Document:

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                                                                    Exhibit 10.3

                          CHANGE OF CONTROL AGREEMENT

     This change of control agreement ("Agreement") is entered into effective as
of [_______][___], [____], by and between Canaan Energy Corporation ("Canaan")
and [NAME] ("Executive").

     WHEREAS, Canaan desires to retain certain key employee personnel and,
accordingly, the Board of Directors of Canaan has approved Canaan entering into
a change of control agreement with Executive in order to encourage Executive's
continued service to Canaan.

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

1.   DEFINITIONS.
     -----------

     (a)  "Change in Duties" shall mean the occurrence, within two (2) years
          after the date upon which a Change of Control occurs, of any one or
          more of the following:

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

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

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

          (iv)  a change in the location of Executive's principal place of
                employment by Canaan or its successor by more than fifty (50)
                miles from the location where Executive was principally employed
                immediately prior to the date on which a Change of Control
                occurs.

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

          (i)   an acquisition (other than directly from Canaan) of any voting
                securities of Canaan (the "Voting Securities") by any "Person"
                (as the term person is used for purposes of Section 13(d) or
                14(d) of the Securities Exchange Act of 1934 (the "Exchange
                Act")) immediately after which such Person has "Beneficial
                Ownership" (within the meaning of Rule 13d-3 promulgated under
                the
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                Exchange Act) of fifty percent (50%) or more of the combined
                voting power of Canaan's then outstanding Voting Securities;

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

          (iii) consummation of:

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

                     (1) the stockholders of Canaan, immediately before such
                         merger, consolidation or reorganization, own directly
                         or indirectly immediately following such merger,
                         consolidation or reorganization, at least sixty percent
                         (60%) of the combined voting power of the outstanding
                         voting securities of the corporation resulting from
                         such merger or consolidation or reorganization (the
                         "Surviving Corporation") in substantially the same
                         proportion as their ownership of the Voting Securities
                         immediately before such merger, consolidation or
                         reorganization;

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

                     (3) no person other than Canaan, any subsidiary, any
                         employee benefit plan (or any trust forming a part
                         thereof) maintained by Canaan, the Surviving
                         Corporation, or any subsidiary, or

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                         any person who, immediately prior to such merger,
                         consolidation or reorganization had Beneficial
                         Ownership of fifty percent (50%) or more of the then
                         outstanding Voting Securities, has Beneficial Ownership
                         of fifty percent (50%) or more of the combined voting
                         power of the Surviving Corporation's then outstanding
                         voting securities.

               (B)  a complete liquidation or dissolution of Canaan; or

               (C)  an agreement for the sale or other disposition of all or
                    substantially all of the assets of Canaan to any Person
                    (other than a transfer to a subsidiary).

     Notwithstanding the foregoing, a Change of Control shall not be deemed to
     occur solely because any Person (the "Subject Person") acquired Beneficial
     Ownership of more than the permitted percent of the outstanding Voting
     Securities as a result of the acquisition of Voting Securities by Canaan
     that, by reducing the number of Voting Securities outstanding, increases
     the proportional number of shares Beneficially Owned by the Subject Person,
     provided that if a Change of Control would occur (but for the operation of
     this sentence) as a result of the acquisition of Voting Securities by
     Canaan, and after such share acquisition by Canaan, the Subject Person
     becomes the Beneficial Owner of any additional Voting Securities that
     increases the percentage of the then outstanding Voting Securities
     Beneficially Owned by the Subject Person, then a Change of Control shall
     occur.

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

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

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

          (ii) the highest annual bonus received by Executive during the three
               (3) years immediately prior to the date on which a Change of
               Control occurs.

     (e)  "Involuntary Termination" shall mean any termination of Executive's
          employment with Canaan or its successor other than (i) termination for
          cause; (ii) termination as a result of death or disability; (iii)
          retirement; or (iv) resignation by Executive except resignation on or
          before the date that is ninety (90) days after the date upon which
          Executive receives notice of a Change in Duties.

