Document:

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT dated as of this _____ day of  _______________,  2000
by and between  Staten Island  Savings Bank, a financial  institution  chartered
under  the laws of the  State of  __________________  (the  "Agent")  and  Russo
Securities, Inc. ("Russo Securities").

                               W I T N E S S E T H:

     WHEREAS,   HARBOUR   ENTERTAINMENT,   INC.,  a  Delaware  corporation  (the
"Company"),  is offering  1,715,000  shares of common stock (the  "Shares") on a
"best  efforts" basis a minimum of $8,000,000  (the "Minimum  Offering") up to a
maximum of $12,000,000 (the "Maximum Offering")  (collectively,  the "Offering")
at a  purchase  price  of  $7.00  per  share,  in  a  registered  offering  (the
"Offering"),  through Russo Securities,  as the underwriter (the  "Underwriter")
pursuant to a registration  statement on Form SB-2, initially filed on April 28,
2000 with the Securities and Exchange  Commission  (the "SEC").  All capitalized
terms not otherwise  defined herein shall have the meanings given to them in the
Memorandum.

     WHEREAS, the Memorandum provides that:

     A. The Offering will commence on _____________, 2000 and will expire thirty
days (30)  after  the  effective  date of the  registration  statement  for this
offering  (the  "Termination  Date").  The  Company  has an option to extend the
expiration date of this offering for an additional thirty days (30);

     B.  The  Offering  is being  conducted  on a "best  efforts"  basis as to a
minimum of  $8,000,000  and up to a maximum  of  $12,000,000.  Once the  minimum
dollar has been raised and accepted by the Company and the Placement Agent, they
may be released, at the mutual consent of the Company and the Underwriter,  from
escrow and paid to the Company and the  Underwriter,  within ten  business  days
after the Initial Closing and each other Closing;

     C. The initial  closing (the "Initial  Closing") of the Offering shall take
place on  _____________,  but not later than ten days following the  Termination
Date, and subsequent  closings of the Offering (if  applicable) may be scheduled
at the  discretion  of the Company and Placement  Agent,  each of which shall be
deemed a "Closing".

     D. Once the Company and the Underwriter have issued the Shares, an investor
shall not be entitled to a return of their investment;

     E.  Proceeds  from the sale of the  Shares  shall be held in  escrow by the
Agent pending a Closing on the Shares, and disbursed upon such Closing; and if a
Share is not accepted,  the funds  therefor  will be returned to the  applicable
purchaser, without interest, after the Termination Date.

     NOW,  THEREFORE,  in  consideration of the mutual promises herein contained
and intending to be legally bound, the parties hereby agree as follows:

     1.  Appointment of Agent.  Russo  Securities  hereby appoints Staten Island
Savings Bank as escrow agent in  accordance  with the terms and  conditions  set
forth herein, and the Agent hereby accepts such appointment.

     2. Delivery of Proceeds.  All checks, drafts, or other instruments received
from  Investors  as  payment  for the  Securities  will be  delivered  by  Russo
Securities to the Agent,  made payable to Staten Island  Savings Bank, as Escrow
Agent for Russo  Securities,  Inc.("Russo  Securities")  Russo  Securities  will
provide the Agent with a chart setting  forth,  as to each  investor,  his name,
address,  social security number or employer  identification  number,  number of
Shares,  and the amount  paid in  connection  with such  purchase.  The Agent is
hereby  empowered  on behalf of Russo  Securities  to endorse  and  collect  all
checks,  drafts,  wire funds transfers,  promissory  notes or other  instruments
received on account of securities purchased.
<PAGE>
     3.  Agent to Hold and  Disburse  Funds.  The  Agent  will hold in a special
account  established for the benefit of Russo  Securities and disburse all funds
received by it pursuant to the terms of this Escrow Agreement, as follows:

          3.1 In the event that the Agent has received funds (and such funds are
cleared  within 10 days of a Closing  with respect to such Shares) from the sale
of any Shares, the Agent will, on the date of the applicable  Closing,  pursuant
to written  instructions  signed by the Russo  Securities,  pay to the  Company,
and/or  to any  other  person  designated  in such  instructions,  the  proceeds
received by the Agent from the sale of such Shares.

          3.2 All  funds  received  by the Agent  pursuant  to the terms of this
Escrow Agreement shall be invested only in money market instruments.

          3.3 If no written  instructions  are  received by the Agent from Russo
Securities  relative to the  admission of one or more  purchasers to the Company
within 15 days of the  Termination  Date, the Agent will return all funds to the
purchasers, for which no written instructions were received, without interest.

