Document:

EXHIBIT 10-13

                                 PETROGEN CORP.

                      2004 STOCK OPTION AND INCENTIVE PLAN

1.       PURPOSES OF THE PLAN.

         The  purposes  of this  Plan are to (i)  attract  and  retain  the best
available  personnel for positions of  responsibility  within Petrogen Corp (the
"Company"),  (ii)  provide  additional  incentives  to Employees of the Company,
(iii)  provide  Directors,  Consultants  and  Advisors  of the  Company  with an
opportunity to acquire a proprietary  interest in the Company to encourage their
continued  provision of services to the Company and to provide such persons with
incentives  and rewards for superior  performance  more  directly  linked to the
profitability of the Company's  business and increases in shareholder value, and
(iv)  generally  to  promote  the  success  of the  Company's  business  and the
interests  of the  Company  and all of its  stockholders,  through  the grant of
options to purchase shares of the Company's Common Stock and other incentives.

         Incentive  benefits  granted  hereunder may be either  Incentive  Stock
Options,  Non-qualified  Stock Options,  stock awards,  Restricted Shares,  cash
awards  or  other  incentives  determined  by  the  board,  as  such  terms  are
hereinafter  defined.  The types of options or other incentives granted shall be
reflected in the terms of written agreements.

2.       DEFINITIONS.

         As used herein, the following definitions shall apply:

         2.1      "BOARD" shall mean the Board of Directors of Petrogen Corp.

         2.2      "CHANGE OF CONTROL"  means a change in ownership or control of
the Company effected through any of the following transactions:

                  (a) the  direct  or  indirect  acquisition  by any  person  or
related group of persons (other than by the Company or a person that directly or
indirectly  controls,  is controlled  by, or is under common  control with,  the
Company)  of  beneficial  ownership  (within  the  meaning  of Rule 13d-3 of the
Exchange  Act) of  securities  possessing  more than 50% of the  total  combined
voting power of the  Company's  outstanding  securities  pursuant to a tender or
exchange   offer  made  directly  to  the  Company's   shareholders,   or  other
transaction,  in each case which the Board does not recommend such  shareholders
to accept; or

                  (b) a change in the  composition of the Board over a period of
12 consecutive months or less such that a majority of the Board members (rounded
up to the  next  whole  number)  ceases,  by  reason  of one or  more  contested
elections for Board  membership,  to be comprised of individuals  who either (i)
have been Board members  continuously since the beginning of such period or (ii)
have been elected or nominated for election as Board members  during such period
by at least a majority  of the Board  members  described  in clause (i) who were
still in office at the time such  election  or  nomination  was  approved by the
Board; or

<PAGE>

                                       2

                  (c) a Corporate Transaction as defined below.

         2.3  "CODE"  shall  mean  the US  Internal  Revenue  Code or  analogous
legislation,  as  amended  from  time to time,  and the  rules  and  regulations
promulgated thereunder.

         2.4  "COMMITTEE"  shall mean the  Committee  constituting  the Board in
accordance with Section 4.1 of the Plan, if one is appointed.

         2.5  "COMMON  STOCK" or  "COMMON  SHARES"  shall mean (i) shares of the
common stock, no par value, of the Company  described in the Company's  Articles
of Incorporation, as amended, and (ii) any security into which Common Shares may
be converted by reason of any  transaction  or event of the type  referred to in
Section 12 of this Plan.

         2.6  "COMPANY"  shall mean  Petrogen  Corp.  a Nevada  corporation, and
shall  include  any parent or subsidiary corporation of the Company.

         2.7 "CONSULTANTS" and "ADVISORS" shall include any third party retained
or engaged  by the  Company to provide  service to the  Company,  including  any
employee of such third party providing such services.

         2.8    "CORPORATE    TRANSACTION"    means   any   of   the   following
shareholder-approved transactions to which the Company is a party:

                  (a) a merger or  consolidation in which the Company is not the
surviving entity,  except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

                  (b)  the  sale,  transfer  or  other  disposition  of  all  or
substantially  all of the  assets of the  Company  in  complete  liquidation  or
dissolution of the Company; or

                  (c) any reverse  merger in which the Company is the  surviving
entity but in which  securities  possessing  more than 50% of the total combined
voting power of the Company's outstanding securities are transferred to a person
or persons different from the persons holding those securities immediately prior
to such merger.

         2.9  "DATE OF  GRANT"  means  the date  specified  by the  Board or the
Committee on which a grant of Options,  Stock Appreciation  Rights,  Performance
Shares of Performance  Units or a grant or sale of Restricted Shares or Deferred
Shares shall become effective.

         2.10  "DEFERRAL  PERIOD" means the period of time during which Deferred
Shares are subject to deferral limitations under Section 9.3 of this Plan.

         2.11  "DEFERRED  SHARES"  means an award  pursuant to Section 9 of this
Plan of the right to receive  Common  Shares at the end of a specified  Deferral
Period.

<PAGE>

                                       3

         2.12  "DIRECTOR" shall mean a member of the Board.

         2.13  "EFFECTIVE DATE" shall have the meaning ascribed thereto in
Section 6.

         2.14  "EMPLOYEE"  shall  mean  any  person,   including   officers  and
directors,  employed  by the  Company.  The payment of a  director's  fee by the
Company shall not be sufficient to constitute  "employment" by the Company.  For
inclusiveness  purposes,  but not  having  legal  effect as to  obligations  and
liabilities,  Employee in this  Agreement  may also  encompass  Consultants  and
Advisors  where such is appropriate or where such is intended by the Board or by
a particular grant hereunder.

         2.15  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and all pertinent rules and regulations.

         2.16  "FAIR MARKET VALUE" shall mean,  with respect to the date a given
Option or other incentive is granted or exercised, the value of the Common Stock
determined  by the  Board  in such  manner  as it may  deem  equitable  for Plan
purposes but, in the case of an Incentive Stock Option, no less than is required
by applicable  laws or  regulations;  PROVIDED,  HOWEVER,  that where there is a
public market for the Common Stock, the fair Market Value per share shall be the
average of the bid and asked prices of the Common Stock on the Date of Grant, as
reported by the National  Association of Securities Dealers Automated  Quotation
System - Small Cap or National  Markets or the National  Association of Security
Dealers Over the Counter  Bulletin  Board or other exchange on which the Company
is listed and as determined by the Board.

         2.17  "INCENTIVE AGREEMENT" shall mean the written agreement between
the  Company  and  the   Participant   relating  to  Incentive   Stock  Options,
Non-qualified  Stock Options,  stock awards,  Restricted  Shares and cash awards
granted under the Plan, and shall include an Incentive  Stock Option  Agreement,
Non-qualified  Stock Option  Agreement  or other form of Agreement  which may be
approved by the Board.

         2.18  "INCENTIVE AWARD" shall mean the award of one or more Incentives.

         2.19  "INCENTIVE STOCK OPTION" shall mean an Option which is intended
         to qualify as an incentive  stock option  within the meaning of Section
422 of the Code, or any successor provision thereto.

         2.20  "INCENTIVES"  shall mean those  incentive  benefits  which may be
granted  from time to time under the terms of the Plan which  include  Incentive
Stock Options,  Non-qualified Stock Options, stock awards, Restricted Shares and
cash awards.

         2.21  "MANAGEMENT  OBJECTIVES"  means the  achievement  of  performance
objectives  established pursuant to this Plan for Participants who have received
grants of Performance  Shares or Performance Units or, when so determined by the
Board or the Committee, Restricted Shares.

         2.22  "NON-QUALIFIED STOCK OPTION" means an Option that is not intended
to qualify as a Tax-Qualified Option.

<PAGE>

                                       4

         2.23  "OPTION PRICE" means the purchase price payable upon the exercise
of an Option.

         2.24  "OPTION"  means  the right to  purchase  Common  Shares  from the
Company upon the  exercise of a  Non-qualified  Stock Option or a  Tax-Qualified
Option granted pursuant to Section 7 of this Plan.

         2.25  "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.

         2.26  "OPTION TERM" shall have the meaning ascribed to it in Section
7.3.

         2.27  "OPTIONEE" shall mean an Employee, Director, Consultant or
Advisor of the Company who has been granted one or more Options.

         2.28  "PARENT"  shall  mean  a  "parent  corporation,"  whether  now or
hereafter existing, as defined in Section 424(e) of the Code.

         2.29  "PARTICIPANT"  means a person who is  selected  by the Board or a
Committee  to  receive  benefits  under  this  Plan  and (i) is at that  time an
officer, including without limitation an officer who may also be a member of the
Board,  director,  or other  employee  of, or a  Consultant  or Advisor,  to the
Company, or (ii) has agreed to commence serving in any such capacity.

         2.30  "PERFORMANCE  PERIOD" means, in respect of a Performance Share or
Performance  Unit, a period of time  established  pursuant to Section 10 of this
Plan within which the Management objectives relating thereto are to be achieved.

         2.31  "PERFORMANCE  SHARE" means a  bookkeeping  entry that records the
equivalent of one Common Share awarded pursuant to Section 10 of this Plan.

         2.32  "PERFORMANCE  UNIT" means a bookkeeping entry that records a unit
equivalent to the Board selected monetary unit awarded pursuant to Section 10 of
this Plan.

         2.33 "PLAN" shall mean this Stock Option and Incentive Plan, as amended
from time to time in accordance with the terms hereof.

         2.34  "RESTRICTED  SHARES" means Common Shares granted or sold pursuant
to section 8 of this Plan as to which neither the substantial risk of forfeiture
nor the restrictions on transfer referred to in Section 8.9 hereof has expired.

         2.35 "RULE 16B-3"  means Rule 16b-3,  as  promulgated  and amended from
time to time by the Securities and Exchange  Commission  under the Exchange Act,
or any successor rule to the same effect.

         2.36  "SHARE"  shall mean a share of the Common  Stock,  as adjusted in
accordance  with Section 11 of the Plan.

<PAGE>

                                       5

         2.37  "SUBSIDIARY" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.

         2.38  "TAX DATE"  shall mean the date an Optionee is required to pay
the Company an amount with respect to tax withholding  obligations in connection
with the exercise of an option.

         2.39  "TAX-QUALIFIED OPTION" means an Option that is intended to
qualify under particular provisions of the Code, including without limitation an
Incentive Stock Option.

         2.40  "TERMINATION DATE" shall have the meaning ascribed thereto in
Section 6.

3.       COMMON STOCK SUBJECT TO THE PLAN.

3.1 Subject to the provisions of Section 11 of the Plan,  the maximum  aggregate
number of shares which may be optioned and sold or otherwise  awarded  under the
Plan is Six Million  (6,000,000)  Common Shares. Any Common Shares available for
grants and  awards at the end of any  calendar  year  shall be carried  over and
shall be available for grants and awards in the  subsequent  calendar  year. For
the purposes of this Section 3:

                  (a) Upon  payment of cash in lieu of exercise  provided by any
award granted under this Plan, or upon  expiration or  cancellation of any award
granted  under this Plan,  any Common Shares that were covered by such award and
not issued shall again be available for issuance hereunder.

                  (b) Common Shares covered by any award granted under this Plan
shall be deemed  to have  been  issued  or  transferred,  and shall  cease to be
available for future  issuance or transfer in respect of any other award granted
hereunder,  at the  earlier  of the  time  when  they  are  actually  issued  or
transferred or the time when dividends or dividend equivalents are paid thereon;
PROVIDED, HOWEVER, that Restricted Shares shall be deemed to have been issued or
transferred  at the  earlier  of the time when  they  cease to be  subject  to a
substantial risk of forfeiture or the time when dividends are paid thereon.

                  (c) Performance Units that are granted under this Plan and are
paid in Common  Shares but are not earned by the  Participant  at the end of the
Performance Period shall be available for future grants of incentives hereunder.

<PAGE>

                                       6

4.       ADMINISTRATION OF THE PLAN.

         4.1   PROCEDURE.

               (a) The  Board  shall  administer  the  Plan  and is the  body
responsible  for the Plan;  provided,  however,  that the  Board  may  appoint a
Committee  consisting  solely  of two (2) or more  "Non-Employee  Directors"  to
conduct  day-to-day  administration  of the  Plan on  behalf  of the  Board,  in
accordance with Rule 16b-3 and subject to the authority of the Board.

               (b) Once  appointed,  the  Committee  shall  continue to serve
until otherwise  directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members
(with or without cause),  appoint new members in substitution therefor, and fill
vacancies  however  caused;  PROVIDED,  HOWEVER,  that at no time may any person
serve on the Committee if that person's membership would cause the committee not
to satisfy the requirements of Rule 16b-3.

               (c) A majority of the Committee shall constitute a quorum, and
the acts of the members of the Committee who are present at any meeting  thereof
at which a quorum is present, or acts unanimously approved by the members of the
Committee in writing, shall be the acts of the Committee.

               (d)  Any   reference   herein  to  the  Board   shall,   where
appropriate,   encompass  a  Committee  appointed  to  administer  the  Plan  in
accordance with this Section 4.

         4.2   POWER OF THE BOARD OR THE COMMITTEE

               (a)  Subject to the  provisions  of the Plan,  the Board shall
have the authority, in its discretion:  (i) to grant Options or Incentive Awards
to Participants;  (ii) to determine,  upon review of relevant information and in
accordance  with Section  2.16 of the Plan,  the Fair Market Value of the Common
stock; (iii) to determine the exercise price per share of Options to be granted,
which exercise price shall be determined in accordance  with Section 7.14 of the
Plan;  (iv) to determine the number of Common Shares to be  represented  by each
Option or Incentive  Award;  (v) to determine the  Participants to whom, and the
time or times at which,  Options and Incentive Awards shall be granted;  (vi) to
interpret the Plan; (vii) to prescribe,  amend and rescind rules and regulations
relating  to the Plan;  (viii) to  determine  the terms and  provisions  of each
Option and Incentive  Award granted (which need not be identical)  and, with the
consent of the grantee thereof,  modify or amend such Option or Incentive Award;
(ix) to  accelerate or defer (with the consent of the grantee) the exercise date
of any Option or  Incentive  Award;  (x) to  authorize  any person to execute on
behalf of the Company any  instrument  required  to  effectuate  the grant of an
Option or Incentive  Award  previously  granted by the Board;  (xi) to accept or
reject the election made by a grantee  pursuant to Section 7.5 of the Plan;  and
(xii) to make all other  determinations  deemed  necessary or advisable  for the
administration of the Plan.

               (b) The Board or a Committee may delegate to an officer of the
Company the authority to make decisions pursuant to this Plan,  provided that no
such  delegation  may be made that  would  cause any award or other  transaction
under the Plan to cease to be exempt from Section  16(b) of the Exchange  Act. A
Committee  may  authorize  any one or more of its  members or any officer of the
Company to execute and deliver documents on behalf of the Committee.

