Document:

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                                                                  Exhibit 10.5.1

                             LEASE OF OFFICE SPACE

                                   LANDLORD:
                             BROOKFIELD DENVER INC.

                                    TENANT:
                          PATINA OIL & GAS CORPORATION

                                    PREMISES
                                       IN
                                 1625 BROADWAY
                                DENVER, COLORADO
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                               TABLE OF CONTENTS
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ARTICLE 1.00   DEFINITIONS......................................................................   1

   1.01  Definitions............................................................................   1

ARTICLE 2.00   GRANT OF LEASE...................................................................   2

   2.01  Grant..................................................................................   2

   2.02  Quiet Enjoyment........................................................................   2

   2.03  Covenants of Landlord and Tenant.......................................................   3

ARTICLE 3.00   TERM AND POSSESSION..............................................................   3

   3.01  Term...................................................................................   3

   3.02  Acceptance of Premises.................................................................   3

ARTICLE 4.00   RENT AND OCCUPANCY COSTS.........................................................   3

   4.01  Annual Rent............................................................................   3

   4.02  Occupancy Costs........................................................................   3

   4.03  Other Charges..........................................................................   3

   4.04  Payment of Rent - General..............................................................   3

   4.05  Annual Rent - Early Termination........................................................   4

   4.06  Payment - Occupancy Costs..............................................................   4

ARTICLE 5.00   USE OF PREMISES..................................................................   5

   5.01  Use....................................................................................   5

   5.02  Compliance with Laws...................................................................   5

   5.03  Abandonment............................................................................   6

   5.04  Nuisance...............................................................................   6

   5.05  Sale of Goods from Premises............................................................   6

ARTICLE 6.00   SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS BY LANDLORD........................   6

   6.01  Operation of Building..................................................................   6
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   6.02  Services to Premises...................................................................   6

   6.03  Building Service.......................................................................   7

   6.04  Maintenance, Repair and Replacement....................................................   7

   6.05  Additional Services and Utilities......................................................   8

   6.06  Alterations by Landlord................................................................   8

   6.07  Access by Landlord.....................................................................   9

   6.08  Energy, Conservation and Security Policies.............................................   9

ARTICLE 7.00   MAINTENANCE, REPAIR, ALTERATIONS AND IMPROVEMENTS BY TENANT......................   9

   7.01  Condition of Premises..................................................................   9

   7.02  Failure to Maintain Premises...........................................................  10

   7.03  Alterations by Tenant..................................................................  10

   7.04  Trade Fixtures and Personal Property...................................................  10

   7.05  Mechanic's Liens.......................................................................  11

   7.06  Signs..................................................................................  11

ARTICLE 8.00   TAXES............................................................................  11

   8.01  Tenant's Pro Rata Share................................................................  11

   8.02  Tenant's Other Taxes...................................................................  12

   8.03  Right to Contest.......................................................................  12

ARTICLE 9.00   INSURANCE........................................................................  12

   9.01  Landlord's Insurance...................................................................  12

   9.02  Tenant's Insurance.....................................................................  12

ARTICLE 10.00  INJURY TO PERSON OR PROPERTY.....................................................  13

   10.01  Indemnity by Tenant...................................................................  13

   10.02  Subrogation...........................................................................  14

ARTICLE 11.00  ASSIGNMENT AND SUBLETTING........................................................  14

   11.01  Assignment............................................................................  14
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   11.02  Subleasing............................................................................  14

   11.03  First Offer to Landlord...............................................................  14

   11.04  Limitation............................................................................  15

   11.05  Tenant's Obligations Continue.........................................................  15

   11.06  Subsequent Assignments................................................................  15

   11.07  Building Directory Changes............................................................  16

ARTICLE 12.00  SURRENDER........................................................................  16

   12.01  Possession............................................................................  16

   12.02  Trade Fixtures, Personal Property and Improvements....................................  16

   12.03  Merger................................................................................  16

   12.04  Payments After Termination or Notice..................................................  16

ARTICLE 13.00  HOLDING OVER.....................................................................  17

   13.01  Month-to-Month Tenancy................................................................  17

   13.02  Tenancy at Sufferance.................................................................  17

   13.03  General...............................................................................  17

ARTICLE 14.00  RULES AND REGULATIONS............................................................  17

   14.01  Purpose...............................................................................  17

   14.02  Observance............................................................................  17

   14.03  Modification..........................................................................  18

   14.04  Non-Compliance........................................................................  18

ARTICLE 15.00  EMINENT DOMAIN...................................................................  18

   15.01  Taking of Premises....................................................................  18

   15.02  Partial Taking of Building............................................................  18

   15.03  Surrender.............................................................................  19

   15.04  Partial Taking of Premises............................................................  19

   15.05  Awards................................................................................  19
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ARTICLE 16.00  DAMAGE BY FIRE OR OTHER CASUALTY.................................................  19

