Document:

EXHBIT 10.15

THIS  WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN  REGIS-TERED  UNDER  THE  SECURITIES  ACT  OF  1933, AS AMENDED.  EXCEPT AS
OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF MAY
15,  2002,  NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED
OR  ASSIGNED  IN  THE  ABSENCE  OF AN EFFECTIVE REGISTRA-TION STATEMENT FOR SUCH
SECURITIES  UNDER  SAID  ACT  OR,  AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE,  CUSTOMARY  FOR  OPINIONS  OF  COUNSEL  IN  COMPARABLE TRANSACTIONS, THAT
REGISTRATION  IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144
OR  REGULATION  S  UNDER  SUCH  ACT.

Right to Purchase 150,000 Shares of Common Stock, no par value per share

                             STOCK PURCHASE WARRANT

     THIS  CERTIFIES  THAT,  for value received, AJW Partners, LLC,  or  its
registered  assigns, is entitled to purchase from Torbay Holdings,
Inc.,  a  Delaware corporation (the "Company"), at any time or from time to time
during  the  period  specified  in  Paragraph  2 hereof, Two Hundred Twenty-Five
Thousand  (225,000)  fully paid and nonassessable shares of the Company's Common
Stock, $.0001 par value per share (the "Common Stock"), at an exercise price per
share  equal  to $.05 (the "Exercise Price"). The term "Warrant Shares," as used
herein,  refers to the shares of Common Stock purchasable hereunder. The Warrant
Shares and the Exercise Price are subject to adjustment as provided in Paragraph
4  hereof.  The term "Warrants" means this Warrant and the other warrants issued
pursuant  to  that certain Securities Purchase Agreement, dated May 15, 2002, by
and  among  the Company and the Buyers listed on the execution page thereof (the
"Securities  Purchase  Agreement"),  including  any additional warrants issuable
pursuant  to  Section  4(l)  thereof.

     This Warrant is subject to the following terms, provisions, and conditions:

1.     MANNER  OF  EXERCISE;  ISSUANCE  OF  CERTIFICATES;  PAYMENT  FOR  SHARES.
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Subject  to  the  provisions hereof, this Warrant may be exercised by the holder
hereof,  in  whole or in part, by the surrender of this Warrant, together with a
completed  exercise  agreement  in  the  form  attached  hereto  (the  "Exercise
Agreement"),  to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company  as  it may designate by notice to the holder hereof), and upon (i)
payment  to the Company in cash, by certified or official bank check or by wire
transfer  for  the  account of the Company of the Exercise Price for the Warrant
Shares  specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares  by  the  holder  is  not  then  registered  pursuant  to  an  effective
registration  statement  under  the  Securities  Act  of  1933,  as amended (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares  specified  in  the  Exercise Agreement.  The Warrant Shares so purchased
shall  be deemed to be issued to the holder hereof or such holder's designee, as
the  record  owner  of  such  shares, as of the close of business on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement
shall  have been delivered, and payment shall have been made for such shares as
set  forth  above.  Certificates  for  the  Warrant  Shares  so  purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall  be delivered to the holder hereof within a reasonable time, not exceeding
three  (3)  business days, after this Warrant shall have been so exercised.  The
certificates  so delivered shall be in such denominations as may be requested by
the  holder  hereof  and  shall be registered in the name of such holder or such
other  name  as  shall be designated by such holder.  If this Warrant shall have
been  exercised only in part, then, unless this Warrant has expired, the Company
shall,  at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this  Warrant  shall  not  then  have  been exercised.  In addition to all other
available  remedies  at  law  or  in  equity,  if  the  Company fails to deliver
certificates  for  the  Warrant Shares within three (3) business days after this
Warrant is exercised, then the Company shall pay to the holder in cash a penalty
(the  "Penalty")  equal to 2% of the number of Warrant Shares that the holder is
entitled  to  multiplied by the Market Price for each day that the Company fails
to  deliver  certificates for the Warrant Shares.  For example, if the holder is
entitled  to  100,000  Warrant  Shares  and  the Market Price is $2.00, then the
Company  shall  pay  to the holder $4,000 for each day that the Company fails to
deliver  certificates  for the Warrant Shares.  The Penalty shall be paid to the
holder  by  the  fifth  day  of  the  month  following the month in which it has
accrued.

     Notwithstanding anything in this Warrant to the contrary, in no event shall
the  holder  of  this  Warrant  be entitled to exercise a number of Warrants (or
portions thereof) in excess of the number of Warrants (or portions thereof) upon
exercise  of  which  the  sum  of  (i)  the  number  of  shares  of Common Stock
beneficially owned by the holder and its affiliates (other than shares of Common
Stock  which  may  be  deemed  beneficially  owned  through the ownership of the
unexercised  Warrants  and  the  unexercised or unconverted portion of any other
securities  of  the  Company  (including  the  Debentures  (as  defined  in  the
Securities  Purchase  Agreement))  subject  to  a  limitation  on  conversion or
exercise  analogous  to  the limitation contained herein) and (ii) the number of
shares  of  Common  Stock  issuable  upon  exercise of the Warrants (or portions
thereof) with respect to which the determination described herein is being made,
would  result  in  beneficial ownership by the holder and its affiliates of more
than  4.9%  of  the  outstanding  shares  of  Common Stock.  For purposes of the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d)  of  the  Securities  Exchange  Act of 1934, as
amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
(i)  of  the  preceding  sentence.  The  holder  of  this  Warrant may waive the
limitations  set  forth  herein  by  sixty-one  (61)  days written notice to the
Company.  Notwithstanding  anything  to  the  contrary  contained  herein,  the
limitation  on  exercise  of  this  Warrant  set forth herein may not be amended
without  (i)  the  written consent of the holder hereof and the Company and (ii)
the  approval  of  a  majority  of  shareholders  of  the  Company.

2.     PERIOD OF EXERCISE.  This Warrant is exercisable at any time or from time
       ------------------
     to  time on or after the date on which this Warrant is issued and delivered
pursuant to the terms of the Securities Purchase Agreement and before 6:00 p.m.,
New  York,  New York time on the third (3rd) anniversary of the date of issuance
(the  "Exercise  Period").

3.     CERTAIN  AGREEMENTS  OF  THE  COMPANY.  The  Company hereby covenants and
       -------------------------------------
agrees  as  follows:

(A)     SHARES  TO  BE  FULLY  PAID.  All  Warrant Shares will, upon issuance in
        ---------------------------
accordance  with  the  terms of this Warrant, be validly issued, fully paid, and
nonassessable  and  free  from all taxes, liens, and charges with respect to the
issue  thereof.

(B)     RESERVATION OF SHARES.  During the Exercise Period, the Company shall at
        ---------------------
     all  times  have  authorized, and reserved for the purpose of issuance upon
exercise  of  this  Warrant,  a  sufficient number of shares of Common Stock to
provide  for  the  exercise  of  this  Warrant.

(C)     LISTING.  The Company shall promptly secure the listing of the shares of
        -------
Common Stock issuable upon exercise of the Warrant upon each national securities
exchange or automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance upon exercise of
this Warrant) and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all shares of Common Stock from time to time
issuable upon the exercise of this Warrant; and the Company shall so list on
each national securities exchange or automated quotation system, as the case may
be, and shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of this Warrant if and so long as any shares
of the same class shall be listed on such national securities exchange or
automated quotation system.

(D)     CERTAIN ACTIONS PROHIBITED.  The Company will not, by amendment of its
        --------------------------
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant.  Without limiting the generality of the foregoing, the Company
(i) will not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, and
(ii) will take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(E)     SUCCESSORS AND ASSIGNS.  This Warrant will be binding upon any entity
        ----------------------
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all the Company's assets.
4.     ANTIDILUTION  PROVISIONS.  During the Exercise Period, the Exercise Price
       ------------------------
and  the  number  of  Warrant Shares shall be subject to adjustment from time to
time  as  provided  in  this  Paragraph  4.
     In  the  event that any adjustment of the Exercise Price as required herein
results  in a fraction of a cent, such Exercise Price shall be rounded up to the
nearest  cent.

(A)     ADJUSTMENT  OF  EXERCISE  PRICE  AND  NUMBER  OF SHARES UPON ISSUANCE OF
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COMMON  STOCK.  Except as otherwise provided in Paragraphs 4(c) and 4(e) hereof,
--------------
if  and  whenever  on or after the date of issuance of this Warrant, the Company
issues  or  sells, or in accordance with Paragraph 4(b) hereof is deemed to have
issued  or  sold,  any  shares  of  Common  Stock  for no consideration or for a
consideration  per share (before deduction of reasonable expenses or commissions
or  underwriting  discounts or allowances in connection therewith) less than the
Market  Price  (as  hereinafter  defined)  on  the date of issuance (a "Dilutive
Issuance"), then immediately upon the Dilutive Issuance, the Exercise Price will
     be  reduced  to  a  price  determined  by multiplying the Exercise Price in
effect  immediately  prior  to  the  Dilutive  Issuance  by  a fraction, (i) the
numerator  of which is an amount equal to the sum of (x) the number of shares of
Common  Stock  actually  outstanding immediately prior to the Dilutive Issuance,
plus (y) the quotient of the aggregate consideration, calculated as set forth in
Paragraph  4(b)  hereof,  received  by  the  Company upon such Dilutive Issuance
divided  by  the  Market  Price  in  effect  immediately  prior  to the Dilutive
Issuance,  and  (ii)  the  denominator of which is the total number of shares of
Common  Stock  Deemed  Outstanding  (as  defined  below)  immediately  after the
Dilutive  Issuance.

(B)     EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS.  For purposes of determining
        ------------------------------------------
     the adjusted Exercise Price under Paragraph 4(a) hereof, the following will
be  applicable:

(I)     ISSUANCE  OF  RIGHTS OR OPTIONS.  If the Company in any manner issues or
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grants  any warrants, rights or options, whether or not immediately exercisable,
to  subscribe  for  or  to purchase Common Stock or other securities convertible
into or exchangeable for Common Stock ("Convertible Securities") (such warrants,
     rights  and  options to purchase Common Stock or Convertible Securities are
hereinafter  referred  to as "Options") and the price per share for which Common
Stock  is  issuable  upon  the  exercise of such Options is less than the Market
Price  on  the date of issuance or grant of such Options, then the maximum total
number  of shares of Common Stock issuable upon the exercise of all such Options
will,  as  of the date of the issuance or grant of such Options, be deemed to be
outstanding  and  to have been issued and sold by the Company for such price per
share.  For  purposes  of the preceding sentence, the "price per share for which
Common  Stock  is  issuable  upon the exercise of such Options" is determined by
dividing  (i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or granting of all such Options, plus the minimum
aggregate  amount  of  additional  consideration, if any, payable to the Company
upon  the  exercise  of  all  such  Options,  plus,  in  the case of Convertible
Securities  issuable  upon  the  exercise of such Options, the minimum aggregate
amount  of  additional  consideration  payable  upon  the conversion or exchange
thereof  at  the  time  such  Convertible Securities first become convertible or
exchangeable,  by  (ii)  the  maximum  total  number  of  shares of Common Stock
issuable  upon  the  exercise  of  all such Options (assuming full conversion of
Convertible  Securities,  if applicable).  No further adjustment to the Exercise
Price  will  be  made  upon  the  actual  issuance of such Common Stock upon the
exercise  of  such  Options  or  upon  the conversion or exchange of Convertible
Securities  issuable  upon  exercise  of  such  Options.