<PAGE>

                                       7

         4.3   EFFECT OF  BOARD  OR  COMMITTEE  DECISIONS.   All  decisions  and
determinations  and  the  interpretation  and  construction  by the  Board  or a
Committee  of any  provision  of this  Plan or any  agreement,  notification  or
document  evidencing the grant of Options,  Restricted Shares,  Deferred Shares,
Performance Shares or Performance Units, and any determination by the Board or a
Committee  pursuant  to any  provision  of  this  plan  or any  such  agreement,
notification or document, shall be final, binding and conclusive with respect to
all grantees  and any other  holders of any Option or  Incentive  Award  granted
under the Plan.  No member of the Board or a  Committee  shall be liable for any
such action taken or determination made in good faith.

5.       ELIGIBILITY.

         Consistent with the Plan's  purposes,  Options and Incentive Awards may
be granted only to such Directors, Officers, Employees, Consultants and Advisors
of the Company as determined by the Board.  Subject to the terms of the Plan, an
Employee,  Officer,  Director,  Consultant  or Advisor  who has been  granted an
Option or  Incentive  Award  may,  if he is  otherwise  eligible,  be granted an
additional Option or Incentive Award.

6.       BOARD APPROVAL; EFFECTIVE DATE; TERMINATION DATE.

         The Plan shall take effect as of June 1, 2004 (the  "Effective  Date").
The Plan shall terminate on June 1, 2014 (the "Termination Date");  accordingly,
no  Incentive  Award  or  Option  under  this  Plan  may be  granted  after  the
Termination Date but the term of an award may extend beyond the Plan Termination
Date.

7.       STOCK OPTIONS.

         The Board or the  Committee may from time to time  authorize  grants to
Participants of Options to purchase Common Shares upon such terms and conditions
as the Board or the Committee  may  determine in  accordance  with the following
provisions:

         7.1   OPTIONS TO BE GRANTED; TERMS.

               (a)  Options  granted  pursuant  to  this  Section  7  may  be
Non-qualified  Stock Options or Tax-Qualified  Options or combinations  thereof.
The Board or the Committee shall determine the specific terms of Options.

               (b)  Each  grant  shall  specify  the  period  or  periods  of
continuous  employment,  or continuous  engagement of the consulting or advisory
services,  of the Optionee by the Company or any  Subsidiary  that are necessary
before the Options or installments thereof shall become exercisable.

               (c) Any grant of a Non-qualified  Stock Option may provide for
the payment to the Optionee of a dividend  equivalent  thereon in cash or Common
Shares on a current, deferred or contingent basis, or the Board or the Committee
may provide that any dividend  equivalents  shall be credited against the Option
Price.

<PAGE>

                                       8

         7.2   NUMBER OF SHARES SUBJECT TO OPTIONS. Each grant shall specify the
number of Common Shares to which it pertains.  Successive  grants may be made to
the same Optionee  regardless of whether any Options  previously  granted to the
Optionee remain unexercised.

         7.3   TERM  OF OPTION;  EARLIER  TERMINATION.  Subject  to the  further
provisions of this Section 7, unless otherwise provided in the Option Agreement,
the term (the  "Option  Term") of each  Option  shall be five (5) years from the
Date of Grant.

         7.4   EXERCISE PRICE.

               (a) Each grant shall  specify an Option Price per Common Share
for the Common Share to be issued pursuant to exercise of an Option, which shall
be determined by the Board or the Committee.  Unless otherwise determined by the
Board an Incentive Stock Option shall be no less than one hundred percent (100%)
of the Fair  Market  Value per share on the Date of Grant,  and in the case of a
Non-qualified  Stock Option shall be no less than seventy-five  percent (75%) of
the Fair Market Value per share on the Date of Grant.

               (b) With respect to Incentive  Stock  Options,  the  aggregate
Fair Market Value  (determined as of the  respective  Date or Dates of Grant) of
the Common  Shares for which one or more options  granted to any Optionee  under
this Plan may for the first time become  exercisable as Incentive  Stock Options
under the  federal  tax laws during any one  calendar  year (under all  employee
benefit plans of the Company) shall not exceed $100,000.  To the extent that the
Optionee holds two or more such options which become  exercisable  for the first
time in the same calendar year, the foregoing  limitation on the  exercisability
of such options as Incentive  Stock Options under the deferral tax laws shall be
applied on the basis of the order in which such options are granted.  Should the
number of Common  Shares for which any  Incentive  Stock  Option  first  becomes
exercisable in any calendar year exceed the applicable $100,000 limitation, then
that Option may  nevertheless  be exercised in such calendar year for the excess
number of Shares as a Non-qualified Stock Option under the federal tax laws.

         7.5   PAYMENT FOR SHARES. The price of an exercised Option and any
taxes  attributable  to the delivery of Common Stock under the Plan,  or portion
thereof, shall be paid as follows:

               (a) Each grant shall specify the form of  consideration  to be
paid in  satisfaction  of the  Option  Price and the  manner of  payment of such
consideration,  which may include (i) cash in the form of United States currency
or  check  or  other  cash   equivalent   acceptable   to  the   Company,   (ii)
nonforfeitable,  unrestricted  or restricted  Common  Shares,  which are already
owned by the Optionee and have a market referenced value at the time of exercise
that is equal to the Option Price, (iii) any other legal  consideration that the
Board or the Committee may deem appropriate,  including  without  limitation any
form of consideration authorized pursuant to this Section 7 on such basis as the
Board or the Committee may determine in accordance  with this Plan, and (iv) any
combination  of the foregoing.  The Board (or Committee) in its sole  discretion
may permit a so-called "cashless exercise" (net exercise) of the Options.

<PAGE>

                                       9

               In the event of a cashless  exercise of the Option the Company
shall issue the Option holder the number of Shares determined as follows:

               X = Y (A-B)/A
where:

               X  = the number of Shares to be issued to the Optionholder.

               Y = the number of Shares  with  respect to which the Option is
                   being exercised.

               A = the average of the closing sale prices of the Common Stock
                  for the five (5) Trading  Days  immediately  prior to (but not
                  including) the Date of Exercise.

               B = the Exercise Price.

               (b) Any grant of a Non-qualified Stock Option may provide that
payment of the Option  Price may also be made in whole or in part in the form of
Restricted  Shares  or  other  Common  Shares  that are not  subject  to risk of
forfeiture or  restrictions  on transfer in the manner  determined by the Board.
Unless  otherwise  determined by the Board or the Committee on or after the Date
of Grant,  whenever any Option Price is paid in whole or in part by means of any
of the forms of  consideration  specified  in this  Section  7.5(b),  the Common
Shares  received by the Optionee  upon the exercise of the  Non-qualified  Stock
Option shall be subject to the same risks of forfeiture as those that applied to
the  consideration  surrendered by the Optionee;  PROVIDED,  HOWEVER,  that such
risks of  forfeiture  shall  apply  only to the same  number  of  Common  Shares
received by the Optionee as applied to the forfeitable Common Shares surrendered
by the Optionee.

               (c) Any grant may allow for  deferred  payment  of the  Option
Price  through a sale and  remittance  procedure  by which a  Participant  shall
provide concurrent  irrevocable written instructions to (i) a Company-designated
brokerage firm to effect the immediate  sale of the purchased  Common Shares and
remit to the company, out of the sale proceeds available on the settlement date,
sufficient  funds to cover the aggregate  Option Price payable for the purchased
Common Share, and (ii) the Company to deliver the certificates for the purchased
Common Shares directly to such brokerage firm to complete the sale transaction.

               (d) The Board or Committee shall determine  acceptable methods
for tendering  Common Stock as payment upon exercise of an Option and may impose
such  limitations  and  prohibitions  on the use of Common  Stock to exercise an
Option as it deems appropriate.

         7.6   RIGHTS AS A  STOCKHOLDER. Until the issuance (as evidenced by the
appropriate  entry on the books of the Company or of a duly authorized  transfer
agent of the Company) of the stock certificate evidencing such Common Shares, no
right to vote or receive  dividends or any other rights as a  stockholder  shall
exist with respect to the Optioned  Stock,  notwithstanding  the exercise of the
Option.  No  adjustment  will be made for a dividend  or the right for which the
record  date is prior to the date the stock  certificate  is  issued,  except as
provided in Section 11 of the Plan.

<PAGE>

                                       10

         7.7   LOANS OR INSTALLMENT PAYMENTS; BONUSES.

               (a) The Board or the Committee may, in its discretion,  assist
any Participant in the exercise of one or more awards under the plan,  including
the satisfaction of any federal,  state, local and foreign income and employment
tax obligations  arising  therefrom,  by (i) authorizing the extension of a loan
from the Company to such Participant;  or (ii) permitting the participant to pay
the exercise price or purchase price for the purchased  shares in  installments;
or (iii) a guaranty by the Company of a loan  obtained  by the  Optionee  from a
third  party;  or (iv)  granting a cash bonus to the  Participant  to enable the
Participant to pay federal,  state,  local and foreign income and employment tax
obligations arising from an award.

               (b) Any loan or installment  method of payment  (including the
interest rate and terms of  repayment)  shall be upon such terms as the Board or
the Committee specifies in the applicable Incentive Agreement or otherwise deems
appropriate  under  the  circumstances.  Loans or  installment  payments  may be
authorized with or without security or collateral.  However,  the maximum credit
available to the  Participant  may not exceed the exercise or purchase  price of
the acquired shares (less the par value of such shares) plus any federal,  state
and local income and  employment  tax liability  incurred by the  Participant in
connection with the acquisition of such shares. The amount of any bonus shall be
determined  by the  Board or the  Committee  in its sole  discretion  under  the
circumstances.

               (c)  The  Board  or  the   Committee   may,  in  its  absolute
discretion,  determine  that one or more loans  extended  under  this  financial
assistance  program may be subject to  forgiveness by the Company in whole or in
part  upon such  terms and  conditions  as the Board or the  Committee  may deem
appropriate;  PROVIDED,  HOWEVER,  that the  Board or the  Committee  shall  not
forgive  that  portion  of any loan owed to cover  the par  value of the  Common
Shares.

         7.8   EXERCISE OF OPTION.

               (a)      PROCEDURE FOR EXERCISE.

                        (i) Any Option granted hereunder shall be exercisable
at such times and under such  conditions as  determined by the Board,  including
performance  criteria with respect to the Company  and/or the  Optionee,  and as
shall be permissible under the terms of the Plan. Unless otherwise determined by
the Board at the time of grant,  an Option may be exercised in whole or in part.
An Option may not be exercised for a fraction of a share.

                        (ii) An Option shall be deemed to be  exercised  when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person  entitled to exercise  the Option and full
payment for the Common  Shares with respect to which the Option is exercised has
been  received by the Company.  Full payment  may, as  authorized  by the Board,
consist of any  consideration  and method of payment allowable under Section 7.5
of the Plan.

                        (iii)  Exercise  of an  Option  in any  manner  shall
result in a decrease in the number of Shares which  thereafter may be available,
both for  purposes of the Plan and for sale under the  Option,  by the number of
Common Shares as to which the Option is exercised.

<PAGE>

                                       11

               (b)  TERMINATION  OF STATUS AS AN EMPLOYEE.  Unless  otherwise
provided in an Incentive Agreement,  if an Employee's  employment by the Company
is  terminated,  except  if such  termination  is  voluntary  or  occurs  due to
retirement with the consent of the Board or due to death or disability, then the
Option,  to the extent not exercised,  shall  terminate on the date on which the
Employee's employment by the company is terminated. If an Employee's termination
is voluntary or occurs due to retirement with the consent of the Board, then the
Employee  may after  the date such  Employee  ceases  to be an  employee  of the
Company,  exercise his Option at any time within three (3) months after the date
he ceases to be an Employee of the  Company,  but only to the extent that he was
entitled to exercise it on the date of such  termination.  To the extent that he
was not entitled to exercise the Option at the date of such  termination,  or if
he does not exercise such Option (which he was entitled to exercise)  within the
time specified herein, the Option shall terminate. In no event may the period of
exercise  in the case of  Incentive  Stock  Options  extend  more than three (3)
months beyond termination of employment.

               (c)  DISABILITY.  Unless  otherwise  provided in the Incentive
Agreement,  notwithstanding the provisions of Section 7.8(b) above, in the event
an Employee is unable to continue his employment with the Company as a result of
his permanent and total disability (as defined in Section 22(e)(3) of the Code),
he may  exercise  his Option at any time  within six (6) months from the date of
termination,  but only to the extent he was  entitled to exercise it at the date
of such  termination.  To the extent that he was not  entitled  to exercise  the
Option at the date of termination, or if he does not exercise such Option (which
he was entitled to exercise) within the time specified herein,  the Option shall
terminate.  In no event may the period of exercise  in the case of an  Incentive
Stock  Option  extend more than six (6) months  beyond the date the  Employee is
unable to continue employment due to such disability.

               (d)  DEATH.   Unless  otherwise   provided  in  the  Incentive
Agreement,  if an Optionee dies during the term of the Option and is at the time
of his death an Employee who shall have been in continuous status as an Employee
since the date of Grant of the Option,  the Option may be  exercised at any time
within six (6) months following the date of death by the Optionee's estate or by
a  person  who  acquired  the  right  to  exercise  the  Option  by  bequest  or
inheritance,  but only to the extent that an Optionee  was  entitled to exercise
the  Option on the date of death,  or if the  Optionee's  estate,  or person who
acquired  the right to exercise the Option by bequest or  inheritance,  does not
exercise  such  Option  (which he was  entitled  to  exercise)  within  the time
specified  herein,  the Option  shall  terminate.  In no event may the period of
exercise  in the case of an  Incentive  Stock  Option  extent  more than six (6)
months beyond the date of the employee's death.

         7.9   OPTION REISSUANCE.  The  Board or the  Committee  shall  have the
authority to effect,  at any time and from time to time, with the consent of the
affected  Participant,  the cancellation of any or all outstanding Options under
this Section 7 and grant in substitution new Options under the Plan covering the
same or a different  number of Common Shares but with an exercise price not less
than (i) 75% of the Fair Market Value per share on the new Date of Grant or (ii)
100% of the Fair Market Value per share in the case of Incentive Stock Options.

<PAGE>

                                       12

         7.10  INCENTIVE STOCK OPTIONS - DISPOSITION OF SHARES. In the case of
an Incentive Stock Option,  a Participant who disposes of Common Shares acquired
upon exercise of such Incentive  Stock Option by sale or exchange (i) within two
(2) years  after the Date of Grant of the  Option,  or (ii)  within one (1) year
after the exercise of the Option,  shall notify the Company of such  disposition
and the amount realized upon such disposition.

         7.11  INCENTIVE  AGREEMENT.   Each  grant  shall  be  evidenced  by  an
agreement,  which  shall be  executed  on behalf of the  Company by any  officer
thereof and  delivered to and  accepted by the  Optionee and shall  contain such
terms and provisions as the Board or the Committee may determine consistent with
this Plan.