   16.01  Limited Damage to Premises............................................................  19

   16.02  Major Damage to Premises..............................................................  20

   16.03  Abatement.............................................................................  20

   16.04  Major Damage to Building..............................................................  20

   16.05  Limitation on Landlord's Liability....................................................  20

   16.06  Demolition or Substantial Renovation..................................................  21

ARTICLE 17.00  TRANSFERS BY LANDLORD............................................................  21

   17.01  Sale, Conveyance and Assignment.......................................................  21

   17.02  Effect of Sale, Conveyance, or Assignment.............................................  21

ARTICLE 18.00  NOTICES, ACKNOWLEDGMENTS, AUTHORITIES FOR ACTION.................................  21

   18.01  Notices...............................................................................  21

   18.02  Acknowledgments.......................................................................  22

   18.03  Authorities for Action................................................................  22

ARTICLE 19.00  TENANT'S DEFAULT AND LANDLORD'S REMEDIES.........................................  22

   19.01  Interest and Costs....................................................................  22

   19.02  Events of Default.....................................................................  22

   19.03  Landlord's Remedies...................................................................  23

   19.04  Effect on Subleases...................................................................  26

ARTICLE 20.00  BANKRUPTCY.......................................................................  26

   20.01  Bankruptcy............................................................................  26

ARTICLE 21.00  MISCELLANEOUS....................................................................  29

   21.01  Relationship of Parties...............................................................  29

   21.02  Consent Not Unreasonably Withheld.....................................................  29

   21.03  Name of Building and Project..........................................................  29

   21.04  Applicable Law and Construction.......................................................  29
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   21.05  Entire Agreement......................................................................  29

   21.06  Offer Irrevocable.....................................................................  29

   21.07  Amendment or Modification.............................................................  30

   21.08  Construed Covenants and Severability..................................................  30

   21.09  No Implied Surrender or Waiver........................................................  30

   21.10  Successors Bound......................................................................  30

   21.11  Relocation - Substitute Premises......................................................  30

   21.12  Lease Approval........................................................................  31

   21.13  Nondiscrimination.....................................................................  31

   21.14  Deposit...............................................................................  31

   21.15  Guaranty..............................................................................  31

   21.16  Personal Liability....................................................................  31

   21.17  Brokerage Commission..................................................................  32

   21.18  Unavoidable Delay.....................................................................  32

   21.19  Hazardous Materials...................................................................  32

   21.20  Authorization.........................................................................  33

   21.21  No Air Rights.........................................................................  33

   21.22  Recording; Confidentiality............................................................  33

   21.23  Alternate Electricity Provider........................................................  33

   21.24  Non-Severability......................................................................  33
</TABLE>

Exhibit A Depiction of the Premises
Exhibit B Definitions; Occupancy Costs; Additional Charges; Miscellaneous
Exhibit C Rules and Regulations
Exhibit D Additional Terms and Conditions
{Intentionally Omitted
Exhibit F Estoppel Certificate
Exhibit G Telecommunications
Exhibit H Janitorial Specifications

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                             LEASE OF OFFICE SPACE

BETWEEN:             BROOKFIELD DENVER INC.
                     a Colorado corporation                       ("Landlord")
(address)            1625 Broadway, Suite 1500
                     Denver, Colorado 80202

AND:                 PATINA OIL & GAS CORPORATION
                     a Delaware corporation                       ("Tenant")
(address)            1625 Broadway, Suite 2000
                     Denver, Colorado  80202

PREMISES IN:         1625 Broadway
                     Denver, Colorado 80202

DATE:                                    (to be dated upon Landlord's execution)

LANDLORD AND TENANT, in consideration of the covenants herein contained, hereby
agree as follows:

ARTICLE 1.00         DEFINITIONS

1.01  Definitions.  In this Lease:

(a)   "Annual Rent" means the amount payable by Tenant to Landlord in respect of
      each year of the Term under Article 4.01.