(II)     ISSUANCE  OF  CONVERTIBLE  SECURITIES.  If  the  Company  in any manner
         -------------------------------------
issues  or  sells  any  Convertible  Securities,  whether  or  not  immediately
convertible  (other  than  where  the  same  are  issuable  upon the exercise of
Options)  and  the  price per share for which Common Stock is issuable upon such
conversion  or  exchange  is less than the Market Price on the date of issuance,
then  the  maximum  total  number  of  shares  of Common Stock issuable upon the
conversion  or  exchange of all such Convertible Securities will, as of the date
of  the issuance of such Convertible Securities, be deemed to be outstanding and
to  have  been issued and sold by the Company for such price per share.  For the
purposes  of the preceding sentence, the "price per share for which Common Stock
is  issuable upon such conversion or exchange" is determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration for
     the  issuance  or sale of all such Convertible Securities, plus the minimum
aggregate  amount  of  additional  consideration, if any, payable to the Company
upon  the conversion or exchange thereof at the time such Convertible Securities
first  become  convertible  or exchangeable, by (ii) the maximum total number of
shares  of  Common  Stock  issuable  upon the conversion or exchange of all such
Convertible  Securities.  No  further  adjustment  to the Exercise Price will be
made  upon  the actual issuance of such Common Stock upon conversion or exchange
of  such  Convertible  Securities.

(III)     CHANGE IN OPTION PRICE OR CONVERSION RATE.  If there is a change at
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any time in (i) the amount of additional consideration payable to the Company
upon the exercise of any Options; (ii) the amount of additional consideration,
if any, payable to the Company upon the conversion or exchange of any
Convertible Securities; or (iii) the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock (other than under or by
reason of provisions designed to protect against dilution), the Exercise Price
in effect at the time of such change will be readjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed additional consideration
or changed conversion rate, as the case may be, at the time initially granted,
issued or sold.

(IV)     TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE SECURITIES.
         -------------------------------------------------------------------
If, in any case, the total number of shares of Common Stock issuable upon
exercise of any Option or upon conversion or exchange of any Convertible
Securities is not, in fact, issued and the rights to exercise such Option or to
convert or exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be readjusted to the Exercise
Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.

(V)     CALCULATION  OF CONSIDERATION RECEIVED.  If any Common Stock, Options or
        --------------------------------------
Convertible  Securities  are issued, granted or sold for cash, the consideration
received  therefor  for  purposes of this Warrant will be the amount received by
the  Company  therefor, before deduction of reasonable commissions, underwriting
discounts  or  allowances  or  other reasonable expenses paid or incurred by the
Company  in  connection  with  such issuance, grant or sale.  In case any Common
Stock,  Options or Convertible Securities are issued or sold for a consideration
part  or  all of which shall be other than cash, the amount of the consideration
other  than  cash  received  by  the  Company  will  be  the  fair value of such
consideration,  except where such consideration consists of securities, in which
case  the  amount  of  consideration  received by the Company will be the Market
Price  thereof  as of the date of receipt.  In case any Common Stock, Options or
Convertible  Securities are issued in connection with any acquisition, merger or
consolidation  in  which the Company is the surviving corporation, the amount of
consideration  therefor  will  be deemed to be the fair value of such portion of
the  net assets and business of the non-surviving corporation as is attributable
to  such  Common  Stock,  Options or Convertible Securities, as the case may be.
The  fair  value  of  any  consideration  other  than cash or securities will be
determined  in  good  faith  by  the  Board  of  Directors  of  the  Company.

(VI)     EXCEPTIONS  TO  ADJUSTMENT  OF  EXERCISE  PRICE.  No  adjustment to the
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Exercise  Price  will  be made (i) upon the exercise of any warrants, options or
convertible  securities  granted, issued and outstanding on the date of issuance
of  this  Warrant; (ii) upon the grant or exercise of any stock or options which
may  hereafter  be  granted  or exercised under any employee benefit plan, stock
option  plan  or  restricted  stock  plan  of  the Company now existing or to be
implemented  in  the future, so long as the issuance of such stock or options is
approved  by  a majority of the independent members of the Board of Directors of
the Company or a majority of the members of a committee of independent directors
     established  for  such purpose; or (iii) upon the exercise of the Warrants.

(C)     SUBDIVISION  OR COMBINATION OF COMMON STOCK.  If the Company at any time
        -------------------------------------------
subdivides  (by  any  stock  split,  stock  dividend,  recapitalization,
reorganization,  reclassification  or  otherwise)  the  shares  of  Common Stock
acquirable  hereunder  into  a greater number of shares, then, after the date of
record  for effecting such subdivision, the Exercise Price in effect immediately
prior  to  such  subdivision will be proportionately reduced.  If the Company at
any  time  combines  (by  reverse stock split, recapitalization, reorganization,
reclassification  or  otherwise) the shares of Common Stock acquirable hereunder
into  a  smaller  number of shares, then, after the date of record for effecting
such  combination,  the  Exercise  Price  in  effect  immediately  prior to such
combination  will  be  proportionately  increased.

(D)     ADJUSTMENT  IN  NUMBER  OF SHARES.  Upon each adjustment of the Exercise
        ---------------------------------
Price  pursuant  to  the provisions of this Paragraph 4, the number of shares of
Common  Stock  issuable  upon  exercise  of  this  Warrant  shall be adjusted by
multiplying  a number equal to the Exercise Price in effect immediately prior to
such  adjustment  by the number of shares of Common Stock issuable upon exercise
of this Warrant immediately prior to such adjustment and dividing the product so
obtained  by  the  adjusted  Exercise  Price.

(E)     CONSOLIDATION, MERGER OR SALE.  In case of any consolidation of the
        -----------------------------
Company with, or merger of the Company into any other corporation, or in case of
any sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company,
then as a condition of such consolidation, merger or sale or conveyance,
adequate provision will be made whereby the holder of this Warrant will have the
right to acquire and receive upon exercise of this Warrant in lieu of the shares
of Common Stock immediately theretofore acquirable upon the exercise of this
Warrant, such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this Warrant
had such consolidation, merger or sale or conveyance not taken place.  In any
such case, the Company will make appropriate provision to insure that the
provisions of this Paragraph 4 hereof will thereafter be applicable as nearly as
may be in relation to any shares of stock or securities thereafter deliverable
upon the exercise of this Warrant.  The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Paragraph 4 and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.

(F)     DISTRIBUTION OF ASSETS.  In case the Company shall declare or make any
        ----------------------
distribution of its assets (including cash) to holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise, then,
after the date of record for determining stockholders entitled to such
distribution, but prior to the date of distribution, the holder of this Warrant
shall be entitled upon exercise of this Warrant for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such distribution.

(G)     NOTICE OF ADJUSTMENT.  Upon the occurrence of any event which requires
        --------------------
any adjustment of the Exercise Price, then, and in each such case, the Company
shall give notice thereof to the holder of this Warrant, which notice shall
state the Exercise Price resulting from such adjustment and the increase or
decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.  Such calculation shall be certified
by the Chief Financial Officer of the Company.

(H)     MINIMUM ADJUSTMENT OF EXERCISE PRICE.  No adjustment of the Exercise
        ------------------------------------
Price shall be made in an amount of less than 1% of the Exercise Price in effect
at the time such adjustment is otherwise required to be made, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.

(I)     NO FRACTIONAL SHARES.  No fractional shares of Common Stock are to be
        --------------------
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.

(J)     OTHER NOTICES.  In case at any time:
        -------------

(I)     the  Company shall declare any dividend upon the Common Stock payable in
shares of stock of any class or make any other distribution (including dividends
or  distributions  payable in cash out of retained earnings) to the holders
of  the  Common  Stock;

(II)     the Company shall offer for subscription pro rata to the holders of the
Common  Stock  any additional shares of stock of any class or other rights;

(III)     there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all its assets to, another
corporation or entity; or

(IV)     there shall be a voluntary or involuntary dissolution, liquidation or
winding  up  of  the Company; then, in each such case, the Company shall give to
the  holder  of  this  Warrant  (a) notice of the date on which the books of the
Company  shall  close  or a record shall be taken for determining the holders of
Common  Stock  entitled  to  receive  any  such  dividend,  distribution,  or
subscription  rights  or for determining the holders of Common Stock entitled to
vote  in  respect  of  any such reorganization, reclassification, consolidation,
merger,  sale, dissolution, liquidation or winding-up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation  or  winding-up,  notice  of  the  date  (or,  if  not then known, a
reasonable approximation thereof by the Company) when the same shall take place.
Such  notice  shall  also  specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription rights
or  to  exchange  their  Common  Stock for stock or other securities or property
deliverable  upon such reorganization, re-classification, consolidation, merger,
sale,  dissolution, liquidation, or winding-up, as the case may be. Such notice
shall  be  given  at least 30 days prior to the record date or the date on which
the  Company's  books  are  closed  in respect thereto. Failure to give any such
notice  or  any  defect therein shall not affect the validity of the proceedings
referred  to  in  clauses  (i),  (ii),  (iii)  and  (iv)  above.

(K)     CERTAIN  EVENTS.  If  any  event  occurs of the type contemplated by the
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adjustment provisions of this Paragraph 4 but not expressly provided for by such
     provisions,  the  Company  will  give  notice  of such event as provided in
Paragraph  4(g)  hereof,  and  the  Company's  Board  of  Directors will make an
appropriate  adjustment in the Exercise Price and the number of shares of Common
Stock  acquirable upon exercise of this Warrant so that the rights of the holder
shall  be  neither  enhanced  nor  diminished  by  such  event.

