployment, or other similar
benefits. Except for Amato Interest and for benefits provided under Plan B by
CMS from revenue attributable to the Subject Contracts, the Company does not
currently nor has it ever provided compensation, bonus, incentive payment or
other types of benefits for any employee or former employee of any Person,
including, any current or former Affiliate of the Company.

         4.09 Insurance. Schedule 4.09 contains a list of all policies of
property damage, liability, and other forms of insurance of any kind or
character (other than officer's and director's liability policies) which cover
occurrences as of, or claims made on or prior to, the date hereof and maintained
by CMS, Seller or the Company under any of the Company Material Contracts or any
of their respective Affiliates to the extent applicable to the Company.

                                      -17-
<PAGE>   23

         4.10 Litigation. Except as set forth in Schedule 4.10, (i) there are no
lawsuits, arbitrative proceedings, bankruptcy proceedings, or other legal
proceedings at Law or in equity pending, or to the Knowledge of CMS and Seller
threatened, against the Company, its assets or properties (including its
interests in the Company Material Contracts), or otherwise relating to the
conduct of the Business, and, to the Knowledge of CMS and Seller (including
Knowledge based on the Operator's written response to a request from CMS for
such information in connection with this Agreement), there is no basis for any
of the foregoing; (ii) to the Knowledge of CMS and Seller, there are no Third
Party Claims or governmental investigations pending against the Company, its
assets or properties, (iii) none of CMS, Seller or the Company has received any
notice of default under any Company Material Contract; (iv) none of CMS, Seller,
or the Company is in default with respect to any order, writ, injunction or
decree relating to the Business known to or served upon CMS, Seller or the
Company of any court or of any national, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign; and (v) there is no action or suit by the Company pending,
threatened or contemplated against others.

         4.11 Liability for Brokers' Fees. Neither Buyer, Crestar nor the
Company will, directly or indirectly, incur any liability or expense as a result
of (i) any undertakings or agreements of CMS and/or Seller for brokerage fees,
finder's fees, agent's commissions or other similar forms of compensation in
connection with this Agreement or any agreement or transaction contemplated
hereby or (ii) costs incurred by the Operator as a result of responding to
requests for information by CMS and/or Seller in connection with this Agreement
and the transactions contemplated hereby.

         4.12 Compliance with Laws. Except as listed in Schedule 4.12, the
Company has not received any written notice of any violation of any applicable
Law (including any applicable Environmental Law) other than such violations, as
would not have a Material Adverse Effect. To the Knowledge of CMS and Seller,
except as listed in Schedule 4.12, (i) the Company has complied with all Laws
applicable to the Business, its operations, properties, assets, products and
services, (ii) the Company has all necessary permits, licenses and other
authorizations required to conduct the Business as currently conducted, and
(iii) the Company has been operating the Business pursuant to and in compliance
with the terms of all such permits, licenses and other authorizations. To the
Knowledge of CMS and Seller, the Company and the Operator are each in compliance
with all applicable Environmental Laws. The Company has not entered into or
agreed to any court decree or order and, to the Knowledge of CMS and Seller, is
not subject to, any judgment, decree or order relating to compliance or
non-compliance with any applicable Environmental Laws. To the Knowledge of CMS
and Seller, the Operator has not entered into or agreed to any court decree or
order and is not subject to, any judgment, decree or order relating to
compliance, which affects the Company, the Business, the Subject Contracts or
the Joint Operating Agreement, with any applicable Environmental Laws.

         4.13 Consents and Preferential Rights. Except as disclosed in Schedule
4.13, no consents are required to be obtained by CMS, Seller or the Company in
connection with the transfer of the Shares to Buyer. There are no preferential
purchase rights applicable to the transfer of the Shares to Buyer.

         4.14 Taxes.

                                      -18-
<PAGE>   24

                  (a) All returns and reports of or with respect to any Tax
         which are required to be filed on or before the Closing Date by or with
         respect to the Company ("Tax Returns") have been or will be duly and
         timely filed, and no extensions with respect to such Tax Returns have
         (or as of the Closing Date will have) been requested or granted.

                  (b) The Company has as of the Effective Date paid all Taxes
         due, or claimed by any taxing authority to be due, from or with respect
         to it, except Taxes that are being contested in good faith by
         appropriate legal proceedings and for which the non-payment would not
         have a Material Adverse Effect.

                  (c) There has been no material issue raised in connection with
         any of the Tax Returns nor are there any material Taxes that are being
         contested through appropriate legal proceedings by or with any taxing
         authority in connection with any of the Tax Returns.

                  (d) The Company has (and as of the Closing Date will have)
         made all material deposits required with respect to Taxes.

                  (e) No waiver or extension of any statute of limitations as to
         any Tax matter has been given by or requested from the Company.

                  (f) Seller is a business entity that is classified, for United
         States federal tax purposes, as a corporation under United States
         Treasury Regulation Section 301.7701-3, and neither Seller nor its
         direct or indirect shareholders has or shall file an election with the
         Internal Revenue Service to treat Seller, for United States federal tax
         purposes, as an entity other than as a corporation effective for any
         period on or before the Closing Date.

                  (g) CMS, Seller and the Company have converted the exchange
         losses incurred by the Company in the conduct of its Business to Tax
         benefits on the Records of the Company, and to the Knowledge of CMS and
         Seller, such converted exchange losses are duly recognized as Tax
         benefits of the Company by the appropriate Governmental Authorities in
         Ecuador.

                  (h) The net operating loss carry forward and other tax
         benefits on the Records of the Company as of the Effective Date are as
         set forth on Schedule 4.14(h) attached hereto. The Parties agree that
         no representation or warranty is being made regarding (i) the tax
         consequences or results to Crestar, Buyer, the Company or any other
         Person of such net operating loss carry forward and other tax benefits,
         or (ii) the tax treatment accorded such net operating loss carry
         forward and other tax benefits by any Governmental Authority.

         4.15 Company Assets. The Company holds its interests in the Company
Material Contracts free and clear of mortgages, pledges, security interests,
liens, charges and other encumbrances, subject only to (i) the Amato Interest,
(ii) matters arising in the ordinary course of the Business, (iii) matters
arising in connection with the OCP Project, and (iv) the Permitted Encumbrances.
Schedule 4.15 lists each well which the Company, directly or indirectly, holds
or has a right to use in the conduct of its Business. To the Knowledge of CMS
and Seller, the tangible personal property, which the Company, directly or
indirectly, holds or has the right to use, including

                                      -19-
<PAGE>   25

without limitation the assets listed on Schedule 4.15, is sufficient to allow
the Company to conduct its Business consistent in all material respects with the
Company's past practices.

         4.16     Oil and Gas Matters

                  (a) Except as set forth in Schedule 4.16(a), to the Knowledge
of CMS and Seller (including Knowledge based on the Operator's written response
to a request from CMS for such information in connection with this Agreement):

                           (i) the Company has, directly or indirectly through
                  Operator, the contracts, permits, rights of way, entitlements
                  and other authorizations necessary to conduct its Business in
                  accordance in all material respects with the Company's past
                  practices;

                           (ii) such contracts, permits, rights of way,
                  entitlements and other authorizations are in full force and
                  effect and are, directly or indirectly, through the Operator,
                  enforceable by the Company; and

                           (iii) the Company and the Operator are in full
                  compliance with such contracts, permits, rights of way,
                  entitlements and other authorizations, where applicable, and
                  have not received any notice of non-compliance concerning such
                  contracts, permits, rights of way, entitlements and other
                  authorizations.

                  (b) Schedule 4.16(b) sets out a true, correct and complete
         list and a brief description of all unfulfilled work commitments and
         expenditure obligations (including without limitation any work
         commitments and expenditure obligations to any Governmental Authority
         or PETROECUADOR) arising from (i) the Company's interest in the Company
         Material Contracts, (ii) to the Knowledge of CMS and Seller, Other
         Material Contracts, or (iii) to the Knowledge of CMS and Seller, with
         respect to the Operator's activities regarding the OCP Project. Except
         as disclosed in Schedule 4.16(b), the Company has, and to the Knowledge
         of CMS and the Seller, the Operator has, fulfilled all such work
         commitments and expenditure obligations, and there are no pending or
         threatened Third Party Claims arising therefrom.

                  (c) Excluding actions taken on behalf of the Company by the
         Operator, (i) the Company has not affirmatively taken any action in
         contravention of its obligations to landowners, including indigenous
         peoples, in the areas subject to the Company Material Contracts; (ii)
         the Company has not affirmatively taken any action in contravention of
         its obligations to Governmental Authorities having jurisdiction over
         the areas subject to the Company Material Contracts; and (iii) the
         Company has not affirmatively taken any action resulting in outstanding
         debts or claims pending or, to the Knowledge of CMS and Seller,
         threatened in relation to such obligations to landowners and/or
         Governmental Authorities. To the Knowledge of CMS and Seller, (x) the
         Company and the Operator are in full compliance with all obligations to
         landowners, including indigenous peoples, in the areas subject to the
         Company Material Contracts; (y) the Company and the Operator are in
         full compliance with all obligations to Governmental Authorities having
         jurisdiction over the areas subject to the Company Material Contracts;
         and (z) there are no outstanding debts or

                                      -20-
<PAGE>   26

         claims pending or threatened in relation to such obligations to
         landowners and/or Governmental Authorities.

         4.17     Loans and Advances. Except as set forth in Schedule 4.17, as
of the Closing Date, the Company does not have any outstanding loans or advances
to any Person and is not obligated to make any such loans or advances.

         4.18      Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons.

                   (a) Except as set forth on Schedule 4.18, the Company has not
         assumed, guaranteed, endorsed or otherwise become directly, indirectly,
         or contingently liable on any indebtedness or obligations of any other
         Person (including, without limitation, liability by way of agreement,
         contingent or otherwise, to purchase, to provide funds for payment, to
         supply funds to or otherwise invest in the debtor, or otherwise to
         assure the creditor against loss), except for guaranties by endorsement
         of negotiable instruments for deposit or collection in the ordinary
         course of the Business. In particular the Company has not assumed,
         guaranteed, endorsed or otherwise become directly, indirectly, or
         contingently liable on any indebtedness or obligations under Plan B,
         nor are the Company Material Contracts directly, indirectly, or
         contingently burdened or encumbered under Plan B.

                   (b) Except as set forth on Schedule 4.18, neither CMS nor
         Seller has assumed, guaranteed, endorsed or otherwise become directly,
         indirectly, or contingently liable on any indebtedness or obligations
         of the Company.

         4.19 No Intentional Concealment. Except as set forth on Schedule 4.19,
neither CMS, Seller nor the Company has intentionally concealed or withheld from
Crestar and the Buyer (i) any Records regarding the Company and the Business, or
(ii) any information that would constitute a breach of the representations of
CMS or the Seller under this Agreement or under any other document executed by
CMS or Seller in connection herewith.