     (f)  "Retirement" shall mean Executive's resignation on or after the date
          Executive reaches age sixty-five (65).

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     (g)  "Severance Amount" shall mean an amount equal to three (3) times
          Executive's Compensation.

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

          (i)  the continued failure by the Executive to devote reasonable time
               and effort to the performance of Executive's duties after written
               demand for improved performance has been delivered to the
               Executive by Canaan that specifically identifies how Executive
               has not devoted reasonable time and effort to the performance of
               Executive's duties; or

          (ii) the willful engaging by Executive in misconduct that is
               materially injurious to Canaan, monetarily and otherwise.

2.   SEVERANCE BENEFITS.  If Executive's employment by Canaan or its successor
     ------------------
is subject to an Involuntary Termination that occurs within two (2) years after
the date upon which a Change of Control occurs, then Executive shall be entitled
to receive, as additional compensation for services rendered to Canaan or its
successor, a lump sum cash payment in an amount equal to Executive's Severance
Amount but in no event greater than the amount that would be deductible by
Canaan under Code Section 280G, after taking into consideration all payments to
such Executive covered by such section, which shall be limited to those payments
calculated in the manner required under Section 280G an Executive receives or is
deemed to receive (i) under this Agreement; (ii) under the Canaan Stock Option
Plan by reason of the acceleration of any vesting of options granted thereunder;
or (iii) under any other plan or arrangement that would otherwise be considered
a "parachute payment" under Section 280G.  Such payment shall be accompanied by
a notice specifying the calculation of the payment as well as the amount of any
"parachute payments" and the Executive's deduction limit under section 280G.
Such notice shall contain sufficient detail to enable the Executive to challenge
Canaan's computation of any payment without significant additional information.

3.   TERM.  Within ninety (90) days after January 1, 2005, and within ninety
     ----
(90) days after each successive five-year (5) period of time thereafter that
this Agreement is in effect, Canaan shall have the right to review this
Agreement, and in its sole discretion either continue and extend this Agreement,
terminate this Agreement, and/or offer Executive a different agreement.  Canaan
will notify Executive of such action within said ninety (90) day period.  This
Agreement shall remain in effect until so terminated and/or modified by Canaan.
Failure of Canaan to take any action within said ninety (90) day period shall be
considered as an extension of this Agreement for an additional five-year (5)
period of time.  If a Change of Control occurs while this Agreement is in
effect, then this Agreement shall not be subject to termination or modification
and shall remain in force for a period of two (2) years after such Change of
Control, and if within said two (2) years the contingency factors occur that
would entitle Executive to the benefits as provided herein, this Agreement shall
remain in effect in accordance with its terms.

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4.   GENERAL.
     -------

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

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

     (c)  Controlling Law.  This Agreement shall be governed by, and construed
          ---------------
          in accordance with, the laws of the State of Oklahoma.

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

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

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

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

                        [SIGNATURES ON FOLLOWING PAGE]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
_____ day of ____________, _______.

                                      "EXECUTIVE"

                                      NAME

                              By:     _______________________________________
                              Title:  _______________________________________
                                      Canaan

                                      CANAAN ENERGY CORPORATION

                              By:     _______________________________________
                              Title:  _______________________________________

                                       6<PAGE>

                                                                    EXHIBIT 10.4

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                            SHAREHOLDER'S AGREEMENT

                                 By and Between

                           CANAAN ENERGY CORPORATION

                                      and

                              CERTAIN SHAREHOLDERS

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                            SHAREHOLDER'S AGREEMENT

          This Shareholder's Agreement (the "Agreement") is made as of the ___
day of __________, 2000, by and between Canaan Energy Corporation, an Oklahoma
corporation (the "Company"), and Leo E. Woodard ("Woodard"), John Penton
("Penton"), Michael S. Mewbourn ("Mewbourn"), Thomas H. Henson ("Henson"),
Dunning Family Limited Partnership ("Dunning"), Larry D. Hartzog ("Hartzog"),
Michael C. Black, Trustee of the Michael C. Black Revocable Trust ("Black"), and
Anthony Lasuzzo ("Lasuzzo"), (individually sometimes referred to herein as
"Shareholder" and collectively sometimes referred to herein as "Shareholders").
Woodard, Penton, Mewbourn and Henson are sometimes collectively referred to
herein as the "Coral Shareholders" and Dunning, Hartzog, Black, and Lasuzzo are
sometimes collectively referred to herein as the "Indian Shareholders").