(L)     CERTAIN  DEFINITIONS.
        --------------------

(I)     "COMMON  STOCK  DEEMED  OUTSTANDING"  shall mean the number of shares of
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Common  Stock actually outstanding (not including shares of Common Stock held in
the treasury of the Company), plus (x) pursuant to Paragraph 4(b)(i) hereof, the
maximum  total  number of shares of Common Stock issuable upon the exercise
of  Options,  as  of the date of such issuance or grant of such Options, if any,
and  (y)  pursuant  to  Paragraph  4(b)(ii)  hereof, the maximum total number of
shares  of  Common  Stock  issuable  upon  conversion or exchange of Convertible
Securities,  as  of the date of issuance of such Convertible Securities, if any.

(II)     "MARKET  PRICE,"  as  of  any  date,  (i) means the average of the last
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reported  sale  prices  for  the  shares of Common Stock on the Over-the-Counter
Bulletin Board (the "OTCBB") for the five (5) trading days immediately preceding
such  date  as  reported  by  Bloomberg Financial Markets or an equivalent,
reliable  reporting  service  mutually  acceptable to the Company and the holder
hereof  ("Bloomberg"),  or (ii) if the OTCBB is not the principal trading market
for  the shares of Common Stock, the average of the last reported sale prices on
the  principal  trading  market  for  the Common Stock during the same period as
reported  by Bloomberg, or (iii) if market value cannot be calculated as of such
date  on  any  of the foregoing bases, the Market Price shall be the fair market
value  as  reasonably  determined in good faith by (a) the Board of Directors of
the  Company  or,  at the option of a majority-in-interest of the holders of the
outstanding  Warrants  by  (b)  an  independent  investment  bank  of nationally
recognized  standing  in  the valuation of businesses similar to the business of
the  corporation. The manner of determining the Market Price of the Common Stock
set  forth  in  the  foregoing  definition shall apply with respect to any other
security  in  respect  of  which a determination as to market value must be made
hereunder.

(III)     "COMMON STOCK," for purposes of this Paragraph 4, includes the Common
           ------------
Stock, par value $.0001 per share, and any additional class of stock of the
Company having no preference as to dividends or distributions on liquidation,
provided that the shares purchasable pursuant to this Warrant shall include only
shares of Common Stock, par value $.0001 per share, in respect of which this
Warrant is exercisable, or shares resulting from any subdivision or combination
of such Common Stock, or in the case of any reorganization, reclassification,
consolidation, merger, or sale of the character referred to in Paragraph 4(e)
hereof, the stock or other securities or property provided for in such
Paragraph.

5.     ISSUE  TAX.  The  issuance  of  certificates  for Warrant Shares upon the
       ----------
exercise  of  this  Warrant  shall  be made without charge to the holder of this
Warrant  or  such shares for any issuance tax or other costs in respect thereof,
provided  that  the  Company  shall  not be required to pay any tax which may be
payable  in respect of any transfer involved in the issuance and delivery of any
certificate  in  a  name  other  than  the  holder  of  this  Warrant.

6.     NO  RIGHTS  OR  LIABILITIES  AS  A  SHAREHOLDER.  This  Warrant shall not
       -----------------------------------------------
entitle  the holder hereof to any voting rights or other rights as a stockholder
of  the  Company.  No  provision  of this Warrant, in the absence of affirmative
action  by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein  of the rights or privileges of the holder hereof, shall give rise to any
liability  of  such  holder  for  the  Exercise Price or as a shareholder of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the  Company.

7.     TRANSFER,  EXCHANGE,  AND  REPLACEMENT  OF  WARRANT.
       ---------------------------------------------------

(A)     RESTRICTION  ON  TRANSFER.  This  Warrant  and the rights granted to the
        -------------------------
holder  hereof  are  transferable,  in  whole or in part, upon surrender of this
Warrant,  together  with  a  properly  executed  assignment in the form attached
hereto,  at  the  office  or agency of the Company referred to in Paragraph 7(e)
below,  pro-vided,  however, that any transfer or assignment shall be subject to
the  conditions  set  forth  in  Paragraph  7(f)  hereof  and  to the applicable
provisions  of  the  Securities  Purchase  Agreement.  Until due presentment for
registration  of transfer on the books of the Company, the Company may treat the
registered  holder  hereof  as the owner and holder hereof for all purposes, and
the  Company  shall  not  be  affected  by  any  notice  to  the  contrary.
Notwithstanding  anything  to  the  contrary  contained herein, the registration
rights  described  in  Paragraph  8  are  assignable only in accordance with the
provisions  of  that certain Registration Rights Agreement of even date herewith
by  and  among  the Company and the other signatories thereto (the "Registration
Rights  Agreement").

(B)     WARRANT  EXCHANGEABLE  FOR  DIFFERENT  DENOMINA-TIONS.  This  Warrant is
        -----------------------------------------------------
exchange-able,  upon  the surrender hereof by the holder hereof at the office or
agency  of  the Company referred to in Paragraph 7(e) below, for new Warrants of
like  tenor  representing  in  the aggregate the right to purchase the number of
shares  of  Common  Stock  which  may  be  purchased hereunder, each of such new
Warrants  to  represent  the right to purchase such number of shares as shall be
designated  by  the  holder  hereof  at  the  time  of  such  surrender.

(C)     REPLACEMENT OF WARRANT.  Upon receipt of evidence reasonably
        ----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reason-ably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

(D)     CANCELLATION; PAYMENT OF EXPENSES.  Upon the surrender of this Warrant
        ---------------------------------
in connection with any transfer, exchange, or replacement as provided in this
Paragraph 7, this Warrant shall be promptly canceled by the Company.  The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Paragraph 7.

(E)     REGISTER.  The  Company  shall  maintain,  at  its  principal  executive
        --------
offices  (or  such  other office or agency of the Company as it may designate by
notice  to the holder hereof), a register for this Warrant, in which the Company
shall  record  the name and address of the person in whose name this Warrant has
been  issued,  as well as the name and address of each transferee and each prior
owner  of  this  Warrant.

(F)     EXERCISE  OR  TRANSFER  WITHOUT  REGISTRATION.  If,  at  the time of the
        ---------------------------------------------
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares  issuable hereunder), shall not be registered under the Securities Act of
1933, as amended (the "Securities Act") and under applicable state securities or
blue  sky  laws,  the  Company  may  require,  as  a  condition of allowing such
exercise,  transfer,  or  exchange,  (i)  that  the holder or transferee of this
Warrant,  as  the  case  may  be,  furnish  to  the Company a written opinion of
counsel,  which opinion and counsel are acceptable to the Company, to the effect
that such exercise, transfer, or exchange may be made without registration under
said  Act  and under applicable state securities or blue sky laws, (ii) that the
holder  or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an "accredited investor"
shall  be  required in connection with a transfer pursuant to Rule 144 under the
Securities  Act.  The  first  holder  of this Warrant, by taking and holding the
same,  represents  to the Company that such holder is acquiring this Warrant for
investment  and  not  with  a  view  to  the  distribution  thereof.

8.     REGISTRATION  RIGHTS.  The  initial  holder  of this Warrant (and certain
       --------------------
assignees  thereof)  is  entitled  to the benefit of such registration rights in
respect  of the Warrant Shares as are set forth in Section 2 of the Registration
Rights  Agreement.

9.     NOTICES.  All  notices,  requests,  and other communications required or
       -------
permitted to be given or delivered hereunder to the holder of this Warrant shall
be  in  writing,  and  shall  be  personally delivered, or shall be sent by
certified  or  registered  mail or by recognized overnight mail courier, postage
prepaid  and  addressed,  to such holder at the address shown for such holder on
the  books of the Company, or at such other address as shall have been furnished
to  the  Company  by  notice from such holder.  All notices, requests, and other
communications  required  or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid  and  addressed,  to the office of the Company at 4 Mulford Place, Suite
2G,  Hempstead,  New  York  11550,  Attention:  President  and  Chief  Executive
Officer,  or at such other address as shall have been furnished to the holder of
this  Warrant  by  notice  from the Company.  Any such notice, request, or other
communication  may  be sent by facsimile, but shall in such case be subsequently
confirmed  by  a writing personally delivered or sent by certified or registered
mail  or  by  recognized overnight mail courier as provided above.  All notices,
requests,  and other communications shall be deemed to have been given either at
the  time  of the receipt thereof by the person entitled to receive such notice
at the address of such person for purposes of this Paragraph 9, or, if mailed by
registered  or  certified  mail or with a recognized overnight mail courier upon
deposit  with  the  United States Post Office or such overnight mail courier, if
postage  is  prepaid  and the mailing is properly addressed, as the case may be.

10.     GOVERNING LAW.  THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND
        -------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH STATE, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT
SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.
11.     MISCELLANEOUS.
        -------------

(A)     AMENDMENTS.  This  Warrant  and any provision hereof may only be amended
        ----------
by  an  instrument  in  writing  signed  by  the  Company and the holder hereof.

(B)     DESCRIPTIVE  HEADINGS.  The  descriptive  headings  of  the  several
        ---------------------
paragraphs  of  this  Warrant  are inserted for purposes of reference only, and
shall  not  affect  the meaning or construction of any of the provisions hereof.

(C)     CASHLESS EXERCISE.  Notwithstanding anything to the contrary contained
        -----------------
in this Warrant, if the resale of the Warrant Shares by the holder is not then
registered pursuant to an effective registration statement under the Securities
Act, this Warrant may be exercised by presentation and surrender of this Warrant
to the Company at its principal executive offices with a written notice of the
holder's intention to effect a cashless exercise, including a calculation of the
number of shares of Common Stock to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise").  In the event of a Cashless
Exercise, in lieu of paying the Exercise Price in cash, the holder shall
surrender this Warrant for that number of shares of Common Stock determined by
multiplying the number of Warrant Shares to which it would otherwise be entitled
by a fraction, the numerator of which shall be the difference between the then
current Market Price per share of the Common Stock and the Exercise Price,  and
the denominator of which shall be the then current Market Price per share of
Common Stock.  For example, if the holder is exercising 100,000 Warrants with a
per Warrant exercise price of $0.75 per share through a cashless exercise when
the Common Stock's current Market Price per share is $2.00 per share, then upon
such Cashless Exercise the holder will receive 62,500 shares of Common Stock.

(D)     REMEDIES.  The Company acknowledges that a breach by it of its
        --------
obligations hereunder will cause irreparable harm to the holder, by vitiating
the intent and purpose of the transaction contemplated hereby.  Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Warrant will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Warrant, that the
holder shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Warrant and
to enforce specifically the terms and provisions thereof, without the necessity
of showing economic loss and without any bond or other security being required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly  authorized  officer.
TORBAY HOLDINGS, INC.