     4.   Exculpation and Indemnification of Agent.

          4.1 The Agent  shall  have no duties or  responsibilities  other  than
those  expressly set forth  herein.  The Agent shall have no duty to enforce any
obligation of any person to make any payment or delivery,  or to direct or cause
any payment or delivery to be made,  or to enforce any  obligation of any person
to perform  any other act.  The Agent shall be under no  liability  to the other
parties  hereto or to anyone  else by reason of any  failure  on the part of any
party  hereto  or any  maker,  guarantor,  endorser  or other  signatory  of any
document or any other person to perform such person's obligations under any such
document.  Except for amendments to this Agreement referred to below, and except
for instructions  given to the Agent by Russo Securities  relating to the escrow
deposit under this Agreement,  the Agent shall not be obligated to recognize any
agreement between any and all of the persons referred to herein, notwithstanding
that  references  thereto may be made herein and whether or not it has knowledge
thereof.

     4.2 The Agent  shall not be liable to the Company or to anyone else for any
action  taken or  omitted  by it, or any  action  suffered  by it to be taken or
omitted,  in good faith and in the exercise of its own best judgment.  The Agent
may rely  conclusively and shall be protected in acting upon any order,  notice,
demand,  certificate,  opinion or advice of counsel (including counsel chosen by
the Agent), statement,  instrument,  report or other paper or document (not only
as to its due execution and the validity and  effectiveness  of its  provisions,
but  also  as  to  the  truth  and  acceptability  of  any  information  therein
contained),  which is  believed  by the Agent to be genuine  and to be signed or
presented by the proper  person or persons.  The Agent shall not be bound by any
notice or demand, or any waiver, modification, termination or rescission of this
Agreement or any of the terms thereof unless evidenced by a writing delivered to
the Agent  signed by the proper party or parties and, if the duties or rights of
the Agent are affected, unless it shall give its prior written consent thereto.

     4.3 The Agent shall not be responsible  for the  sufficiency or accuracy of
the form of; or the execution, validity, value or genuineness of any document or
property  received,  held or delivered by it  hereunder,  or of any signature or
endorsement  thereon,  or for  any  lack  of  endorsement  thereon,  or for  any
description  therein;  nor shall the Agent he responsible or liable to the other
parties  hereto or to anyone  else in any  respect on  account of the  identity,
authority or rights of the persons  executing or  delivering  or  purporting  to
execute or deliver any document or property or this  Agreement.  The Agent shall
have no  responsibility  with respect to the use or  application of any funds or
other property paid or delivered by the Agent pursuant to the provisions hereof.
The Agent  shall not be liable  to the  Company  or to anyone  else for any loss
which may be incurred by reason of any  investment  of any monies which it holds
hereunder  provided the Agent has complied  with the  provisions  of Section 3.2
hereunder.
<PAGE>
          4.4 The Agent shall have the right to assume in the absence of written
notice to the contrary from the proper person or persons that a fact or an event
by reason of which an action would or might be taken by the Agent does not exist
or has not occurred,  without incurring liability to the other parties hereto or
to anyone else for any action taken or omitted,  or any action suffered by it to
be taken or omitted, in good faith and in the exercise of its own best judgment,
in reliance upon such assumption.

          4.5 To the extent  that the Agent  becomes  liable for the  payment of
taxes,  including  withholding  taxes,  in  respect of income  derived  from the
investment of funds held hereunder or any payment made hereunder,  the Agent may
pay such  taxes.  The Agent may  withhold  from any payment of monies held by it
hereunder such amount as the Agent estimates to be sufficient to provide for the
payment  of such  taxes  not yet  paid,  and may use the sum  withheld  for that
purpose.  The Agent shall be indemnified and held harmless against any liability
for taxes  and for any  penalties  or  interest  in  respect  of taxes,  on such
investment  income or  payments  in the  manner  provided  in Section  4.6.  The
principal  amounts  deposited with the Agent shall in no way be utilized for any
of the above-mentioned purpose aud cannot be subject to any lien or encumbrances
by the Agent for any reason.

          4.6  The  Agent  will  be  indemnified  and  held  harmless  by  Russo
Securities from and against any and all expenses,  including  reasonable counsel
fees and  disbursements,  or loss suffered by the Agent in  connection  with any
action, suit or other proceeding  involving any claim, or in connection with any
claim or demand,  which in any way,  directly  or  indirectly,  arises out of or
relates to this Agreement,  the services of the Agent  hereunder,  the monies or
other property held by it hereunder or any income earned from investment of such
monies. The Agent shall have a lien, with the exception of the principal amounts
deposited in the escrow account,  for the amount of any such expenses or loss on
the monies and other  property  held by it  hereunder  and shall be  entitled to
reimburse itself from such monies or property for the amount of any such expense
or loss.  Promptly  after the  receipt  by the Agent or notice of any  demand or
claim or the commencement of any action, suit or proceeding, the Agent shall, if
a claim in respect thereof is to be made against Russo Securities,  notify Russo
Securities thereof in writing,  but the failure by the Agent to give such notice
shall not relieve Russo Securities from any liability which Russo Securities may
have to the Agent hereunder. Notwithstanding any obligation to make payments and
deliveries  hereunder,  the Agent may  retain and hold for such time as it deems
necessary  such amount of monies or property as it shall,  from time to time, in
its sole  discretion,  deem sufficient to indemnify  itself for any such loss or
expense and for any amounts due it under Section 7.