         4.20 Officers and Directors. Set forth in Schedule 4.20 is a true,
correct and complete list of the names of the officers and directors of the
Company and all Persons holding special or general powers of attorney to act for
the Company. None of such Persons has an employment agreement or understanding,
whether oral or written, with the Company, which is not terminable on notice by
the Company without cost or other liability to the Company.

         4.21 Transactions With Affiliates. Except for the Company Material
Contracts, no director, officer, employee or shareholder of the Company, or
member of the immediate family of any such Person, or any corporation,
partnership, trust or other entity in which any such Person, or any member of
the immediate family of any such Person, is an officer, director, trustee,
partner or holder of more than 5% of the outstanding capital stock or other
equity interest thereof, is a party to any transaction with the Company, or to
the Knowledge of CMS and Seller, with the Operator, including any contract,
agreement or other arrangement providing for the employment of, furnishing of
services by, rental of real or personal property from or otherwise requiring
payments to any such Person or firm, other than employment-at-will arrangements
in the ordinary course of the Business.

                                      -21-
<PAGE>   27

         4.22 No Corrupt Practices. With respect to the Company and the
Business, the Company, CMS and Seller have not taken any action which would
cause them to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or the OECD Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions.

         4.23 Corporate Records. The minute books and share registers of the
Company are substantially correct and complete, and have been maintained in
accordance with good business practice and all applicable Laws.

         4.24 Banking. Schedule 4.24 is a true, correct and complete list of
names and addresses of all banks or other financial institutions in which the
Company has an account, deposit or safe-deposit box, with the names of all
persons authorized to draw on these accounts or deposits or to these boxes.

                                   ARTICLE V

               REPRESENTATIONS AND WARRANTIES OF CRESTAR AND BUYER

         Buyer and Crestar, jointly and severally, represent and warrant to CMS
and Seller as of the Closing Date as follows:

         5.01 Corporate Existence and Qualification. Each of Crestar and Buyer
is a corporation or company duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its organization. Buyer is duly
licensed, qualified and authorized to conduct business and is in good standing
under the Laws of each jurisdiction where such license, qualification or
authorization is required to carry on its business as presently conducted or as
contemplated to be conducted following the consummation of the transactions
contemplated by this Agreement. Buyer has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as presently conducted and as contemplated to be conducted following the
consummation of the transactions contemplated by this Agreement.

         5.02 Authority, Approval and Enforceability. Each of Crestar and Buyer
has all requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. The execution and
delivery of this Agreement by Crestar and Buyer and the performance of the
transactions contemplated hereby by Crestar and Buyer have been duly and validly
approved by the respective Boards of Directors of Crestar and Buyer and by any
other corporate action necessary on behalf of Crestar and Buyer. This Agreement
and the other documents required to be executed by Crestar and Buyer and
delivered at Closing pursuant to this Agreement have been duly executed and
delivered on behalf of Crestar and Buyer and constitute the legal, valid and
binding obligation of Crestar and Buyer enforceable in accordance with its
terms, subject to Creditor's Right.

         5.03 No Default or Consents. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will:

                                      -22-
<PAGE>   28

                  (a) conflict with, result in a breach, constitute a default
         (with notice of lapse of time or both) or violation of the articles,
         by-laws or other similar formation documents of Crestar or Buyer; or

                  (b) conflict with or result in a material breach, default or
         violation of any applicable Law or any written agreement, document,
         instrument, judgment, decree, order, governmental permit, certificate
         or license to which Crestar or Buyer is a party or is subject.

         5.04 Capability. To the Knowledge of Crestar and Buyer, the
administrative, technical or financial capability of Crestar and Buyer are
sufficient to enable the Company after the transfer of Shares contemplated by
this Agreement to perform its obligations under the Company Material Contracts.

         5.05 Liability for Brokers' Fees. Neither CMS nor Seller will, directly
or indirectly, incur any liability or expense as a result of any undertakings or
agreements of Crestar and/or Buyer for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.

         5.06 No Corrupt Practices. With respect to the Company, the Business
and the transactions contemplated by this Agreement, Crestar and Buyer have not
taken any action which would cause them to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, or the OECD Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions.

         5.07 Investment. Buyer is an accredited investor as defined in
Regulation D of the Securities Act of 1933, as amended, and is acquiring the
Shares for its own account, for investment and not with a view to, or for offer
of resale in connection with, a distribution thereof within the meaning of the
Securities Acts of 1933, as amended, and the rules and regulations thereunder or
a distribution thereof in violation of any applicable securities laws.

                                   ARTICLE VI
                              DELIVERIES AT CLOSING

         6.01 Deliveries to Seller. Crestar and Buyer shall deliver or cause to
be delivered at Closing to Seller and all of the following, any one or more of
which may be waived in writing in whole or in part by Seller:

                   (a) Purchase Price. The Preliminary Purchase Price, no later
         than 4:00 p.m., Houston, Texas time, on the Closing Date, by wire
         transfer of immediately available funds to the account specified in
         Schedule 6.01(a) (the "Designated Account");

                   (b) Officers' Certificate. A certificate dated as of the
         Closing Date and signed by the Secretary or any Assistant Secretary of
         each of Crestar and Buyer, certifying the accuracy and completeness of
         the copies of, as well as the current effectiveness of, the resolutions
         to be attached thereto of the Board of Directors (or any committee
         thereof) of Crestar and

                                      -23-
<PAGE>   29

         Buyer, respectively, authorizing the execution, delivery and
         performance of this Agreement and the consummation of the transactions
         contemplated herein, as well as to the incumbency of the officers
         executing this Agreement and any other documents required to be
         delivered at Closing pursuant to this Agreement;

                   (c) Legal Opinions. Legal opinions addressed to CMS and
         Seller from legal counsel of Crestar and Buyer in the forms attached
         hereto as Schedule 6.01(c);

                   (d) Notification Letter. A letter executed by Buyer to the
         appropriate Governmental Authorities (the "Notification Letter")
         notifying them that:

                           (i) Buyer will acquire the Shares of the Company,
                  which is a party to the Block 16 consortium;

                           (ii) the Company will change its name;

                           (iii) although there will be no transfer of rights
                  under the Subject Contracts, there is a change of control of
                  the Company which is party to the Subject Contracts and,
                  therefore, both CMS and Crestar are willing to pay a transfer
                  charge equal to the "transfer fees" that would have been
                  payable pursuant to a transfer of rights under the Subject
                  Contracts; and

                           (iv) the parent company guarantee issued by CMS on
                  November 14, 1996 will be replaced by a guarantee issued by
                  Crestar;

                  (e) Crestar Guarantee. An original of the Crestar Guarantee
         duly executed by Crestar, as required pursuant to Section 8.03;

                  (f) Payment Instructions. The instruction letters duly
         executed by the Buyer and the Company as required pursuant to Section
         8.10; and

                  (g) Other. Any other documents required to be delivered by
         Crestar or Buyer at Closing pursuant to the terms of this Agreement.

         6.02 Deliveries to Buyer. CMS and Seller shall deliver or cause to be
delivered at Closing to Buyer all of the following, any one or more of which may
be waived in writing in whole or in part by Crestar and Buyer:

                  (a) Share Certificates. With respect to the Shares, one or
         more stock certificates representing such Shares, duly endorsed for
         transfer to Buyer or accompanied by stock powers duly executed in
         blank;

                  (b) Officers' Certificate. A certificate dated as of the
         Closing Date and signed by the Secretary or an Assistant Secretary of
         each of CMS and Seller, certifying the accuracy and completeness of the
         copies of, as well as the current effectiveness of, the resolutions to
         be attached thereto of the Board of Directors (or any committee
         thereof) of CMS and Seller, respectively, and any necessary shareholder
         authorization of Seller authorizing the execution,

                                      -24-
<PAGE>   30

         delivery and performance of this Agreement and the consummation of the
         transactions contemplated herein, as well as to the incumbency of the
         officers executing this Agreement on behalf of CMS and Seller and any
         other documents required to be delivered at Closing pursuant to this
         Agreement;

                  (c) Resolutions and Resignations. The following items: (i) a
         resolution of the Board of Directors of the Company appointing the
         nominees of Buyer as new directors, such appointment to take effect as
         of the close of business on the Closing Date, and revoking all
         outstanding powers of attorney to act for the Company, other than the
         power of attorney of Dr. Francisco Roldan Cobo and Dr. Jose M. Perez
         A., and (ii) the resignations, effective as of the close of business on
         the Closing Date, of all of the members of the Board of Directors and
         all officers of the Company and of the Persons having signatory
         authority over the bank accounts listed on Schedule 4.24;

                  (d) Legal Opinions. Legal opinions addressed to Crestar and
         Buyer from Vinson & Elkins, L.L.P. and other legal counsel (Cayman and
         Ecuador) for CMS, Seller and the Company, in the forms attached hereto
         as Schedule 6.02(d);

                  (e) Charter Documents. A certificate dated as of the Closing
         Date and signed by the Secretary or Assistant Secretary of the Company
         certifying that attached thereto are true, correct and complete copies
         of the charter and related documents for the Company as amended as of
         the Closing Date and that no action to further amend such documents or
         to dissolve the Company has occurred;

                  (f) Notification Letter. An original of the Notification
         Letter executed by Seller, and a notice letter, in a form reasonably
         acceptable to the Parties, notifying YPF-Repsol, OPIC and Murphy-Canam
         of the sale of the Company;

                  (g) Termination of Contracts. Evidence reasonably satisfactory
         to Crestar and Buyer that CMS and Seller have terminated or released
         the leases, agreements and other contracts listed on Schedule 4.06(c)
         at no cost to the Company;

                  (h) Financial Matters. A certificate dated as of the Closing
         Date and signed by the chief financial officer of each of CMS and
         Seller certifying to (i) any cash amounts contributed by Seller to the
         Company during the Adjustment Period, and (ii) the amount of any cash
         dividends or distributions by the Company to Seller during the
         Adjustment Period;

                  (i) Operator Responses. Copies of each written request for
         information to the Operator relating to this Agreement and the response
         of the Operator thereto; and

                  (j) Other. All other documents required to be delivered by CMS
         or Seller at Closing pursuant to terms of this Agreement.

                                      -25-
<PAGE>   31

                                  ARTICLE VII
                                   TAX MATTERS

         7.01     Preparation and Filing of Tax Returns.

                  (a) Seller shall prepare all Tax Returns of the Company to be
         filed for any period prior to the Effective Date including, but not
         limited to the Tax Returns to be filed in Ecuador for calendar year
         1999. CMS and Seller have filed the 1999 Tax Returns for the Company
         and CMS and Seller have delivered to Crestar and Buyer a copy of such
         Tax Returns. If the aggregate amount of Tax due exceeds the amount
         reflected on such Tax Returns, CMS and Seller shall pay to Crestar and
         Buyer the amount of such excess Tax not less than five days following
         written notice to CMS and Seller of payment by the Company of such
         excess Tax (together with reasonable supporting documentation). Crestar
         and Buyer shall prepare the Tax Returns to be filed in Ecuador by the
         Company for calendar year 2000, subject to the provisions of Section
         7.01(b). Crestar and Buyer shall be solely responsible for all Taxes of
         the Company for calendar year 2000.