By: /s/ William Thomas Large
  _______________________________
 William Thomas Large
 President and Chief Executive Officer

Dated as of May 15, 2002

<PAGE>

                           FORM OF EXERCISE AGREEMENT

                                             Dated:  ________ __, 200_

To:     Torbay Holdings, Inc.

     The  undersigned,  pursuant  to  the  provisions  set  forth  in the within
Warrant,  hereby  agrees  to purchase ________ shares of Common Stock covered by
such  Warrant,  and  makes  payment  herewith in full therefor at the price per
share provided by such Warrant in cash or by certified or official bank check in
the  amount of, or, if the resale of such Common Stock by the undersigned is not
currently  registered  pursuant to an effective registration statement under the
Securities  Act  of  1933,  as amended, by surrender of securities issued by the
Company  (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant)  equal  to $_________.  Please issue a certificate or certificates for
such  shares  of Common Stock in the name of and pay any cash for any fractional
share  to:

Name:     ______________________________

Signature:
Address:____________________________
     _____________________________

Note:     The above signature should correspond exactly with the name on the
face of the within Warrant, if applicable.

and,  if  said  number  of  shares  of  Common Stock shall not be all the shares
purchasable  under the within Warrant, a new Warrant is to be issued in the name
of  said  undersigned  covering the balance of the shares purchasable thereunder
less  any  fraction  of  a  share  paid  in  cash.

<PAGE>

                               FORM OF ASSIGNMENT

     FOR  VALUE  RECEIVED,  the undersigned hereby sells, assigns, and transfers
all  the rights of the undersigned under the within Warrant, with respect to the
number  of  shares  of  Common  Stock covered thereby set forth hereinbelow, to:

Name of Assignee               Address                         No of Shares
----------------               -------                         ------------

, and hereby irrevocably constitutes and appoints
___________________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named corporation, with full power of
substitution in the premises.

Dated:     ________ __, 200_

In the presence of:                             ______________________________
Name:______________________________

Signature:_________________________
Title of Signing Officer or Agent (if any): ________
          ______________________________
Address:     ______________________________
          ______________________________

Note:     The  above  signature  should  correspond exactly with the name on the
face  of  the  within  Warrant,  if  applicable.

<PAGE>Exhibit 10.1

                            STOCK PURCHASE AGREEMENT

                                     between

                              VALLENAR ENERGY CORP.

                                       and

                             BREK ENERGY CORPORATION

<PAGE>

                            STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT is made as of the 12th day of March 2002, between
Vallenar Energy Corp., a Nevada corporation ("Vallenar"), and Brek Energy
Corporation, a Nevada corporation ("Brek")

THE PARTIES HEREBY AGREE AS FOLLOWS:

1. Purchase and Sale of Stock.

      1.1 Sale and Issuance of Series A Preferred Stock.

            (a) Vallenar shall adopt and file with the Secretary of State of
Nevada on or before the Closing (as defined below) the Certificate of
Designation in the form attached hereto as Exhibit A (the "Certificate of
Designation").

            (b) Subject to the terms and conditions of this Agreement, Brek
shall purchase at the Closing and Vallenar shall sell and issue to Brek at the
Closing 733,333 shares of Vallenar's Series A Preferred Stock (the "Shares") for
the aggregate purchase price of $350,000 (the "Purchase Price").

      1.2 Closing. The purchase and sale of the Shares shall take place at the
offices of Vallenar's counsel, at 10:00 A.M., on a date agreed to by the parties
which shall not be more than five days after all the conditions set forth in
Section 6 shall have been satisfied (which time and place are designated as the
"Closing"). At the Closing, Vallenar shall deliver to Brek a certificate
representing the Shares against payment of the Purchase Price therefor by wire
transfer, to an account designated at least three days before the Closing by
Vallenar in writing, or at the option of Brek by the forgiveness of indebtedness
of $350,000 in principal amount owed by Vallenar to Brek, or by a combination of
cash and forgiveness of indebtedness.

2. Representations and Warranties of Vallenar. Vallenar hereby represents and
warrants to Brek that:

      2.1 Valid Issuance of Preferred and Conversion Stock. The Shares have been
duly and validly authorized and, when issued, sold and delivered in accordance
with the terms of this Agreement, will be validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws. The Common Stock issuable upon conversion of the Shares
has been duly and validly reserved for issuance and, when issued upon conversion
of the Shares in accordance with the terms of the Certificate of Designations,
will be duly and validly issued, fully paid, and nonassessable and will be free
of restrictions on transfer other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws. The Founder
Shares have been validly issued and fully paid and are nonassessable.

      2.2 Organization. Each of Vallenar and its Subsidiaries (collectively, the
"Vallenar Subsidiaries") is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
requisite power and authority to carry on its business as now being conducted.
Vallenar and each of the Vallenar Subsidiaries is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing could not
reasonably be expected to have a Material Adverse Effect on Vallenar or prevent
or materially delay the consummation of the Reorganization. Vallenar has
delivered to Brek complete and correct copies of its Articles of Incorporation
and By-laws and the organizational documents of each of the Vallenar
Subsidiaries.

      2.3 Subsidiaries. Vallenar's only Subsidiaries are Nathan Oil Partners LP,
a Texas limited partnership, and Nathan Oil Operating Co. LLC, a Texas limited
liability company, both of which were organized on October 31, 2001. All of the
outstanding equity of each Vallenar Subsidiary has been validly issued. All of
the outstanding equity of each Vallenar Subsidiary is owned by Vallenar or by
another Vallenar Subsidiary free and clear of any and all Liens. Except for
equity in the Vallenar Subsidiaries, neither Vallenar nor any of the Vallenar
Subsidiaries owns, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, joint venture, limited liability
company or other entity.

      2.4 Capital Structure. The authorized capital stock of Vallenar consists
of 250,000,000 shares of capital stock, of which 200,000,000 shares are
authorized to be issued as common stock (the "Common Stock"), and 50,000,000
shares are authorized to be issued as preferred stock. On the date hereof,
Vallenar has (i) 10,050,000 shares of common stock issued and outstanding and no
shares of preferred stock outstanding; (ii) no shares of stock held in its
treasury; (iii) no shares of capital stock reserved for issuance upon exercise
of

                                     - 45 -
<PAGE>

outstanding stock options (the "Vallenar Stock Options") and (iv) no shares of
capital stock that it may be required to issue under agreements (other than this
Agreement). Except as set forth above and as contemplated by this Agreement
there are no shares of capital stock of Vallenar or equity of any Vallenar
Subsidiary issued, reserved for issuance or outstanding, and there are no stock
appreciation rights, phantom stock rights or other contractual rights the value
of which is determined in whole or in part by the value of any capital stock of
Vallenar or any equity of a Vallenar Subsidiary. The Vallenar Stock Options and
any other security convertible into or exercisable or exchangeable for Common
Stock (each of which shall be determined on an as if converted, exercised or
exchanged basis) are herein referred to as "Vallenar Stock Equivalents." Each
outstanding share of Common Stock is, and each share of common stock which may
be issued pursuant to the Vallenar Stock Options will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no outstanding bonds, debentures, notes or other
indebtedness of Vallenar or any Vallenar Subsidiary having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matter on which Vallenar's stockholders may vote. Except as set forth above,
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind obligating Vallenar or any
of the Vallenar Subsidiaries to issue, deliver or sell or create, or cause to be
issued, delivered or sold or created, additional shares of capital stock or
other voting securities or Vallenar Stock Equivalents or equity equivalents of
any of the Vallenar Subsidiaries or obligating Vallenar or any of the Vallenar
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.

      There are no outstanding contractual obligations of Vallenar or any of the
Vallenar Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock or other equity of Vallenar or any of the Vallenar Subsidiaries.

      2.5 Authority. The Board of Directors of Vallenar, at a meeting duly
called and held, duly adopted resolutions approving this Agreement. The
execution, delivery and performance of this Agreement by Vallenar and the
consummation by Vallenar of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Vallenar. This
Agreement has been duly executed and delivered by Vallenar and (assuming the
valid authorization, execution and delivery of this Agreement by Brek)
constitutes the valid and binding obligation of Vallenar enforceable against
Vallenar in accordance with its terms, except that such enforceability (i) may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights and
remedies generally, and (ii) is subject to general principles of equity
(regardless of whether considered in a proceeding in equity or at law).

      2.6 Consents and Approvals; No Violations. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, state securities or "Blue Sky"
laws, the Exchange Act, the NRS, or the rules and regulations of Nasdaq
(collectively, the "Vallenar Required Approvals"), neither the execution,
delivery or performance of this Agreement by Vallenar nor the consummation by
Vallenar of the transactions contemplated hereby will (i) violate or conflict
with the Articles of Incorporation or By-laws of Vallenar or the organizational
documents of any of the Vallenar Subsidiaries, (ii) require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity (except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings could not reasonably be expected to have a Material
Adverse Effect on Vallenar, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Vallenar or any of the Vallenar Subsidiaries is a party or by which any
of their respective properties are bound, (iv) violate any law, court order,
judgment, decree, or regulation applicable to Vallenar or any of the Vallenar
Subsidiaries or by which any of their respective properties are bound, or (v)
result in the creation or imposition of any Lien on any asset of Vallenar or the
Vallenar Subsidiaries, except in the case of clauses (iii), (iv) or (v) for
violations, breaches or defaults that could not reasonably be expected to have a
Material Adverse Effect on Vallenar.

      2.7 Reserved.

      2.8 Absence of Material Adverse Change. Since December 31, 2000, Vallenar
and the Vallenar Subsidiaries have conducted their respective businesses in all
material respects only in the ordinary course, consistent with past practices,
and there has not been (i) any Material Adverse Change with respect to Vallenar,
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock or any redemption, purchase or
other acquisition of any of its capital stock, (iii) any split, combination or

                                     - 46 -
<PAGE>

reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, or (iv) any material change
in accounting methods, principles or practices by Vallenar affecting its assets,
liabilities or business, except insofar as may have been required by a change in
generally accepted accounting principles.

      2.9 Permits; Compliance with Laws. (a) Each of Vallenar and the Vallenar
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Vallenar or any of the Vallenar Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted or as it is
planned to be conducted in connection with the acquisition and exploitation of
oil and gas leases in Edwards County, Texas (the "Vallenar Permits"), except
where the failure to have any of the Vallenar Permits could not, individually or
in the aggregate, have a Material Adverse Effect on Vallenar, and, as of the
date of this Agreement, no suspension or cancellation of any of the Vallenar
Permits is pending or, to the knowledge of Vallenar, threatened, except where
the suspension or cancellation of any of the Vallenar Permits could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Vallenar. The business of Vallenar and the Vallenar
Subsidiaries is not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that could
not reasonably be expected to have a Material Adverse Effect on Vallenar.