          4.7 For the purposes hereof,  the term "expense or loss" shall include
all amounts  paid or payable to satisfy any claim,  demand or  liability,  or in
settlement of any claim,  demand,  action,  suit or proceeding  settled with the
express written consent of the Agent, and all costs and expenses, including, but
not limited to, reasonable counsel fees and  disbursements,  paid or incurred in
investigating  or  defending  against any such claim,  demand,  action,  suit or
proceeding.

     5.   Termination of Agreement and Resignation of Agent.

          5.1 This Escrow Agreement shall terminate on the final  disposition of
the monies and property  held in escrow  hereunder,  provided that the rights of
the Agent and the obligations of the other parties hereto under Sections 4 and 7
shall survive the termination hereof.

          5.2 The Agent may resign at any time and be discharged from its duties
as Agent  hereunder by giving Russo  Securities at least 30 days' notice thereof
As soon as  practicable  after its  resignation,  the Agent shall turn over to a
successor  escrow agent  appointed  by the Company all monies and property  held
hereunder  (less such  amount as the Agent is  entitled  to retain  pursuant  to
Section 7) upon presentation of the document appointing the new escrow agent and
its acceptance thereof. If no new Agent is so appointed within the 60-day period
following such notice of resignation, the Agent may deposit the aforesaid monies
and property with any court it deems appropriate.
<PAGE>
     6.   Form of Payments by Agent.
          6.1 Russo  Securities shall inform the Agent when any payment shall be
made from the escrow account.

          6.2 Any payments by the Agent to  purchasers  or to persons other than
the  Company  pursuant  to the terms of this  Agreement  shall be made by check,
payable to the order of each respective purchaser or other person.

          6.3 All amounts  referred  to herein are  expressed  in United  States
Dollars and all payments by the Agent shall be made in such dollars.

     7. Compensation of Agent. For services rendered, the Agent shall receive as
compensation  $_______.  The Agent shall also be entitled to reimbursement  from
Russo  Securities for all expenses paid or incurred by it in the  administration
of its duties hereunder,  including, but not limited to, all counsel,  advisors'
and  Agents'  fees  and   disbursements   and  all  reasonable  taxes  or  other
governmental charges.

     8.  Notices.  All  notices,  requests,  demands  and  other  communications
provided  for  herein  shall be in  writing,  shall be  delivered  by hand or by
first-class  mail, shall be deemed given when received and shall be addressed to
the parties hereto at their  respective  addresses listed below or to such other
persons or  addresses as the  relevant  party shall  designate as to itself from
time to time in writing delivered in like manner.

 If to the Company: Harbour Entertainment, Inc.
                    Attention: Marlowe Walker
                    100A Gary Way
                    Ronkonkoma, NY 11779
                    Tel. # 631-738-1010

 with a copy to:    Michael Beckman
                    Beckman, Millman & Sanders, LLP
                    116 John Street
                    New York, NY 10038
                    Tel.# 212-406-4700
                    Fax# 212-732-1443

 If to the Agent:   Staten Island Savings Bank
                    ---------------------------
                    ---------------------------
                    ---------------------------

 If to Russo
 Securities:        Russo Securities, Inc.
                    Attention: Fred Russo
                    128 Sand Lane
                    Staten Island, New York 10305
                    Tel. # (718) 448-2900
                    Fax. # (718) 448-0081
<PAGE>
     9.  Further  Assurances:  From time to time on and  after the date  hereof,
Russo  Securities  shall  deliver  or cause to be  delivered  to the Agent  such
further documents and instruments and shall do and cause to be done such further
acts as the Agent shall  reasonably  request (it being understood that the Agent
shall have no obligation to make any such request) to carry out more effectively
the provisions and purposes of this Agreement,  to evidence  compliance herewith
or to assure itself that it is protected in acting hereunder.

     10.  Consent to Service of Process.  Russo  Securities  hereby  irrevocably
consents to the  jurisdiction  of the courts of the State of New York and of any
federal court located in such State in connection with any action, suit or other
proceeding  arising out of or relating to this  Agreement or any action taken or
omitted  hereunder,  and waives  personal  service of any summons,  complaint or
other  process and agrees that the service  thereof may be made by  certified or
registered  mail  directed to Russo  Securities  at its address for  purposes of
notices hereunder.