(b)   "Building" means the building as defined in Exhibit B.

(c)   "Building Standard" means the quantity and quality of materials,
      equipment, finishing, workmanship and other elements from time to time
      specified by Landlord for the Building.

(d)   "Article" means an article of this Lease.

(e)   "Commencement Date" means the first day of the Term.

(f)   "Exhibit A" means the plan(s) attached hereto as Exhibit A.

(g)   "Exhibit B" means the provisions relating to Occupancy Costs and other
      matters attached hereto as Exhibit B.

(h)   "Exhibit C" means the Rules and Regulations attached hereto as Exhibit C.

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(i)   "Exhibit D" means the Supplemental Terms and Conditions attached hereto as
      Exhibit D.

(j)   {Intentionally Omitted}

(k)   "Exhibit F" means the estoppel certificate attached hereto as Exhibit F.

(l)   "Exhibit G" means the Telecommunications exhibit attached hereto as
      Exhibit G.

(m)   "Exhibit H" means the Janitorial Specifications exhibit attached hereto as
      Exhibit H.

(n)   "Fiscal Year" means a twelve-month period (all or part of which falls
      within the Term) from time to time determined by Landlord, at the end of
      which Landlord's books are balanced for auditing and/or taxation purposes.

(o)   "Land" means the Land as defined in Exhibit B.

(p)   "Lease" means this lease, Exhibits A, B, C, D, F, G and any other Exhibit
      attached to this Lease, and every instrument complying with Article 21.07
      which by its terms amends, modifies or supplements this Lease.

(q)   "Occupancy Costs" means amounts payable by Tenant to Landlord under
      Article 4.02.

(r)   "Other Charges" means amounts payable by Tenant to Landlord under Article
      4.03.

(s)   "Premises" means 28,628 rentable square feet, more or less, comprising
      floors nineteen (19) and twenty (20) of the Building as generally
      indicated on Exhibit A, which includes for calculation of Rent only,
      26,026 usable square feet, plus 2,602 square feet of unallocated space in
      the Building as determined pursuant to Section 3.00 of Exhibit B.

(t)   "Rent" means the aggregate of all amounts payable by Tenant to Landlord
      under Articles 4.01, 4.02 and 4.03.

(u)   "Term" means the period of time set out in Article 3.01.

ARTICLE 2.00      GRANT OF LEASE

2.01  Grant. Landlord hereby demises and leases the Premises to Tenant, and
      Tenant hereby leases and accepts the Premises from Landlord, to have and
      to hold during the Term, subject to the terms and conditions of this
      Lease.

2.02  Quiet Enjoyment. Landlord shall warrant and defend Tenant in the quiet
      enjoyment and possession of the Premises during the Term, subject to the
      terms and conditions of this Lease.

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2.03     Covenants of Landlord and Tenant. Landlord covenants to observe and
         perform all of the terms and conditions to be observed and performed by
         Landlord under this Lease. Tenant covenants to pay the Rent when due
         under this Lease, and to observe and perform all of the terms and
         conditions to be observed and performed by Tenant under this Lease.

ARTICLE 3.00      TERM AND POSSESSION

3.01     Term. Notwithstanding Articles 3.02 and 3.03, and except as may
         otherwise be provided in any exhibit attached hereto, the Term of this
         Lease shall be four (4) years, beginning on the first day of the month
         of December 1, 2001, and ending on the last day of the month of
         November 2005, unless terminated earlier as provided in this Lease.

3.02     Acceptance of Premises. Taking possession of all or any portion of the
         Premises by Tenant shall be conclusive evidence as against Tenant that
         the Premises or such portion thereof are in satisfactory condition on
         the date of taking possession.

ARTICLE 4.00      RENT AND OCCUPANCY COSTS

4.01     Annual Rent.   Tenant shall pay to Landlord as Annual Rent for the
         Premises:

         (i)   the sum of $469,499.16 per annum in respect of years one (1)
               through two (2) of the Term (December 1, 2001, through November
               30, 2003), calculated at $16.40 per rentable square foot per
               annum on 28,628 rentable square feet, payable in advance and
               without notice in monthly installments of $39,124.93, commencing
               on December 1, 2001, and on the first day of each calendar month
               during this period; and

         (ii)  the sum of $526,755.24 per annum in respect of years three (3)
               through four (4) of the Term (December 1, 2003, through November
               30, 2005), calculated at $18.40 per rentable square foot per
               annum on 28,628 rentable square feet, payable in advance and
               without notice in monthly installments of $43,896.27, commencing
               on December 1, 2003, and on the first day of each calendar month
               during this period.