      2.10 Tax Matters. Except as would not have a Material Adverse Effect on
Vallenar: (i) Vallenar and each of the Vallenar Subsidiaries have timely filed
(after taking into account any extensions to file) all Tax Returns required to
be filed by them either on a separate or combined or consolidated basis; (ii)
all such Tax Returns are correct in all respects and accurately disclose in all
respects all Taxes required to be paid for the periods covered thereby; (iii)
Vallenar and the Vallenar Subsidiaries have paid or caused to be paid all Taxes
shown as due on such Tax Returns and all Taxes for which no Tax Return was
required to be filed, and the Financial Statements reflect an adequate reserve
as determined in accordance with generally accepted accounting principles for
all material Taxes payable by Vallenar and the Vallenar Subsidiaries and not yet
due (other than a reserve for deferred Taxes established to reflect timing
differences between book and Tax treatment) for all taxable periods and portions
thereof accrued through the date of such Financial Statements; (iv) none of
Vallenar or any Vallenar Subsidiary has waived in writing any statute of
limitations in respect of Taxes; (v) there is no action, suit, investigation,
audit, claim or assessment that has been formally commenced or proposed to
Vallenar in writing with respect to Taxes of Vallenar or any of the Vallenar
Subsidiaries where an adverse determination is reasonably likely; (vi) there are
no Liens for Taxes upon the assets of Vallenar or any Vallenar Subsidiary except
for Liens relating to current Taxes not yet due; (vii) all Taxes which Vallenar
or any Vallenar Subsidiary is required by law to withhold or to collect for
payment have been duly withheld and collected, and have been paid or accrued on
the books of Vallenar or such Vallenar Subsidiary; (viii) neither Vallenar nor
any Vallenar Subsidiary has been a member of any group of tax payors filing Tax
Returns on a consolidated, combined, unitary or similar basis other than each
such group of which it is currently a member; (ix) no deduction of any amount
that would otherwise be deductible by Vallenar or any of the Vallenar
Subsidiaries could be disallowed under Section 162(m) of the Code; (x) neither
Vallenar nor any of the Vallenar Subsidiaries is a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code; (xi)
none of Vallenar, Brek or any of their Subsidiaries will be obligated to make a
payment, in connection with the transactions contemplated hereunder or
otherwise, to any employee or former employee of, or individual providing
services to, Vallenar or any Vallenar Subsidiary that would be a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future;
and (xii) none of Vallenar, Brek or any of their Subsidiaries will be obligated
to pay any excise taxes or similar taxes imposed on any employee or former
employee of, or individual providing services to, Vallenar or any Vallenar
Subsidiary under Section 4999 of the Code or any similar provisions as a result
of the consummation of the transactions contemplated hereby, either alone or in
connection with any other event.

      2.11 Liabilities. Except for the $350,000 principal amount loan made by
Brek to Vallenar, Vallenar and the Vallenar Subsidiaries, taken as a whole, do
not have any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of Vallenar and its
Subsidiaries or in the notes thereto that were not set forth in the Financial
Statements.

      2.12 Benefit Plans; Employees and Employment Practices. Neither Vallenar
nor any of the Vallenar Subsidiaries has adopted or agreed to create, adopt or
contribute to any Vallenar Benefit Plan. There exist no material employment,
consulting, severance, bonus, incentive or termination agreements between

                                     - 47 -
<PAGE>

Vallenar or any of the Vallenar Subsidiaries and any current or former employee,
officer or director of Vallenar or any of the Vallenar Subsidiaries.

      2.13 Litigation. As of the date of this Agreement there is no suit,
action, proceeding or investigation pending or, to Vallenar's knowledge,
threatened, against Vallenar or any of the Vallenar Subsidiaries before any
Governmental Entity that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Vallenar. Neither Vallenar nor any
of the Vallenar Subsidiaries is subject to any outstanding judgment, order,
writ, injunction or decree that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Vallenar.

      2.14 Environmental Matters. Vallenar is conducting its businesses in
material compliance with all applicable laws, including Environmental Laws, and
has and is in compliance with all licenses and permits required under any such
laws, unless failure to so comply would not reasonably be expected to have a
Material Adverse Effect. None of Vallenar's operations or properties is the
subject of federal, state or local investigation evaluating whether any material
remedial action is needed to respond to a release of any Hazardous Materials
into the environment or to the improper storage or disposal (including storage
or disposal at offsite locations) of any Hazardous Materials, unless such
remedial action would not reasonably be expected to have a Material Adverse
Effect. Vallenar is not responsible (and to the best knowledge of Vallenar, no
Person has filed any notice indicating that Vallenar is responsible) for the
improper release into the environment, or the improper storage or disposal, of
any material amount of any Hazardous Materials. To the best knowledge of
Vallenar, no Hazardous Materials have been improperly released by any other
Person or are improperly stored or disposed of, upon any property of Vallenar,
unless such release, storage or disposal would not reasonably be expected to
have a Material Adverse Effect.

      2.15 Intellectual Property. The Intellectual Property Rights consist
solely of items and rights which are: (i) owned by Vallenar or the Vallenar
Subsidiaries; (ii) in the public domain; or (iii) rightfully used by Vallenar or
the Vallenar Subsidiaries pursuant to a license, and, with respect to
Intellectual Property Rights owned by Vallenar or the Vallenar Subsidiaries,
Vallenar or the Vallenar Subsidiaries own the entire right, title and interest
in and to such Intellectual Property Rights free and clear of any Liens.
Vallenar and the Vallenar Subsidiaries have all rights in the Intellectual
Property Rights necessary to carry out their businesses substantially as
currently conducted except as could not reasonably be expected to have a
Material Adverse Effect on Vallenar. The Intellectual Property Rights do not
infringe on any proprietary right of any Person, except to the extent that any
such infringement, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Vallenar. As of the date of this
Agreement, no claims against Vallenar or any Vallenar Subsidiary (or, to
Vallenar's knowledge, against any other holder of Intellectual Property Rights)
(x) challenging the validity, effectiveness, or ownership by Vallenar or the
Vallenar Subsidiaries of any of the Intellectual Property Rights, or (y) to the
effect that the Intellectual Property Rights infringe or will infringe on any
intellectual property or other proprietary right of any Person have been
asserted or, to Vallenar's knowledge, are threatened by any Person nor to
Vallenar's knowledge are there any valid grounds for any bona fide claim of any
such kind. To Vallenar's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Intellectual Property Rights by
any third party, employee or former employee of Vallenar or the Vallenar
Subsidiaries.

      2.16 Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Vallenar.

      2.17 Contracts. Except for this Agreement and the agreements referenced
hereby, neither Vallenar nor any of the Vallenar Subsidiaries is a party to or
bound by: (i) any "material contract" (as such term is defined in Schedule
601(b)(10) of Regulation S-K of the SEC) or any agreement, contract or
commitment the loss or termination of which could have a Material Adverse Effect
on Vallenar; (ii) any non-competition agreement or any similar agreement or
obligation which materially limits or could materially limit Vallenar or any of
the Vallenar Subsidiaries from engaging in the business of oil and gas
exploration; or (iii) any management agreement, technical services agreement or
other agreement whereby Vallenar or any of the Vallenar Subsidiaries is
providing or is required to provide management or technical services to any
other Person. (Taken as a whole, the contracts and agreements required to be
filed by Vallenar with the SEC are collectively referred to as the "Vallenar
Contracts"). With such exceptions as, individually or in the aggregate, have not
had, and could not be reasonably expected to have, a Material Adverse Effect on
Vallenar, (x) each of the Vallenar Contracts is valid and in full force and
effect (except to the extent they have previously expired in accordance with
their terms), and (y) neither Vallenar nor any of the Vallenar Subsidiaries has
violated any provision of, or committed or failed to perform any act which, with
or without notice, lapse of time, or both, would constitute a default under the
provisions of any Vallenar Contract. To the knowledge of Vallenar, no
counterparty to any such contract, agreement or commitment has violated any
provision of, or

                                     - 48 -
<PAGE>

committed or failed to perform any act which, with or without notice, lapse of
time, or both would constitute a default or other breach under the provisions
of, such Vallenar Contract, except for defaults or breaches which, individually
or in the aggregate, have not had, or would not reasonably be expected to have,
a Material Adverse Effect on Vallenar. Neither Vallenar nor any of the Vallenar
Subsidiaries is a party to, or otherwise a guarantor of or liable with respect
to, any interest rate, currency or other swap or derivative transaction, other
than any such transactions which are not material to the business of Vallenar or
the Vallenar Subsidiaries. Vallenar has provided or made available to Brek a
copy of each agreement described in subparts (i), (ii) and (iii) above. The
designation or definition of Vallenar Contracts for purposes of this Section
2.17 and the disclosures made pursuant hereto shall not be construed or utilized
to expand, limit or define the terms "material" and "Material Adverse Effect" as
otherwise referenced and used in this Agreement.

      2.18 Transactions with Affiliates. No director or executive officer of
Vallenar or any 5% or greater stockholder of Vallenar is at the date hereof a
party to any transaction with Vallenar or any of the Vallenar Subsidiaries in
which the amount involved exceeds $50,000, including any contract or arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property (including intellectual property) to or from, or otherwise
requiring payments to or from Vallenar or any of the Vallenar Subsidiaries.

      2.19 Financial Statements. Vallenar has provided Brek with its financial
statements as of and for the nine-month period ended September 30, 2001 (the
"Financial Statements"). The Financial Statements present fairly, in all
material respects, the financial position of Vallenar as of September 30, 2001
and the results of their operations and their cash flows for the nine-month
period then ended in conformity with generally accepted accounting principles..

      2.20 Leases. Vallenar holds good and defensible title to the leases set
forth on Exhibit B in accordance with standards generally acceptable in the oil
and gas industry, free and clear of any mortgage, lien, charge, encumbrance,
easement or title imperfection, except liens for (i) taxes or assessments not
due and payable, or which are being contested in good faith by appropriate
proceedings, (ii) liens for current costs of development and operation under
operating agreements, none or which is in default, (iii) development obligations
under the leases, the breach of which will result in failure of title only as to
portions of the property subject to the lease where producing units have not
been established and (iv) title imperfections that do not in the aggregate
materially detract from the value or materially interfere with the current use
of the properties leased by Vallenar as a whole. Each lease set forth on Exhibit
B is valid and subsisting and there is not any existing default under any such
lease, with such exceptions as in the aggregate are not material to all of such
leases taken as a whole.