     11. Miscellaneous.

     11.1 If for any reason the escrow  deposit is not  received by the Agent as
contemplated  herein,  Russo  Securities  shall  reimburse  the  Agent  for  all
expenses, including reasonable counsel fees and disbursements,  paid or incurred
by it in making preparations for providing the services contemplated hereby.

     11.2 This Agreement shall be construed without regard to any presumption or
other rule requiring  construction  against the party causing such instrument to
be drafted. The terms "hereby", "hereof', "hereto",  "hereunder" and any similar
terms, as used in this Agreement, refer to the Agreement in its entirety and not
only to the  particular  portion of this  Agreement  where the term is used. The
word "person" shall mean any natural person,  partnership,  company,  government
and any other form of business or legal entity.  All words or terms used in this
Agreement,  regardless of the number or gender in which they are used,  shall be
deemed to include  any other  number  and any other  gender as the  context  may
require.  This  Agreement  shall not be  admissible  in evidence to construe the
provisions  of any prior  agreement.  The rule of ejusdem  generis  shall not be
applicable  herein  to  limit a  general  statement,  which  is  followed  by or
referable  to an  enumeration  of specific  matters,  to matters  similar to the
matters specifically mentioned.

     11.3 This  Agreement  and the rights  and  obligations  hereunder  of Russo
Securities  may be assigned  by Russo  Securities  only to a successor  to Russo
Securities'  entire  business.  This  Agreement  and the rights and  obligations
hereunder  of the Agent may be assigned by the Agent only to a successor  to its
entire  business.  This Agreement shall be binding upon and inure to the benefit
of each party's respective  successors,  heirs and permitted  assigns.  No other
person shall  acquire or have any rights  under or by virtue of this  Agreement.
This  Agreement may not be changed orally or modified,  amended or  supplemented
without an express written agreement executed by the Agent and Russo Securities.
This Agreement is intended to be for the sole benefit of the parties hereto, and
(subject to the  provisions of this Section 11.3) their  respective  successors,
heirs and assigns,  and none of the provisions of this Agreement are intended to
be, nor shall they be construed to be, for the benefit of any third person.

     11.4 This Agreement  shall be governed by and construed in accordance  with
the internal laws of the State of New York. The  representations  and warranties
contained in this Agreement  shall survive the execution and delivery hereof and
any  investigations  made by any party.  The headings in this  Agreement are for
purposes of reference  only and shall not limit or  otherwise  affect any of the
terms hereof.
<PAGE>
          11.5 All  deposits to the escrow  account are funds  deposited  by the
clients of Russo  Securities.  Therefore,  the Agent  agrees that it can neither
place any lien or  encumbrance,  nor freeze the  deposits  of Russo  Securities'
clients in said escrow account.

     12. Execution in Counterparts. This Agreement may be executed in any number
of counterparts,  each of which shall be deemed to be an original as against any
party  whose  signature  appears  thereon,  and  all  of  which  shall  together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof,  individually or taken together, shall bear the
signature of all of the parties reflected hereon as the signatures.

     IN WITNESS WHEREOF,  the parties have executed and delivered this Agreement
on the day and year first above written.

                           STATEN ISLAND SAVINGS BANK

                           By:___________________________
                           Name:_________________________
                           Title:________________________

                           RUSSO SECURITIES, INC.

                           By: _________________________________
                           Fred Russo, President & CEOFARMOUT AGREEMENT

      THIS FARMOUT AGREEMENT (this "Agreement") is entered into effective as of
September 22, 2000 (the "Effective Date"), by and among COLORADO WYOMING RESERVE
COMPANY, a Wyoming corporation ("Farmor"), whose address is 1801 Broadway, Suite
600, Denver, Colorado 80202, and ST OIL COMPANY, a Nevada corporation ("ST"),
whose address is 1801 Broadway, Suite 600, Denver, Colorado 80202, FM ENERGY
LLC, a California limited liability company ("FM"), whose address is 21484 Paseo
Portola, Malibu, California 90265, and THE SHORELINE COMPANIES, LLC, a Colorado
limited liability company ("Shorco"), whose address is Post Office Box 3437,
Englewood, Colorado 80155. ST, FM and Shorco may sometimes be collectively
referred to hereafter as "Farmees."