4.02     Occupancy  Costs.  Tenant shall pay to Landlord, at the times and in
         the manner provided in Article 4.06, the Occupancy Costs determined
         under Exhibit B.

4.03     Other Charges. Tenant shall pay to Landlord, at the times and in the
         manner provided in this Lease or, if not so provided, as reasonably
         required by Landlord, all amounts (other than those payable under
         Articles 4.01 and 4.02) which are payable by Tenant to Landlord under
         this Lease.

4.04     Payment of Rent - General. All amounts payable by Tenant to Landlord
         under this Lease shall be deemed to be Rent and shall be payable and
         recoverable as Rent in the manner herein provided, and Landlord shall
         have all rights against Tenant for default in

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         any such payment as in the case of arrears of Rent as is more
         particularly hereinafter provided. Rent shall be paid to Landlord,
         without deduction or set-off, in legal tender of the jurisdiction in
         which the Building is located, at the address of Landlord as set forth
         in the beginning of this Lease, or to such other person or at such
         other address as Landlord may from time to time designate in writing.
         Tenant's obligation to pay Rent for the entire Term shall survive the
         expiration or earlier termination of this Lease and is independent of
         any covenant or obligation of Landlord hereunder. The covenants and
         obligations of Landlord under this Lease are dependent upon the
         performance by Tenant of all of its covenants and obligations
         hereunder.

4.05     Annual Rent - Early Termination. If the Term ends on a day other than
         the last day of a calendar month, the installment of Annual Rent
         payable on the first day of the last calendar month of the Term shall
         be that proportion of the Annual Rent which the number of days from the
         first day of such last calendar month to and including the last day of
         the Term bears to 365.

4.06     Payment - Occupancy Costs.

         (a)   Prior to the Commencement Date and the beginning of each Fiscal
               Year thereafter, Landlord shall compute and deliver to Tenant a
               bona fide estimate of Occupancy Costs for the appropriate Fiscal
               Year and without further notice Tenant shall pay to Landlord in
               monthly installments one-twelfth of such estimate simultaneously
               with Tenant's payments of Annual Rent during such Fiscal Year.
               Any failure by Landlord to deliver any such estimate as aforesaid
               shall not relieve Tenant of its obligation to pay Occupancy Costs
               as herein provided. If at any time it reasonably appears to
               Landlord that the Occupancy Costs for the current Fiscal Year
               will vary from Landlord's estimate then Landlord may readjust the
               Occupancy Costs for such Fiscal Year, but not more than twice per
               Fiscal Year, by 30 days' prior written notice delivered to
               Tenant, and subsequent payments by Tenant for such Fiscal Year
               will be based upon such readjusted Occupancy Costs.

         (b)   Unless delayed by causes beyond Landlord's reasonable control,
               Landlord shall deliver to Tenant within one hundred twenty (120)
               days after the end of each Fiscal Year a written statement (the
               "Statement") setting out in reasonable detail the amount of
               Occupancy Costs for such Fiscal Year and certified to be correct
               by a representative of Landlord. If the aggregate of monthly
               installments of Occupancy Costs actually paid by Tenant to
               Landlord during such Fiscal Year differs from the amount of
               Occupancy Costs payable for such Fiscal Year under Article 4.02
               as indicated in the Statement, then, as the case may be, Tenant
               shall pay the difference to Landlord or Landlord shall issue a
               credit to Tenant against the Rent remaining to be paid hereunder
               for the difference, or if no Rent then remains to be paid, refund
               the difference to Tenant, without interest, within thirty (30)
               days after the date of delivery of the Statement.