                  (b) Any Tax Return to be prepared pursuant to the provisions
         of this Article VII shall be prepared in a manner consistent with
         practices followed in prior years with respect to similar Tax Returns,
         except for changes required by changes in Law.

                  (c) Crestar and Buyer shall not take any action, or allow the
         Company to take any action, on or after the Closing Date, that would
         increase the liability of CMS and Seller or its direct or indirect
         shareholders for Taxes during the period of time prior to or ending on
         the Closing Date. Neither CMS nor Seller shall take any action that
         would increase the liability of the Company or Crestar and Buyer for
         Taxes during the period of time following the Closing Date.

         7.02 Access to Information.

                  (a) CMS and Seller shall grant to Crestar and Buyer (or their
         designees) access at all reasonable times to all of the information,
         books and records relating to the Company within the possession of CMS
         and Seller (including work papers and correspondence with taxing
         authorities), and shall afford Buyer (or its designees) the right (at
         Crestar's and Buyer's expense) to take extracts therefrom and to make
         copies thereof, to the extent reasonably necessary to permit Crestar
         and Buyer (or their designees) to prepare Tax Returns, to conduct
         negotiations with, to implement the provisions of, and to investigate,
         prosecute, or defend any claim, suit or proceeding relating to Tax.

                  (b) Crestar and Buyer shall grant or cause the Company to
         grant to CMS and Seller (or their designees) access at all reasonable
         times to all of the information, books and records relating to the
         Company within the possession of Crestar, Buyer or the Company
         (including work papers and correspondence with Tax authorities), and
         shall afford Seller (or their designees) the right (at CMS' and
         Seller's expense) to take extracts therefrom and to make copies
         thereof, to the extent reasonably necessary to permit CMS and Seller
         (or their designees) to prepare Tax Returns, to conduct negotiations
         with Tax authorities, and to

                                      -26-
<PAGE>   32

         implement the provisions of, or to investigate or defend any claims
         between the Parties arising under, this Agreement.

                  (c) Each of the Parties will preserve and retain all
         schedules, work papers and other documents relating to any Tax Returns
         of or with respect to the Company or to any claims, audits or other
         proceedings affecting the Company until the expiration of the statute
         of limitations (including extensions) applicable to the taxable period
         to which such documents relate or until the final determination of any
         controversy with respect to such taxable period, and until the final
         determination of any payments that may be required with respect to such
         taxable period under this Agreement.

                  (d) Each of the Parties shall cooperate with each other in the
         conduct of any audit or other similar proceedings and each shall
         execute and deliver such powers of attorney and other documents as are
         necessary to carry out this intent. Each of the Parties, shall each
         promptly give written notice to the others of any examination, audit,
         inquiry, or proposed or actual assessment by a Governmental Authority
         covering any potential liability for Taxes where a right may exist of
         one Party to demand payment for such Tax from, or be indemnified by,
         the other Party.

         7.03 Indemnification by CMS and Seller. CMS and Seller hereby agree,
jointly and severally, to protect, defend, indemnify and hold harmless Buyer and
the Company from and against, and agrees to pay, (i) any Taxes of the Company
attributable to the time period prior to the Effective Date, and (ii) any Taxes
of Seller and of any entity (other than the Company) that is or was an Affiliate
of Seller at any time on or prior to the Closing Date. Notwithstanding anything
to the contrary in this Agreement, no claim shall be permitted under this
Section 7.03 unless such claim is first made on or prior to the expiration of
three (3) years from the date of filing the Ecuadorian income Tax Return for the
Company for the year ended December 31, 1999. Notwithstanding anything to the
contrary in this Agreement, no claim shall be permitted under this Section 7.03
to the extent such claim relates to or arises in connection with a Purchase
Price Adjustment Matter.

         7.04 Buyer Indemnification. Crestar and Buyer hereby, jointly and
severally, agree to protect, defend, indemnify and hold harmless Seller from and
against, and agrees to pay (i) any Taxes of the Company attributable to the time
period on or after the Effective Date, and (ii) any liability arising from a
breach by Buyer of its covenants in Section 7.01(b) or (c).

         7.05 Indemnification Procedures.

                  (a) If a claim shall be made by any Tax authority that, if
         successful, would result in the indemnification of a party under this
         Agreement (referred to herein as the "Tax Indemnified Party"), the Tax
         Indemnified Party shall promptly notify the party obligated under this
         Agreement to so indemnify (referred to herein as the "Tax Indemnifying
         Party") in writing of such fact.

                  (b) The Tax Indemnified Party shall take such action in
         connection with contesting such claim as the Tax Indemnifying Party
         shall request in writing from time to time, including the selection of
         counsel and experts and the execution of powers of attorney; provided
         that (i) within 30 days after the notice described in Section 7.05(a)
         has been

                                      -27-
<PAGE>   33

         delivered (or such earlier date that any payment of Taxes is due by the
         Tax Indemnified Party but in no event sooner than 5 days after the Tax
         Indemnifying Party's receipt of such notice), the Tax Indemnifying
         Party requests that such claim be contested, (ii) the Tax Indemnifying
         Party shall have agreed to pay to the Tax Indemnified Party all costs
         and expenses that the Tax Indemnified Party incurs in connection with
         contesting such claim, including, without limitation, reasonable
         attorneys' and accountants' fees and disbursements, and (iii) if the
         Tax Indemnified Party is requested by the Tax Indemnifying Party to pay
         the Tax claimed and sue for a refund, the Tax Indemnifying Party shall
         have advanced to the Tax Indemnified Party, on an interest-free basis,
         the amount of such claim. The Tax Indemnified Party shall not make any
         payment of such claim for at least 30 days (or such shorter period as
         may be required by applicable Law) after the giving of the notice
         required by Section 7.05(a), shall give to the Tax Indemnifying Party
         any information reasonably requested relating to such claim, and
         otherwise shall cooperate with the Tax Indemnifying Party in good faith
         in order to contest effectively any such claim.

                  (c) Subject to the provisions of Section 7.05(b), the Tax
         Indemnified Party shall only enter into a settlement of such contest
         with the applicable taxing authority or prosecute such contest to a
         determination in a court or other tribunal of initial or appellate
         jurisdiction as instructed by the Tax Indemnifying Party.

                  (d) If, after actual receipt by the Tax Indemnified Party of
         an amount advanced by the Tax Indemnifying Party pursuant to Section
         7.05(b)(iii), the extent of the liability of the Tax Indemnified Party
         with respect to the claim shall be established by the final judgment or
         decree of a court or other tribunal or a final and binding settlement
         with an administrative agency having jurisdiction thereof, the Tax
         Indemnified Party shall promptly repay to the Tax Indemnifying Party
         the amount advanced to the extent of any refund received by the Tax
         Indemnified Party with respect to the claim together with any interest
         received thereon from the applicable taxing authority and any recovery
         of legal fees from such taxing authority, net of any Taxes as are
         required to be paid by the Tax Indemnified Party with respect to such
         refund, interest or legal fees (calculated at the maximum applicable
         statutory rate of Tax without regard to any other Tax Items).
         Notwithstanding the foregoing, the Tax Indemnified Party shall not be
         required to make any payment hereunder before such time as the Tax
         Indemnifying Party shall have made all payments or indemnities then due
         with respect to the Tax Indemnified Party pursuant to this Agreement.

         7.06 Conflict. In the event of a conflict between the provisions of
this Article VII and any other provisions of this Agreement, this Article VII
shall control.

                                  ARTICLE VIII

             ADDITIONAL AGREEMENTS OF CRESTAR, BUYER, CMS AND SELLER

         8.01 Adjustments to Purchase Price. The Purchase Price shall be
adjusted in accordance with this Section 8.01 and Section 8.02 to reflect
certain agreements of the Parties as well as to reflect the concept that
revenues and operating expenses attributable to the Company prior to the
Effective Date are for the account of Seller and that revenues and operating
expenses attributable to

                                      -28-
<PAGE>   34

the Company after the Effective Date are for the account of Buyer. The Purchase
Price shall be (i) increased by any cash amounts contributed by Seller to the
Company during the Adjustment Period, (ii) decreased by the amount of any cash
dividends or distributions by the Company to CMS, Seller or any Affiliate of CMS
during the Adjustment Period, (iii) increased by the amount of US$2,567,082
(representing an adjustment with respect to the Balance Sheet Items), (iv)
decreased by US$2,927,400 (representing an adjustment with respect to the
Quality Differential Matters) and (v) decreased by US$599,994 (representing an
adjustment with respect to the Environmental Tax Matters).

         8.02 Settlement Statement.

                  (a) Within 90 days following the Closing Date, or as soon
         thereafter as possible, Seller shall prepare and deliver to Buyer a
         statement (the "Settlement Statement") setting forth (x) adjustments to
         the Purchase Price pursuant to clauses (i) and (ii) of Section 8.01 and
         showing the calculations thereof and (y) adjustments such that the
         Purchase Price shall be increased by any revenues received by and
         refunds or reductions in expenses of the Company after the Closing Date
         and attributable to the period prior to the Effective Date, and
         decreased by any operating expenses or capital expenditures payable and
         reductions in revenues receivable by the Company after the Closing Date
         and incurred in the ordinary course of the Business during the period
         prior to the Effective Date, and showing the calculations thereof;
         provided, however, that the adjustments described in this clause (y)
         shall include only incremental or decremental changes, as applicable,
         to the Balance Sheet Items.

                  (b) Within 10 days after Buyer's receipt of the proposed
         Settlement Statement, Buyer shall deliver to Seller a written report
         containing any changes that Buyer proposes to be made to such proposed
         Settlement Statement. The Parties shall undertake in good faith to
         agree on the Settlement Statement no later than 120 days after the
         Closing Date; provided, if Buyer and Seller shall be unable to agree on
         and Settlement Statement within such 120-day period, unless the Parties
         otherwise agree, the public accounting firm of Arthur Andersen LLC, or
         such other nationally recognized public accounting firm mutually
         acceptable to Buyer and Seller, shall be engaged to make its
         determination of the amount in dispute (and only such amount). Buyer
         and Seller shall each bear and pay one-half of the fees and other costs
         charged by such accounting firm.

                  (c) If any accounting firm is engaged as provided in Section
         8.02(b), Seller and Buyer agree to provide such accounting firm with
         all books, records and other information relevant to the determination
         of the amount in dispute. Such accounting firm shall be instructed to
         use a materiality standard as such firm may determine to be reasonable
         under the circumstances, in light of the cost to be incurred and the
         amount in issue. Such accounting firm shall be instructed to make such
         calculations as soon as practicable, and in any event within 15
         Business Days after the submission of such matter to such firm. The
         final determination of any of the aforesaid components of the Purchase
         Price pursuant to this Section 8.02(c) shall be binding on the Parties.