                              EXPLANATORY STATEMENT

      A. Farmor owns the mineral working interests in and to certain oil and gas
leases and seismic options covering approximately 61,000 acres of land located
in the Paradox Basin in San Juan County, Utah, as described in EXHIBIT A
attached hereto and incorporated herein by this reference, together with
associated seismic data, maps and other related proprietary information. Such
leases and lands are subject to the burdens identified in EXHIBIT A. Such leases
and lands described in EXHIBIT A, subject to the burdens identified in EXHIBIT
A, may sometimes be collectively referred to hereafter as the "Lease Acreage."

      B. Farmor has agreed to assign to Farmees, and Farmees have agreed to
accept from Farmor, certain working interests in the leases and seismic options
described in EXHIBIT A, in consideration of Farmees' completing, processing,
interpreting and providing to Farmor a three-dimensional seismic survey of up to
50 square miles covered by the above referenced oil and gas leases and seismic
options (the "Survey"); provided that the cost of such seismic survey shall not
exceed $1,100,000.00. Farmor shall have no obligation to make any assignment
until the seismic data resulting from the Survey (the "Data") has been
transferred to it on terms and in a form reasonably acceptable to it.

      C. Effective as of even date herewith, Farmees have entered into a certain
Seismic Acquisition Agreement (the "Seismic Agreement") for purposes of funding
and performing the Survey. A copy of the Seismic Agreement is attached hereto as
EXHIBIT B and incorporated herein by this reference.

      D. Effective as of even date herewith, Farmor and Farmees have entered
into a certain Tax Partnership Agreement, a copy of which is attached hereto as
EXHIBIT C and incorporated herein by this reference.

<PAGE>

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the Explanatory Statement, the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Farmor and Farmees, each intending to be legally bound, hereby covenant and
agree as follows:

     1.0 EXPLANATORY STATEMENT. The Explanatory Statement is true and correct,
and is incorporated herein by this reference.

     2.0 3-D SEISMIC SURVEY. As soon as is reasonably practical after Farmees
have contributed funds pursuant to the Seismic Agreement, Farmees, acting in
accordance with the Seismic Agreement, shall commence the Survey, subject to the
cost limitations contained in Section 2.1 below. Farmees shall cause the Survey
to be completed in a diligent and workmanlike manner, not later than 180 days
after commencement, unless otherwise mutually agreed and subject to the force
majeure provisions of Section 7.0. Upon completion of the Survey, Farmees shall
cause the Data to be processed and interpreted in a diligent and workmanlike
manner.

            2.1 COST OF SURVEY. The entire cost and expense of performing and
completing the Survey, and processing, analyzing and interpreting the Data
resulting therefrom, shall be borne by Farmees; provided, however, that such
aggregate cost and expense, general and administrative expense, management fees,
legal fees, consulting fees, contractor's fees and other expenses incurred in
connection with the Survey, shall not exceed the maximum amount of $1,100,000.00
(the "Maximum Cost"). Farmees shall not be obligated to expend more than such
Maximum Cost, nor shall they be obligated to expend all of such Maximum Cost.

            2.2   ACCESS AND OWNERSHIP.

                  2.2.1 PROPRIETARY DATA. If Farmees, or any one of them,
conduct the Survey and acquire the Data, Farmees shall transfer to Farmor a
fifty percent (50%) ownership interest in the Data or in an entity owning the
Data. Farmor shall have no obligation to make the Assignments described in
Section 3 below until the Data has been transferred to it on terms and in a form
reasonably acceptable to it.

                  2.2.2 SPEC DATA. Farmees may, subject to the prior written
approval of Farmor, enter into a contract with a third party to conduct the
Survey and acquire the Data (a "Spec Survey"). If Farmees decide to pursue a
Spec Survey, Farmees must obtain the prior approval of Farmor of the terms and
conditions of the Spec Survey, including any related licensing agreements, which
approval shall not be unreasonably withheld or delayed.

                                       2

<PAGE>

            2.3 COPIES OF DATA. Farmor and Farmees, and their respective agents,
employees, consultants and representatives, shall each have access to the entire
Survey, including, without limitation, all original field data, tapes, surveys,
observer notes and processed data volume.

            2.4 CONFIDENTIALITY. Except as and to the extent required by law and
subject to Section 2.2, Farmor and Farmees shall not disclose or use, and shall
direct their respective agents and representatives not to disclose or use, the
Data and any other associated information without the prior written consent of
all other parties hereto.