         (c)   If Tenant disagrees with the accuracy of Occupancy Costs as set
               forth in the Statement or in any adjustment thereto made by
               Landlord pursuant to Article 4.06(d), Tenant shall be required to
               give Landlord written notice thereof within forty-five (45) days
               after the date Landlord gives Tenant the Statement or notice

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               of adjustment thereto, as the case may be, or Tenant shall
               conclusively be deemed to have accepted the accuracy of the
               Statement, or modification thereto, as the case may be, and to
               have waived any right to claim any readjustment in connection
               therewith. In order for Tenant to determine whether it disagrees
               with Landlord's statement and provided there is no Event of
               Default then existing, Tenant may review Landlord's actual
               Occupancy Costs for the Fiscal Year covered by the Statement,
               within such 45-day period once per calendar year, provided such
               review will be conducted only during regular business hours at
               Landlord's office, and only after Tenant gives Landlord ten (10)
               days' prior written notice. All of the information obtained
               through Tenant's review with respect to financial matters,
               including, without limitation, costs, expenses, and other matters
               pertaining to Landlord or the Project shall be held in strict
               confidence by Tenant. However Tenant may disclose such
               information to Tenant's accountants, attorneys, managing
               employees, and others in privity with Tenant as reasonably
               necessary for Tenant's business purposes. If Tenant so disagrees
               with the Statement, or modification thereto, as the case may be,
               and gives such notice to Landlord, Tenant shall nevertheless make
               payment in accordance with any notice given by Landlord, but the
               disagreement shall be referred by Landlord for prompt decision by
               a certified public accountant, architect, insurance broker or
               other professional consultant selected by Landlord and reasonably
               acceptable to Tenant, who shall be unaffiliated with and
               unrelated to either Landlord or Tenant or any of their officers,
               directors or employees, who shall be deemed to be acting as
               expert(s) and not arbitrator(s), and a determination signed by
               the selected expert(s) and certified to Landlord and Tenant shall
               be final and binding on both Landlord and Tenant. Any adjustment
               required to any previous payment made by Tenant or Landlord by
               reason of any such decision shall be made within thirty (30) days
               thereof, and the party required to make payment under such
               adjustment shall bear all costs of the expert(s) making such
               decision except where that payment represents five percent (5%)
               or less of the Occupancy Costs that were the subject of the
               disagreement, in which case Tenant shall bear all such costs.

         (d)   Landlord may readjust the Occupancy Costs for a Fiscal Year by
               notice delivered to Tenant within six (6) months after the date
               of delivery of the Statement.

ARTICLE 5.00      USE OF PREMISES

5.01     Use.   The Premises shall be used and occupied only as business offices
         for the business of Tenant, which may include the business being
         conducted in the Premises as of the date of this Lease, or for such
         other purpose as Landlord may specifically authorize in writing.

5.02     Compliance with Laws. The Premises shall be used and occupied in a
         safe, careful and proper manner so as not to contravene any present or
         future governmental or quasi-governmental laws in force or regulations
         or orders or the requirements of Landlord's insurance carriers. If due
         solely to Tenant's use of the Premises, improvements are necessary to
         comply with any of the foregoing or with the

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         requirements of insurance carriers, Tenant shall pay the entire cost
         thereof after having been given notice thereof in accordance with the
         procedures and notice periods set forth in Article 7.02.

5.03     Abandonment. Tenant shall not abandon the Premises or any portion
         thereof at any time during the Term. For purposes of this Lease,
         "abandoned" or "abandonment" shall mean Tenant's failure to occupy the
         Premises in accordance with the terms hereof, coupled with Tenant's
         failure to pay Rent in accordance with the terms hereof.

5.04     Nuisance. Tenant, its employees, agents and invitees, shall not cause
         or maintain any nuisance in or about the Premises, and Tenant shall
         keep the Premises free of debris, rodents, vermin and anything of a
         dangerous, noxious or offensive nature or which could create a fire
         hazard (through undue load on electrical circuits or otherwise) or
         undue vibration, heat or noise.

5.05     Sale of Goods from Premises. Tenant shall not conduct or permit the
         conduct of any "fire," "bankruptcy," "going out of business," or
         auction sale in or from the Premises.

ARTICLE 6.00      SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS BY LANDLORD

6.01     Operation of Building. During the Term, Landlord shall operate and
         maintain the Building in accordance with all applicable laws and
         regulations, the requirements of Landlord's insurance carriers and
         standards from time to time prevailing for first-class office buildings
         of comparable age and character in the area in which the Building is
         located, and shall provide the services set out in Articles 6.02 and
         6.03.