8.       RESTRICTED SHARES.

         Restricted  Shares  are  shares  of  Common  Stock  which  are  sold or
transferred  by the Company to a Participant at a price which may be below their
Fair Market Value, or for no payment,  but subject to restrictions on their sale
or other transfer by the Participant.  The transfer of Restricted Shares and the
transfer and sale of Restricted  Shares shall be subject to the following  terms
and conditions:

         8.1   NUMBER OF SHARES. The number of Restricted Shares to be
transferred  or sold by the Company to a Participant  shall be determined by the
Board or Committee, if any.

         8.2   SALE PRICE. The Board shall determine the prices, if any, at
which Restricted  Shares shall be sold to Participant,  which may vary from time
to time and among Participants,  and which may be below the Fair Market Value of
such shares of Common Stock on the date of sale.

         8.3   RESTRICTIONS. All Restricted Shares transferred or sold hereunder
shall be subject to such  restrictions  as the Board may  determine,  including,
without limitation, any or all of the following:

               (a) a prohibition against the sale, transfer,  pledge or other
encumbrance of the Restricted Shares,  such prohibition to lapse at such time or
times as the Board or the Committee shall  determine  (whether in annual or more
frequent installments, at the time of the death, disability or retirement of the
holder of such Restricted Shares, or otherwise);

               (b) a requirement that the holder of Restricted Shares forfeit
or resell back to the  Company,  at his cost,  all or a part of such  Restricted
Shares in the event of termination of his employment  during any period in which
such Restricted Shares are subject to restrictions; and

               (c) a  prohibition  against  employment  of the holder of such
Restricted  Shares by any  competitor  of the  Company  or a  subsidiary  of the
Company,  or against such holder's  dissemination  of any secret or confidential
information belonging to the Company or a subsidiary of the Company.

         8.4   ESCROW. In order to enforce the restrictions imposed by the Board
pursuant to Section 8.3 above, the Participant receiving Restricted Shares shall
enter into an agreement  with the Company  setting  forth the  conditions of the
grant.  Restricted Shares shall be registered in the name of the Participant and
deposited, together with a stock power endorsed in blank, with the Company.

<PAGE>

                                       13

         8.5   END OF RESTRICTIONS. Subject to Section 8.3, at the end of any
time period during which the  Restricted  Shares are subject to  forfeiture  and
restrictions on transfer, such Restricted Shares will be delivered,  free of all
restrictions,  to the Participant or to the Participant's legal  representative,
beneficiary or heir.

         8.6   STOCKHOLDER. Subject to the terms and conditions of the Plan,
each  Participant  receiving  Restricted  Shares  shall have all the rights of a
stockholder  with  respect to such shares of stock  during any period which such
shares are  subject to  forfeiture  and  restrictions  on  transfer,  including,
without  limitation,  the right to vote such shares.  Dividends  paid in cash or
property other than Common Stock with respect to the Restricted  Shares shall be
paid to the Participant currently.

         8.7   OWNERSHIP OF RESTRICTED SHARES. Each grant or sale shall
constitute an immediate  transfer of the ownership of the  Restricted  Shares to
the Participant in consideration of the performance of services,  entitling such
Participant  to  dividend,  voting and other  ownership  rights,  subject to the
"substantial  risk of  forfeiture"  and  restrictions  on  transfer  referred to
hereinafter.

         8.8   ADDITIONAL CONSIDERATION.  Each grant or sale may be made without
additional  consideration  from the Participant or in consideration of a payment
by the Participant that is less than the Fair Market Value per share on the Date
of Grant.

         8.9   SUBSTANTIAL RISK OF FORFEITURE.

               (a)  Each  grant or sale  shall  provide  that the  Restricted
Shares covered  thereby shall be subject to a  "substantial  risk of forfeiture"
within the  meaning of Section 83 of the Code for a period to be  determined  by
the Board or the Committee on the Date of Grant.

               (b) Each grant or sale shall provide  that,  during the period
for which substantial risk of forfeiture is to continue,  the transferability of
the Restricted Shares shall be prohibited or restricted in the manner and to the
extent  prescribed  by the Board or the  Committee  on the Date or  Grant.  Such
restrictions  may  include  without  limitation  rights of  repurchase  or first
refusal in the  Company or  provisions  subjecting  the  Restricted  Shares to a
continuing substantial risk of forfeiture in the hands of any transferee.

         8.10  DIVIDENDS. Any grant or sale may require that any or all
dividends or other distributions paid on the Restricted Shares during the period
of such restrictions be automatically sequestered and reinvested on an immediate
or deferred basis in additional Common Shares,  which may be subject to the same
restrictions as the underlying award or such other  restrictions as the Board of
the Committee may determine.

         8.11  ADDITIONAL  GRANTS. Successive grants or sales may be made to the
same Participant  regardless of whether any Restricted Shares previously granted
or sold to a Participant remain restricted.

9.       DEFERRED SHARES.

         The Board or the Committee  may  authorize  grants or sales of Deferred
Shares to  Participants  upon  such  terms  and  conditions  as the Board or the
Committee may determine in accordance with the following provisions:

<PAGE>

                                       14

         9.1   PERFORMANCE  CONDITIONS. Each grant or sale shall  constitute the
agreement by the Company to issue or transfer  Common Shares to the  Participant
in the future in  consideration  of the performance of services,  subject to the
fulfillment  during the Deferral  Period of such  conditions as the Board or the
Committee may specify.

         9.2   ADDITIONAL CONSIDERATION.  Each grant or sale may be made without
additional  consideration  from the Participant or in consideration of a payment
by the  participant  that is less than the Fair  Market  Value per shares on the
Date of Grant.

         9.3   DEFERRAL PERIOD. Each grant or sale shall provide that the
Deferred  Shares covered  thereby shall be subject to a Deferral  Period,  which
shall be fixed by the Board or the Committee on the Date of Grant.

         9.4   OWNERSHIP OF SHARES. During the Deferral  Period, the Participant
shall not have any right to transfer any rights under the subject  award,  shall
not have any rights of ownership  in the Deferred  Shares and shall not have any
right to vote the  Deferred  Shares,  but the Board or the  Committee  may on or
after the Date of Grant  authorize  the payment of dividend  equivalents  on the
Deferred  Shares in cash or additional  Common Shares on a current,  deferred or
contingent basis.

         9.5   ADDITIONAL GRANTS. Successive  grants or sales may be made to the
same Participant regardless of whether any Deferred Shares previously granted or
sold to a Participant have vested.

         9.6   AGREEMENT. Each grant or sale shall be evidenced by an agreement,
which shall be  executed  on behalf of the  Company by any  officer  thereof and
delivered to and accepted by the  Participant  and shall  contain such terms and
provisions  as the Board or the Committee  may  determine  consistent  with this
Plan.

10.      PERFORMANCE SHARES AND PERFORMANCE UNITS.

         The Board or the Committee may authorize  grants of Performance  Shares
and Performance  Units,  which shall become payable to the Participant  upon the
achievement of specified Management  Objectives,  upon such terms and conditions
as the Board or the Committee  may  determine in  accordance  with the following
provisions:

         10.1  NUMBER. Each grant shall specify the number of Performance Shares
or Performance Units to which it pertains, which may be subject to adjustment to
reflect changes in compensation or other factors.

         10.2  PERFORMANCE PERIOD.  The Performance  Period with respect to each
Performance  Share or  Performance  Unit shall be determined by the Board or the
Committee on the Date of Grant.

<PAGE>

                                       15

         10.3  MANAGEMENT OBJECTIVES.

               (a) Each grant shall specify the  Management  Objectives  that
are to be  achieved  by the  Participant,  which  may be  described  in terms of
Company-wide objectives or objectives that are related to the performance of the
individual  Participant  or the  Subsidiary,  division,  department  or function
within the Company or  Subsidiary in which the  Participant  is employed or with
respect to which the participant provides consulting services.

               (b) Each grant  shall  specify  in  respect  of the  specified
Management  Objectives a minimum  acceptable level of achievement below which no
payment will be made and shall set forth a formula for determining the amount of
any  payment to be made if  performance  is at or above the  minimum  acceptable
level  but  falls  short  of  full  achievement  of  the  specified   Management
Objectives.

               (c)  The  Board  or  the  Committee   may  adjust   Management
Objectives and the related  minimum  acceptable  level of achievement if, in the
sole  judgment  of the  Board or the  Committee,  events  or  transactions  have
occurred  after the Date of Grant that are unrelated to the  performance  of the
Participant and result in distortion of the Management Objectives or the related
minimum acceptable level of achievement.

         10.4  PAYMENT.

               (a) Each grant shall specify the time and manner of payment of
Performance  Shares or  Performance  Units that shall have been earned,  and any
grant may  specify  that any such  amount  may be paid by the  Company  in cash,
Common Shares or any combination thereof and may either grant to the Participant
or  reserve  to the  Board or the  Committee  the  right to  elect  among  those
alternatives.

               (b) Any  grant of  Performance  Shares  may  specify  that the
amount  payable with respect  thereto may not exceed a maximum  specified by the
Board or the Committee on the Date of Grant. Any grant of Performance  Units may
specify that the amount  payable,  on the number of Common Shares  issued,  with
respect thereto may not exceed maximums  specified by the Board or the Committee
Shares on the Date of Grant.

         10.5  DIVIDENDS.  On or after the Date of Grant of Performance  Shares,
the Board or the  Committee  may provide for the payment to the  Participant  of
dividend  equivalents  thereon in cash or additional Common Shares on a current,
deferred or contingent basis.

         10.6  ADDITIONAL  GRANTS.  Successive  grants  may be made to the  same
Participant  regardless of whether any Performance  Shares or Performance  Units
granted to any Participant have vested.

         10.7  AGREEMENT.  Each grant shall be evidenced by an agreement,  which
shall be executed on behalf of the Company by any officer  thereof and delivered
to and accepted by the  Participant  and shall contain such terms and provisions
as the Board or the Committee may determine consistent with this Plan.

<PAGE>

                                       16

11.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.

         Subject to any required action by the stockholders of the Company,  the
number of shares of Common Stock covered by each outstanding Option or Incentive
Award,  and the number of shares of Common Stock which have been  authorized for
issuance under the Plan but as to which no Options nor Incentive Awards have yet
been  granted  or which  have been  returned  to the Plan upon  cancellation  or
expiration  of an Option or Incentive  Award,  as well as the price per share of
Common Stock covered by each such outstanding  Option or Incentive Award,  shall
be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split,  reverse stock split, stock
dividend,  combination  or  reclassification  of the Common Stock,  or any other
increase  or decrease in the number of issued  shares of Common  Stock  effected
without  receipt  of  consideration  by the  Company;  provided,  however,  that
conversion of any  convertible  securities of the Company shall not be deemed to
have been "effected without receipt of consideration."  Such adjustment shall be
made by the Board, whose  determination in that respect shall be final,  binding
and conclusive.  Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities  convertible into shares of stock
of any class, shall affect,  and no adjustment by reason thereof,  shall be made
with  respect  to the  number or price of shares of Common  Stock  subject to an
Option or Incentive Award.

         In the event of the proposed dissolution or liquidation of the Company,
all  Options  and  Incentive  Awards  will  terminate  immediately  prior to the
consummation of such proposed action unless otherwise provided by the Board. The
Board may, in the exercise of its sole  discretion  in such  instances,  declare
that any Option or  Incentive  Award shall  terminate  as of a date fixed by the
Board and give each holder the right to exercise of its sole  discretion in such
instances,  declare that any Option or Incentive  Award shall  terminate as of a
date fixed by the Board and give each holder the right to exercise his Option or
Incentive Award as to all or any part thereof,  including Shares as to which the
Option or Incentive Award would not otherwise be exercisable.  In the event of a
proposed sale of all or substantially  all of the assets of the Company,  or the
merger of the Company with or into another corporation,  the Option or Incentive
Award  shall be assumed or an  equivalent  Option or  Incentive  Award  shall be
substituted  by such  successor  corporation  or a parent or  subsidiary of such
successor corporation,  unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the holder shall
have the  right to  exercise  the  Option  or  Incentive  Award as to all of the
Shares,  including  Shares as to which the Option or  Incentive  Award would not
otherwise  be  exercisable.  If the Board  makes an Option  or  Incentive  Award
exercisable  in lieu of assumption or  substitution  in the event of a merger or
sale of assets,  the Board shall  notify the holder that the Option or Incentive
Award shall be fully  exercisable  for a period of sixty (60) days from the date
of such notice (but not later than the  expiration  of the term of the Option or
Incentive  Award),  and the Option or Incentive  Award will  terminate  upon the
expiration of such period.

12.      TRANSFERABILITY.

         Except to the extent  otherwise  expressly  provided  in an award,  the
right to  acquire  Common  Shares  or  other  assets  under  the Plan may not be
assigned,  encumbered or otherwise  transferred by a Participant and any attempt
by a  Participant  to do so will be null and void.  However  Option or Incentive
Awards  granted under this Plan may be  transferred  by a Participant by will or
the laws of  descent  and  distribution  or  pursuant  to a  qualified  domestic
relations  order as  defined by the Code or Title I of the  Employee  Retirement
Income  Security Act, as amended,  or the rules  thereunder.  Unless assigned in
accordance  with the terms of an award,  options and other awards  granted under
this Plan may not be exercised  during a  Participant's  lifetime  except by the
Participant  or,  in the event of the  Participant's  legal  incapacity,  by his
guardian or legal representative acting in a fiduciary capacity on behalf of the
Participant under state law and court supervision.

<PAGE>

                                       17

13.      TIME OF GRANTING INCENTIVES.

         The  Date of Grant of an  Option  or  Incentive  Award  shall,  for all
purposes,  be the date on which the Board or Committee  makes the  determination
granting such Option or Incentive Award.  Notice of the  determination  shall be
given to each  Participant  to whom an Option or  Incentive  Award is so granted
within a reasonable time after the date of such grant.

14.      AMENDMENT AND TERMINATION OF THE PLAN.

         14.1  The  Board may amend or  terminate  the Plan from time to time in
such  respects  as the Board may deem  advisable;  provided,  however,  that the
following  revisions or amendments  shall  require  approval of the holders of a
majority of the outstanding  Shares of the Company entitled to vote thereon,  to
the extent required by law, rule or regulation:

               (a) Any increase in the number of Shares  subject to the Plan,
other than in connection with an adjustment under Section 11 of the Plan;

               (b) Any change in the designation of the persons  eligible (or
any change in the class of Employees  eligible,  in the case of Incentive  Stock
Options) to be granted Options or Incentive Awards involving Shares; or

               (c) If the Company has a class of equity  security  registered
under  Section 12 of the Exchange Act at the time of such revision or amendment,
any material increase in the benefits accruing to participants under the Plan.

         14.2  Notwithstanding  the foregoing,  stockholder  approval under this
Section 14 shall only be required at such time as (A) any rules of the  National
Association of Securities  Dealers' Automated Quotation  System-National  Market
System shall require stockholder  approval of a plan or arrangement  pursuant to
which  Common  Stock may be acquired by officers or  directors  of the  Company,
and/or (B) any rule or regulation  promulgated  by the  Securities  and Exchange
Commission, or (C) if Section 422 of the Code shall require shareholder approval
of an amendment to the Plan.