      3.0 ASSIGNMENTS. Upon the date of delivery to Farmor of the first
processed copies of the interpretive maps of the Survey and the satisfaction of
the terms and conditions of Section 2.2 (hereafter referred to as "Full
Performance"), Farmees shall have earned an aggregate one-half (1/2) of Farmor's
right, title and interest in and to the Lease Acreage and Farmor's seismic
options (to the extent such seismic options have not been exercised by the date
of such assignment). As soon as reasonably practical after the date of execution
of this Agreement, Farmor shall execute and deliver into escrow three separate
assignments conveying such interests to Farmees, subject only to burdens of
record and agreements between or among the parties hereto, existing as of the
Effective Date (collectively, the "Assignments"), apportioned among Farmees as
follows:

                  ST                20%

                  FM                20%

                  Shorco            10%

            3.1 ESCROW AGENT. Farmor and Farmees hereby designate and appoint
Trinity Petroleum Management, LLC, a Colorado limited liability company, whose
address is 1801 Broadway, Suite 600, Denver, Colorado 80202, as the escrow agent
to hold the Assignments and deliver them according to the terms of this
Agreement (the "Escrow Agent"). The Escrow Agent shall hold the Assignments in
trust for the benefit of Farmor and/or Farmees, as the case may be, and shall
deliver the Assignments (i) to the respective Farmees upon receipt of written
notice from Farmor that Full Performance has occurred within the time period
specified by this Agreement, or (ii) to Farmor upon receipt of written notice
from Farmor that Full Performance did not occur within the time periods
specified by this Agreement. The Escrow Agent shall deliver the Assignments to
the pertinent parties within five (5) business days of its receipt of the
operative written notice. The Escrow Agent shall be entitled to rely upon the
contents of any such written notice, without inquiring into the truth or
accuracy thereof. Farmor and Farmees, jointly and severally, shall indemnify,
defend and hold harmless the Escrow Agent from and against any and all losses,
damages, liabilities, cost and expenses that may be incurred by it arising out
of or in any way connected with its service hereunder, except for such losses,
damages, liabilities, costs and expenses as may result from the Escrow Agent's
gross negligence or willful misconduct. If, in the Escrow Agent's reasonable
opinion, there exists a bona fide dispute between Farmor and Farmees concerning
the delivery of the Assignments, the Escrow Agent may commence an

                                       3

<PAGE>

interpleader action in any court of competent jurisdiction and deposit the
Assignments into the registry of such court.

            3.2 NEGOTIATIONS. As soon as practical after delivery of the
Assignments to the Farmees, Farmor and Farmees shall market the project to the
industry for purposes of determining (i) the nature of any and all reasonable
development alternatives, including, without limitation, sale of the entire
project, and (ii) the value of the project. Thereafter, Farmor and Farmees shall
timely meet and conduct good faith negotiations to determine how best to realize
the value of the Prospect. All decisions as to further development (and/or any
other matter hereunder) must be approved by Parties holding an aggregate eighty
percent (80%) of the aggregate working interests held by Farmor and Farmees in
and to the Lease Acreage, assuming in all events that Farmees are entitled, or
have already received delivery of, the respective Assignments. In the event
Farmor and Farmees determine not to accept any industry proposal to purchase or
develop the project, or if no industry proposals are received, one or more of
the parties may notify the other parties that it desires to drill one or more
wells on the prospect. If Farmor and Farmees cannot in good faith agree upon
such drilling program, then the party or parties desiring to drill such well(s)
(the "Consenting Parties") may provide written notice to the other party or
parties (the "Non-Consenting Parties") of their intention to drill and the
Non-Consenting Parties shall have a period of thirty (30) days after receipt of
such notice in which to notify the Consenting Parties of their election to
participate or not to participate in such drilling program. Failure of any of
the Non-Consenting Parties to respond within such thirty (30) day period shall
be deemed an election not to participate. Upon any actual or deemed election not
to participate, each Non-Consenting Party making such election shall farmout its
entire interest in the Lease Acreage to the Consenting Parties, upon standard
industry terms and conditions.

            3.3   RECORDING.  Farmees   shall  be  entitled  to  record   their
respective Assignments upon receipt thereof.

      4.0 LEASE MAINTENANCE. Throughout the term of this Agreement, Farmor shall
timely and promptly pay any and all lease maintenance costs and expenses
relative to the leases covering the Lease Acreage, including, without
limitation, delay rentals, and shall do any and all things reasonable necessary
to maintain such leases in full force and effect. Within fifteen (15) days after
receiving a bill therefor, Farmees shall reimburse Farmor for one-half (1/2) of
the total amount of such lease maintenance costs and expenses incurred and paid
by Farmor since March 30, 2000. If any of Farmor's seismic options expires
before Full Performance, any of the Parties may determine to exercise such
options prior to expiration, pursuant to the procedures set forth in Section 6.0
of this Agreement.

      5.0   WARRANTIES OF FARMOR.   Farmor  hereby  warrants,  to and  for  the
benefit  of Farmees, jointly and severally, that:

            5.1 Farmor has good right and lawful authority to sell and convey
one-half (1/2) of its interest in the Lease Acreage to Farmees.