6.02     Services to Premises.   Landlord shall provide in the Premises:

         (a)   heat, ventilation and cooling as required for the comfortable use
               and occupancy of the Premises during normal business hours for
               general office use, in a range of 68 to 75 degrees Fahrenheit,
               expressly excepting any computer rooms, telephone rooms, and
               other high density areas within the Premises which require
               upgraded HVAC design and supplementation,

         (b)   janitorial services, in accordance with Exhibit H of this Lease,
               including window washing, provided that Tenant shall leave the
               Premises in a reasonably tidy condition at the end of each
               business day,

         (c)   electric power as supplied by the local utility company. Tenant
               shall be entitled to its pro rata share of the Base Building's
               electrical capacity for each floor on which Tenant occupies
               space. If Tenant leases a full floor, Tenant shall be entitled to
               the entire Base Building capacity available for tenant use for
               that particular floor. The Base Building capacity for each floor
               includes an LPH panel (480 volt, 100 amps, 3 phase) and an LPN
               panel (208 volt, 100 amps, 3 phase). Notwithstanding the above,
               however, Landlord shall not be required to supply to Tenant or
               the Premises electrical power in excess of Tenant's pro rata
               share of the above stated Base Building capacity (on a per floor
               basis) for items

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                  such as, without limitation, consistent Tenant operations of
                  unmetered areas beyond 12 hours per day, electrical power to
                  computer rooms, to above Building Standard lighting fixtures,
                  or to supplemental air conditioning equipment,

         (d)      replacement of Building Standard fluorescent tubes, light
                  bulbs and ballasts as required from time to time as a result
                  of normal usage, and

         (e)      maintenance, repair and replacement as set out in Article
                  6.04.

6.03     Building Service.   Landlord shall provide in the Building:

         (a)      domestic running water and necessary supplies in washrooms
                  sufficient for the normal use thereof by occupants in the
                  Building,

         (b)      twenty-four hour a day, seven days per week access to and
                  egress from the Premises, including elevator or escalator
                  service if included in the Building, which elevator service
                  shall be maintained at the level substantially similar to that
                  as of the date of this Lease,

         (c)      heat, ventilation, cooling, lighting, electric power, domestic
                  running water and janitorial service in those areas of the
                  Building from time to time designated by Landlord for use
                  during normal business hours by Tenant in common with all
                  tenants and other persons in the Building but under the
                  exclusive control of Landlord,

         (d)      a general directory board on which Tenant shall be entitled to
                  have its name shown, provided that Landlord shall have
                  exclusive control thereof and of the space thereon to be
                  allocated to each tenant, and

         (e)      maintenance, repair and replacement as set out in Article
                  6.04.

6.04     Maintenance, Repair and Replacement. Landlord shall operate, maintain,
         repair and replace the systems, facilities and equipment necessary for
         the proper operation of the Building and for provision of Landlord's
         services under Articles 6.02 and 6.03 (but not including any systems,
         facilities or equipment in the Premises such as, without limitation,
         non-Building Standard items such as light fixtures and bulbs,
         partitioned glass, doors and frames, and non-Building Standard plumbing
         fixtures, such as sinks, water heaters, refrigerators, and garbage
         disposals, rest rooms exclusively within the Premises and supplemental
         air conditioning equipment, all of which Tenant shall be responsible
         for pursuant to Article 7.01), and shall maintain and repair the
         foundations, structure and roof of the Building and repair damage to
         the Building which Landlord is obligated to insure against under
         Article 9.00, provided that,

         (a)      if all or part of such systems, facilities and equipment are
                  destroyed, damaged or impaired, Landlord shall have a
                  reasonable time in which to complete necessary repair or
                  replacement, and during that time shall be required only to
                  maintain such services as are reasonably possible in the
                  circumstances,

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         (b)      Landlord may temporarily discontinue such services or any of
                  them at such times as may be necessary due to causes (except
                  lack of funds) beyond the reasonable control of Landlord,

         (c)      Landlord shall use reasonable diligence in carrying out its
                  obligations under Articles 6.03 and 6.04, but shall not be
                  liable under any circumstances for any consequential damage to
                  any person or property for any failure to do so,

         (d)      no reduction or discontinuance of such services as permitted
                  by this Lease shall be construed as an eviction of Tenant or
                  release Tenant from any obligation of Tenant under this Lease,
                  and

         (e)      nothing contained herein shall derogate from the provisions of
                  Article 16.00.

6.05     Additional Services and Utilities.

         (a)      If from time to time requested in writing by Tenant, and to
                  the extent that it is reasonably able to do so, Landlord shall
                  provide in the Premises services in addition to those set out
                  in Article 6.02 such as, by way of example but not in
                  limitation, heat, ventilation and cooling during times other
                  than normal business hours, provided that Tenant shall within
                  thirty (30) days of receipt of any invoice for any such
                  additional service pay Landlord therefor at reasonable rates
                  as Landlord may from time to time establish.