3. Representations and Warranties of Brek. Brek hereby represents and warrants
that:

      3.1 Authorization. Brek has full corporate power and authority to enter
into this Agreement, and this Agreement constitutes its legal valid and binding
obligation, enforceable against Brek in accordance with its terms.

      3.2 Purchase Entirely for Own Account. The Shares and the Common Stock
issuable upon conversion thereof (the "Conversion Stock" and, collectively with
the Shares, the "Securities") will be acquired for investment for Brek's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof except in compliance with applicable securities
laws.

      3.3 Investment Experience. Brek acknowledges that it can bear the economic
risk of its investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the shares. Brek represents that it has not been organized for the
purpose of acquiring the Shares.

      3.4 Accredited Investor. Brek is an "accredited investor" within the
meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D,
as presently in effect.

      3.5 Restricted Securities. Brek understands that the Securities are
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from Vallenar in a transaction not involving a public offering
and that under such laws and applicable regulations the Securities may be resold
without registrations

                                     - 49 -
<PAGE>

under the Act only in certain limited circumstances. Brek represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.

4. Covenants of Vallenar and Brek.

      4.1 Delivery of Financial Information; Auditors. Vallenar shall deliver to
Brek financial information about Vallenar sufficiently ahead of the deadlines
for filing reports with the SEC to permit Brek to prepare and file such reports
on a timely basis. Vallenar acknowledges that its results of operations will be
material to Brek's financial statements. Vallenar shall provide preliminary
information regarding its results of operations to Brek when and as the same
becomes available with the understanding that the information is subject to
change. Final results of operations of Vallenar shall in any event be delivered
to Brek at least ten business days before the same are required to be included
in a report that Brek is required to file with the SEC. Vallenar shall use a
firm of certified public accountants that is reasonably acceptable to Brek.

      4.2 Inspection. Vallenar shall permit Brek, at Brek's expense, to visit
and inspect Vallenar's properties, to examine its books of account and records
and to discuss Vallenar's affairs, finances and accounts with its officers, all
at such reasonable times as may be requested by Brek.

      4.3 Use of Proceeds. Vallenar shall use the proceeds from the sale of the
Shares solely to acquire oil and gas leases in Edwards County, Texas.

      4.4 Anti-dilution Protection. If Vallenar issues and sells Common Stock at
an average price per share of less than $0.50, then Brek shall have the right to
demand in writing that Vallenar issue to it (at no additional cost to Brek) that
number of shares of Common Stock so that after such issuance Brek owns the
percentage of Vallenar's fully diluted Common Stock outstanding that it would
have owned if the average price per share of such issuances and sales had been
$0.50.

      Upon receipt of such a written demand from Brek pursuant to the foregoing
paragraph, Vallenar may either issue the shares of Common Stock referred to
above to Brek or offer to acquire all the capital stock of Vallenar owned by
Brek at an all-cash price equal to 125% of the price paid by Brek for each share
of such capital stock. If Vallenar makes such an offer to Brek, Brek must accept
within ten (10) days or its demand shall be deemed withdrawn, and in the absence
of such acceptance Vallenar's and Brek's obligations under this Section 4.4
shall be considered discharged. If Brek accepts such an offer by Vallenar,
Vallenar shall acquire its capital stock from Brek within ten (10) days by
paying the purchase price set forth above in full.

      4.5 Reserved

      4.6 Right of First Refusal. Except for issuance and sale of (i) the common
stock outstanding on the date hereof as set forth in Section 2.4, (ii) the
Shares and (iii) up to 2,200,000 shares of Common Stock first issued after the
date hereof for an aggregate purchase price not to exceed $1,100,000, Vallenar
shall not (and shall cause its Subsidiaries not to) issue or sell any debt or
equity securities or any securities exercisable for or convertible into such
securities (except upon conversion of the Shares) unless the requirements of
this Section 4.6 shall have been satisfied.

            4.6.1 Vallenar or the Subsidiary that is issuing the securities (the
"Issuer") shall in writing offer to sell to Brek the securities it plans to
issue or sell. Such offer shall set forth in reasonable detail the price, which
must be stated as a dollar amount, and other terms of the offer.

            4.6.2 Brek shall have seven (7) days after receiving the offer in
which to accept the offer in writing and, if it so accepts, an additional thirty
(30) days to acquire the securities by delivering the full purchase price
therefor to the Issuer.

            4.6.3 If Brek does not accept the offer as required by Section
4.6.2, then the Issuer shall be free to sell the securities so offered to
another person on the same terms or on terms more favorable to the Issuer than
those offered to Brek for a period of sixty (60) days commencing upon the
expiration of the 7-day period referred to in Section 4.6.2 for such acceptance
(or upon the delivery of a binding, irrevocable, written notice by Brek to the
Issuer that Brek declines the offer).

      4.7 Registration Rights. If Vallenar files a registration statement under
the Securities Act of 1933 covering the registration of any securities, then
Brek will have the right to include the Conversion Shares and any other Common
Stock owned by Brek in the registration.

                                     - 50 -
<PAGE>

5. Reserved.

6. Conditions of Brek's Obligations at Closing. The obligations of Brek under
subsection 1.1(b) of this Agreement are subject to the fulfillment at or before
the Closing of each of the following conditions:

      6.1 Representations and Warranties. The representations and warranties of
Vallenar contained in Section 2 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the date of such Closing.

      6.2 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares shall be duly obtained and effective as of the Closing.

      6.3 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Brek's counsel, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request

      6.4 Founder Shares. Brek shall have acquired 2,512,500 shares of
Vallenar's already-outstanding Common Stock from the holders thereof at a price
of no more than $0.005 per share (the "Founder Shares")

7. Conditions of Vallenar's Obligations at Closing. The obligations of Vallenar
to Brek under this Agreement are subject to the fulfillment at or before the
Closing of each of the following conditions by Brek:

      7.1 Representations and Warranties. The representations and warranties of
Brek contained in Section 3 shall be true on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
the Closing.

      7.2 Payment of Purchase Price. Brek shall have delivered the Purchase
Price.

      7.3 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall be duly obtained and effective as of the
Closing.

8. Miscellaneous.

      8.1 Survival. The representations, warranties and covenants of Vallenar
and Brek contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of Brek or Vallenar.

      8.2 Assignment; Successors and Assigns. This Agreement shall not be
assignable by any party hereto without the prior written consent thereto, and
any purported assignment in violation hereof shall be null and void. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

      8.3 Governing Law; Jurisdiction. This Agreement shall be governed in all
respects by the laws of the United States of America and by the laws of the
State of Nevada, excluding its conflict of law provisions. The parties hereby
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the courts of the State of Nevada and of the United States of America located
in Nevada (the "Nevada Courts") for any litigation arising out of or relating to
this Agreement and the transactions contemplated hereby, waive any objection to
the laying of venue of any such litigation in the Nevada Courts and agree not to
plead or claim in any Nevada Court that such litigation brought therein has been
brought in an inconvenient forum; provided that any judgment obtained in any
such litigation may be enforced in any court having jurisdiction over a party or
its assets.

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

                                     - 51 -
<PAGE>

      8.5 Titles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

      8.6 Notices. All notices and other communications hereunder shall be
validly given or made if in writing, when delivered personally (by courier
service or otherwise), when delivered by telecopy, or when actually received
when mailed by first-class certified or registered United States mail,
postage-prepaid and return receipt requested, in each case to the address of the
party to receive such notice or other communication set forth below, or at such
other address as any party hereto may from time to time advise the other parties
pursuant to this subsection:

            If to Vallenar, to:

            Vallenar Energy Corp.
            14 Inverness Drive East, Suite H-236
            Denver, Colorado 80112
            Attention: President
            Fax: 303 483 0011

            with a copy to:

            Rene Daignault
            Jeffs & Company Law Corporation
            1100 Melville Street, 6th Floor
            Vancouver, British Columbia V6E 4A6
            Facsimile: 604-664-0671

            if to Brek, to:

            Brek Energy Corporation
            80 Gloucester Road
            19th Floor
            Wan Chai
            Hong Kong SAR
            Attention: CFO
            Facsimile: 852.2804.6291

            with a copy to:

            D. Roger Glenn, Esq.
            Edwards & Angell, LLP
            750 Lexington Avenue
            New York, New York 10022
            Telecopy: (212) 308-4844

      8.7 Expenses. Vallenar and Brek each shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and performance
of this Agreement.

      8.8 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of Vallenar and Brek.

      8.9 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms. Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.

                                     - 52 -
<PAGE>

      8.10 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein or therein has been made or relied upon by either party hereto.
Neither this Agreement nor any provision hereof or thereof, is intended to
confer upon any person other than the parties hereto rights or remedies
hereunder or thereunder.

      8.11 Definitions. As used in this Agreement, the following terms have the
meanings given to them below:

      "Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.

      "Affiliate" shall mean with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person provided that, for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.

      "Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City, are authorized or required by law to
close.

      "Closing" shall have the meaning set forth in Section 2.

      "Code" shall mean the United States Internal Revenue Code of 1986, as
amended.

      "Environmental Laws" shall mean any applicable statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to or regulating or imposing liability or standards of conduct with respect to
pollution, protection of the environment or environmental regulation or control
or regarding Hazardous Substances or occupational health or safety.

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.

      "ERISA Affiliate" shall mean (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as Vallenar; (ii) any partnership, trade or business (whether or not
incorporated) which on the day before the Closing Date was under common control
(within the meaning of Section 414(c) of the Code) with Vallenar; and (iii) any
entity which is a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as either Vallenar, any corporation
described in clause (i) or any partnership, trade or business described in
clause (ii).

      "ERISA Benefit Plan" shall mean a Vallenar Benefit Plan maintained as of
the date of this Agreement which is also an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) or which is also an "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA).

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.

      "Final Order" shall mean action by the applicable Governmental Entity
which is in full force and effect, with respect to which no petition or other
request for such Governmental Entity or court stay, reconsideration or review of
any kind is pending, and as to which all time periods have expired within which
a Governmental Entity may be asked to stay, reconsider or review the action or
may stay, reconsider or review the action sua sponte.

      "Financial Statements" shall have the meaning given to it in Section 2.19.

      "Founder Shares" shall have the meaning given to it in Section 6.6.

                                     - 53 -
<PAGE>

      "Governmental Entity" shall mean any federal, state or local government or
any court, tribunal, administrative agency or commission or other governmental
or other regulatory authority or agency, domestic, foreign or supranational.

      "Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.