                                R E C I T A L S

          WHEREAS, the Coral Shareholders are the record and beneficial owners
of all the shares of Common Stock of Coral Reserves, Inc. and Coral Reserves
Energy Corporation (collectively the "Coral Combining Entities");

          WHEREAS, the Indian Shareholders are the record and beneficial owners
of all the shares of Common Stock of Indian Oil Company, an Oklahoma corporation
("Indian");

          WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company and the Shareholders are entering into a Plan of
Combination and Agreement of Merger dated as of the date hereof (the "Merger
Agreement"), pursuant to which the Shareholders will become owners of common
stock, par value $.01 per share of the Company ("Common Stock"), in exchange for
their respective shares of the Coral Combining Entities or Indian Common Stock
as provided for in the Merger Agreement; and

          WHEREAS, the Merger Agreement further contemplates that the Company
and the Shareholders shall enter into this Agreement which sets forth the
understanding among the Company and the Shareholders, as to the matters set
forth herein with respect to, among other things, the holding, acquisition and
transfer of the Common Stock by the Shareholders and their Affiliates (as
defined below) following consummation of the transactions contemplated by the
Merger Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:

            1. Certain Defined Terms.  As used in this Agreement, the following
               ---------------------
terms shall have the following meanings:

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          "Affiliate" shall have the meaning set forth in Rule 12b-2, as in
effect on the date hereof, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and with respect to Dunning, Hartzog and Black shall
include Cibola Corporation.

          "beneficially own" shall have the meaning set forth in Rule 13d-3, as
in effect on the date hereof, under the Exchange Act.

          "Board" shall mean the Board of Directors of the Company.

          "Effective Time" shall mean the Effective Time as defined in the
Merger Agreement.

          "Employee Plan" shall mean any equity incentive plan, agreement,
bonus, award, stock purchase plan, stock option plan or other stock arrangement
with respect to any directors, officers or other employees of the Company.

          "Family Member" shall mean the Shareholder's spouse and his or her
lineal descendants, and a trust, the income or principal of which is or may be
distributed exclusively to the Shareholder or one of the foregoing and any
business entity, the owners of which are any of the foregoing.

          "Group" shall have the meaning set forth in Rule 13d-5, as in effect
on the date hereof, under the Exchange Act.

          "Person" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.

          "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.

          "Company Stock" shall mean the Common Stock of the Company.

          2.   Additional Purchases.  The Shareholders covenant and agree that
               --------------------
during the term of this Agreement, the Shareholders and each of their Affiliates
and Family Members shall not, directly or indirectly, alone or through or with
others, acquire in any given three (3) month period an amount of shares of
Company Stock which exceeds one percent (1%) of the total voting power of shares
of Company Stock then outstanding, except:

               (a)  if the acquiring Shareholder, Affiliate or Family Member
makes a written notice of an offer to the other parties hereto of an opportunity
to buy their pro rata share of such amount of Company Stock which exceeds one
percent (1%) of the total voting power of the shares outstanding, on the same
terms as the acquiring Shareholder, Affiliate or Family Member, which offer
shall remain open for five (5) business days and if one of the parties hereto
fails to

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accept this offer, the other parties hereto can purchase such pro rata share of
those shares not purchased;

               (b)  such acquisition is from an Affiliate or Family Member; or

               (c) such acquisition is from the Company pursuant to an Employee
Plan.