         14.3  Any such amendment  or  termination  of the Plan shall not affect
Options  already  granted and such Options shall remain in full force and effect
as if this Plan had not been  amended  or  terminated,  unless  mutually  agreed
otherwise between the Optionee and the Board, which agreement must be in writing
and signed by the Optionee and the Company.

         14.4  Notwithstanding the foregoing, this Plan shall terminate upon the
earlier of (i) the  Termination  Date or such  earlier  date as the Board  shall
determine,  or (ii) the date on which all awards  available  for issuance in the
last year of the Plan shall have been issued or canceled.  Upon  termination  of
the Plan, no further awards may be granted,  but all grants  outstanding on such
date shall  thereafter  continue to have force and effect in accordance with the
provisions of the agreements evidencing such grants.

<PAGE>

                                       18

15.      WITHHOLDING TAXES.

         The Company is  authorized to withhold  income taxes as required  under
applicable  laws or  regulations.  To the extent that the Company is required to
withhold federal,  state,  local or foreign taxes in connection with any payment
made or benefit  realized by a Participant  or other person under this Plan, and
the amounts  available to the Company for the withholding are  insufficient,  it
shall be a condition  to the receipt of any such payment or the  realization  of
any such benefit  that the  Participant  or such other person make  arrangements
satisfactory  to the Company for payment of the balance of any taxes required to
be  withheld.  At  the  discretion  of the  Board  or the  Committee,  any  such
arrangements may without limitation  include  relinquishment of a portion of any
such  payment or benefit or the  surrender of  outstanding  Common  Shares.  The
Company  and  any  Participant  or such  other  person  may  also  make  similar
arrangements  with  respect to the  payment  of any taxes with  respect to which
withholding is not required.

16.      CORPORATE TRANSACTION OR CHANGE OF CONTROL.

         The Board or the Committee  shall have the right in its sole discretion
to  include  with  respect  to any  award  granted  to a  Participant  hereunder
provisions  accelerating  the  benefits of the award in the event of a Corporate
Transaction or Change of Control,  which  acceleration  rights may be granted in
connection with an award pursuant to the agreement evidencing the same or at any
time after an award has been granted to a Participant.

17.      MISCELLANEOUS PROVISIONS.

         17.1  PLAN EXPENSE.  Any expenses of administering this Plan shall be
borne by the Company.

         17.2  CONSTRUCTION  OF PLAN.  The place of  administration  of the Plan
shall  be  in  the  State  of   Colorado,   and  the   validity,   construction,
interpretation,  administration  and  effect  of the Plan and of its  rules  and
regulations,  and rights relating to the Plan, shall be determined in accordance
with the  laws of the  State of  Colorado  without  regard  to  conflict  of law
principles and, where applicable, in accordance with the Code.

         17.3  OTHER COMPENSATION.  The Board or the Committee may condition the
grant of any award or  combination of awards  authorized  under this Plan on the
surrender or deferral by the  Participant  of his or her right to receive a cash
bonus or other compensation  otherwise payable by the Company or a Subsidiary to
the Participant.

         17.4  CONTINUATION OF EMPLOYMENT OR SERVICES. This Plan shall not
confer upon any  Participant any right with respect to continuance of employment
or other service with the Company or any  Subsidiary  and shall not interfere in
any way with any right that the Company or any Subsidiary  would  otherwise have
to terminate any Participant's  employment or other service at any time. Nothing
contained in the Plan shall prevent the Company or any Subsidiary  from adopting
other or additional compensation arrangements for its employees.

<PAGE>

                                       19

         17.5  TAX-QUALIFIED  OPTIONS.  To the extent that any provision of this
Plan would  prevent any Option that was  intended to qualify as a  Tax-Qualified
Option  from so  qualifying,  any such  provision  shall  be null and void  with
respect to any such Option;  PROVIDED,  HOWEVER,  that any such provision  shall
remain in effect with  respect to other  Options,  and there shall be no further
effect on any provision of this Plan.

         17.6  CERTAIN   TERMINATIONS  OF  EMPLOYMENT  OR  CONSULTING  SERVICES,
HARDSHIP AND APPROVED LEAVES OF ABSENCE.  Notwithstanding any other provision of
this  Plan to the  contrary,  in the  event  of  termination  of  employment  or
consulting  services by reason of death,  disability,  normal retirement,  early
retirement  with the  consent  of the  Company,  termination  of  employment  or
consulting  services to enter public or military service with the consent of the
Company or leave of absence approved by the Company, or in the event of hardship
or other special circumstances, of a Participant who holds an Option that is not
immediately  and  fully  exercisable,  any  Restricted  Shares  as to which  the
substantial risk of forfeiture or the prohibition or restriction on transfer has
not lapsed, any Performance Shares or Performance Units that have not been fully
earned,  or any  Common  Shares  that are  subject to any  transfer  restriction
pursuant  to Section 8 of this  Plan,  the Board or the  Committee  may take any
action  that it deems to be  equitable  under the  circumstances  or in the best
interest of the Company,  including without  limitation waiving or modifying any
limitation or requirement with respect to any award under this Plan.

         17.7  BINDING  EFFECT.  The  provisions  of the Plan shall inure to the
benefit of, and be binding upon, the Company and its successors or assigns,  and
the Participants, their legal representatives, their heirs or legacees and their
permitted assignees.

         17.8  EXCHANGE  ACT  COMPLIANCE.  With  respect to  persons  subject to
Section 16 of the  Exchange  Act,  transactions  under this Plan are intended to
comply with all applicable  conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provisions of the Plan or action by the Board or
the  Committee  fails to so comply,  they shall be deemed null and void,  to the
extent permitted by law and deemed advisable by the Board or the Committee.

         17.9  CONDITIONS UPON ISSUANCE OF SHARES.

               (a) Shares shall not be issued  pursuant to the exercise of an
Option or Incentive  Award unless the exercise of such Option or Incentive Award
and the issuance and delivery of such Shares pursuant  thereto shall comply with
all relevant  provisions of law, including,  without limitation,  the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed,  and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

               (b) As a condition  to the  exercise of an Option or Incentive
Award,  the Company may require the person  exercising  such Option or Incentive
Award to represent  and warrant at the time of any such exercise that the Shares
are being  purchased or otherwise  acquired only for  investment and without any
present  intention  to sell or  distribute  such  Shares  if, in the  opinion of
counsel  for  the  Company  such  a  representation  is  required  by any of the
aforementioned relevant provisions of law.

<PAGE>

                                       20

               (c)  Inability  of the  Company to obtain  authority  from any
regulatory body having jurisdiction,  which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Share  hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell  such  Shares  as to which  such  requisite  authority  shall not have been
obtained.

         17.10 FRACTIONAL SHARES. The Company shall not be required to issue any
fractional  Common Shares  pursuant to this Plan. The Board or the Committee may
provide for the elimination of fractions or for the settlement thereof in cash.

         17.11 RESERVATION OF SHARES.  The Company will at all times reserve and
keep  available  such  number of Shares as shall be  sufficient  to satisfy  the
requirements of the Plan.

         17.12 INDEMNIFICATION.   In   addition   to  such  other   rights  of
indemnification  as they may have as members of the  Board,  the  members of the
Board and of the Committee shall be indemnified by the Company against all costs
and expenses  reasonably incurred by them in connection with any action, suit or
proceeding  to which  they or any of them may be party by reason  of any  action
taken or  failure to act under or in  connection  with the Plan or any Option or
Incentive  Award,  and against all amounts  paid by them in  settlement  thereof
(provided such settlement is approved by independent  legal counsel  selected by
the Company) or paid by them in  satisfaction  of a judgment in any such action,
suit or  proceeding,  except a  judgment  based  upon a  finding  of bad  faith;
provided  that upon the  institution  of any such action,  suit or  proceeding a
Board member or Committee  member  shall,  in writing,  give the Company  notice
thereof and an  opportunity,  at its own expense,  to handle and defend the same
before such Board member or Committee member  undertakes to handle and defend it
on his own behalf.

         17.13 GENDER.  For purposes of this Plan,  words used in the masculine
gender shall include the feminine and neuter, and the singular shall include the
plural and vice versa, as appropriate.

         17.14 USE OF PROCEEDS.  Any cash proceeds  received by the Company from
the sale of Common  Shares  under the Plan shall be used for  general  corporate
purposes.

         17.15 REGULATORY APPROVALS.

               (a) The implementation of the Plan, the granting of any awards
under the Plan and the  issuance  of any Common  Shares  shall be subject to the
Company's  procurement  of all  approvals  and permits  required  by  regulatory
authorities  having  jurisdiction over the Plan, the awards granted under it and
the Common Shares issued pursuant to it.

               (b) No  Common  Shares  or other  assets  shall be  issued  or
delivered under this Plan unless and until there shall have been compliance with
all applicable  requirements of federal and state securities laws, including the
filing and  effectiveness of the Form S-8 registration  statement for the Common
Shares issuable under the Plan, and all applicable  listing  requirements of any
securities exchange on which the Common Shares are then listed for trading.

<PAGE>

                                       21

         17.16 OTHER TAX MATTERS. Reference herein to the Code and any described
tax  consequences  related to the Plan or the  granting  or exercise of an award
hereunder  pertain only to those persons  (including the Company) subject to the
tax laws of the United  States of America or any state or territory  thereof and
include all amendments to the Code enacted hereafter.EXHIBIT 10-14

                         AMENDED MANAGEMENT CONSULTING
                               SERVICES AGREEMENT

                                     AMONG:

                                 PETROGEN CORP.

                                      AND:

                                 PETROGEN, INC.

                                      AND:

                              LEO WILLIAM KERRIGAN

                                 PETROGEN CORP.
                       3200 Southwest Freeway, Suite 3300
                         Houston, Texas, U.S.A., 77077

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -2-

         (the  Company,  Petrogen,  Inc. and the  Consultant  being  hereinafter
         singularly also referred to as a "PARTY" and  collectively  referred to
         as the "PARTIES" as the context so requires).

         WHEREAS:

A. The Company is a reporting company  incorporated  under the laws of the State
of Nevada,  U.S.A.,  and has its common  shares listed for trading on the NASDAQ
Over-The-Counter Bulletin Board;

B. Petrogen, Inc. is a non-reporting company incorporated, under the laws of the
State of Colorado, U.S.A., and, in accordance with the terms and conditions of a
certain "Share Exchange Agreement",  dated for reference effective as at October
11, 2002 (the "SHARE EXCHANGE AGREEMENT"1),  as entered, into among the Company,
Petrogen,  Inc.  and all of the  shareholders  of  Petrogen,  Inc.,  the Company
therein  purchased all of the issued and  outstanding  shares of Petrogen,  Inc.
from the shareholders of Petrogen, Inc.;

C. Prior to the  completion of the Share  Exchange  Agreement the Consultant was
the President,  Chief  Executive  Officer,  Chairman and a Director of Petrogen,
Inc. and, in accordance with the terms and conditions of a certain  pre-existing
consulting  arrangement  with Petrogen,  Inc. (the  "UNDERLYING  ARRANGEMENT'"),
Petrogen,  Inc.  therein  retained the Consultant to provide certain services to
Petrogen, Inc. as Petrogen, Inc.'s President and Chief Executive Officer;

D. In.  conjunction  with the  recent  completion  by the  Company  of the Share
Exchange  Agreement  the  resulting  Company is now  involved  in the  principal
business of Petrogen,  Inc.;  which is oil and gas  development  and  production
(collectively,  the resulting  "BUSINESS'");  and, as a consequence thereof, the
Companies  were thereby  desirous of  retaining  the  Consultant  as both of the
Companies'  respective President and Chief Executive Officer, and the Consultant
was thereby  desirous of  accepting  such  positions,  in order to provide  such
related services to both Companies  (collectively,  the "GENERAL  SERVICES'") as
may be  necessary  and  determined  during  the  continuance  of the  Underlying
Arrangement;

E. As a result,  and in  conjunction  with the  completion of the Share Exchange
Agreement,  the Parties  hereto  entered into a certain  "Management  Consulting
Services Agreement",  dated for reference effective as at February 12, 2003 (the
date of closing under the Share Exchange Agreement; the "UNDERLYING AGREEMENT"),
pursuant to which the  Companies  therein  formally  retained the  Consultant to
provide the General  Services to the Companies in accordance  with the terms and
conditions therein contained;

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -3-

F. Since the introduction of the Parties hereto, together with the entering into
of the Underlying Agreement, the Parties hereby acknowledge and agree that there
have been  various  discussions,  negotiations,  understandings  and  agreements
between them relating to the terms and  conditions of the General  Services and,
correspondingly,  that it is their intention by the terms and conditions of this
"Amended Management  Consulting Services Agreement"' (the "AGREEMENT") to hereby
replace,  in  their  entirety,  the  Underlying  Agreement  and all  such  prior
discussions,  negotiations,  understandings  and agreements  with respect to the
General Services; and

G. The Parties hereto have agreed to enter into this Agreement  which  replaces,
in its  entirety,  the  Underlying  Agreement,  together  with  all  such  prior
discussions,  negotiations,  understandings  and agreements,  and,  furthermore,
which necessarily clarifies their respective duties and obligations with respect
to the within General Services to be provided hereunder,  all in accordance with
the terms and conditions of this Agreement;

         NOW THEREFORE THIS AGREEMENT  WITNESSETH  that, in consideration of the
mutual  covenants and provisos  herein  contained,  THE PARTIES  HERETO AGREE AS
FOLLOWS.

                                    ARTICLE 1
                         DEFINITIONS AND INTERPRETATION

1.1  DEFINITIONS,  For all  purposes  of this  Agreement,  except  as  otherwise
expressly provided or unless the context otherwise requires, the following words
and phrases shall have the following meanings:

         (a)  "ADVANCES"  has  the  meaning  ascribed  to it in  section.  "3.4"
              hereinbelow;

         (b)  "ADDITIONAL  OPTIONS"  has the  meaning  ascribed to it in section
              "4.7r hereinbelow;

         (c)  "AGREEMENT"  means this  Amended  Management  Consulting  Services
              Agreement as from time to time  supplemented  or amended by one or
              more agreements entered into pursuant to the applicable provisions
              hereof, together with any Schedules attached hereto;

         (d)  "ARBITRATION  ACT" means the COMMERCIAL  ARBITRATION  ACT (British
              Columbia),  R.S.B.C. 1996, as amended, as set forth in Article "8"
              hereinbelow;

         (e)  "BENEFITS"  has  the  meaning  ascribed  to  it in  section  "4.8"
              hereinbelow;

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -4-

         (f)  "BOARD  OF  DIRECTORS"  means the  Board of  Directors  of each or
              either of the Company and Petrogen,  Inc. as duly constituted from
              time to time;

         (g)  "BONUS"  has  the  meaning   ascribed  to  it  in  section   "4.3"
              hereinbelow;

         (h)  "BUSINESS"  has  the  meaning  ascribed  to  it  in  recital  "D."
              hereinabove.