      "Indebtedness" of any Person at any date shall mean (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (b) any
other indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (c) all obligations of such Person under financing
leases, (d) all obligations of such Person in respect of acceptances issued or
created for the account of such Person and with respect to unpaid reimbursement
obligations related to letters of credit issued for the account of such Person
and (e) all liabilities secured by any Lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof.

      "Intellectual Property Rights" shall mean any right to use, all patents,
patent rights, trademarks, trade names, trade dress, logos, service marks,
copyrights, know how and other proprietary intellectual property rights and
computer programs held or used by Vallenar or any of the Vallenar Subsidiaries
that are individually or in the aggregate material to the conduct of the
business of Vallenar and the Vallenar Subsidiaries, taken as a whole.

      "Investment Entity" shall mean an entity in which Vallenar or any of the
Vallenar Subsidiaries has an Investment Interest.

      "Investment Interest" shall mean a direct or indirect ownership of (i)
capital stock, bonds, debentures, partnership, membership interests or other
ownership interests or other securities of any Person; (ii) any deposit with or
advance, loan or other extension of credit (including the purchase of property
from another Person subject to an understanding or agreement, contingent or
otherwise to resell such property to such other Person) to any other Person;
(iii) any revenue or profit interests pursuant to any agreement or license, or
(iv) any agreement, commitment, right, understanding or arrangement with respect
to any of the items referred to in (i), (ii) or (iii) of this definition.

      "Knowledge" and "known to" shall mean the actual knowledge of the
executive officers of Vallenar or the executive officers of Brek, as the case
may be, who have exercised reasonable due diligence with respect to the
representation and warranty to which such knowledge statement is made.

      Liens" shall mean any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.

      Material Adverse Change" or "Material Adverse Effect" shall mean, when
used in connection with a person, any change or effect (or any development that,
insofar as can reasonably be foreseen, is likely to result in any change or
effect) or fact or condition that is materially adverse to the business,
properties, assets, financial condition or results of operations of that person
and its Subsidiaries taken as a whole, provided, however, that (i) any adverse
change, effect or development that is primarily caused by conditions affecting
the United States economy generally or the economy of any nation or region in
which that person, or its Subsidiaries conducts business that is material to the
business of that person and its Subsidiaries, taken as a whole, shall not be
taken into account in determining whether there has been (or whether there could
reasonably be foreseen) a "Material Adverse Change" or "Material Adverse Effect"
with respect to that person (ii) any adverse change, effect or development that
is primarily caused by conditions generally affecting the industries in which a
person, conducts its business shall not be taken into account in determining
whether there has been (or whether there could reasonably be foreseen) a
"Material Adverse Change" or "Material Adverse Effect" with respect to that
person, and (iii) any adverse change, effect or

                                     - 54 -
<PAGE>

development that is primarily caused by the announcement or pendency of this
Agreement, the Reorganization or the transactions contemplated hereby shall not
be taken into account in determining whether there has been (or whether there
could reasonably be foreseen) a "Material Adverse Change" or "Material Adverse
Effect" with respect to a person; and a "Material Adverse Effect" with respect
to a person, shall include any applicable event, fact or condition with respect
to that party which would reasonably be expected to delay, interfere with,
impair or prevent the transactions contemplated by this agreement in a manner
which would have a material adverse effect on such transactions taken as a whole
considering the intentions and expectations of the parties hereto.

      "NRS" shall mean the Nevada Revised Statutes, Chapter 78 and 92A.

      "Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company,
unincorporated syndicate, unincorporated organization, trust, trustee, executor,
administrator or other legal representative, Governmental Entity, political
subdivision, or any group of Persons acting in concert.

      "SEC" shall mean the Securities and Exchange Commission.

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

      "Subsidiary" or "subsidiary" of a Person shall mean any Person (including
any corporation, partnership, joint venture, limited liability company or other
entity) in which the Person in question owns, directly or indirectly, an amount
of the voting securities, other voting ownership or voting partnership interests
which is sufficient to elect at least a majority of such Person's Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests) of such Person.

      "Tax" and "Taxes" shall mean any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Entity.

      "Tax Return" shall mean any return, report or similar statement required
to be filed with respect to any Tax including any information return, claim for
refund, amended return or declaration of estimated tax.

      "Vallenar Benefit Plan" shall mean any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, life insurance, supplemental unemployment
benefits, employee stock purchase, stock appreciation, restricted stock or other
employee benefit plan, policy, arrangement or agreement providing benefits to
any current or former employee, officer or director of Vallenar or any of the
Vallenar Subsidiaries or with respect to which Vallenar or any of the Vallenar
Subsidiaries (or, in the case of an ERISA Benefit Plan, any of the Vallenar's
ERISA Affiliates) may have any liability.

      "Vallenar Contracts" shall have the meaning set forth in Section 2.17.

      "Vallenar Employee" shall mean any employee of Vallenar or any of the
Vallenar Subsidiaries.

      "Vallenar Permits" shall have the meaning set forth in Section 2.9.

      "Vallenar Required Approvals" shall have the meaning set forth in Section
2.6.

                                     - 55 -
<PAGE>

      "Vallenar Stock Equivalents" shall have the meaning set forth in Section
2.4.

      "Vallenar Stock Options" shall have the meaning set forth in Section 2.4.

      "Vallenar Subsidiaries" shall have the meaning set forth in Section 2.2.

                                     - 56 -
<PAGE>

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

                                     VALLENAR ENERGY CORP.

                                     By: _______________________________________
                                         Kenneth G. C. Telford, Vice President

                                     BREK ENERGY CORPORATION

                                     By: _______________________________________
                                         Gregory M. Pek, Chief Executive Officer

                                    EXHIBIT A

           Exhibit A to that certain Stock Purchase Agreement between
                Vallenar Energy Corp. and Brek Energy Corporation
                   made as of the 12th day of March 12, 2002.

                     (number of pages including this one: 6)

--------------------------------------------------------------------------------

                           VALLENAR EXPLORATION CORP.

                                     Form of
                           Certificate of Designation

   CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
     AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF THE
                            SERIES A PREFERRED STOCK
            AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
     Pursuant to Section 1955 of Chapter 78 of the Nevada Revised Statutes

      Vallenar Exploration Corp., a corporation organized and existing under the
laws of the State of Nevada (the "Corporation"), certifies that, pursuant to
authority conferred upon the Board of Directors of the Corporation by its
Articles of Incorporation (the "Articles") and pursuant to the provisions of
Section 1955 of Chapter 78 of the Nevada Revised Statutes, the following
resolution was duly approved and adopted by the Board of Directors of the
Corporation pursuant to the unanimous written consent of all of the members of
the Board of Directors:

      RESOLVED that, pursuant to the authority vested in the Board of Directors
of the Corporation and by the Articles, a series of shares be created and
authorized out of the Preferred Shares of the authorized capital of the
Corporation and 733,333 shares of the Preferred Shares be designated as Series
"A" Preferred Shares (the "Series "A" Preferred Shares") having the voting
powers, designations, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions as are set
forth in this Resolution as follows:

                                     - 57 -
<PAGE>

      Section I. Dividends; Other Distributions.

      A. The holders of Series "A" Preferred Shares will be entitled to receive
cash dividends out of funds legally available for payment of dividends, when and
as the same are declared by the Board of Directors of the Corporation. Dividends
will be paid to the holders of record of the Series "A" Preferred Shares as
their names appear on the share register of the Corporation on the record date
for such dividend.

      B. So long as any Series "A" Preferred Shares remains outstanding, the
Corporation will neither (1) declare, pay or set apart for payment any dividend
on Common Stock or (2) make any distribution on any Common Stock, nor will the
Corporation or any of its subsidiaries (3) purchase, redeem or otherwise acquire
any Common Stock or (4) pay or make available any monies for a sinking fund for
the purchase or redemption of any Common Stock, unless the same action is taken
by the Corporation with respect to the Series "A" Preferred Shares on an
as-converted basis.

      Section II. Liquidation Preference.

In the event of a liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after all liquidation preferences in respect
of any class or series of Preferred Stock that by its terms is senior to the
Series "A" Preferred Shares (collectively, "Senior Shares") have been paid to
the holders thereof, the holders of Series "A" Preferred Shares will be entitled
to receive out of the assets of the Corporation, whether such assets are stated
capital or surplus of any nature, an amount equal to one dollar ($1.00) per
share (subject to appropriate adjustments for stock splits, stock dividends,
combinations or other recapitalizations) plus any dividends declared but unpaid
pursuant to Section I (the "Preference Amount Per Share") and will receive such
Preference Amount Per Share before any payment will be made or any assets
distributed to the holders of Common Stock.

      Section III. Voting Rights.

      A. A holder of Series "A" Preferred Shares will be entitled to vote on all
matters on which the holders of the Common Stock are entitled to vote, and to
notice of any shareholders' meeting. Except as otherwise required by law or
provided for in Section III (D) and (E), the holders of Series "A" Preferred
Shares and the holders of Common Stock will vote together as a single class on
all matters presented to shareholders and not as separate classes.

      B. For so long as at least one-half of the Series "A" Preferred Shares
remain outstanding, the Series "A" Preferred Shares will be entitled to the
greater of (i) 26% of the total voting power of all Common Stock and Series "A"
Preferred Shares outstanding on the record date for the shareholders' vote
treated as a single class less the voting power of all outstanding Common Stock
owned by the holders of the Series "A" Preferred Shares on such record date and
(ii) the voting power of the Common Stock issuable upon conversion of the Series
"A" Preferred Shares (the greater of (i) and (ii) being herein referred to as
the "Preferred Voting Power"). Each Series "A" Preferred Share will be entitled
to that number of votes equal to the Preferred Voting Power divided by the
number of Series "A" Preferred Shares outstanding.

      C. If less than one-half of the Series "A" Preferred Shares remain
outstanding, a holder of Series "A" Preferred Shares will be entitled to one
vote for each share of Common Capital Share into which it is convertible.

      D. An affirmative vote of the Series "A" Preferred Shares, voting as a
separate class, will be required:

            1.    to approve any plan or merger or exchange entered into by the
                  Corporation or the disposition by the Corporation of all or
                  substantially all its assets;

            2.    to amend the Articles;

            3.    for the Corporation to issue any capital stock other than
                  Common Stock; or

            4.    for the Corporation to increase the size of its board of
                  directors to more than eight (8).

                                     - 58 -
<PAGE>

      E. Unless (i) the Corporation's Board of Directors has designated an
executive or other committee with powers the same as those of the Corporation's
executive committee, which has been designated and is in existence on the date
hereof as set forth in the Corporation's by-laws, (ii) a person designated by
the affirmative vote of the Series "A" Preferred Shares is a member of such
committee and (iii) the rules of such committee require that any action of the
committee be affirmed by the unanimous vote of the members of the committee,
then (except as otherwise required by law) any action by the Board of Directors
or any committee thereof must be ratified by the affirmative vote of a majority
of the Series "A" Preferred Shares in order to have any force or effect.