           3.  Sales and Other Dispositions.
               ----------------------------

              (a) The Shareholders covenant and agree that during the term of
this Agreement, without the prior written consent of the Company approved by
two-thirds of the directors of the Company, neither they nor any of their
Affiliates or Family Members shall sell, transfer, hypothecate, pledge or
otherwise dispose of any shares of Company Stock except:

                  (i)    to the Company;

                  (ii)   in sales or distributions to any Person or Group in
     amounts not to exceed one percent (1%) of the total voting power of shares
     of Company Stock then outstanding in any given three (3) month period, so
     long as any such sale, to the knowledge of the selling Shareholder, would
     not result in such Person or Group acquiring such Company Stock
     beneficially owning in the aggregate more than 10% of the total voting
     power of shares of Company Stock then outstanding;

                  (iii)  pursuant to a bona fide pledge of, or granting of a
     security interest, in the Company Stock owned by the Shareholders and their
     Affiliates or Family Members to an institutional lender for money borrowed
     or pursuant to the foreclosure of any such pledge or security interest;
     provided, however, that either (A) such pledge relates to no more than an
     aggregate of 4% of the outstanding shares of Company Stock, or (B) such
     lender (a "Lender") prior thereto acknowledges in a writing reasonably
     satisfactory to the Company that it has received a copy of this Agreement
     and agrees to be bound by all of the provisions hereof;

                  (iv)   to an Affiliate of a Shareholder or a Family Member, if
     such Affiliate or Family Member acknowledges in writing reasonably
     satisfactory to the Company that it has received a copy of this Agreement
     and agrees to be bound by all its provisions with respect to the Company
     Stock as if he, she or it was the Shareholder;

                  (v)    pursuant to a merger or consolidation in which the
     Company is acquired, or a plan of liquidation of the Company; or

                  (vi)   any sale complying with the provisions of Section 3(b).

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          (b)  In connection with any proposed sale of Company Stock not
permitted by Section 3(a)(i) through (v), the Shareholder proposing to make such
a transfer or sale must first give written notice to the Company of such
Shareholder's intent to sell such shares of Company Stock and the specific terms
and conditions of such proposed sale or transfer.  Upon receipt of such notice,
the Company shall have the first option to purchase all (but no less than all)
of such shares of Company Stock on the same terms and under the same conditions
as set forth in the notice ("Company Option").  The Company shall have two (2)
business days to exercise its option to purchase such shares of Company Stock
pursuant to the Company Option.  If the Company elects to exercise the Company
Option, the Company shall be required to pay for the shares of Company Stock
acquired under the Company Option within ten (10) days of the exercise of the
Company Option.  If the Company fails to pay, the shares of Company Stock
proposed to be sold shall be released from this Agreement and may be sold or
transferred at any time thereafter without regard to the terms hereof.  If the
Company fails to exercise the Company Option or notifies the Shareholder of its
intent to waive its right to exercise the Company Option, the Shareholder
proposing to transfer or sell the shares of Company Stock is free to transfer or
sell such shares of Company Stock for not less than the purchase price and for
not more favorable terms to the purchaser than as were offered to the Company in
the Company Option for a period of sixty (60) days thereafter.  Upon the
expiration of such sixty (60) day period, a Shareholder wishing to make such
sale or disposition again must comply with this Section 3(b).

          (c)  Any purported sale or transfer of Company Stock not in compliance
with Section 3 of this Agreement during the term hereof shall be void and of no
force or effect and the Company shall not be required to transfer any Company
Stock to the new purported owner or recognize it as a Shareholder for any
purpose.  The Company shall include the legend set forth in Section 3(d) on all
certificates representing shares of Company Stock subject to this Agreement and
shall notify the Transfer Agent of the Company Stock of this restriction.

          (d) Any certificates nor or hereafter issued by the Company to
represent shares of Company Stock which are subject to this Agreement shall be
endorsed with a legend reading substantially as follows:

          Any sale, assignment, transfer or other disposition of Common Stock
          represented by this certificate is restricted by and subject to the
          terms and provisions of the Shareholders Agreement, dated __________,
          2000.  Any transferee, including a lender, taking the Common Stock
          represented by this Certificate as collateral, is subject to all the
          restrictions and duties contained in such Agreement.  A copy of such
          Agreement is on file with the Secretary of the Company.  By acceptance
          of this Certificate the holder hereof agrees to be bound by the terms
          of such Agreement.