         (i)  "BUSINESS  DAY" means any day  during  which  Canadian.  Chartered
              Banks are open for business in the City of Vancouver,  Province of
              British Columbia;

         (j)  "CHANGE  IN  CONTROL'*   means,   in  relation  to  section  "4.6"
              hereinbelow, the occurrence of any of the following events:

              (i)  the acquisition, whether direct or indirect, of voting shares
                   of the Company in excess of 20% of the issued and outstanding
                   voting  shares of the Company by a person or group of persons
                   acting in concert,  other than  through an  Consultant  share
                   purchase plan or Consultant  share  ownership plan, and other
                   than by  persons  who  are,  or who arc  controlled  by,  the
                   existing shareholders of the Company;

              (ii) any  change or  changes  in the  composition  of the Board of
                   Directors  of the Company from the  Effective  Date such that
                   less than a majority of the Board of  Directors  continues to
                   consist of Directors  who are  continuing  Directors  (each a
                   "CONTINUING  DIRECTOR").  In this regard Continuing  Director
                   means an individual who is a member of the Board of Directors
                   as of the  Effective  Date,  or who  becomes  a member of the
                   Board of Directors  subsequent to the Effective Date with the
                   approval of a majority of the Directors  who were  Continuing
                   Directors as of the Effective Date;

              (iii)a merger  of the  voting  shares  of the  Company  where  the
                   voting  shares of the resulting  merged  company are owned or
                   controlled by  shareholders of whom more than 20% are not the
                   same as the shareholders of the Company  immediately prior to
                   the merger; or

              (iv) a sale by the Company of  substantially  all of the assets of
                   the Company to an entity that is not controlled by either the
                   shareholders of the Company or by the Company;

         (k)  "COMPANIES" means the Company and Petrogen, Inc.;

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>
                                           -5-

         (l)  "COMPANY"  means  Petrogen  Corp.  {having  changed  its name from
              "Hadro Resources,  Inc." as a consequence of the due and complete
              closing of the Share Exchange  Agreement),  a company incorporated
              under the laws of the State of Nevada,  U.S.A.,  or any  successor
              company,   however   formed,   whether  as  a  result  of  merger,
              amalgamation or other action;

         (m)  "COMPANY'S  NON-RENEWAL NOTICE"' has the meaning ascribed to it in
              section ;'3.2" hereinbelow;

         (n)  "CONSULTANT" means Sacha H. Spindler;

         (o)  "EFFECTIVE  DATE'"'  has the  meaning  ascribed to it on the front
              page of this Agreement;;

         (p)  '"EFFECTIVE  TERMINATION  DATE"' has the meaning ascribed to it in
              each of sections "3.2", "3.3", "3.4" and "3.5" hereinbelow;

         (q)  "EXPENSES"  has  the  meaning  ascribed  to  it in  section  "4.4"
              hereinbelow;

         (r)  "FEE"'  has  the  meaning   ascribed   to  it  in  section   "4.1"
              hereinbelow;

         (s)  "GENERAL SERVICES" has the meaning ascribed to it in section "2.1"
              hereinbelow;

         (t)  "INDEMNIFIED  PARTY" has the  meaning  ascribed,  to it in section
              "6.1" hereinbelow;

         (u)  "OPTIONS"  has  the  meaning  ascribed  to  it  in  section  "4.6"
              hereinbelow;

         (v)  "OPTION  PLAN" has the  meaning  ascribed  to it in section  "4.6"
              hereinbelow;

         (w)  "OPTION  SHARE" has the meaning  ascribed  to it in section  "4.6"
              hereinbelow;

         (x)  "PARTIES" or "PARTY" means,  individually  and  collectively,  the
              Company,  Petrogen,  Inc.  and/or the  Consultant  hereto,  as the
              context  so  requires,  together  with  each of  their  respective
              successors and permitted assigns as the context so requires;

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                       -6-

         (y)  "PETROGEN,  INC." means  Petrogen,  Inc.,  a company  incorporated
              under the laws of the State of Colorado,  U.S.A., or any successor
              company,   however   formed,   whether  as  a  result  of  merger,
              amalgamation or other action;

         {z)  "REGULATORY   APPROVAL"  means  the  acceptance  for  filing,   if
              required,  of the  transactions  contemplated by this Agreement by
              the Regulatory Authorities;

         (aa) "'REGULATORY   AUTHORITIES'"  and  "REGULATORY  AUTHORITY"  means,
              either singularly or collectively as the context so requires, such
              regulatory  agencies  who have  jurisdiction  over the  affairs of
              either of the Company,  Petrogen,  Inc.  and/or the Consultant and
              including,  without limitation,  and where applicable, the British
              Columbia Securities  Commission,  the United States Securities and
              Exchange  Commission,  NASDAQ and all regulatory  authorities from
              whom any such authorization,  approval or other action is required
              to be obtained or to be made in connection  with the  transactions
              contemplated by this Agreement;

         (ab) "RULE"'  has  the  meaning   ascribed  to  it  in  section   "4.6"
              hereinbelow;

         (ac) "SECURITIES  ACT" has the meaning  ascribed to it in section "4.6"
              hereinbelow;

         (ad) "SEVERANCE  PACKAGE""  has the  meaning  ascribed to it in section
              "3.2" hereinbelow;

         (ae) "SUBSIDIARY"1  means any company or  companies  of which more than
              50%  of  the  outstanding  shares  carrying  votes  at  all  times
              (provided  that the ownership of such shares  confers the right at
              all times to elect at least a majority  of the  directors  of such
              company or companies)  are for the time being owned by or held for
              that  company  and/or any other  company in like  relation to that
              company  and  includes  any  company  in  like   relation  to  the
              subsidiary;

         (af) "UNDERLYING  AGREEMENT" has the meaning  ascribed to it in recital
              "E." here in above; and

         (ag) "VACATION"  has  the  meaning  ascribed  to  it in  section  "4.5"
              hereinbelow.

1.2  INTERPRETATION.  For the  purposes of this  Agreement,  except as otherwise
expressly provided or unless the context otherwise requires:

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      - 7 -

         (a)  the words "HEREIN",  "HEREOF and  "HEREUNDER"  and other words of
              similar  import refer to this Agreement as a. whole and not to any
              particular   Article,   section  or  other   subdivision  of  this
              Agreement;

         (b)  any reference to an entity shall include and shall be deemed to be
              a reference  to any entity that is a permitted  successor  to such
              entity; and

         (c)  words  in  the  singular  include  the  plural  and  words  in the
              masculine gender include the feminine and neuter genders, and VICE
              VERSA.

                                    ARTICLE 2
                     REPLACEMENT OF UNDERLYING AGREEMENT AND
                 GENERAL SERVICES AND DUTIES OF THE CONSULTANT

2.1 REPLACEMENT OF UNDERLYING  AGREEMENT.  This Agreement constitutes the entire
agreement to date between the Parties hereto and replaces, in its entirety,  the
Original  Agreement,   together  with  every  previous  agreement,   discussion,
expectation.,  negotiation,  representation  or  understanding,  whether oral or
written,  express or implied,  statutory or otherwise,  between the Parties with
respect to the subject matter of the Underlying Agreement.

2.2 GENERAL  SERVICES.  During the  continuance  of this Agreement the Companies
hereby agree to retain the Consultant as the Executive Vice president of Geology
and Secretary of each of the Companies,  and the Consultant  hereby agrees to be
subject to the  direction  and  supervision  of, and to have the authority as is
delegated  to the  Consultant  by, the Board of  Directors  of the Company  (the
"BOARD OF DIRECTORS")  consistent with such  positions,  and the Consultant also
agrees to accept such,  positions in order to provide such,  related services as
the  Board of  Directors  shall,  from  time to time,  reasonably  assign to the
Consultant and as may be necessary for the ongoing  maintenance  and development
of the Companies'  various  Business  interests  during the continuance of this
Agreement   (collectively,   the  ^GENERAL   SERVICES"):   it  being   expressly
acknowledged  and agreed by the Parties hereto that the Consultant  shall commit
and provide to the  Companies  the General  Services on a  reasonably  full-time
basis during the  continuance of this  Agreement for which the Company,  as more
particularly  set forth  hereinbelow,  hereby  agrees to pay and  provide to the
order and direction of the Consultant  each of the proposed Fee (as  hereinafter
determined),   Bonus  (as  hereinafter  determined),   Expense  (as  hereinafter
determined)  payment  reimbursements,   Options  (as  hereinafter   determined),
Additional  Options  (as  hereinafter  determined),   Vacation  (as  hereinafter
determined) pay, Benefits (as hereinafter  determined) and Severance Package (as
hereinafter determined) in accordance with Articles "3" and "4" hereinbelow.

2.3 ADDITIONAL  DUTIES  RESPECTING THE GENERAL  SERVICES.  Without in any manner
limiting the generality of the General  Services to be provided as set forth, in
section  "2.2"  hereinabove,  it is hereby  also  acknowledged  and agreed  that
Consultant

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                       -8-

will,  during the  continuance of this Agreement,  devote  reasonably all of the
Consultant's consulting time to the General Services of the Consultant as may be
determined  and required by the Board of Directors for the  performance  of said
General  Services  faithfully,  diligently,  to the  best  of  the  Consultant's
abilities and in the best interests of the Companies and, furthermore,  that the
Consultant's  consulting time will be prioritized at all times for the Companies
in that regard.

2.4  ADHERENCE TO RULES AND POLICIES OF THE  COMPANIES.  The  Consultant  hereby
acknowledges  and  agrees  to  abide  by  the  reasonable  rules,   regulations,
instructions,  personnel practices and policies of the Companies and any changes
therein  which  may be  adopted  from  time to time by the  same as such  rules,
regulations,  instructions,  personnel  practices and policies may be reasonably
applied to the Consultant as the Chairman and Chief Executive Officer of each of
the Companies.

                                    ARTICLE 3
                    EFFECTIVENESS, TERMINATION AND SEVERANCE

3.1  EFFECTIVENESS OF THE AGREEMENT.  This Agreement  commences on the Effective
Date as set  forth  hereinabove,  however,  is  subject,  at all  times,  to the
Companies' prior receipt,  if required,  of Regulatory Approval from each of the
Regulatory  Authorities  to the terms  and  conditions  of and the  transactions
contemplated by this Agreement.

3.2   TERMINATION   WITHOUT  CAUSE  BY  THE  COMPANY  AND   SEVERANCE   PACKAGE.
Notwithstanding  any other  provision of this  Agreement,  this Agreement may be
terminated  by the Company at any time after the  Effective  Date and during the
continuance  of this  Agreement  upon its  delivery to the  Consultant  of prior
written  notice  of  its  intention  to  do  so  (the   '"COMPANY'S   NOTICE  OF
TERMINATION")  at least 60 calendar days prior to the effective date of any such
termination  (the  "EFFECTIVE   TERMINATION   DATE").  In  any  such  event  the
Consultant's  ongoing  obligation to provide the General  Services will continue
only until the Effective  Termination  Date and the Company's  shall continue to
pay to the  Consultant  all of the amounts  otherwise  payable to the Consultant
under  Article  "4"  hereinbelow  until  the  Effective  Termination  Date  (and
including for greater  certainty,  however,  without limiting any of the amounts
payable  under  Article  "4"  hereinbelow,  a pro rata  portion  of any Fees (as
hereinafter  determined),  Bonuses (as  hereinafter  determined).  Vacation  (as
hereinafter determined) pay and Benefits (as hereinafter  determined)).  In this
regard,  and in addition to all of the amounts  otherwise due and payable to the
Consultant  under  Article "4"  hereinbelow,  the Company  shall also pay to the
Consultant the following  amounts in the following manner,  however,  subject at
all  times  to  the  Consultant's   ongoing  compliance  with  the  Consultant's
obligations under Article "5" hereinbelow:

         (a)  an additional  severance cash payment  equating to an aggregate of
              12 months of the  monthly  Fee then  payable by the Company to the
              Consultant on the Effective  Termination  Date; and payable within
              10 business days of the Effective Termination Date;

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      - 9 -

         (b)  any  Expense  payment  reimbursements  which would then be due and
              owing  by  the  Company  to the  Consultant  to  the  date  of the
              Effective Termination Date; and, subject to the Consultant's prior
              compliance  with the  provisions  of  section  "4.4"  hereinbelow,
              payable within 10 business days of the Effective Termination Date;

         (c)  any  Vacation pay which would then be due and owing by the Company
              to the Consultant to the date of the Effective  Termination  Date;
              and payable  within 10 business days of the Effective  Termination
              Date;

         (d)  subject  to  the   provisions   of  sections   ';4.6"  and  ;i4.7"
              hereinbelow, confirmation that all of the Consultant's then issued
              and outstanding and vested Options,  Additional Options and Follow
              On Options in and to the Company as at the  Effective  Termination
              Date are exercisable for a period of five years from the Effective
              Termination Date; and

         (e)  confirmation  that  all  of the  Consultant's  then  Benefits  and
              Insurance  coverage pursuant to Article "6.2" would be extended to
              the  Consultant  for a period  ending two years from the Effective
              Termination Date;

with the  aggregate  of each such  obligation  of the Company to the  Consultant
under  each of  paragraphs  "(a)",  "(b)",  "(c)",  "(d)" and "(e)"  hereinabove
being herein collectively referred to as the "SEVERANCE PACKAGE'.

3.3  TERMINATION  WITHOUT  CAUSE BY THE  CONSULTANT.  Notwithstanding  any other
provision of this Agreement., this Agreement may be terminated by the Consultant
at any  time  after  the  Effective  Date and  during  the  continuance  of this
Agreement upon the Consultant's  delivery to the Company of prior written notice
of its intention to do so at least 30 calendar days prior to the effective  date
of any such termination  (herein also the "EFFECTIVE  TERMINATION DATE"). In any
such event the Company shall pay to the Consultant all of the amounts  otherwise
due or  payable to the  Consultant  by the  Company  pursuant  to the  Severance
Package and Article L14': hereinbelow until the Effective Termination Date.

3.4  TERMINATION FOR CAUSE BY ANY PARTY AND ADVANCE.  Notwithstanding  any other
provision of this  Agreement,  this  Agreement may be terminated by either Party
hereto  at any time upon  written  notice  to the  other  Party of such  Party's
intention to do so at least 30 calendar days prior to the effective  date of any
such termination  (herein also the "EFFECTIVE  TERMINATION  DATE"),  and damages
sought, if:

         (a)  the other Party fails to cure a material  breach of any  provision
              of this  Agreement  within 30  calendar  days from its  receipt of
              written notice from

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -10-

              said Party (unless such material breach cannot be reasonably cured
              within  said 30  calendar  days and the  other  Party is  actively
              pursuing to cure said material breach);

         (b)  the other Party is willfully  non-compliant  in the performance of
              its respective duties under this Agreement within 30 calendar days
              from its receipt of written  notice from said Party  (unless  such
              willful  non-compliance cannot be reasonably corrected within said
              30 calendar days and the other Party is actively  pursuing to cure
              said willful non-compliance);

         (c)  the other Party commits fraud or serious  neglect or misconduct in
              the  discharge of its  respective  duties  hereunder or under the
              law; or

         (d)  the other  Party  becomes  adjudged  bankrupt  or a  petition  for
              reorganization   or   arrangement   under  any  law   relating  to
              bankruptcy,  and  where  any  such  involuntary  petition  is  not
              dismissed within 30 calendar days.