         (b)      Tenant shall not without Landlord's written consent install or
                  operate in the Premises equipment (including telephone
                  equipment or lighting) which generates sufficient heat to
                  affect the temperature otherwise maintained in the Premises by
                  the air conditioning system as normally operated. Landlord may
                  install supplementary air conditioning units, facilities or
                  services in the Premises, or modify its air conditioning
                  system, as may in Landlord's reasonable opinion be required to
                  maintain proper temperature levels, and Tenant shall pay
                  Landlord within thirty (30) days of receipt of any invoice for
                  the cost thereof, including installation, operation and
                  maintenance expense.

         (c)      If Landlord shall from time to time reasonably determine that
                  the use of electricity or any other utility or service in the
                  Premises is in excess of any power needs which can be met by
                  Tenant's proportionate share of the Base Building LPH panels,
                  or if any supplemental or 24-hour air conditioning is
                  installed in the Premises, Landlord may separately charge
                  Tenant for, and Tenant shall pay to Landlord, the excess costs
                  at reasonable rates attributable to such excess use together
                  with the reasonable costs incurred by Landlord in determining
                  that Tenant's use is excessive. At Landlord's request, Tenant
                  shall install and maintain, at Tenant's expense, metering
                  devices for measuring the use of any such utility or service
                  in the Premises. Tenant shall also pay Landlord $10.00 per ton
                  per month of connected load for Tenant's use of condenser
                  water provided by Landlord. The price of condenser water may
                  change from time to time based on Landlord's costs to provide
                  the service.

6.06     Alterations by Landlord.   Landlord may from time to time

                                       8
<PAGE>

         (a)   make repairs, replacements, changes or additions to the
               structure, systems, facilities and equipment in the Premises
               where necessary or desirable to serve the Premises or other parts
               of the Building,

         (b)   make changes in or additions to any part of the Building not in
               or forming part of the Premises, and

         (c)   change or alter the location of the Common Areas,

         provided that in doing so Landlord shall not unreasonably disturb or
         interfere with Tenant's use of or access to the Premises and operation
         of its business or materially alter the quality or character of the
         Premises.

6.07     Access by Landlord. Tenant shall permit Landlord to enter the Premises
         outside normal business hours, and during normal business hours where
         such will not unreasonably disturb or interfere with Tenant's use of
         the Premises and operation of its business, to examine, inspect and
         show the Premises to persons wishing to lease them, but only during the
         last year of the Term, or to any lender, prospective lender or
         purchaser of the Building or Project (as defined in Exhibit B), or any
         portion thereof or interest therein, to provide services or make
         repairs, replacements, changes or alterations as set out in this Lease,
         to monitor Tenant's compliance with its obligations hereunder, and to
         take such steps as Landlord may deem necessary or desirable for the
         safety, improvement or preservation of the Premises or the Building.
         Landlord shall whenever possible (except in an emergency) consult with
         or give reasonable notice to Tenant prior to such entry, but no such
         entry shall constitute an eviction or entitle Tenant to any abatement
         of Rent, or otherwise relieve Tenant of any of its obligations
         hereunder, and Landlord shall return the Premises to its condition
         prior to Landlord's access.

6.08     Energy, Conservation and Security Policies. Landlord shall be deemed to
         have observed and performed the terms and conditions to be performed by
         Landlord under this Lease, including those relating to the provision of
         utilities and services, if in so doing it acts in accordance with a
         directive, policy or request of a governmental or quasi-governmental
         authority serving the public interest in the fields of energy,
         conservation or security.

ARTICLE 7.00      MAINTENANCE, REPAIR, ALTERATIONS AND IMPROVEMENTS BY TENANT

7.01     Condition of Premises. Tenant shall maintain the Premises and all
         improvements therein in good order and in first-class condition
         consistent with the Building and the premises of other tenants therein,
         including, but not limited to,

         (a)   repainting and redecorating the Premises, provided that Landlord
               agrees that Tenant will not be obligated to perform the same at
               any time during the initial Term, and cleaning window coverings
               and carpets at reasonable intervals as needed, and

                                       9
<PAGE>

         (b)      making repairs, replacements and alterations as needed,
                  including those necessary to comply with the requirements of
                  any governmental or quasi-governmental authority having
                  jurisdiction.