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           4.  Representations; Covenants.
               --------------------------

               (a) The Company represents and warrants that it has the requisite
corporate power to enter into this Agreement, that it has duly authorized,
executed and delivered this Agreement and that the Agreement constitutes the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.

               (b)  Each Shareholder represents and warrants that:

                    (i)  he or it has the requisite power to enter into this
     Agreement, that he or it has duly executed this Agreement and that this
     Agreement constitutes the valid and binding obligation of the Shareholder,
     enforceable against the Shareholder and his or its Affiliates in accordance
     with its terms; and

                    (ii) except for the Shareholder and his or its Affiliates,
     no other Person, corporation, entity or association is, or may be deemed to
     be, a member of a Group which includes the Shareholder or any of his or its
     Affiliates with respect to the Company Stock.

               (c)  Each Shareholder agrees that (i) he or it will not permit
any Company Stock to be owned by any Affiliates of the Shareholder unless either
(a) the Shareholder owns at least a majority of the outstanding securities of
such Affiliate which are ordinarily entitled to vote for the election of
directors or others performing similar functions with respect to such Affiliate
or (B) with respect to an Affiliate that is a trust or partnership, the
Shareholder otherwise controls, or has the authority to control, such Affiliate
in the Shareholder's capacity as a trustee or general partner, as the case may
be, of such Affiliate, and (ii) that he or it will not sell or otherwise dispose
of any voting securities of any Affiliate of the Shareholder which owns Company
Stock so as to reduce its actual or potential (assuming the conversion of any
such convertible securities) ownership of the outstanding voting securities of
such Affiliate to below 50.1%, unless either (A) prior thereto the shares of
Company Stock held by such entity are transferred to the Shareholder or one or
more of his or its Affiliates in which the Shareholder owns at least a majority
of the outstanding securities which are ordinarily entitled to vote for the
election of directors or other performing similar functions with respect to such
Affiliate or (B) with respect to an Affiliate that is a trust or partnership,
such transfer will not result in the loss of control, or the loss of the
authority to control, such Affiliate in the Shareholder's capacity as a trustee
or general partner, as the case may be, of such Affiliate.

           5.  Term of Agreement; Amendments.
               -----------------------------

               (a)  This Agreement shall be in full force and effect for a term
of five (5) years following the Effective Time (as defined in the Merger
Agreement), which five (5) year period shall constitute the term of this
Agreement. This Agreement shall be binding on the parties hereto and their
successors and assigns.

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<PAGE>

               (b)  Neither this Agreement nor any provision hereof may be
amended or waived orally or in writing, except by a writing signed by the
parties hereto and approved by two-thirds of the Board;

          6.   Termination.  This Agreement may be terminated under Section 5(a)
               -----------
or upon the mutual written agreement of all the parties hereto.

          7.   Specific Enforcement.  The Shareholders acknowledge and agree
               --------------------
that the Company and its Shareholders (including the Shareholders executing this
Agreement) would be irreparably injured in the event that any provision of this
Agreement is breached or not performed by the Shareholders and their Affiliates
in accordance with its specific terms.  Accordingly, it is agreed that each
party shall be entitled to temporary and permanent injunctive relief with
respect to each and any breach or purported repudiation of this Agreement by the
other and to specifically enforce strict adherence to this Agreement and the
terms and provisions hereof against the other in any action instituted in a
court of competent jurisdiction, in addition to any other remedy which such
aggrieved party may be entitled to obtain.  Moreover, in the event of the breach
of any of the provisions of this Agreement, timeliness in obtaining relief is of
the essence.