         In  this  regard,  and in  the  event  that  either  of  the  Companies
terminates  this  Agreement at any time for cause by providing 30 calendar days'
prior  written  notice to the  Consultant  with respect to either of  paragraphs
"(a)" or "(b)" only hereinabove,  the Company shall pay to the Consultant all of
the amounts  otherwise due or payable to the Consultant by the Company  pursuant
to Article "4" hereinbelow until the Effective  Termination Date  (collectively,
the  "ADVANCE"');  and which  Advance may then be utilized by the  Consultant to
either cure or correct any material breach or willful non-compliance  consequent
thereon;  failing which the Company may then offset or claim any such Advance as
against any other  amounts which may then be due and owing by the Company to the
Consultant under the terms and conditions of this Agreement.

         In this regard,  and in the event that the Consultant  terminates  this
Agreement  at any time for cause by providing  30 calendar  days' prior  written
notice to the Company with respect to either of  paragraphs  "(a)" or "(b)" only
hereinabove,  the Company  shall also pay to the  Consultant  all of the amounts
otherwise due or payable to the  Consultant  by the Company  pursuant to Article
"4" hereinbelow until the Effective Termination Date as an Advance. In addition,
and should it then be either agreed by the Company or determined by  arbitration
in accordance  with Article 4;8"  hereinbelow  that the Consultant had, in fact,
appropriately  terminated  this  Agreement for cause,  the Company shall then be
obligated to provide and pay to the Consultant all of the amounts which comprise
the Severance Package in the manner as set forth in section "3.2" hereinabove.

3.5 DISABILITY OR DEATH AND ADVANCE. Notwithstanding any other provision of this
Agreement,  this  Agreement may be terminated at any time by any Party within 30
calendar  days after the death or  disability  of the  Consultant,  as a without
fault  termination (the resulting  effective date of any such termination  being
herein also the "EFFECTIVE

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -11-

TERMINATION  DATE").  For the purposes of this  Agreement the term  "'DISABILITY
shall mean the Consultant shall have been unable to provide the General Services
contemplated  under this Agreement for a period of 180 calendar days, whether or
not consecutive, during any 360 calendar day period, due to a physical or mental
disability.  A  determination  of  disability  shall  be  made  by  a  physician
satisfactory  to both  the  Consultant  and the  Company;  provided  that if the
Consultant  and the Company do not agree on a physician,  the Consultant and the
Company  shall each select a physician  and these two  together  shall  select a
third physician  whose  determination  as to disability  shall be binding on all
Parties. In the event that the Consultant's employment is terminated by death or
because of disability  pursuant to this Agreement,  the Company shall pay to the
estate of the Consultant or to the  Consultant,  as the case may be, ail amounts
to  which  the  Consultant   would  otherwise  be  entitled  under  Article  "4"
hereinbelow until the Effective Termination Date.

3.6 EFFECT OF  TERMINATION.  Terms of this  Agreement  relating  to  accounting,
payments, confidentiality non-compete, accountability for damages or claims, and
all other matters reasonably extending beyond the terms of this Agreement and to
the benefit of the Parties  hereto or for the  protection of the Business of the
Companies  shall survive the  termination of this  Agreement,  and any matter of
interpretation  thereto  shall  be  given a wide  latitude  in this  regard.  In
addition,  and without  limiting the foregoing,  each of sections "3.2",  "3.3",
"3.4",  "3.5"  and "3.6"  hereinabove  shall  survive  the  termination  of this
Agreement.

                                    ARTICLE 4
                GENERAL SERVICES COMPENSATION OF THE CONSULTANT

4.1 FEE. Subject at all times to sections "4,2", "4.3" and "4.4" hereinbelow, it
is hereby  acknowledged  and agreed that the Consultant shall render the General
Services as defined  hereinabove  during the  continuance  of this Agreement and
shall thus be  compensated  on a monthly basis by the Company from the Effective
Date of this  Agreement to the  termination of the same by way of the payment by
the Company to the  Consultant,  or to the  further  order or  direction  of the
Consultant  as the  Consultant  may  determine,  in the  Consultant's  sole  and
absolute  discretion,  and advise the Company of prior to such  payment,  of the
gross monthly fee of U.S. $10,000.00 (the "FEE1').  \X\ this regard it is hereby
acknowledged  and agreed that the within Fee  represents  the gross Fee which is
presently  due and owing by the  Company to the  Consultant  under the terms and
conditions  of this  Agreement.  All such  Fees will be due and  payable  by the
Company  to  the  Consultant,  or to  the  further  order  or  direction  of the
Consultant  as the  Consultant  may  determine,  in the  Consultant's  sole  and
absolute  discretion,  and advise the Company of prior to any such. Fee payment,
on the final  business day of the month of then monthly period of service during
the  continuance  of  this  Agreement;  provided,  however,  that  it is  hereby
acknowledged  and agreed that only U.S.  $7,000.00  of the Fee will  actually be
paid by the Company to the order or  direction of the  Consultant"  on a monthly
basis from the Effective Date hereof, with the balance of each monthly Fee being
accrued, without interest, until such time as the Company is in a position to be
able to afford to pay the  Consultant  either the balance of all Fees accrued or
the entire monthly Fee from future  financing(s)  and/or  positive  monthly cash
flow.

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      - 12-

4.2 INCREASE IN THE FEE. It is hereby acknowledged that the proposed initial Fee
payments under this Agreement:  were negotiated as between the Parties hereto in
the  context of the stage of  development  of the  Companies  existing as at the
effective  date  of the  Underlying  Agreement.  Correspondingly,  it is  hereby
acknowledged  and agreed that the Fee shall be reviewed and  renegotiated at the
request of either Party on a reasonably  consistent basis during the continuance
of this Agreement and, in the event that the Parties cannot agree,  then the Fee
shall be  increased  on. an annual  basis by the greater of (i) 15% and (ii) the
percentage  which is the  average  percentage  of all  increases  to  management
salaries and fees within the Companies during the previous 12-month period.  Any
dispute  respecting  either  the  effectiveness  or  magnitude  of the final Fee
hereunder  shall be determined by  arbitration,  in accordance  with Article "8"
hereinbelow.

4.3 BONUS, It is hereby also  acknowledged that the Board of Directors shall, in
good faith,  consider the payment of reasonable industry standard annual bonuses
(each being a "BONUS'") based upon the performance of the Companies and upon the
achievement  by the  Consultant  and/or the Companies of  reasonable  management
objectives  to be  reasonably  established  by the  Board  of  Directors  (after
reviewing  proposals  with  respect  thereto  defined by the  Consultant  in the
Consultant's capacity as the Chairman and Chief Executive Officer of each of the
Companies, and delivered to the Board of Directors by the Consultant at least 30
calendar  days  before the  beginning  of the  relevant  year of the Company (or
within 90 calendar  days  following  the  commencement  of the  Company's  first
calendar year commencing on the Effective  Date)).  These management  objectives
shall consist of both financial,  and subjective goals and shall be specified in
writing by the Board of Directors,  and a copy shall be given to the  Consultant
prior to the  commencement of the applicable year. The payment of any such Bonus
shall be payable no later than  within 120  calendar  days of the  ensuing  year
after any calendar year commencing on the Effective Date. Any dispute respecting
either  the  effectiveness  or the  magnitude  of any Bonus  hereunder  shall be
determined, by arbitration in accordance with Article "8" hereinbelow.

4.4  REIMBURSEMENT  OF EXPENSES.  It is hereby  acknowledged and agreed that the
Consultant shall also be reimbursed for all direct, reasonable expenses actually
and  properly  incurred  by the  Consultant  for the  benefit  of the  Companies
(collectively,  the "EXPENSES"1'); and which Expenses, it is hereby acknowledged
and agreed, shall be payable by the Company to the order,  direction and account
of the Consultant as the Consultant may designate in writing, from time to time,
in the  Consultant's  sole  and  absolute  discretion,  as soon as  conveniently
possible  after the prior  delivery by the  Consultant to the Company of written
substantiation on account of each such reimbursable Expense.

4.5 PAID VACATION.  It is hereby also  acknowledged and agreed that,  during the
continuance of this  Agreement,  the Consultant  shall be entitled to four weeks
paid vacation  (collectively,  the "VACATION") during each and every year during
the  continuance  of this  Agreement.  In this  regard it is further  understood
hereby that the  Consultant's  entitlement to any such paid Vacation  during any
year  (including the initial year) during the continuance of this Agreement will
be subject,  at all times,  to the  Consultant's  entitlement to only a pro rata
portion of any such paid Vacation time during any year

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -13-

(including the initial year) and to the effective date upon which this Agreement
is terminated prior to the end of any such year for any reason whatsoever.

4.6 OPTIONS.  Subject to the following,  it is hereby further  acknowledged  and
agreed that,  during the continuance of this  Agreement,  the Consultant will be
granted,  when  available  and subject to each of the rules and  policies of the
Regulatory  Authorities  and applicable  securities  legislation,  the terms and
conditions of the Company's  existing stock option plan (the "OPTION PLAN"') and
the  final  determination  of the  Board of  Directors,  acting  reasonably,  an
incentive  stock  option or stock  options in and to the Company  (each being an
"OPTION")  for the  collective  purchase of no less than an  aggregate  of up to
300,000 common shares of the Company (each an "OPTION  SHARE'):  which incentive
Option or Option(s) will be exercisable for a period of at least ten years from,
the  date of  granting  at such  minimum  exercise  price  or  prices  as may be
determined  at  such  date or  dates  of  granting,  or from  time to  time,  in
accordance with the rules and policies of the Regulatory Authorities.

         In this  regard,  and  subject  also  to the  following,  it is  hereby
acknowledged  and  agreed  that  the  exercise  of any such  Option(s)  shall be
subject,  at all times,  to such  vesting and resale  provisions  as may then be
contained in the Company's  Option Plan and as may be finally  determined by the
Board of Directors, acting reasonably.  Notwithstanding the foregoing,  however,
it is hereby also acknowledged and agreed that:

         (a)  in the event that this Agreement is terminated in accordance  with
              either of sections "3.2", "3.3", "3.4" or "3.5" hereinabove,  such
              portion of the within,  and remaining  Option(s)  which shall have
              then  vested  in  the  foregoing  manner  and  on  the  determined
              Effective  Termination Date shall,  notwithstanding  the remaining
              exercise  period  of the  Option(s),  then be  exercisable  by the
              Consultant  for a period of five years  following  such  Effective
              Termination Date; and

         (b)  in the event of a Change in  Control  of the  Company,  the within
              Option(s)  shall vest  immediately  and in  priority  to any other
              vesting provision contained in this Agreement and in any agreement
              evidencing  the within  Option(s)  subject,  at all times,  to the
              terms and conditions of the Company's then Option Plan.

         In this regard,  and in accordance with the terms and conditions of the
final form of Option  agreement,  the Consultant  hereby also  acknowledges  and
agrees that:

         (a)  NO  OBLIGATION  TO  REGISTER  ANY OPTION  SHARES:  the  Consultant
              understands  that the Company is under no  obligation  to register
              any Option Shares under the United States  SECURITIES ACT OF 1933,
              as amended (the "SECURITIES ACT"), and that, in the absence of any
              such  registration,  the Option Shares may not be sold unless they
              are sold  pursuant to an  exemption  from  registration  under the
              Securities Act. Furthermore, the

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                         - 14-

              Consultant  fully  understands  that the Option  Shares may not be
              registered  under the  Securities Act and that they will be issued
              in  reliance  upon an  exemption  which is  available  only if the
              Consultant acquires such Option Shares for investment and not with
              a view to distribution. The Consultant is familiar with the phrase
              "acquired for investment and not with a view to  distribution"  as
              it relates to the Securities Act and the special  meaning given to
              such term in various releases of the United States  Securities and
              Exchange Commission; and

         (b)  DISPOSITION OF OPTION  SHARES:  the Company is under no obligation
              to comply,  or to assist the  Consultant  in complying  with,  any
              exemption from such registration requirement,  including supplying
              the Consultant  with any  information  necessary to permit routine
              sales of the Option  Shares  under  Rule !44 of the United  States
              Securities and Exchange  Commission (the "RULE'").  The Consultant
              also understands that, with respect to the Rule,  routine sales of
              securities  made in  reliance  upon  such Rule only can be made in
              limited  amounts in accordance with the terms and condition of the
              Rule,  and  that in  cases  in  which  the  Rule is  inapplicable,
              compliance  with  either   Regulation  A  or  another   disclosure
              exemption  under the  Securities  Act will be required.  Thus, the
              Option Shares will have to be held  indefinitely in the absence of
              registration  under  the  Securities  Act  or  an  exemption  from
              registration,  the Consultant  also  acknowledges  and understands
              that:

              (i)  the  Option  Shares  are  restricted  securities  within  the
                   meaning of Rule 144;

              (ii) the exemption  from  registration  under Rule 144 will not be
                   available in any event for at least one year from the date of
                   purchase and payment of the Option Shares by the  Consultant,
                   and even  then  will  not be  available  unless  (A) a public
                   trading  market  then  exists  for the  common  stock  of the
                   Company, (B) adequate  information  concerning the Company is
                   then  available  to  the  public  and  (C)  other  terms  and
                   conditions of Rule 144 are complied with: and

              (iii)any sale of the Option  Shares may be made by the  Consultant
                   only in  limited  amounts in  accordance  with such terms and
                   conditions.

              The Consultant further  acknowledges and understands that, without
              in anyway limiting the  acknowledgements and understandings as set
              forth hereinabove, the Consultant agrees that the Consultant shall
              in no event  make any  disposition  of all or any  portion  of the
              Option Shares which the  Consultant may acquire  hereunder  unless
              and until:

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -15-

              (iv) there is then in effect a '"REGISTRATION STATEMENT" under the
                   Securities  Act covering such proposed  disposition  and such
                   disposition  is made in  accordance  with  said  Registration
                   Statement; or

              (v)  (A) the  Consultant  shall have  notified  the Company of the
                   proposed  disposition  and shall have  furnished  the Company
                   with a detailed  statement of the  circumstances  surrounding
                   the  proposed  disposition.  (B) the  Consultant  shall  have
                   furnished the Company with an opinion of the Consultant's own
                   counsel to the effect that such  disposition will not require
                   registration  of any such Option Shares under the  Securities
                   Act and (C) such opinion of the  Consultant's  counsel  shall
                   have been  concurred  in by counsel  for the  Company and the
                   Company   shall  have   advised   the   Consultant   of  such
                   concurrence.