      Section IV. Conversion.

      A. Subject to Section IV.C., each Series "A" Preferred Share will be
convertible, at the option of the holder thereof at any time, into one (1) whole
share of fully paid and non-assessable Common Stock by giving notice of such
conversion at the principal place of business of the Corporation to the
attention of the Secretary (or at such other place or places, or to such other
person's attention, as may be designated by the Corporation). Such notice will
state that the holder elects to convert such Series "A" Preferred Share, or a
stated number of shares thereof, in accordance with the provisions hereof, and
will also state the name or names (with addresses) in which the certificate or
certificates for Common Stock will be issued.

      B. As promptly as practicable after exercise by any holder of such
holder's option to convert any Series "A" Preferred Shares, the Corporation will
deliver or cause to be delivered to or upon the written order of such holder,

            1.    a certificate or certificates representing the number of
                  Common Stock issuable by reason of such conversion in such
                  name or names and such denomination or denominations as the
                  converting holder has specified consistent with all governing
                  documents and agreements;

            2.    payment in an amount equal to all dividends declared with
                  respect to each Series "A" Preferred Shares converted that
                  have not been paid prior thereto; and

            3.    a certificate representing any Series "A" Preferred Share that
                  was represented by the certificate or certificates delivered
                  to the Corporation in connection with such conversion but
                  which were not converted.

      Each such conversion will be deemed to have been made immediately prior to
the close of business on the day the option to convert is exercised, and all
rights of the converting holder as a holder of the Series "A" Preferred Shares
surrendered for conversion will cease at such time and the person or persons in
whose name or names the certificate(s) for the Common Stock issuable upon
conversion are to be issued will be treated for all purposes as having become
the record holder or holders thereof at such time.

      C. The number of Common Stock issuable upon conversion of the Series "A"
Preferred Shares (the "Conversion Shares") will be the amount set forth in
Section IV.A. unless an adjustment of the Conversion Shares is required pursuant
to subparts 1 or 2 hereof, in which case the number of Conversion Shares will be
such adjusted amount.

            1.    In case any of the following occurs:

                  a.    any reclassification or change in the outstanding Common
                        Stock (other than a change in par value, or from par
                        value to no par value, or from no par value to par
                        value, or as a result of a subdivision or combination);
                        or

                                     - 59 -
<PAGE>

                  b.    any consolidation or merger to which the Corporation is
                        a party (other than a merger in which the Corporation is
                        the surviving corporation and that does not result in
                        any reclassification of, or change in, the outstanding
                        Common Stock);

                  (each of the foregoing, an "Organic Change")

                  then, in each such case, the holders of the Series "A"
                  Preferred Shares then outstanding will have the right to
                  convert such Series "A" Preferred Shares into the kind and
                  amount of shares, other securities or property, including
                  cash, which would have been receivable upon such Organic
                  Change by a holder of the Common Stock that were issuable upon
                  conversion of the Series "A" Preferred Shares had such Common
                  Stock been issued and outstanding at the time of and on any
                  record date for such Organic Change. In each such case, the
                  Corporation will make appropriate provisions (in form and
                  substance satisfactory to the holders of a majority of the
                  Series "A" Preferred Shares then outstanding) to insure that
                  the provisions of this Section IV will be applicable to the
                  Series "A" Preferred Shares. The Corporation will not effect
                  any such Organic Change, unless prior to the consummation
                  thereof, the successor entity (if other than the Corporation)
                  resulting from consolidation or merger assumes by written
                  instrument (in form and substance satisfactory to the holders
                  of a majority of the Series "A" Preferred Shares then
                  outstanding), the obligation to deliver to each such holder
                  such shares of stock, securities or assets as, in accordance
                  with the foregoing provisions, such holder may be entitled to
                  acquire. In connection with any provision made pursuant to the
                  terms of the preceding sentence, provision will also be made
                  for adjustments that will be as nearly equivalent as may be
                  practicable to the adjustments provided for in this Section
                  IV. The provisions of Section IV.C.1. will apply to successive
                  Organic Changes.

            2.    If at any time the Corporation subdivides or combines the
                  outstanding Common Stock issuable upon conversion of the
                  Series "A" Preferred Shares, then, in each such case, the
                  Conversion Shares will, effective as of the effective date of
                  such subdivision or combination, be proportionately increased
                  in the case of subdivision or proportionately decreased in the
                  case of combination.

      D. The Corporation will at all times reserve and keep available out of its
authorized but unissued Common Stock, solely for the purpose of issue upon
conversion of the Series "A" Preferred Shares, as provided in this Section IV,
such number of Common Stock that will be sufficient from time to time to permit
the conversion of all outstanding Series "A" Preferred Shares. The Corporation
will take all such actions as may be necessary to assure that all such Common
Stock may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
Common Stock may be listed (except for official notice of issuance that will be
immediately delivered by the Corporation upon each such issuance). The
Corporation will not take any action that would cause the number of authorized
but unissued Common Stock to be less than the number of such shares required to
be reserved hereunder for issuance upon conversion of the Series "A" Preferred
Shares.

                                     - 60 -
<PAGE>

      E. The issuance of certificates for Common Stock will be made without
charge for any tax in respect of such issuance or other cost incurred by the
Corporation in connection with such conversion and the related issuance of
Common Stock upon conversion of Series "A" Preferred Shares; provided, however,
that if any such certificate is to be issued in a name other than that of the
holder of the converted Series "A" Preferred Shares, the Corporation will not be
required to issue or deliver any share certificate or certificates unless and
until the holder has paid to the Corporation the amount of any tax which may be
payable in respect of any transfer involved in such issuance or establishes to
the satisfaction of the Corporation that such tax has been paid or is not due.
Upon conversion of each share of Series "A" Preferred Shares, the Corporation
will take all such actions as are necessary in order to insure that the Common
Stock issuable with respect to such conversion will be validly issued, fully
paid and non-assessable, free and clear of all taxes, liens, charges and
encumbrances with respect to the issuance thereof.

      F. The Corporation will not close its books against the transfer of Series
"A" Preferred Shares or of Common Stock issued or issuable upon conversion of
Series "A" Preferred Shares in any manner that interferes with the timely
conversion of the Series "A" Preferred Shares. The Corporation will assist and
cooperate with any holder of Series "A" Preferred Shares required to make any
governmental filings or to obtain any governmental approval prior to or in
connection with any conversion of Series "A" Preferred Shares hereunder
(including, without limitation, making any filings required to be made by the
Corporation).

      G. If any event occurs of the type contemplated by the provisions of this
Section IV that is not expressly provided for by such provisions then the
Corporation's Board of Directors will make an appropriate adjustment in the
number of Conversion Shares so as to protect the rights of the holders of Series
"A" Preferred Shares.

      Section V. Redemption of the Series "A" Preferred Shares

      A. The Corporation, at its option, may (except to the extent that the same
will have been converted into Common Stock) redeem, at any time on or after
January 1, 2007 the whole (and not merely a part) of the Series "A" Preferred
Shares then outstanding at the redemption price equal to $0.48 per share plus
all dividends declared but unpaid thereon to the date of redemption (the
"Redemption Price"); provided, however, that no such redemption may occur unless
during the twenty-day period commencing thirty days before the date on which the
notice referred to in Section V.B. is sent (i) the Common Stock was and
continues to be listed and registered on a national securities exchange or is
quoted on the automated quotation system of a national securities association
and (ii) the last sale price of the Common Stock on each day during such
twenty-day period was at least $0.48 per share (adjusted as appropriate for
adjustments made pursuant to Section IV.C.).

      B. Not less than sixty days nor more than ninety days prior to the date
fixed for any redemption of the Series "A" Preferred Shares, a notice specifying
the time and place for such redemption and the redemption price will be given by
mail to the holders of record of the shares to be redeemed at their respective
addresses as shown on the records of the Corporation. Such notice will state
that the holder's Series "A" Preferred Shares will be redeemed on the redemption
date specified in the notice (the "Redemption Date") provided that written
consent to such redemption is received by the Corporation from the holder no
later than the second full Business Day prior to such Redemption Date, and that,
if such notice is not received by such day, the holder's Series "A" Preferred
Shares will be converted in accordance with the provisions of Section IV.

      C. On the Redemption Date, Redemption Price for such Series "A" Preferred
Shares will be payable to the order of the person whose name appears on the
certificate or certificates evidencing the Series "A" Preferred Shares as the
owner thereof. If on the Redemption Date the applicable Redemption Price
therefor is either paid or made available for payment, then all rights of the
holders thereof as shareholders of the Corporation will terminate, except only
the right to receive payment of the applicable Redemption Price

      D. Series "A" Preferred Shares redeemed pursuant to this Section V or
converted pursuant to Section IV above will thereupon be deemed retired and will
resume the status of authorized but unissued Preferred Shares (without serial
designation) and may, subject to the provisions hereof, be reissued as Series
"A" Preferred Shares or shares of any other series of Preferred Shares as
determined by the Board of Directors of the Corporation.

                                     - 61 -
<PAGE>

      IN WITNESS WHEREOF, the undersigned have signed this Certificate of
Designation as of December 14, 2001.

                                        Vallenar Exploration Corp.

                                        By______________________________________
                                          Gregory M. Pek
                                          President

                                        By______________________________________
                                          Kenneth G.C. Telford
                                          Secretary

                                     - 62 -
<PAGE>

                                    EXHIBIT B

           Exhibit B to that certain Stock Purchase Agreement between
                Vallenar Energy Corp. and Brek Energy Corporation
                   made as of the 12th day of March 12, 2002.

                     (number of pages including this one: 1)

--------------------------------------------------------------------------------

      Leases

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Project     Acres     Terms of Lease                         Royalties (1)               Payments
-----------------------------------------------------------------------------------------------------------
<S>         <C>       <C>                                    <C>                         <C>
Tract 1     7,750     5 years for all depths - renewable     1/6 for 0 ft. - 1500 ft.    $35/acre bonus (2)
                                                             1/5 for below 1500 ft.
Tract 3       790     5 years all depths -                   1/6 all depths              $27,657 bonus (2)
                      renewable
-----------------------------------------------------------------------------------------------------------
Total       8,540
-----------------------------------------------------------------------------------------------------------
</TABLE>

      (1)   Paid on the gross proceeds of the production from the property.

      (2)   One time payment for the full term of the lease made to the owners
            of the properties.

                                     - 63 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}]]