           8.  Miscellaneous.
               -------------

               (a)  Notices.  All notices and other communications provided for
                    -------
herein shall be in writing and shall be delivered by hand, by facsimile,
telecopied or sent by certified or registered mail, return receipt requested,
postage prepaid, addressed in the manner set forth below (or in such other
manner for a party as shall be specified in a notice given in accordance with
this Section 8(a)):

                    (i)  if to the Company, to:

                         Leo E. Woodard
                         119 North Robinson
                         Suite 600
                         Oklahoma City, Oklahoma  73102
                         Phone: (405) 232-3222
                         Fax:  (405) 232-2226

                    (ii) if to the Shareholders, to such Shareholder's most
current address on record with the Company.

All such notices shall be conclusively deemed to be received and shall be
effective, if sent by facsimile, hand delivery or telecopied, upon receipt, or
if sent by registered or certified mail, on the fifth day after the day on which
such notice was mailed.

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<PAGE>

          (b)  Expenses.  Except as otherwise provided herein, all costs and
               --------
expenses incurred in connection with this Agreement shall be paid by the party
incurring such costs and expenses.

          (c)  Successors and Assigns.  This Agreement shall inure to the
               ----------------------
benefit of and be binding upon the successors and permitted assigns of each of
the parties hereto.  This Agreement may not be assigned by the Shareholder
without the prior written consent of all the parties hereto.

          (d)  Third Party Beneficiaries.  Nothing expressed or implied in this
               -------------------------
Agreement is intended or shall be construed to give any Person, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement.

          (e)  Entire Agreement.  This Agreement is intended by the parties to
               ----------------
be a final expression of their Agreement and a complete and exclusive statement
of their Agreement and understanding in respect of the subject matter contained
herein.  This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

          (f)  Severability.  In the event that any provision contained herein,
               ------------
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

          (g)  Waiver; Remedies.  No delay on the part of any party hereto in
               ----------------
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party hereto of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.

          (h)  Attorneys' Fees.  In any action at law or in equity brought to
               ---------------
enforce or interpret any provision of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees, costs and disbursements, in
addition to any other relief to which such party may be entitled.

          (i)  Waiver of Jury Trial.  The Company and the Shareholder hereby
               --------------------
irrevocably waive all right to trial by jury in any action or proceeding
(whether based on contract, tort or otherwise) arising out of or relating to
this Agreement.

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<PAGE>

          (j)  Governing Law.  This Agreement shall be governed by and construed
               -------------
in accordance with the laws of the State of Oklahoma applicable to agreements
made and to be performed entirely within that State.

          (k)  Headings.  The headings in this Agreement are for convenience of
               --------
reference only and shall not limit or otherwise affect the meaning hereof.

          (l)  Counterparts.  This Agreement may be executed in any number of
               ------------
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.

          (m)  Action as Director.  Notwithstanding the restrictions contained
               ------------------
in this Agreement, actions taken by the Shareholders as members of the Board
pursuant to his responsibilities in such capacity shall not be deemed to violate
this Agreement.

          (n) Gender and Number.  Whenever required by the context, as used in
              -----------------
this Agreement, the singular number shall include the plural and vice versa and
pronouns of whatever gender shall be deemed to include and designate the
masculine, feminine or neuter gender.

          IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement in their individual capacity or caused it to be duly executed by their
respective authorized signatories thereunto duly authorized as of the date first
written above.

COMPANY:                      CANAAN ENERGY CORPORATION

                              By: _________________________________________
                              Name: Leo E. Woodard
                              Title:   Chairman and Chief Executive Officer

SHAREHOLDERS:
                              _____________________________________________
                              Leo E. Woodard

                              _____________________________________________
                              John Penton

                              _____________________________________________
                              Michael S. Mewbourn

                                       8
<PAGE>

                              _____________________________________________
                              Thomas H. Henson

                              DUNNING FAMILY LIMITED PARTNERSHIP

                              By: Dunning Management, L.L.C.

                              By:
                              _____________________________________________
                                    Richard R. Dunning, Manager

                              _____________________________________________
                              Larry D. Hartzog

                              _____________________________________________
                              Michael C. Black, as Trustee of the Michael C.
                              Black Revocable Trust

                              _____________________________________________
                              Anthony Lasuzzo

                                       9

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