                  (d) The amount of the difference between the Preliminary
         Purchase Price paid by Buyer to Seller at the Closing and the Purchase
         Price as determined in accordance with this

                                      -29-
<PAGE>   35

         Section 8.02 (the "Adjusted Purchase Price"), shall be paid within five
         Business Days after its final determination by wire transfer in
         immediately available funds. Seller shall pay such amount to Buyer if
         the Preliminary Purchase Price paid exceeds the Adjusted Purchase
         Price. Buyer shall pay such amount to Seller if the Preliminary
         Purchase Price paid is less than the Adjusted Purchase Price. The
         Adjusted Purchase Price paid pursuant to this Section 8.02(d) shall be
         the final Purchase Price, and there shall be no further adjustment of
         the Purchase Price. Provided, however, that, for the avoidance of
         doubt, the preceding sentence shall not limit the indemnity obligations
         of the Parties under Article VII and Article IX.

         8.03 Replacement Guarantee.

         (a) On the Closing Date, Crestar shall deliver to CMS two executed
guarantees of Crestar in the forms required of the parent company of the Company
pursuant to the Subject Contracts (collectively, the "Crestar Guarantee"), to be
used in replacement for the two guarantees issued by CMS on 14 November 1996
(collectively, the "CMS Guarantee"). CMS, Buyer and Crestar shall use all
Reasonable Efforts to obtain from the relevant Governmental Authority (i) an
unconditional release of the CMS Guarantee, and (ii) an acknowledgement of the
change of control of the Company. CMS shall use Reasonable Efforts to assist
Buyer and Crestar in changing the name of the Company, as contemplated by
Section 8.06.

         (b) CMS shall send a facsimile copy of the Crestar Guarantee to its
local counsel in Ecuador with instructions to such local counsel to attempt to
deliver such copy to the appropriate Governmental Authorities on the Closing
Date. The original of the Crestar Guarantee shall be sent by messenger to CMS'
local counsel in Ecuador. CMS shall instruct its local counsel in Ecuador to use
all Reasonable Efforts, in coordination with the Buyer's local counsel in
Ecuador, to deliver the original Crestar Guarantee to the appropriate
Governmental Authorities and to obtain an acknowledgement of such Governmental
Authorities that the CMS Guarantee has been released and that a change of
control has occurred with respect to the Company.

         (c) Until such release has been delivered to CMS and its Affiliates,
Buyer and Crestar, jointly and severally, shall indemnify CMS, Seller and their
Affiliates from and against any and all Losses resulting from claims relating to
or arising in connection with the CMS Guarantee (including, without limitation,
Losses resulting from such claims brought by any Governmental Authority or any
of the other parties to the Subject Contracts); provided, however, that no such
indemnification shall be available with respect to a matter that would have been
covered by Section 9.01(a)(iii) but for the fact that there was no Third Party
Claim asserted against a Buyer Indemnified Party. Upon request from CMS or
Seller, Buyer and Crestar shall deliver to CMS and Seller a document reasonably
satisfactory to CMS and Seller further evidencing such indemnification
obligations of Crestar and Buyer hereunder.

         8.04 Preservation of Books and Records; Access. For a period of seven
(7) years after the Closing Date, Crestar and Buyer shall (a) preserve and
retain the Records and all other corporate, accounting, legal, auditing and
other books and records of the Company (including, without limitation, any
documents relating to any governmental or non-governmental actions, suits,
proceedings or investigations) relating to the conduct of the business and
operations of the Company prior to the Closing Date and (b) cause the Company to
permit CMS and Seller and their authorized representatives to have reasonable
access thereto and to meet with employees of Crestar, Buyer and

                                      -30-
<PAGE>   36

the Company on a mutually convenient basis in order to obtain additional
information and explanations with respect to Records. Notwithstanding the
foregoing, during such seven-year period, Crestar, Buyer and the Company may
dispose of any such Records, which are offered to, but not accepted by, Seller.

         8.05 Further Assurances. After the Closing, CMS, Seller, Crestar and
Buyer will take all appropriate action and execute any documents or instruments
of any kind that may be reasonably necessary to effectuate the intent of this
Agreement. Without limiting the foregoing, CMS and Seller shall use their
Reasonable Efforts to assist Crestar and Buyer in obtaining any required
approvals by any Ecuadorian Governmental Authority for the transfer of Shares
contemplated by this Agreement.

         8.06 Change of Name. Within 90 days following the Closing Date or as
soon thereafter as practicable, Crestar and Buyer shall cause the Company to
change its name in the Cayman Islands and, thereafter, use their Reasonable
Efforts to cease using the name "CMS" in its name in Ecuador or in any way in
connection with the business of Crestar, Buyer, the Company or any of their
Affiliates and to register such name change as may be required by applicable
Law. Crestar and Buyer, jointly and severally, shall protect, defend and
indemnify the Seller Indemnified Parties from and against any Losses arising out
of the use of the word "CMS" as part of the name of the Company or in connection
with the Business.

         8.07 Press Releases. Subject to applicable securities laws or stock
exchange requirements, the Parties hereto shall promptly advise and consult with
one another before issuing, or permitting any of their respective directors,
officers, employees, agents or Affiliates to issue, any press release with
respect to this Agreement or the transactions contemplated hereby. Without
limiting the foregoing and subject to applicable securities laws or stock
exchange requirements, the initial press release with respect to this Agreement
or the transactions contemplated by this Agreement shall be subject to
discussion by the Parties prior to its release.

         8.08 Insurance. Crestar and Buyer acknowledge that no insurance
coverage or policy maintained by CMS, Seller or their Affiliates will extend
beyond the Closing for the benefit of the Company, Crestar or Buyer.

         8.09 Capacity. Crestar and Buyer will cause the Company to have
sufficient administrative, technical or financial capability to perform its
obligations under the Company Material Contracts.

         8.10 Certain Receivables.

         (a) At the Closing, Buyer will deliver to the Operator (i) written
instructions, in a form reasonably acceptable to Seller, directing the Operator
to pay to Seller directly any and all proceeds resulting from any adjustment
paid in furtherance of the audit of Joint Operating Agreement revenues and
expenses for the period prior to the Effective Date and (ii) with respect to the
items set forth on Schedule 8.10, written instructions, in forms reasonably
acceptable to Seller, directing the Operator to pay to Seller directly any and
all proceeds resulting from any payment with respect to the items set forth on
Schedule 8.10 (regardless of the amounts set forth in Schedule 8.10, the Parties
recognizing that the amounts set forth in Schedule 8.10 are merely estimates).

                                      -31-
<PAGE>   37

         (b) Following payment of an indemnification claim pursuant to Article
IX by CMS or Seller and upon request from CMS or Seller, Crestar, Buyer and the
Company (i) will assign to CMS and Seller any rights it may have with respect to
any and all proceeds representing refunds, credits, offsets or other items of
value received from Third Parties attributable to the Indemnified Losses giving
rise to such indemnification claim payment, (ii) will, to the fullest extent
permissible under applicable law, assign to CMS and Seller any and all rights,
claims, counterclaims or causes of action against Third Parties with respect to
the matter covered by such indemnification claim, (iii) will join an action
initiated by any of the other parties to the Subject Contracts against any Third
Party with respect to the matter covered by such indemnification claim (provided
that, (x) CMS and Seller shall be responsible for the out-of-pocket costs and
expenses of Crestar, the Buyer or the Company with respect to any such action,
(y) CMS shall have the right to select the legal counsel for any such action,
and (z) if Crestar, Buyer or the Company desire to have additional legal counsel
with respect to such action, it may do so at its sole cost and expense) and (iv)
will deliver to the Operator written instructions, in a form reasonably
acceptable to Seller, directing the Operator to pay to Seller directly any and
all proceeds representing a refund of or offset from Third Parties attributable
to the Indemnified Losses giving rise to such indemnification claim payment. In
the event Crestar, Buyer or the Company is to receive the proceeds described in
this Section 8.10 from a Third Party other than the Operator, upon request from
CMS or Seller, Crestar, Buyer or the Company (as applicable) will deliver the
instructions described above to such other Third Party. In addition, Buyer will
cause the Company to wire transfer in immediately available funds to Seller
promptly upon receipt any and all proceeds received by the Company with respect
to the items described in this Section 8.10. Any payments by the Company to the
Seller under this Section 8.10 shall not constitute adjustments to the Purchase
Price and shall be made to the Designated Account.

         (c) Following payment by Crestar or Buyer to CMS or Seller of an
indemnification claim pursuant to Article IX, Seller or CMS, as applicable, will
wire transfer in immediately available funds to Buyer promptly upon receipt any
and all proceeds received by CMS or Seller from Third Parties as refunds or
reimbursements attributable to the indemnification claim payment made by Crestar
or Buyer. If, after the Closing Date, CMS or Seller receive proceeds of the
Company that are not attributable to the matters described in Schedule 8.10 (or
otherwise attributable to the account of CMS or the Seller under this
Agreement), it shall wire transfer in immediately available funds to the Company
such amounts promptly upon receipt of the same.

         8.11 OCP Project. Crestar and Buyer acknowledge that, other than the
representation and warranty contained in Section 4.06(f), (i) CMS and Seller
make no representation or warranty with respect to the OCP Agreements or the OCP
Project, and (ii) matters relating to the OCP Agreements and/or the OCP Project
shall not constitute a breach by CMS or Seller of any of their representations
or warranties contained in this Agreement.

         8.12 Amato Interest. Buyer shall use its Reasonable Efforts to cause
the Operator to provide to the Company sufficient information in order to enable
CMS to perform all obligations with respect to the Amato Interest (including,
without limitation, any and all production reports, sales reports,
transportation and lifting reports and cost reports), and Buyer shall cause the
Company to provide to CMS such information as is provided by the Operator.
Crestar shall cause any transferee of the shares of the Company (whether through
sale, merger, transfer or other disposition) to comply with the obligations set
forth in this Section 8.12. CMS and Seller shall hold such information strictly
confidential and, without the prior written consent of the Company, shall not

                                      -32-
<PAGE>   38

disclose such information to any Third Parties, except (i) to the extent
necessary to perform the obligations with respect to the Amato Interest, or (ii)
as required by applicable law, regulation, or judicial or regulatory process.
Subject to Buyer causing Company to comply with its obligations in the first
sentence of this Section 8.12, CMS and Seller shall release Crestar, Buyer and
the Company from any and all liability in connection with the Amato Interest.
Within 10 Business Days after the Closing Date, Crestar and Buyer shall cause
the Company to enter into an agreement with CMS and the Seller, in a form
reasonably acceptable to the Parties, that requires the Company to comply with
the obligations set forth in this Section 8.12 and further requires that such
obligation shall be binding upon any transferee of all or any part of the
interests in the Subject Contracts.]

         8.13 Intercompany Accounts. Seller shall cause all intercompany
accounts between the Company and the Seller or between the Company and any of
Seller's Affiliates to be settled in a manner reasonably satisfactory to Crestar
and Buyer such that the Company has no further rights or obligations with
respect to such accounts as of the Closing Date.