4.7 ADDITIONAL OPTIONS. Subject to each of the terms and conditions as set forth
in.  section  "4.6"  hereinabove  and in the  final  form  of  Option  agreement
determining the same, it is hereby also acknowledged and agreed that, subsequent
to the  initial  year from the  Effective  Date and during  each year during the
ongoing continuance of this Agreement,  the Consultant shall also be compensated
by the Company from the  commencement of each such year of this Agreement to the
termination of the same by way of the granting by the Company to the Consultant,
again  subject to each of the rules and policies of the  Regulatory  Authorities
and applicable securities legislation, the terms and conditions of the Company's
existing  Option  Plan and the final  determination  of the Board of  Directors,
acting reasonably,  a further incentive stock, option or stock options in and to
the Company (each being an "ADDITIONAL  OPTION') for the collective  purchase of
not less than a further  aggregate of up to 300,000 Option Shares of the Company
for each such year of this  Agreement;  and which further  incentive  Additional
Option or Additional  Option(s) will be exercisable for a period of at least ten
years from the date of granting at an exercise price per Option Share underlying
any such  Additional  Option  determined  at up to 40%  below  the then  ten-day
trading  average of the Company's  shares on any  recognized  exchange in. North
America  immediately  prior  to the  date  of  granting;  and  which  Option  or
Option(s),  subject  to the  final  form  of  Option  agreement,  shall,  unless
otherwise determined by the Board of Directors, acting reasonably, vest not less
than on an  equivalent  basis  quarterly  during the first year of the  exercise
period of any such Additional  Option and based upon the prior attainment by the
Companies  of certain  development  milestones  which  shall be agreed to by the
Consultant  and the Company in advance of the  granting  of any such  Additional
Option.  Any  dispute  respecting  either  the  granting  or  the  terms  of any
Additional  Options  hereunder  shall be determined by arbitration in accordance
with Article "8" hereinbelow.

4.8 FOLLOW-ON OPTIONS. IT is hereby further acknowledged and agreed that, during
the  continuance  of this  Agreement,  and in addition  to the  Option,  and the
Additional Options hereunder,  the Consultant will also be granted, from time to
time and when applicable, further incentive stock Options in and to the Company
(each  such  Option  being  herein a  "FOLLOW-ON  OPTION'1)  equal to 20% of any
incentive  stock options which are  heretofore  granted by the Company after the
Effective  Date hereof to any  individuals  comprising  the following  executive
positions in and to the Company (collectively, the "EXECUTIVE'"): (that being to
either of the Chairman (currently the

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -16-

Consultant),  the  Chief  Executive  Officer  (currently  the  Consultant),  the
President (currently Mr. Neville Henry), any Executive Vice-President (currently
Messrs.  William  Kerrigan  and  Timothy  Russell);  and on the same  terms  and
conditions  PRO  LANTA.  Any  dispute  respecting  either the  effectiveness  or
magnitude  of any  such  Follow-on  Option  to be  granted  hereunder  shall  be
determined by arbitration in accordance with Article "8" hereinbelow.

4.9 BENEFITS.  It is hereby acknowledged and agreed that, during the continuance
of this  Agreement,  the Consultant  shall be entitled to  participate  fully in
each, of the  Companies'  respective  medical  services plans and management and
employee benefits program(s) (collectively, the "BENEFITS").

                                    ARTICLE 5
                    ADDITIONAL OBLIGATIONS OF THE CONSULTANT

5.1  REPORTING.  At such  time or  times  as may be  required  by the  Board  of
Directors of the Company,  acting  reasonably,  the Consultant  will provide the
Board  of  Directors  with  such  information  concerning  the  results  of  the
Consultant's General Services and activities hereunder for the previous month as
the Board of Directors may reasonably require.

5.2 NO CONFLICT, NO COMPETITION AND NON-CIRCUMVENTION. During the continuance of
this  Agreement,  and other than the  Consultant's  existing  relationship  with
Petrogen   international,   Ltd.,  a  non-reporting  company  affiliated,   with
Petrogen.,  Inc.,  the  Consultant  shall not engage in any business or activity
which reasonably may detract from or conflict with the  Consultant's  respective
duties and  obligations to the Companies as set forth in this Agreement  without
the prior written consent of the Board of Directors of the Company. In addition,
during the continuance of this Agreement and for a period of at least six months
following  the  termination,  of this  Agreement for any reason  whatsoever  the
Consultant  shall not  engage  in any  business  or  activity  whatsoever  which
reasonably may be determined by the Board of Director,  in its sole and absolute
discretion,   to  compete  with  any  portion  of  the  Business   interests  as
contemplated hereby without the prior written consent of the Board of Directors.
Furthermore,  the Consultant hereby  acknowledges and agrees, for a period of at
least six months  following  the  termination  of this  Agreement for any reason
whatsoever, not to initiate any contact or communication directly with either of
the  Companies  or any of  their  respective  subsidiaries,  as the case may be,
together with each of their  respective  directors,  officers,  representatives,
agents or employees, without the prior written consent of the Board of Directors
and,  notwithstanding the generality of the foregoing,  further acknowledges and
agrees,  even with the prior  written  consent of the Board of Directors to such
contact or communication, to limit such contact or communication, to discussions
outside the scope of any confidential  information (as hereinafter  determined).
For the purposes of the foregoing the  Consultant  hereby  recognizes and agrees
that a breach by the Consultant of any of the covenants  herein  contained would
result in irreparable  harm and  significant  damage to the Companies that would
not be adequately compensated for by monetary award. Accordingly, the Consultant
agrees that, in the event of any such breach, in addition to being entitled as a
matter of right to apply to a Court of competent equitable

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      - 17-

jurisdiction  for  relief by way of  restraining  order,  injunction,  decree or
otherwise as may be appropriate to ensure compliance with the provisions hereof,
the Consultant will also be liable to the Companies,  as liquidated damages, for
an amount equal to the amount  received and earned by the Consultant as a result
of and with respect to any such breach. The Parties hereby acknowledge and agree
that if any of the aforesaid  restrictions,  activities,  obligations or periods
are considered by a Court of competent  jurisdiction as being unreasonable,  the
Parties agree that said Court shall have  authority to limit such  restrictions,
activities  or  periods  as the  Court  deems  proper in the  circumstances.  In
addition,  the Parties further  acknowledge  and agree that all  restrictions or
obligations in this Agreement are necessary and fundamental to the protection of
the Business  interests and are  reasonable  and valid,  and all defenses to the
strict enforcement thereof by the Consultant are hereby waived.

5.3  CONFIDENTIALITY,  The Consultant will not, except as authorized or required
by the  Consultant's  duties  hereunder,  reveal  or  divulge  to any  person or
companies any  information  concerning  the  organization,  business,  finances,
transactions  or other  affairs  of the  Companies  or of any of the  Companies'
respective  subsidiaries which may come to the Consultant's knowledge during the
continuance of this Agreement,  and the Consultant will keep in complete secrecy
all  confidential  information  entrusted to the  Consultant and will not use or
attempt to use any such information in any manner which may injure or cause loss
either directly or indirectly to the Companies'  respective  Business interests.
This  restriction will continue to apply after the termination of this Agreement
without  limit  in point of time  but  will  cease to apply to  information,  or
knowledge which may come into the public domain.

5.4  COMPLIANCE  WITH  APPLICABLE  LAWS.  The  Consultant  will  comply with all
Canadian,  U.S.  and  foreign  laws,  whether  federal,   provincial  or  state,
applicable  to the  Consultant's  duties  hereunder  and,  in  addition,  hereby
represents and warrants that any information which the Consultant may provide to
any  person,  or  company  hereunder  will,  to the  best  of  the  Consultant's
knowledge,  information  and belief,  be accurate  and  complete in all material
respects and not misleading,  and will not omit to state any fact or information
which would be material to such person, or company.

5.5 OPINIONS, REPORTS AND ADVICE OF THE CONSULTANT. 1 he Consultant acknowledges
and agrees that all written and oral  opinions,  reports,  advice and  materials
provided by the Consultant to the Companies in connection with the  Consultant's
engagement  hereunder are intended solely for the Companies' benefit and for the
Companies'  uses only,  and that any such  written and oral  opinions,  reports,
advice and  information  are the exclusive  property of the  Companies.  In this
regard the  Consultant  covenants  and agrees that the Companies may utilize any
such opinion, report, advice and materials for any other purpose whatsoever and,
furthermore, may reproduce, disseminate, quote from and refer to, in whole or in
part,  at any time and in any  manner,  any such  opinion,  report,  advice  and
materials in the Companies' sole and absolute discretion. The Consultant further
covenants and agrees that no public  references to the  Consultant or disclosure
of the  Consultant's  role  in  respect  of the  Companies  may be  made  by the
Consultant  without the prior  written  consent of the Board of Directors of the
Company  in each  specific  instance  and,  furthermore,  that any such  written
opinions,  reports,  advice or materials shall, unless otherwise required by the
Board of Directors, be

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -18-

provided by the Consultant to the Companies in a form and with such substance as
would be  acceptable  for filing with and approval by any  Regulatory  Authority
having jurisdiction over the affairs of the Company from time to time.

5.6 CONSULTANT'S  BUSINESS CONDUCT.  The Consultant warrants that the Consultant
shall conduct the business and other  activities in a manner which is lawful and
reputable and which brings good repute to the Companies,  the Business interests
and  the  Consultant.  In  particular,   and  in  this  regard,  the  Consultant
specifically   warrants  to  provide  the  General   Services  in  a  sound  and
professional  manner such that the same meets superior  standards of performance
quality within the standards of the industry or as set by the  specifications of
the  Companies.  In the event  that  either of the  Companies  has a  reasonable
concern that the business as conducted by the Consultant is being conducted in a
way contrary to law or is reasonably  likely to bring  disrepute to the Business
interests or to the Companies' or the Consultant's reputation, the Companies may
require that the Consultant make such alterations in the  Consultant's  business
conduct  or  structure,   whether  of  management  or  Board  representation  or
Consultant  or  sub-licensee  representation,  as the  Board  of  Directors  may
reasonably  require,  in its sole and  absolute  discretion,  failing  which the
Company, in its sole and absolute discretion,  may terminate this Agreement upon
30 calendar  days' prior written notice to the  Consultant.  In the event of any
debate or  dispute as to the  reasonableness  of the Board of  Directors  of the
Company's request or requirements,  the judgment of the Board of Directors shall
be  deemed  correct  until  such  time as the  matter  has  been  determined  by
arbitration in accordance with Article "8" hereinbelow.

                                    ARTICLE 6
                INDEMNIFICATION, INSURANCE AND LEGAL PROCEEDINGS

6.1  INDEMNIFICATION.  The Companies hereby agree to indemnify and save harmless
the Consultant from and against any and all.  losses,  claims,  actions,  suits,
proceedings,  damages, liabilities or expenses of whatever nature or kind and to
the extent allowed by law and including,  without limitation,  any investigation
expenses incurred by the Consultant,  to which the Consultant may become subject
by reason only of the  performance  by the  Consultant  of the General  Services
under this Agreement; provided, however, that this indemnity shall only apply if
the General Services are performed  faithfully,  diligently,  to the best of the
Consultant's  abilities  and in  the  best  interests  of  the  Companies.  This
indemnity  will not apply in respect of the  Consultant in. the event and to the
extent  that a  Court  of  competent  jurisdiction  in a  final  judgment  shall
determine  that the  Consultant  was  grossly  negligent  or guilty  of  willful
misconduct.

         In case any  action is brought  against  the  Consultant  in respect OF
which  indemnity  may be  sought  against  either  of the  Parties  hereto,  the
Consultant  will give the Company  prompt  written  notice of any such action of
which  the   Consultant  has  knowledge  and  the  Company  will  undertake  the
investigation  and defense  thereof on behalf of the  Consultant,  including the
prompt  employment  of counsel and the payment of all  expenses.  Failure by the
Consultant  to so notify  shall not  relieve  the  Companies  of the  Companies'
obligation of indemnification hereunder unless (and only to the extent

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -19-

that) such failure  results in a  forfeiture  by the  Companies  of  substantive
rights or defenses.  No admission of liability  and no  settlement of any action
shall be made  without the consent of each of the Parties  hereto,  such consent
not to be unreasonable withheld. Notwithstanding that the Company will undertake
the investigation and defense of any action,  the Consultant will have the right
to employ  separate  counsel in any such action and  participate  in the defense
thereof, but the fees and expenses of such counsel will be at the expense of the
Consultant  unless such counsel has been authorized by the Company,  the Company
has not  assumed the defense of the action  within a  reasonable  period of time
after  receiving  notice of the  action,  the named  parties to any such  action
include that the Consultant shall have been advised by counsel that there may be
a conflict of interest  between any Party  hereto or there are one or more legal
defenses  available to the Consultant which are different from or in addition to
those available to the Companies.

         If for any reason other than the gross  negligence  or bad faith of the
Consultant being the primary cause of the loss claim, damage, liability, cost or
expense,  the foregoing  indemnification  is  unavailable  to the  Consultant or
insufficient to hold the Consultant harmless,  the Companies shall contribute to
the amount  paid or payable  by the  Consultant  as a result of any and all such
losses,  claim,  damages or liabilities in such  proportion as is appropriate to
reflect not only the relative benefits received by the Companies on the one hand
and the  Consultant on the other,  but also the relative  fault of the Companies
and the Consultant  and other  equitable  considerations  which may be relevant.
Notwithstanding  the foregoing,  the Companies shall in any event  contribute to
the amount  paid or payable by the  Consultant  as a result of the loss,  claim,
damage, liability, cost or expense (other than a loss, claim, damage, liability,
cost or  expenses,  the primary  cause of which is the gross  negligence  or bad
faith of the Consultant),  any excess of such amount over the amount of the fees
actually received by the Consultant hereunder.

6.2  INSURANCE.   During  the   continuance  of  this  Agreement  it  is  hereby
acknowledged  and agreed that the Company  will use its best efforts to seek and
obtain  directors'  and  officers'   liability  insurance   (collectively,   the
"INSURANCE")  for its Board of Directors  and Senior  Officers  which in no case
shall be less than the  insurance  which a  reasonable  and prudent  businessman
carrying  on a similar  line of business  would  acquire  from time to time.  In
connection with the foregoing it is hereby further  acknowledged and agreed that
any such  Insurance  shall be placed with a  reputable  and  financially  secure
insurance  carrier and shall  include the Company as an  additional  insured and
shall provide  primary  coverage with respect to the activities  contemplated by
this  Agreement.  Furthermore,  it is also  intended  that  any  such  Insurance
policy(ies)   shall  include   severability  of  interest  and   cross-liability
provisions  and shall  provide  that the  policy(ies)  shall not be  canceled or
materially  altered  except upon at least 30 calendar days' prior written notice
to each of the relevant parties thereto.

6.3  NO  INDEMNIFICATION.  This  indemnity  will  not  apply  in  respect  of an
Indemnified.  Party in the event  and to the  extent  that a Court of  competent
jurisdiction in a final judgment shall determine that the Indemnified  Party was
grossly negligent or guilty of willful misconduct.