                                       4

<PAGE>

            5.2 The interest being assigned hereunder to Farmees is free and
clear of all liens, encumbrances, burdens and defects of title, and Farmor has
good, absolute and marketable title to the same, subject only to the items
specified in EXHIBIT A attached hereto.

            5.3 The leases described in EXHIBIT A attached hereto are each in
full force and effect, have not been amended or modified and are valid and
subsisting leases covering the entire estates which they purport to cover; all
royalties, rentals and other payments due under the leases have been properly
and timely paid; and all conditions and obligations necessary to keep such
leases and all agreements or rights pertaining thereto in force have been fully
performed and satisfied.

            5.4 Farmor's working interests in and to the leases described in
EXHIBIT A are accurately shown in such EXHIBIT A.

            5.5 Farmor has not entered into any commitments or agreements with
respect to the interest being assigned to Farmees hereunder, except as specified
in EXHIBIT A attached hereto.

            5.6 No suit, action or other proceeding is pending or, to the
knowledge of Farmor, threatened before any court or governmental agency which
might result in impairment or loss of Farmor's title to any part of its interest
in and to the Lease Acreage and/or the interest being assigned to Farmees
hereunder, or the respective values thereof. For purposes of this Section 5, the
"knowledge of Farmor" shall be limited to the actual knowledge of Farmor's Chief
Executive Officer.

            5.7 All valid laws, regulations and orders of all governmental
authorities or persons having jurisdiction over the Lease Acreage have been
complied with, except where noncompliance would not have a material adverse
effect.

            5.8 Farmor has received all necessary consents, permissions,
novations and approvals by third parties in connection with the sale, transfer
and assignment of the interest to Farmees, and all waivers of preferential
rights of third parties to purchase any part of such interest, except where the
failure of Farmor to obtain any consent, permission, novation or approval by a
third party would not have a material adverse effect.

      6.0 AREA OF MUTUAL INTEREST. Farmor and Farmees hereby establish an area
of mutual interest encompassing the lands described in EXHIBIT E attached hereto
and incorporated herein by this reference (the "AMI").

            6.1 TERM. The AMI shall remain in full force and effect for ten (10)
years from the Effective Date or so long as any of Farmor's or Farmee's
interests in the Lease Acreage remain or continue in force, whether extended by
production or otherwise (the "Term").

            6.2 ACQUISITION OF NEW LEASES. If within the Term any Party

                                       6

<PAGE>

hereto acquires an oil and gas leasehold interest in the AMI, either by (i) an
oil and gas acquisition (whether it be the purchase of a new oil and gas lease,
the extension or renewal of an existing lease or the acquisition of leasehold
interests through the acquisition of another entity), (ii) entry into an
agreement whereby such leasehold interests may be earned through drilling or
other exploratory or geophysical operations, or (iii) exercising any one or more
of the unexercised seismic options held by Farmor, the acquiring Party shall
promptly notify the other Parties of such acquisition and/or agreement,
including with such notification all available title information and copies of
leases and pertinent instruments, together with details pertaining to the cost
and expense of such acquisition or any obligation which may be incurred pursuant
thereto. The Parties receiving such notice shall have a period of thirty (30)
days after receipt thereof in which to notify the acquiring Party of its
election to participate or not to participate to the extent of its proportionate
interest. Failure of the Parties receiving such notice to respond to the
notifying Party within such thirty (30) day period shall be deemed an election
not to participate. The rights of the Parties to this AMI shall be subject to
the terms, provisions and conditions of such leasehold interests and farmout
agreements acquired by the Parties in the AMI; provided, however, that such
leasehold interests and farmout agreements shall not be subject to any
additional burdens created by Farmor or Farmees in the nature of royalties,
overriding royalties or production payments, unless Farmor or Farmees is/are
contractually obligated as of the Effective Date to grant such or similar
interests.

            6.3 ASSIGNMENT OF INTERESTS TO PARTICIPANTS. If a Party elects to
participate, the acquiring Party shall promptly assign the participating Parties
an interest in the oil and gas leasehold interest proportionate to their
interest in the Lease Acreage and subject to the proportionate part of all the
existing burdens of record and prior agreements between the Parties (royalty,
overriding royalty and production payments, if any, subject to the limitations
of Section 6.2 above).

            6.4 NON-PARTICIPATION. Non-participation by any Parties in such an
acquisition shall result in the acquired leasehold interest becoming the sole
and exclusive property of the participating Parties and they will be assigned
the share of the non-acquiring Parties pursuant and proportionate to their
interest in the Lease Acreage.