         8.14 Confidentiality Agreements. Within 30 days following the Closing,
CMS shall cause each of the Confidentiality Agreements (other than the agreement
executed by Crestar) pertaining to the sale by Seller of the Company, which
agreements are listed on Schedule 8.14, to be assigned from Seller or the
relevant Affiliates of Seller, as applicable, to Buyer.

         8.15 Standby Letter of Credit

         (a) Within 10 Business Days following the Closing Date, CMS shall
provide to Crestar a standby letter of credit in a form reasonably acceptable to
the Parties, in the amount of US $5,000,000, which shall be maintained in effect
until May 26, 2002, from a financial institution reasonably acceptable to CMS
and Crestar (the "Letter of Credit"). The Parties agree that CMS and Crestar
shall each bear one-half of the costs of obtaining and maintaining the Letter of
Credit. Except as otherwise provided in Section 8.15(b) or (c), the Letter of
Credit may only be drawn upon by the Company, Buyer or Crestar to satisfy claims
under Section 9.01(a)(v) or 9.01(a)(vi) in the amount specified in any joint
written instructions executed by both CMS and Crestar.

         (b) In the case of claims under Section 9.01(a)(v), the Letter of
Credit may be drawn down upon in the amount specified (up to the amount of the
outstanding balance of the Letter of Credit) in a sworn written statement
executed by Crestar, in the form set forth in Schedule 8.15(b), which includes
the following statements:

                  (i) as a result of a claim by any Governmental Authority,
         payments have been made to a Governmental Authority by both the
         Operator, for its own account, and by, or on behalf of, the Company,
         Buyer or Crestar, for SOTE Pipeline transportation tariff adjustments
         or charges which relate to transportation through the SOTE Pipeline
         prior to the Effective Date;

                  (ii) a Claim Notice (or, if applicable, a Supplemental Claim
         Notice) provided in accordance with Sections 9.01(b)(ii) and 9.02(b)
         has been delivered by Crestar to CMS;

                                      -33-
<PAGE>   39

                  (iii) the Losses described in the Claim Notice (or, if
         applicable, the Supplemental Claim Notice) are covered by the indemnity
         obligations of CMS under Section 9.01(a)(v); and

                  (iv)     one of the following:

                           (A) CMS has failed to respond to the Claim Notice
                  (or, if applicable, the Supplemental Claim Notice) in
                  accordance with the time requirements of Section 9.02(d)(i),
                  in which case Crestar is entitled to draw down the entire
                  Claimed Amount;

                           (B) CMS has agreed in writing to the Claimed Amount,
                  but failed to timely make payment of the entire Claimed Amount
                  to Crestar pursuant to Section 9.02(d)(i)(A), in which case
                  Crestar is entitled to draw down the unpaid portion of the
                  Claimed Amount;

                           (C) CMS has failed to timely make payment of the
                  entire Undisputed Amount (as reflected in the Response Notice)
                  to Crestar pursuant to Section 9.02(d)(i)(C), in which case
                  Crestar is entitled to draw down the unpaid portion of the
                  Undisputed Amount;

                           (D) CMS has agreed in writing to make payments on the
                  Deferred Claimed Amount pursuant to Section 9.02(d)(i)(B) or
                  9.02(d)(i)(C), but has failed to timely make payment of the
                  entire Deferred Claimed Amount pursuant to Section
                  9.02(d)(i)(B) or 9.02(d)(i)(C), in which case Crestar is
                  entitled to draw down the unpaid portion of the Deferred
                  Claimed Amount that CMS failed to pay; or

                           (E) an Expert's Decision has been reached, and CMS
                  has failed to timely pay to Crestar the entire Expert's Amount
                  in accordance with the provisions of Section 9.02(d)(ii)(B),
                  in which case Crestar is entitled to draw down the unpaid
                  portion of the Expert's Amount in accordance with the Expert's
                  Decision.

In the case of a draw down under either Section 8.15(b)(iv)(B), (b)(iv)(C) or
(b)(iv)(D), Crestar shall be required to include a copy of the Response Notice
executed by CMS in its written statement. In the case of a draw down under
Section 8.15(b)(iv)(E), Crestar shall be required to include a copy of the
Expert's Decision in its written statement.

         (c) In the case of claims under Section 9.01(a)(vi), the Letter of
Credit may be drawn down upon in the amount specified (up to the amount of the
outstanding balance of the Letter of Credit) in a sworn written statement
executed by Crestar, in the form set forth in Schedule 8.15(c), which states:

         (i) a Claim Notice provided in accordance with Sections 9.01(b)(ii) and
9.02(c) has been delivered to CMS;

         (ii) the Losses described in the Claim Notice are covered by the
indemnity obligations of CMS under Section 9.01(a)(vi); and

                                      -34-
<PAGE>   40

         (iii)    one of the following:

                  (A) CMS has failed to respond to the Claim Notice in
         accordance with the time requirements of Section 9.02(d), in which case
         Crestar is entitled to draw down the entire Claimed Amount;

                  (B) CMS has agreed in writing to the Claimed Amount, but
         failed to timely make payment of the entire Claimed Amount to Crestar
         pursuant to Section 9.02(d)(i)(A), in which case Crestar is entitled to
         draw down the unpaid portion of the Claimed Amount,

                  (C) CMS has failed to timely make payment of the entire
         Undisputed Amount (as reflected in the Response Notice) to Crestar
         pursuant to Section 9.02(d)(i)(C), in which case Crestar is entitled to
         draw down the unpaid portion of the Undisputed Amount, or

                  (D) an Expert's Decision has been reached, and CMS has failed
         to timely pay to Crestar the Expert's Amount in accordance with the
         provisions of Section 9.02(d)(ii)(B), in which case Crestar is entitled
         to draw down the Expert's Amount.

In the case of a draw down under either Section 8.15(c)(iii)(B) or (c)(iii)(C),
Crestar shall be required to include a copy of the Response Notice executed by
CMS in its written statement. In the case of a draw down under Section
8.15(c)(iii)(D), Crestar shall be required to include a copy of the Expert's
Decision in its written statement.

         8.16 CMS Financial Information. For each of calendar years 2000, 2001,
2002, 2003 and 2004, CMS shall provide to Crestar a copy of the audited CMS
annual report within 30 days following the finalization of such report.

                                   ARTICLE IX
             INDEMNIFICATION; SCOPE OF REPRESENTATIONS; LIMITATIONS

         9.01     Indemnification.

                  (a) Subject to Sections 9.01(b) and (e), CMS and Seller,
         jointly and severally, agree to indemnify, defend and hold harmless the
         Buyer Indemnified Parties from and against any and all Indemnified
         Losses resulting from or arising out of any of the following:

                           (i) any breach of any of the representations and
                  warranties of CMS or Seller contained in this Agreement or in
                  any document or instrument required to be executed pursuant to
                  this Agreement;

                           (ii) any breach of any covenant of CMS or Seller
                  contained in this Agreement or in any document or instrument
                  required to be executed pursuant to this Agreement;

                                      -35-
<PAGE>   41

                           (iii) any Third Party Claim in respect of the
                  ownership of the Company or the operation of the Business that
                  results from operations of the Business prior to the Effective
                  Date, notice of which was received by the Company after the
                  Closing Date, and of which Crestar or the Buyer did not have
                  Knowledge on or before the Closing Date;

                           (iv) the Amato Interest or Plan B;

                           (v) any claim or demand by any Governmental
                  Authority, or through the Operator, with respect to amounts
                  paid by, or on behalf of, the Company, Buyer or Crestar for
                  SOTE Pipeline transportation tariff adjustments or charges,
                  which relate to transportation through the SOTE Pipeline prior
                  to the Effective Date, up to a maximum aggregate amount of US$
                  6,000,000;

                           (vi) the difference, if any, between (x) the amounts
                  paid by, or on behalf of, the Company, Buyer or Crestar to any
                  Governmental Authority, or through the Operator (with respect
                  to the Company's interest in the Subject Contracts as of the
                  Closing Date) pursuant to the SOTE II Agreement and the
                  Shushufindi Agreement (but not pursuant to any amended terms
                  thereof) up to a maximum aggregate amount of US$ 4,760,000,
                  and (y) the SOTE II/Shushufindi Credit, plus simple interest
                  on the amount of such difference as of 18 February 2002 at the
                  rate of 8% per annum, calculated from the Closing Date until
                  such amount is paid; or

                           (vii) the matter described in item 1 of Schedule
                  4.10.

                  (b) Notwithstanding anything to the contrary in Section
         9.01(a), in no event shall any amounts be recovered from CMS or Seller:

                           (i) relating to or arising in connection with any of
                  the Purchase Price Adjustment Matters;

                           (ii) for any matter under Section 9.01(a) for which a
                  written notice of claim specifying in reasonable detail the
                  specific nature of and specific basis of the Losses and the
                  estimated amount of such Indemnified Losses ("Claim Notice")
                  is not delivered to CMS and Seller prior to the expiration of
                  the Applicable Limitations Period, and the indemnities granted
                  by CMS and Seller in Section 9.01(a)(i), (iii), (v) and (vi)
                  shall terminate on such date. The indemnities shall survive
                  with respect only to each specific matter that is the subject
                  of any Claim Notice delivered in good faith in compliance with
                  the requirements of this Section 9.01(b)(ii) until the earlier
                  to occur of (x) the date on which a final non-appealable
                  resolution of the matter described in such Claim Notice has
                  been reached or (y) the date on which the matter described in
                  such Claim Notice has otherwise reached final resolution or
                  settlement;

                           (iii) under Section 9.01(a) for any Tax Claim,
                  Buyer's exclusive remedy for any Tax Claim being set forth in
                  Article VII;

                                      -36-
<PAGE>   42

                           (iv) for any Indemnified Losses resulting from
                  matters described in Section 9.01(a)(i) until the aggregate
                  amount of Indemnified Losses incurred by the Buyer Indemnified
                  Parties in respect of all matters giving rise to such
                  Indemnified Losses exceeds individually or in the aggregate
                  $1,000,000 in which event CMS and Seller, subject to the other
                  provisions of this Section 9.01(b), will be obligated to
                  indemnify the Buyer Indemnified Parties for the full amount of
                  such Indemnified Losses; provided, however, such threshold
                  shall not apply to a breach of Sections 4.01, 4.02, 4.03,
                  4.11, 4.14, 4.19, or 4.22;

                           (v) for any Indemnified Losses resulting from matters
                  described in Section 9.01(a)(i), (ii) or (iii) to the extent
                  such Indemnified Losses relate to or arise in connection with
                  the matters described in Section 9.01(a)(v), it being the
                  intention of the Parties that any indemnification obligations
                  of CMS and the Seller with respect to the matters described in
                  Section 9.01(a)(v) be governed exclusively pursuant to Section
                  9.01(a)(v);

                           (vi) for any Indemnified Losses resulting from
                  matters described in Section 9.01(a)(i), (ii) or (iii) to the
                  extent such Indemnified Losses relate to or arise in
                  connection with the matters described in Section 9.01(a)(vi),
                  it being the intention of the Parties that any indemnification
                  obligations of CMS and the Seller with respect to the matters
                  described in Section 9.01(a)(vi) be governed exclusively
                  pursuant to Section 9.01(a)(vi); and

                           (vii) for any Indemnified Losses resulting from
                  matters described in Section 9.01(a)(i) or (iii) that in the
                  aggregate exceed $55,000,000. For the avoidance of doubt, the
                  limitation described in this Section 9.01(b)(vii) permits a
                  maximum possible recovery by the Buyer Indemnified Parties
                  under Section 9.01(a)(i) and (iii) of an aggregate amount
                  equal to $55,000,000.