6.4 CLAIM OF  INDEMNIFICATION.  The Parties hereto agree to waive any right they
might  have of first  requiring  the  Indemnified  Party to  proceed  against or
enforce any

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -20-

other  right,  power,  remedy,  security or claim  payment from any other person
before claiming this indemnity,

6.5 NOTICE OF CLAIM. In case any action is brought against an Indemnified  Party
in  respect  of which  indemnity  may be sought  against  either of the  Parties
hereto,  the  Indemnified  Party will give both Parties  hereto  prompt  written
notice of any such action of which the  Indemnified  Party has knowledge and the
relevant Party will undertake the investigation and defense thereof on behalf of
the Indemnified Party,  including the prompt employment of counsel acceptable to
the  Indemnified  Party  affected and the relevant  Party and the payment of all
expenses.  Failure by the  Indemnified  Party to so notify shall not relieve the
relevant Party of such relevant Party's obligation of indemnification  hereunder
unless (and only to the extent that) such failure results in a forfeiture by the
relevant Party of substantive rights or defenses.

6.6 SETTLEMENT.  No admission OF liability and no settlement of any action shall
be made without the consent of each of the Parties hereto and the consent of the
Indemnified Party affected, such consent not to be unreasonable withheld.

6.7 LEGAL  PROCEEDINGS.  Notwithstanding  that the relevant Party will undertake
the  investigation and defense of any action, an Indemnified Party will have the
right to employ  separate  counsel  in any such  action and  participate  in the
defense  thereof,  but the  fees and  expenses  of such  counsel  will be at the
expense of the Indemnified Party unless:

         (a)  such counsel has been authorized by the relevant Party;

         (b)  the  relevant  Party has not  assumed  the  defense  of the action
              within a reasonable  period of time after receiving  notice of the
              action:

         (c)  the named parties to any such action include that any Party hereto
              and the Indemnified  Party shall have been advised by counsel that
              there may be a conflict of interest  between any Party  hereto and
              the Indemnified Party; or

         (d)  there are one or more legal defenses  available to the Indemnified
              Party which are different  from or in addition to those  available
              to any Party hereto.

6.8 CONTRIBUTION. If for any reason other than the gross negligence or bad faith
of the  Indemnified  Party  being the primary  cause of the loss claim,  damage,
liability,  cost or expense, the foregoing indemnification is unavailable to the
Indemnified  Party or  insufficient  to hold them  harmless,  the relevant Party
shall  contribute  to the amount paid or payable by the  Indemnified  Party as a
result  of any and all  such  losses,  claim,  damages  or  liabilities  in such
proportion as is appropriate to reflect not only the relative benefits

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -21 -

received by the relevant Party on the one hand and the Indemnified  Party on the
other,  but also the relative fault of relevant Party and the Indemnified  Party
and other equitable  considerations  which may be relevant.  Notwithstanding the
foregoing,  the relevant Party shall in any event  contribute to the amount paid
or payable by the  Indemnified  Party, as a result of the loss,  claim,  damage,
liability, cost or expense (other than a loss, claim, damage, liability, cost or
expenses, the primary cause of which is the gross negligence or bad faith of the
Indemnified  Party),  any  excess  of such  amount  over the  amount of the fees
actually received by the Indemnified Party hereunder.

                                    ARTICLE 7
                                  FORCE MAJEURE

7.1 EVENTS.  If either Party hereto is at any time either during this  Agreement
or  thereafter  prevented or delayed in complying  with any  provisions  of this
Agreement by reason of strikes,  walk-outs,  labor shortages,  power shortages,
fires, wars, acts of God, earthquakes,  storms, floods,  explosions,  accidents,
protests or demonstrations  by environmental  lobbyists or native rights groups,
delays in transportation,  breakdown of machinery, inability to obtain necessary
materials  in  the  open  market,  unavailability  of  equipment,   governmental
regulations  restricting normal operations,  shipping delays or any other reason
or reasons  beyond the  control of that  Party,  then the time  limited  for the
performance  by that Party of its respective  obligations  hereunder  shall,  be
extended,  by a period  of time  equal in length to the  period,  of each,  such
prevention or delay.

7.2 NOTICE.  A Party shall within three  calendar  days give notice to the other
Party of each event OF FORCE MAJEURE under section "7.1" hereinabove,  and upon
cessation of such event shall  furnish the other Party with notice of that event
together with particulars of the number of days by which the obligations of that
Party  hereunder have been extended by virtue of such event of FORCE MAJEURE and
all preceding events OF FORCE MAJEURE.

                                    ARTICLE 8
                                   ARBITRATION

8.1 MATTERS FOR  ARBITRATION.  Except for matters of indemnity or in the case of
urgency to prevent  material harm to a substantive  right or asset,  the Parties
agree that all  questions or matters in dispute  with respect to this  Agreement
shall be submitted TO arbitration  pursuant to the terms hereof.  This provision
shall not  prejudice a Party from seeking a Court order or assistance to garnish
or secure  sums or to seek  summary  remedy  for such  matters  as  counsel  may
consider amenable to summary proceedings.

8.2  NOTICE.  IT shall be a  condition  precedent  to the  right of any Party to
submit any matter to  arbitration  pursuant  to the  provisions  hereof that any
Party  intending  to refer any matter to  arbitration  shall have given not less
than five business  days' prior written  notice of its intention to do so to the
other  Parties  together  with  particulars  of the  matter in  dispute.  On the
expiration of such five business days the Party who gave such

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -22-

notice  may  proceed to refer the  dispute to  arbitration  as  provided  for in
section "8.3" here in be low.

8.3 APPOINTMENTS.  The Party desiring  arbitration shall appoint one arbitrator,
and shall notify the other  Parties of such  appointment,  and the other Parties
shall,  within  five  business  days after  receiving  such  notice,  appoint an
arbitrator,  and the two arbitrators so named,  before proceeding to act, shall,
within five business days of the  appointment of the last appointed  arbitrator,
unanimously agree on the appointment of a third arbitrator, to act with them and
be  chairperson  of the  arbitration  herein  provided for. If the other Parties
shall fail to appoint an arbitrator  within five  business days after  receiving
notice of the  appointment of the first  arbitrator,  and if the two arbitrators
appointed  by the  Parties  shall be unable to agree on the  appointment  of the
chairperson,   the  chairperson  shall  be  appointed  in  accordance  with  the
Arbitration Act. Except as specifically  otherwise provided in this section, the
arbitration  herein  provided  for shall be conducted  in  accordance  with such
Arbitration  Act. The  chairperson,  or in the case where only one arbitrator is
appointed, the single arbitrator,  shall fix a time and place for the purpose of
hearing the evidence and  representations  of the Parties,  and the  chairperson
shall preside over the  arbitration and determine all questions of procedure not
provided for by the Arbitration Act or this section.  After bearing any evidence
and representations  that the Parties may submit, the single arbitrator,  or the
arbitrators,  as the case may be,  shall  make an award and  reduce  the same to
writing, and deliver one copy thereof to each of the Parties. The expense of the
arbitration shall be paid as specified in the award.

8.4 AWARD. The Parties agree that the award of a majority of the arbitrators, or
in the case of a  single  arbitrator,  of such  arbitrator,  shall be final  and
binding upon each of them.

                                    ARTICLE 9
                               GENERAL PROVISIONS

9.1 ENTIRE  AGREEMENT.  This Agreement  constitutes the entire agreement to date
between the Parties hereto and supersedes every previous agreement, expectation,
negotiation,  representation or understanding, whether oral, or written, express
or implied,  statutory  or  otherwise,  between the Parties  with respect to the
subject matter of this Agreement and including,  without  limitation,  the terms
and conditions of the Underlying Agreement.

9.2 NO ASSIGNMENT. This Agreement may not be assigned by any Party hereto except
with the prior written consent of the other Parties.

9.3 NOTICE. Each notice, demand or other communication  required or permitted to
be given under this  Agreement  shall be in writing and shall be sent by prepaid
registered mail deposited in a recognized post office and addressed to the Party
entitled to receive the same,  or  delivered  to such Party,  at the address for
such Party

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -23-

specified  on the front  page of this  Agreement.  The date of  receipt  of such
notice,  demand or other  communication shall be the date of delivery thereof if
delivered,  or,  if given  by  registered  mail as  aforesaid,  shall be  deemed
conclusively  to be the third  business  day after the same  shall  have been so
mailed,  except in the case of  interruption  of postal  services for any reason
whatsoever,  in.  which case the date of receipt  shall be the date on which the
notice, demand or other communication is actually received by the addressee. Any
Party may at any time and from time to time notify the other  Parties in writing
of a change of address and the new address to which  notice shall be given to it
thereafter until further change.

9.4 TIME OF THE ESSENCE. Time will be of the essence of this Agreement.

9.5  ENUREMENT.  This Agreement will enure to the benefit of and will be binding
upon the Parties hereto and their respective  heirs,  executors,  administrators
and assigns.

9.6 CURRENCY.  Unless  otherwise  stipulated,  all payments  required to be made
pursuant to the provisions of this  Agreement and all.  money amount  references
contained herein are in lawful currency of the United States.

9.7 FURTHER  ASSURANCES.  The Parties will from time to time after the execution
of this  Agreement  make,  do,  execute  or cause or permit to be made,  done or
executed, all such further and other acts, deeds, things, devices and assurances
in law whatsoever as may be required to carry out the true intention and to give
full force and effect to this Agreement.

9.8 REPRESENTATION  AND COSTS. IT is hereby  acknowledged by each of the Parties
hereto that Devlin Jensen, Barristers and Solicitors, and the law office of Reed
& Reed,  PC,  act  solely  for the  Companies,  and,  correspondingly,  that the
Consultant has been required by each of Devlin Jensen,  the law office of Reed &
Reed,  PC and the Companies to obtain  independent  legal advice with respect to
its review and execution of this  Agreement.  In addition,  it is hereby further
acknowledged  and agreed,  by the Parties hereto that Devlin Jensen,  Barristers
and Solicitors,  and certain or all of its principal owners or associates,  from
time to time,  may have both an  economic  or  shareholding  interest  in and to
Companies   and/or  a  fiduciary   duty  to  the  same  arising  from  either  a
directorship, officer-ship or similar relationship arising out of the request of
the  Companies  for certain of such persons to act in a similar  capacity  while
acting for the  Companies  as counsel.  Correspondingly,  and even  where,  as a
result of this  Agreement,  the  consent  of each  Party  hereto to the role and
capacity of Devlin Jensen,  Barristers and Solicitors,  and its principal owners
and associates,  as the case may be, is deemed to have been received,  where any
conflict or perceived  conflict may arise,  or be seen to arise,  as a result of
any such capacity or representation,  each Party hereto  acknowledges and agrees
to, once more,  obtain  independent legal advice in respect of any such conflict
or perceived conflict and,  consequent  thereon,  Devlin Jensen,  Barristers and
Solicitors,  together with any such principal owners or associates,  as the case
may be, shall be at liberty at any time to resign any such position if it or any
Party hereto is in any way

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -24-

affected or uncomfortable with any such, capacity or representation.  Each Party
to this Agreement will also bear and pay its own costs, legal and otherwise,  in
connection  with  its  respective  preparation,  review  and  execution  of this
Agreement and, in particular, that the costs involved in the preparation of this
Agreement,  and all  documentation  necessarily  incidental  thereto,  by Devlin
Jensen,  Barristers and Solicitors,  and the law office of Reed & Reed, PC shall
be at the cost of the Companies.

9.9 APPLICABLE LAW. The situs of this Agreement is Vancouver,  British Columbia,
and  for  all  purposes  this  Agreement  will be  governed  exclusively  by and
construed and enforced in accordance with, the laws and Courts prevailing in the
Province of British Columbia.

9.10 SEVERABIIITY AND CONSTRUCTION.  Each Article, section,  paragraph, term and
provision of this  Agreement,  and any  portion,  thereof,  shall be  considered
severable,  and if, for any reason,  any portion of this Agreement is determined
to be invalid,  contrary to or in conflict with any applicable present or future
law,  rule or  regulation  in a final  unappealable  ruling issued by any court,
agency or tribunal  with valid  jurisdiction  in a proceeding to which any Party
hereto is a party,  that ruling shall not impair the  operation  of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible  (all of which shall remain  binding on the Parties and continue to
be given full  force and  effect as of the date upon  which the  ruling  becomes
final).

9.11 CAPTIONS.  The captions,  section numbers and Article numbers  appearing in
this  Agreement are inserted for  convenience  of reference only and shall in no
way define,  limit,  construe or describe the scope or intent of this  Agreement
nor in any way affect this Agreement.

9.12 COUNTERPARTS. This Agreement may be signed by the Parties hereto in as many
counterparts as may be necessary, and via facsimile if necessary,  each of which
so  signed  being  deemed  to be an  original  and  such  counterparts  together
constituting  one and the  same  instrument  and,  notwithstanding  the  date of
execution,  being  deemed to bear the  Effective  Date as set forth on the front
page of this Agreement.

9.13 NO  PARTNERSHIP OR AGENCY.  The Parties have not created a partnership  and
nothing  contained in this Agreement shall in any manner  whatsoever  constitute
any Party the partner,  agent or legal  representative of the other Parties, nor
create any fiduciary relationship between them for any purpose whatsoever.

9.14 CONSENTS AND WAIVERS.  No consent or waiver  expressed or implied by either
Party in respect of any  breach or  default by the other in the  performance  by
such other of its obligations hereunder shall;

         (a)  be valid  unless it is in  writing  and  stated to be a consent or
              waiver pursuant to this section;

                Amended Management Consulting Services Agreement
                                 Petrogen Corp

<PAGE>

                                      -25-

         (b)  be relied  upon as a consent  to or waiver of any other  breach or
              default of the same or any other obligation;

         (c)  constitute a general waiver under this Agreement; or

         (d)  eliminate  or modify  the need for a  specific  consent  or waiver
              pursuant to this section, in any other or subsequent instance.

         IN  WITNESS   WHEREOF  the  Parties  hereto  have  hereunto  set  their
respective hands and seals as at the Effective Date as hereinabove determined.

The CORPORATE SEAL of
PETROGEN CORP.,
--------------
the Company herein, was hereunto affixed
in the presence of:

/s/
---------------------------
Authorized Signatory

The CORPORATE SEAL of
PETROGEN, INC.,
--------------
Petrogen, Inc. herein, was hereunto affixed
in the presence of:

/s/
---------------------------
Authorized Signatory

SIGNED, SEALED and DELIVERED by
LEO WILLIAM KERRIGAN,
the Consultant herein, in the presence of:

                                               /s/ LEO WILLIAM KERRIGAN
--------------------------                     -------------------------
Witness Signature                              LEO WILLIAM KERRIGAN

--------------------------
Witness Address

---------------------------
Witness Name and Occupation

                Amended Managment Consulting Services Agreement
                                 Petrogen Corp

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]