      7.0 FORCE MAJEURE. If Farmees are rendered unable, wholly or in part, by
force majeure to carry out their obligations under this Agreement, other than
the obligation (if any) to make payments of money, the obligations of Farmees,
so far as they are affected by the force majeure shall be suspended during the
continuance of the force majeure. The term force majeure shall mean an act of
God, strike, lockout or other disturbance, act of the public enemy, war,
blockade, public riot, lightning, fire, storm, flood, explosion, governmental
action or inaction, unavailability of equipment and any other cause, whether of
the kind specifically enumerated above or otherwise, which is not reasonably
within the control of Farmees.

      8.0   MISCELLANEOUS.

                                       6

<PAGE>

            8.1 WAIVER. No failure to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right. The rights hereunder and under any documents and
instruments executed in connection with this Agreement shall be in addition to
all other rights provided by law. No modification or waiver of any provision of
this Agreement or any documents or instruments executed in connection herewith,
nor consent to departure therefrom, shall be effective unless in writing and no
consent or waiver shall extend beyond the particular case and purpose involved.
No notice or demand given in any case shall constitute a waiver of the right to
take other action in the same, similar or other instances without such notice or
demand.

            8.2 SURVIVAL. Any of the terms and covenants contained in this
Agreement which require the performance of either party after execution hereof
shall survive the execution and delivery of this Agreement and all documents
related hereto.

            8.3 ASSIGNMENT. A party hereto shall not transfer or assign this
Agreement without the prior written consent of the other parties, and any such
transfer or assignment without such prior written consent shall be null and
void. Notwithstanding the foregoing, a party may transfer or assign this
Agreement to an entity that is an affiliate of such party. The term "affiliate"
shall mean a person or entity that, now or hereafter, directly or indirectly
controls, is controlled by, or is under common control with, a specified party.
A person or entity shall be deemed to control another person or entity if such
person or entity possesses, directly or indirectly, the power to direct or cause
the direction of the management policies of such other person or entity, whether
through the ownership of voting securities, by contract or otherwise.

            8.4 LAW  GOVERNING.  This  Agreement  shall  be  governed  by and
construed in accordance with the laws of the State of Colorado, without regard
to principles of conflicts of laws.

            8.5 ATTORNEYS' FEES. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, the prevailing party or parties shall be entitled to an award
of its or their reasonable attorneys' fees and costs to be fixed by the
arbitrator, trial court, and/or appellate court.

            8.6 TITLES AND CAPTIONS. All section and paragraph titles or
captions contained in this Agreement are for convenience only and shall not be
deemed part of the context nor affect the interpretation of this Agreement.

            8.7 NOTICES. Any notice under this Agreement shall be in writing and
shall be effective when actually delivered in person, one (1) business day after
being sent via facsimile to a party at the facsimile number set forth below or
three (3) business days after being deposited in the U.S. mail, registered or
certified, postage prepaid and addressed to the party at the address stated in
this Agreement or such other address as either party may designate by written
notice to the other.

                                       7

<PAGE>

            8.8 ENTIRE AGREEMENT. This Agreement and all other documents
executed in connection herewith contain the entire understanding between and
among the parties and supersede any prior understandings and agreements among
them respecting the subject matter of this Agreement.

            8.9 AGREEMENT  BINDING.  This Agreement  shall be binding upon, and
inure to the benefit of, the respective administrators, successors and assigns
of the parties hereto.

            8.10 FURTHER ACTION. The parties hereto shall execute and deliver
all documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of this Agreement.

            8.11 COUNTERPARTS. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.

            8.12 PARTIES IN INTEREST. Nothing herein shall be construed to be to
the benefit of any third party, nor is it intended that any provision shall be
for the benefit of any third party.

            8.13 SAVINGS CLAUSE. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                     FARMOR:

                                     COLORADO WYOMING RESERVE COMPANY

                                     By:  /S/ KIM FUERST
                                        --------------------------------------
                                         Name:  Kim Fuerst
                                         Title:  President

                                         Facsimile Number: ______________

                                       8

<PAGE>

                                    FARMEES:

                                    ST OIL COMPANY

                                    By: /S/ SALLIE S. TIPPIE
                                       ---------------------------------------
                                        Name:  Sallie S. Tippie
                                        Title:  Vice President

                                        Facsimile Number:  296-0329
                                                          -------------

                                    FM ENERGY LLC

                                    By: /S/ JAMES E. MOORE
                                       ---------------------------------------
                                        Name:  James E. Moore
                                        Title:  Co-Chairman

                                        Facsimile Number: 310-456-6469

                                    THE SHORELINE COMPANIES, LLC

                                    By: /S/ F. ROBERT TIDDENS
                                       ---------------------------------------
                                        Name:  F. Robert Tiddens
                                        Title:  Managing Member

                                        Facsimile Number: 970-428-0529

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]