                  (c) Subject to Sections 9.01(d) and (e), Crestar and Buyer,
         jointly and severally, agree to indemnify, defend and hold harmless the
         Seller Indemnified Parties from and against any and all Indemnified
         Losses resulting from or arising out of any of the following:

                           (i) any breach of any of the representations and
                  warranties of Crestar and Buyer contained in this Agreement or
                  in any document or instrument required to be executed pursuant
                  to this Agreement;

                           (ii) any breach of any covenant of Crestar and Buyer
                  contained in this Agreement or in any document or instrument
                  required to be executed pursuant to this Agreement (including,
                  without limitation, the indemnification obligations set forth
                  in Section 8.03); and

                           (iii) except to the extent covered by CMS' and
                  Seller's indemnification obligations pursuant to Section
                  9.01(a)(iii), (iv), (v), (vi) or (vii), any Third Party Claim
                  in respect of the conduct of the Business or any part thereof,
                  and any liability or obligation of the Company that arises
                  after the Closing Date including, but not limited to, all
                  obligations to properly plug and abandon all wells now or
                  hereafter

                                      -37-
<PAGE>   43

                  located on the lands covered by the Subject Contracts
                  (regardless of whether any such obligation to plug and abandon
                  is attributable to periods of time prior to or after the
                  Closing Date) and restore the surface of the lands covered by
                  Subject Contracts in accordance with applicable Subject
                  Contracts and other agreements and Laws and the obligation to
                  pay all costs, expenses and Taxes incurred with respect to the
                  Business after the Closing Date, but only to the extent that
                  such Third Party Claim did not result from the breach of a
                  representation of CMS or Seller made pursuant hereto.

                  (d) Notwithstanding anything to the contrary contained in
         Section 9.01(c), in no event shall any amounts be recovered from
         Crestar or Buyer:

                           (i) for any matter under Section 9.01(c)(i) for which
                  a Claim Notice is not delivered to Buyer prior to the
                  expiration of the Applicable Limitations Period, and the
                  indemnities granted by Crestar and Buyer in Sections
                  9.01(c)(i) shall terminate on such date; provided, however,
                  that such indemnities shall survive with respect only to the
                  specific matter that is the subject of any Claim Notice
                  delivered in good faith in compliance with the requirements of
                  this Section 9.01(d)(i) until the earlier to occur of (x) the
                  date on which a final non-appealable resolution of the matter
                  described in such Claim Notice has been reached or (y) the
                  date on which the matter described in such Claim Notice has
                  otherwise reached final resolution; or

                           (ii) under Section 9.01(c) for any Tax Claim, the
                  exclusive remedy of CMS and Seller with respect to Tax Claims
                  being set forth in Article VII; or

                           (iii) for any Indemnified Losses resulting from
                  matters described in Section 9.01(c)(i) until the aggregate
                  amount of Indemnified Losses incurred by the Seller
                  Indemnified Parties in respect of all matters giving rise to
                  such Indemnified Losses exceeds individually or in the
                  aggregate $500,000 in which event Crestar and Buyer will be
                  obligated to indemnify the Seller Indemnified Parties for the
                  full amount of such Indemnified Losses; provided, however,
                  such threshold shall not apply to a breach of Sections 5.01,
                  5.02, 5.05, 5.06, or 5.07.

                  (e) Notwithstanding anything to the contrary in this
         Agreement, except as otherwise expressly provided in the second
         sentence of Section 10.01(d), in no event shall Indemnified Losses
         include any exemplary, punitive, special, indirect, consequential,
         remote or speculative damages.

         9.02     Indemnification Procedures.

         (a) Except as otherwise provided in Section 9.02(b) (with respect to
claims arising under Section 9.01(a)(v)), and in Section 9.02(c) (with respect
to claims arising under Section 9.01(a)(vi)), all claims for indemnification
under this Article shall be asserted and resolved pursuant to this Section
9.02(a). Any Person claiming indemnification hereunder is hereinafter referred
to as the "Indemnified Party" and any Person against whom such claims are
asserted hereunder is hereinafter referred to as the "Indemnifying Party." In
the event that any Indemnified Losses are incurred by, asserted against or
sought to be collected from an Indemnified Party, said Indemnified Party shall

                                      -38-
<PAGE>   44

with reasonable promptness consult with the Indemnifying Party and, in any
event, shall with reasonable promptness provide to the Indemnifying Party a
Claim Notice. The Indemnifying Party shall have 30 days from the personal
delivery or receipt of the Claim Notice (the "Notice Period") to notify the
Indemnified Party (x) whether or not it disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such
Losses and/or (y) whether or not it desires, at the sole cost and expense of the
Indemnifying Party, to defend (to the maximum extent possible under the
circumstances) the Indemnified Party against such Losses; provided, however,
that any Indemnified Party is hereby authorized prior to and during the Notice
Period to file any motion, answer or other pleading that it shall deem necessary
or appropriate to protect its interests or those of the Indemnifying Party (and
of which it shall have given notice and opportunity to comment to the
Indemnifying Party) and not prejudicial to the Indemnifying Party. In the event
that the Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against such Losses, the
Indemnifying Party shall have the right to defend all appropriate proceedings,
and with counsel of its own choosing, which proceedings shall be promptly
settled or prosecuted by them to a final conclusion. If the Indemnified Party
desires to participate in, but not control, any such defense or settlement it
may do so at its sole cost and expense. If requested by the Indemnifying Party,
the Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Losses that the Indemnifying Party elects to contest
or, if appropriate and related to the claim in question, in making any
counterclaim against the Person asserting the Third Party Losses, or any
cross-complaint against any Person. No claim may be settled or otherwise
compromised without the prior written consent of the Indemnifying Party.

         (b) In the event of Indemnified Losses arising under Section
9.01(a)(v), the indemnification procedures set forth in this Section 9.02(b)
shall be applicable.

                  (i) The Indemnified Party shall consult with and keep the
         Indemnifying Party reasonably informed of all material developments in
         connection with claims relating to any Indemnified Losses that would be
         covered by Section 9.01(a)(v). In the event that any legal proceeding
         (including an arbitral or judicial proceeding) is initiated with
         respect to any such claim, the Indemnified Party shall with reasonable
         promptness provide to the Indemnifying Party a Claim Notice. The
         Indemnifying Party shall have 30 days from the personal delivery or
         receipt of the Claim Notice (the "Notice Period") to notify the
         Indemnified Party (x) whether or not it disputes the liability of the
         Indemnifying Party to the Indemnified Party hereunder with respect to
         such Losses and/or (y) whether or not it desires, at the sole cost and
         expense of the Indemnifying Party, to defend (to the maximum extent
         possible under the circumstances) the Indemnified Party against such
         Losses; provided, however, that any Indemnified Party is hereby
         authorized prior to and during the Notice Period to file any motion,
         answer or other pleading that it shall deem necessary or appropriate to
         protect its interests or those of the Indemnifying Party (and of which
         it shall have given notice and opportunity to comment to the
         Indemnifying Party) and not prejudicial to the Indemnifying Party. In
         the event that the Indemnifying Party notifies the Indemnified Party
         within the Notice Period that it desires to defend the Indemnified
         Party against such Losses, the Indemnifying Party shall have the right
         (to the maximum extent possible under the circumstances) to defend all
         appropriate proceedings, and with counsel of its own choosing, which
         proceedings shall be promptly settled or prosecuted by them to a final
         conclusion. If the Indemnified Party desires to participate in, but not
         control, any such defense or settlement it may do so at its sole cost
         and expense. If requested by the Indemnifying Party,

                                      -39-
<PAGE>   45

         the Indemnified Party agrees to cooperate with the Indemnifying Party
         and its counsel in contesting any Losses that the Indemnifying Party
         elects to contest or, if related to the claim in question and if doing
         so would not jeopardize the interests of the Indemnified Party, in the
         Indemnified Party's making any counterclaim against the Person
         asserting the Third Party Losses, or any cross-complaint against any
         Person. No claim may be settled or otherwise compromised without the
         prior written consent of the Indemnifying Party.

                  (ii) If (x) as a result of a claim by any Governmental
         Authority, payments have been made to a Governmental Authority by both
         the Operator, for its own account, and by, or on behalf of, the
         Company, Buyer or Crestar, for SOTE Pipeline transportation tariff
         adjustments or charges which relate to transportation through the SOTE
         Pipeline prior to the Effective Date, and (y) the Losses associated
         with the amounts paid by, or on behalf of, the Company, Buyer or
         Crestar under clause (x) are covered by the indemnity obligations of
         the Indemnifying Party under Section 9.01(a)(v), the Indemnified Party
         shall promptly consult with the Indemnifying Party regarding the matter
         and shall, in any event, provide a Claim Notice to the Indemnifying
         Party (if not previously provided) or a supplemental Claim Notice (if a
         Claim Notice has previously been provided) (the "Supplemental Claim
         Notice") within 10 days after the payment described in Section
         9.02(b)(i)(x), which shall include, inter alia, the Indemnified Party's
         calculations of the amounts the Indemnified Party claims are due under
         Section 9.01(a)(v) (including a proposed net present value amount and
         the assumptions necessary to calculate such net present value amount
         (the "NPV Amount") for any future deferred payment obligations) and
         reasonable supporting documentation, and the matter shall be resolved
         in accordance with the Special Indemnity Procedures in Section 9.02(d).

         (c) In the event of Indemnified Losses arising under Section
9.01(a)(vi), the indemnification procedures set forth in this Section 9.02(c)
shall be applicable. If the Indemnified Party believes that Losses have been
incurred that are covered by the indemnity obligations of the Indemnifying Party
under Section 9.01(a)(vi), the Indemnified Party shall with reasonable
promptness (but in any event on or before 1 July 2002), deliver a Claim Notice
to the Indemnifying Party, which shall include, inter alia, the Indemnified
Party's calculations of the amounts set forth in Section 9.01(a)(vi)(x) and
9.01(a)(vi)(y) and the net amount of Indemnified Losses the Indemnified Party
claims are due under Section 9.01(a)(vi) and reasonable supporting
documentation, and the matter shall be resolved in accordance with the Special
Indemnity Procedures in Section 9.02(d).

         (d) In the event that any of the matters described in Sections 9.02(b)
or 9.02(c) are to be resolved in accordance with the "Special Indemnity
Procedures," such procedures shall be as set forth in this Section 9.02(d) (the
"Special Indemnity Procedures").

         (i) Within 20 days after the receipt of a Claim Notice or Supplemental
Claim Notice delivered pursuant to Sections 9.02(b) or (c) by the Indemnified
Party, the Indemnifying Party shall provide written notice (the "Response
Notice") to the Indemnified Party stating one of the following:

         (A) the Indemnifying Party agrees with the amount claimed to be due
from the Indemnifying Party, including (if applicable) the NPV Amount (the
"Claimed Amount"), in which case the Indemnifying Party shall pay the Claimed
Amount to

                                      -40-
<PAGE>   46

the Indemnified Party (by wire transfer to an account designated by the
Indemnified Party) within 10 days after the expiration of the 20 day period
described above;

         (B) the Indemnifying Party agrees with the determination by the
Indemnified Party of any future deferred payment obligations (the "Deferred
Claimed Amounts"), but rejects the Indemnified Party's determination of the NPV
Amount, in which case the Indemnifying Party shall pay the Deferred Claimed
Amounts to the Indemnified Party (by wire transfer to an account designated by
the Indemnified Party) within 10 days after the date such Deferred Claimed
Amounts are required to be paid by the Indemnified Party; or

         (C) the Indemnifying Party disputes, in good faith, one or more of the
following:

                  (1) whether the determination of all or a portion of the
                  Claimed Amount is correct;

                  (2) without limiting the generality of Section
                  9.02(d)(i)(C)(3), whether, in the case of Claimed Amounts
                  arising under Section 9.01(a)(v), the Claimed Amount arises
                  from amounts paid by, or on behalf of, the Company, Buyer or
                  Crestar (and concurrently with amounts paid by the Operator as
                  required by Section 9.02(b)(ii)) to any Governmental Authority
                  (directly or indirectly through the Operator), for SOTE
                  Pipeline transportation tariff adjustments or charges, which
                  relate to transportation through the SOTE Pipeline prior to
                  the Effective Date, up to a maximum aggregate amount of US$
                  6,000,000, and within the Applicable Limitations Period; or

                  (3) whether the Indemnifying Party has liability under this
                  Agreement to pay all or any portion of the Claimed Amount;
                  provided that the Indemnifying Party shall not have the right,
                  under this Section 9.02(d)(i)(C), to dispute the legal,
                  political, economic or operational basis or justification for
                  the payment by the Indemnified Party of amounts included
                  within all or a portion of the Claimed Amount.

                  In the event the Indemnifying Party disputes, in good faith,
                  one of more of the matters described in Sections
                  9.02(d)(i)(C)(1), (C)(2) or (C)(3), (x) the Indemnifying Party
                  shall set forth the disputed amount and provide, in reasonable
                  detail, the basis of such dispute (the "Disputed Matter"); (y)
                  the Indemnifying Party shall pay the undisputed amount of the
                  Claimed Amount (the "Undisputed Amount") to the Indemnified
                  Party (by wire transfer to an account designated by the
                  Indemnified Party) within (aa) in the case of any Claimed
                  Amounts other than Deferred Claimed Amounts, 10 days after the
                  expiration of the 20 day period described above, or (bb) in
                  the case of Deferred Claimed Amounts, 10 days after the date
                  such Deferred Claimed Amounts are required to be paid by the
                  Indemnified Party; and (z) the resolution of the Disputed
                  Matter shall be resolved in accordance with Section
                  9.02(d)(ii).

The failure of the Indemnifying Party to respond to a properly delivered Claim
Notice within the 20-day time limit set forth in Section 9.02(d)(i) shall
constitute an election by the Indemnifying Party under Section 9.02(d)(i)(A).
Notwithstanding anything herein to the apparent contrary, in no event

                                      -41-
<PAGE>   47

shall the terms of this Section 9.02(d) be construed as a waiver by any
Indemnifying Party of any rights it may have to assert against any Indemnified
Party in any arbitration proceeding relating to any Claimed Amount.

         (ii) Upon receipt by the Indemnified Party of notice of any Disputed
Matter, the Disputed Matter may be submitted by either Party to the public
accounting firm of Arthur Andersen LLC, or such other nationally recognized
public accounting firm or other expert mutually acceptable to Buyer and Seller
(the "Expert"), to determine the amount in dispute. The submission shall include
a copy of both the Claim Notice (or Supplemental Claim Notice, if applicable)
and the Response Notice. The Indemnified Party and the Indemnifying Party shall
each bear and pay one-half of the fees and other costs charged by the Expert.

         (A)      Within 10 days after the submission of the matter to the
                  Expert, and based upon the Claim Notice (or Supplemental Claim
                  Notice, if applicable) and the Response Notice, the Expert
                  shall make a determination of whether it is capable of
                  resolving the Disputed Matter or if all or part of the
                  Disputed Matter is of a legal nature such that it should be
                  resolved pursuant to the provisions of Article X. If the
                  Expert determines that it is capable of resolving all or part
                  of the Disputed Matter, the Expert shall proceed to consider
                  the portion of the matter it is capable of resolving in
                  accordance with clause (B). If the Expert determines that it
                  is not capable of resolving all or a portion of the Disputed
                  Matter, the portion that the Expert determines it is not
                  capable of resolving shall be resolved in accordance with the
                  provisions of Article X.

         (B)      If the Expert concludes that it is capable of resolving all or
                  a portion of the Disputed Matter, Seller and Buyer agree to
                  provide the Expert with all books, records and other
                  information relevant to the determination of the amount in
                  dispute. The Expert shall be instructed to make its
                  calculations of the amount in dispute as soon as practicable
                  and, in any event, shall render its written determination (the
                  "Expert's Decision") within 30 days after the initial
                  submission of the Disputed Matter to the Expert. Any payments
                  required to be made in accordance with the Expert's Decision
                  (the "Expert's Amount") shall be made within 10 days after
                  receipt of the Expert's Decision. Provided such payment has
                  been made and notwithstanding anything herein to the apparent
                  contrary, the payment of the Expert's Amount shall be without
                  prejudice to the ability of either Party to challenge the
                  Expert's Decision pursuant to the provisions of Article X.

         (e) In the event of any payment by an Indemnifying Party under Sections
9.02(b) or (c), the Indemnifying Party shall have, in addition to any rights of
the Indemnifying Party under Section 8.03, the right to participate in the
pursuit of any claim against the Governmental Authority or any Third Party
(including any arbitral or judicial proceedings) relating to the matter for to
which such payment related. If, as a result of any such claim, any amounts are
refunded or credited to the Indemnified Party, such amounts shall be paid over
to the Indemnifying Party as provided in Section 8.10(b).

         9.03 Exclusive Remedy. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
REMEDIES SET FORTH IN ARTICLE VII, SECTION 8.15, ARTICLE IX AND ARTICLE X,

                                      -42-
<PAGE>   48

INCLUDING THE LIABILITY LIMITS, SURVIVAL PERIODS, DISCLAIMERS AND LIMITATIONS ON
REMEDIES ARE INTENDED TO BE, AND SHALL BE, THE EXCLUSIVE REMEDIES WITH RESPECT
TO ANY ASPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
HEREBY RELEASES, WAIVES AND DISCHARGES, AND COVENANTS NOT TO SUE WITH RESPECT
TO, ANY CAUSE OF ACTION OR CLAIM NOT EXPRESSLY PROVIDED FOR IN ARTICLE VII,
SECTION 8.15, ARTICLE IX AND ARTICLE X, INCLUDING, WITHOUT LIMITATION, CLAIMS
UNDER APPLICABLE SECURITIES LAWS, AVAILABLE AT COMMON LAW OR BY STATUTE.

         9.04 Scope of Representations. Except to the extent expressly set forth
in this Agreement or any document or instrument executed in connection herewith,
CMS and Seller make no representations or warranties whatsoever and disclaim all
liability and responsibility for any other representation, warranty, statement
or information made or communicated (orally or in writing) to Crestar and Buyer.
Without limiting the generality of the foregoing, except as expressly set forth
in this Agreement or any document or instrument executed in connection herewith,
CMS and Seller make no representation or warranty as to title to any of the
assets or properties of the Company and, with respect to any personal property
and equipment included within such assets or properties, CMS AND SELLER
EXPRESSLY DISCLAIM AND NEGATE ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, AND OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS. Further, CMS and Seller make no representations
or warranties as to the amounts of or values with respect to any hydrocarbon
reserves attributable to the Company or the Business. Crestar and Buyer each
acknowledge and affirm that in making the decision to enter into this Agreement
and to consummate the transactions contemplated hereby, they have relied on the
representations, warranties, covenants and agreements of CMS and Seller set
forth in this Agreement and in the certificates provided for in Sections 6.02(b)
and (e), and other than such reliance, it has relied solely on the basis of its
own independent investigation, analysis and evaluation of the Company and its
assets (including Crestar and Buyer's own estimate and appraisal of the extent
and value of the Company's hydrocarbon reserves, pipelines and undeveloped
properties), business, financial condition, operations and prospects.

                                   ARTICLE X
                                  ARBITRATION

         10.01    Arbitration.

                  (a) Except as otherwise provided in Sections 8.02, 8.15 or
         9.02(d), any and all claims, disputes, controversies, and other matters
         in question arising out of or relating to this Agreement, any provision
         hereof, the alleged breach of any such provision, or in any way
         relating to the subject matter of this Agreement or the relationship
         between the Parties created by this Agreement, involving the Parties
         and/or their respective representatives (all of which are referred to
         herein as "Disputes"), even though some or all of such Disputes
         allegedly are extra-contractual in nature, whether such Disputes sound
         in contract, tort, or otherwise, at Law or in equity, under State,
         federal or foreign Law, whether provided by

                                      -43-
<PAGE>   49

         statute or the common Law, for damages or any other relief, shall be
         resolved by binding arbitration in accordance with this Section 10.01.

                  (b) It is the intention of the Parties that the arbitration
         shall be conducted pursuant to the Federal Arbitration Act, as such Act
         is modified by this Agreement and the federal common Law construing the
         Federal Arbitration Act. If, for any reason, the Federal Arbitration
         act is inapplicable to the Disputes, the arbitration shall be conducted
         under the arbitration act of the State of Texas. The validity,
         construction, and interpretation of this Section 10.01, and all
         procedural aspects of the arbitration conducted pursuant to this
         Section 10.01, including but not limited to, the determination of the
         issues that are subject to arbitration (i.e., arbitrability), the scope
         of the arbitrable issues, allegations of "fraud in the inducement" to
         enter into this Agreement, or this arbitration provision, allegations
         of waiver, laches, delay or other defenses to arbitrability, and the
         rules governing the conduct of the arbitration (including the time for
         filing an answer, the time for the filing of counterclaims, the times
         for amending the pleadings, the specificity of the pleadings, the
         extent and scope of discovery, the issuance of subpoenas, the times for
         the designation of experts, whether the arbitration is to be stayed
         pending resolution of related litigation involved third parties not
         bound by this Agreement, the receipt of evidence, and the like), shall
         be decided by the arbitrators. The arbitration shall be administered by
         the American Arbitration Association (the "AAA"), and shall be
         conducted pursuant to the Commercial Arbitration Rules of the AAA, as
         modified by their Agreement. In deciding the substance of the Parties'
         Disputes, excluding those matters governed by the applicable
         arbitration Law as set forth above. The arbitrators shall refer to the
         substantive Laws of the State of Texas for guidance (excluding Texas
         choice-of-Law principles that might call for the application of some
         other State's Law). Notwithstanding any other provision in this Section
         10.01 to the contrary, the Parties expressly agree that the arbitrators
         shall have absolutely no authority to award treble, exemplary or
         punitive damages of any type under any circumstances regardless of
         whether such damages may be available under Texas Law, the Law of any
         other State, or federal Law, or foreign Law, or under the Federal
         Arbitration Act, or under the Commercial Arbitration Rules of the AAA,
         the Parties hereby waiving their right, if any, to recover treble,
         exemplary or punitive damages in connection with any such Disputes,
         except as otherwise expressly provided in the second sentence of
         Section 10.01(d).

                  (c) The arbitration proceeding shall be conducted in Houston,
         Texas before a panel of three arbitrators appointed in accordance with
         the Commercial Arbitration Rules of the AAA consisting of persons from
         any of the following categories: (i) attorneys having practiced in the
         area of oil and gas Law for at least 10 years, (ii) engineers with at
         least 10 years of experience in the oil and gas industry, or (iii)
         accountants with at least 10 years of experience in the oil and gas
         industry. The arbitrators shall conduct a hearing as soon as reasonably
         practicable after appointment of the third arbitrator, and a final
         decision completely disposing of all Disputes that are the subject of
         the arbitration proceedings shall be rendered by the arbitrators as
         soon as reasonably practicable after the hearing. There shall be a
         transcript of the hearing before the arbitrators. The arbitrators'
         ultimate decision after final hearing shall be in writing, but shall be
         as brief as possible, and the arbitrators shall not assign reasons for
         their ultimate decision. In case the arbitrators award monetary damages
         to either Party, the arbitrators shall certify in their award that they
         have not included any exemplary, punitive, special, indirect,
         consequential, remote or speculative damages.

                                      -44-
<PAGE>   50

                  (d) Except as otherwise provided in the second sentence of
         this Section 10.01(d), the fees and expenses of the arbitrators shall
         be borne equally by the Parties, but the decision of the arbitrators
         may include such award of the arbitrators' fees and expenses and of
         other costs and attorneys' fees as the arbitrators determine
         appropriate. In the event that the arbitrators determine (i) that CMS
         or Seller are liable for the portion of the Claimed Amount disputed by
         CMS or Seller pursuant to Section 9.02(d)(i)(C), and (ii) that CMS or
         Seller acted in bad faith in disputing all or a portion of the Claimed
         Amount pursuant to Section 9.02(d)(i)(C), the arbitrators shall award
         to the Indemnified Party twice the Claimed Amount, plus all fees and
         expenses of the Indemnified Party in pursuing the arbitral award with
         respect to such Claimed Amount.

                  (e) To the fullest extent permitted by Law, the arbitration
         proceeding and the arbitrators' award shall be maintained in confidence
         by the Parties.

                  (f) The award of the arbitrators shall be binding upon the
         Parties and final and nonappealable to the maximum extent permitted by
         Law, and judgment thereon may be entered in a court of competent
         jurisdiction and enforced by any Party as a final judgment of such
         court.

                                   ARTICLE XI
                                  MISCELLANEOUS

         11.01 Confidentiality. Crestar, Buyer, CMS and Seller agree that the
Confidentiality Agreement dated January 4, 2000 executed by Crestar and CMS on
behalf of Seller, is hereby deemed to be in full force and effect; provided,
however, the provisions set forth in such Confidentiality Agreement requiring a
return or destruction of the materials referred to therein upon the request of
CMS and Seller shall not be in force and effect.

         11.02 Expenses. Except as specifically provided herein, each Party
hereto shall pay all legal and other costs and expenses incurred by such Party
or any of its Affiliates in connection with this Agreement and the transactions
contemplated hereby.

                                      -45-
<PAGE>   51

         11.03 Notices. Any notice, request, instruction, correspondence or
other communication to be given or made hereunder by either Party to the other
(herein collectively called "Notice") shall be in writing and (a) delivered by
hand, (b) mailed by certified mail, postage prepaid and return receipt
requested, (c) sent by telecopier, or (d) sent by express mail, overnight
courier, or other express delivery service, as follows:

                  If to CMS and Seller, addressed to:

                  CMS Oil and Gas Company
                  CMS Oil and Gas (International) Ltd.
                  1021 Main Street, Suite 2800
                  Houston, Texas 77002-6606
                  Attention:        William H. Stephens III
                  Telephone:        (713) 651-1700
                  Telecopier:       (713) 651-0622

                  If to Crestar and Buyer, addressed to:

                  Crestar Energy Holdings Ltd.
                  Clarendon House
                  2 Church Street
                  Hamilton  HM11, Bermuda
                  Attention:        Director
                  Telephone:        (441) 296-1047
                  Telecopier:       (441) 295-0560

                  with a copy to:

                  Crestar Energy Inc.
                  333 7th Avenue SW
                  Calgary, Alberta Canada  T2P 4M8
                  Attention:        Ken E. West, President
                  Telephone:        (403) 231-6901
                  Telecopier:       (403) 231-8525

Notice given by hand, overnight or express delivery service or by mail shall be
effective upon actual receipt. Notice given by telecopier shall be effective
upon actual receipt if received during the recipient's normal business hours, or
at the beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours. All Notices by facsimile
shall be confirmed promptly after transmission in writing by certified mail or
personal delivery. No Notice shall be given to or by the Company. Any Party may
change any address to which Notice is to be given to it by giving Notice as
provided above of such change of address.

         11.04 Governing Law. THE PROVISIONS OF THIS AGREEMENT, THE SCHEDULES
HERETO, AND THE DOCUMENTS DELIVERED PURSUANT HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUDING ANY
CONFLICTS-OF-LAW RULE OR PRINCIPLE THAT MIGHT

                                      -46-
<PAGE>   52

REFER SUCH MATTERS TO THE LAWS OF ANOTHER JURISDICTION), EXCEPT TO THE EXTENT
THAT SUCH MATTERS ARE MANDATORILY SUBJECT TO THE LAWS OF ANOTHER JURISDICTION
PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION.

         11.05 Entire Agreement; Amendments and Waivers. This Agreement,
together with all Schedules hereto, constitutes the entire agreement between the
Parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the Party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.

         11.06 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective permitted
successors and assigns. Except as expressly provided herein, nothing in this
Agreement is intended to confer upon any Person other than the Parties and their
respective permitted successors and assigns, any rights, benefits or obligations
hereunder.

         11.07 Severability. If any one or more of the provisions contained in
this Agreement or in any other document delivered pursuant hereto shall for any
reason, be held to be invalid, illegal or unenforceable in any material respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such document.

         11.08 Headings and Schedules. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules referred to herein are attached hereto and incorporated
herein by this reference. Seller may revise or supplement the Schedules at any
time prior to Closing.

         11.09 Survival of Representations and Indemnities. The Parties
acknowledge and agree that (i) except for Sections 4.01, 4.02, 4.03, 4.14, 4.19,
4.22, 5.01, 5.02, 5.06 and 5.07, which shall survive the Closing for the
applicable statute of limitations period, all other representations and
warranties contained in this Agreement shall survive the Closing and continue
until and terminate on July 1, 2002; (ii) the indemnity obligations set forth in
Section 9.01(a)(iii) shall survive the Closing and continue until and terminate
on July 1, 2002; (iii) the indemnity obligations set forth in Section 9.01(a)(v)
shall survive the Closing and continue until and terminate on July 1, 2005;
provided, however, that such indemnity in Section 9.01(a)(v) shall survive (x)
with respect to a specific matter that is the subject of a then pending judicial
or arbitral proceeding against the Company, Buyer or Crestar and with respect to
which a written notice was delivered in good faith to CMS and Seller prior to
July 1, 2005 specifying in reasonable detail the specific nature of, specific
basis of and the estimated amount of the Indemnified Losses associated with such
matter; provided further that such surviving indemnity shall terminate 30 days
after the final non-appealable resolution or settlement of such matter, and (y)
in the event that an Indemnifying Party is obligated to make payments on
Deferred Claimed Amounts under Section 9.02(d), the indemnity obligations of the
Indemnifying Party shall continue with respect to such Deferred Claimed Amounts
until the Deferred Claimed Amounts are paid in full; and (iv) the indemnity
obligations set forth in Section 9.01(a)(vi) shall

                                      -47-
<PAGE>   53

survive the Closing and continue until 1 July 2002 (in each case, the
"Applicable Limitations Period"). Any other covenants and agreements contained
in this Agreement (including the indemnity obligations set forth in Section
9.01(a)(ii), (iv) and (vii) and Section 9.01(c)(ii) and (iii)) shall survive the
Closing and continue in accordance with their respective terms.

         11.10 Time of the Essence. The Parties agree and acknowledge that time
is of the essence of this Agreement.

         11.11 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; but, in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.

         11.12 Signatures. The Parties may execute this Agreement by forwarding
facsimile, telefax, or other forms of copies of the Agreement showing execution
by the Parties sending the facsimile, telefax, or other copy, and the Parties
intend that a facsimile, telefax, or photocopy signature shall have the same
effect as an original. The Parties also intend to be bound by such execution,
and the Parties further waive any defense to validity based on any such copies
of signatures.

                                      -48-
<PAGE>   54

     EXECUTED as of the Effective Date.

     CMS:                  CMS OIL AND GAS COMPANY

                           By  /s/ William H. Stephens III
                             ---------------------------------------------------
                           Name  William H. Stephens III
                               -------------------------------------------------
                           Title  Executive Vice President,
                                  General Counsel and
                                  Secretary
                                ------------------------------------------------

     SELLER:                            CMS OIL AND GAS (INTERNATIONAL)
                                  LTD.

                           By  /s/ William H. Stephens III
                             ---------------------------------------------------
                           Name  William H. Stephens III
                               -------------------------------------------------
                           Title  Executive Vice President,
                                  General Counsel and
                                  Secretary
                                ------------------------------------------------

     BUYER:                CRESTAR ENERGY HOLDINGS LTD.

                           By  /s/ Ken E. West
                             ---------------------------------------------------
                           Name:  Ken E. West
                           Title:    President

     CRESTAR:              CRESTAR ENERGY INC.

                           By  /s/ Ken E. West
                             ---------------------------------------------------
                           Name:  Ken E. West
                           Title:    Senior Vice President - New Ventures and
                                     Strategic Development

                                      -49-

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