7.02     Failure to Maintain Premises. If Tenant fails to perform any obligation
         under this Article 7.00, then on not less than ten (10) days notice to
         Tenant Landlord may enter the Premises and perform such obligation
         without liability to Tenant for any loss or damage to Tenant thereby
         incurred, and without the same constituting an eviction or entitling
         Tenant to any abatement of Rent or otherwise relieving Tenant from any
         of its obligations hereunder, and Tenant shall pay Landlord for the
         cost thereof, plus 10% of such cost for overhead and supervision,
         within ten days of receipt of Landlord's invoice therefor.

7.03     Alterations by Tenant. Tenant may from time to time at its own expense,
         make changes, additions and improvements in the Premises to better
         adapt the same to its business, provided that any change, addition or
         improvement shall

         (a)      comply with the requirements of any governmental or quasi-
                  governmental authority having jurisdiction and with the
                  requirements of Landlord's insurance carriers,

         (b)      be made only with the prior written consent of Landlord (which
                  shall not be unreasonably withheld, provided, however, that in
                  no event may changes be made to the structure or systems of
                  the Building),

         (c)      equal or exceed the then current standard for the Building and
                  be performed in a good and workmanlike manner, and

         (d)      be carried out only by persons selected by Tenant and approved
                  in writing by Landlord who shall if required by Landlord
                  deliver to Landlord, before commencement of the work, evidence
                  of financial capability satisfactory to Landlord to show the
                  ability to pay for such change, addition or improvement, as
                  well as proof of worker's compensation and public liability
                  and property damage insurance coverage, with Landlord and
                  Landlord's property management agent named as an additional
                  insured, in amounts, with companies, and in a form reasonably
                  satisfactory to Landlord, which shall remain in effect during
                  the entire period in which the work will be carried out.

         Any increase in property taxes on or fire or casualty insurance
         premiums for the Building attributable to such change, addition or
         improvements shall be borne solely by Tenant.

7.04     Trade Fixtures and Personal Property. Tenant may install in the
         Premises its usual trade fixtures and personal property in a proper,
         lawful and workmanlike manner, without causing damage to the Premises,
         provided that no such installation shall interfere with or damage the
         mechanical or electrical systems or the structure of the Building. If
         no Event of Default then exists hereunder, trade fixtures and personal

                                       10
<PAGE>

         property installed in the Premises by Tenant may, at Tenant's sole
         expense, be removed from the Premises

         (a)      from time to time in the ordinary course of Tenant's business
                  or in the course of reconstruction, renovation or alteration
                  of the Premises by Tenant, and
         (b)      during a reasonable period prior to the expiration of the
                  Term,

         provided that Tenant promptly repairs at its own expense any damage to
         the Premises or Building resulting from such installation and removal.

7.05     Mechanic's Liens. Tenant shall pay before delinquency all costs for
         work done or caused to be done by Tenant in the Premises which could
         result in any lien or encumbrance on Landlord's interest in the Land or
         Building or any part thereof, shall keep the title to the Land or
         Building and every part thereof free and clear of any lien or
         encumbrance in respect of such work, and shall indemnify and hold
         harmless Landlord against any claim, loss, cost, demand and legal or
         other expense, whether in respect of any lien or otherwise, arising out
         of the supply of material, services or labor for such work. Tenant
         shall immediately notify Landlord of any such lien, claim of lien or
         other action of which it has or reasonably should have knowledge and
         which affects the title to the Land or Building or any part thereof,
         and shall cause the same to be removed within ten (10) days, failing
         which Landlord may take such action as Landlord deems necessary to
         remove the same and the entire cost thereof shall be immediately due
         and payable by Tenant to Landlord. Tenant shall permit Landlord to post
         a notice on the Premises as may be contemplated by applicable law, as
         amended from time to time, or any comparable or other statutory
         provision for protection of the Building and the Project and Landlord's
         interest therein from mechanic's or other liens and to take all other
         actions Landlord may desire for Landlord.

7.06     Signs. Any sign, lettering, decal or design of Tenant placed in or upon
         the Premises which is visible from the exterior of the Premises shall
         be at Tenant's expense and subject to approval by Landlord (in
         Landlord's sole discretion), shall conform to the uniform pattern of
         identification signs for tenants in the Building as prescribed by
         Landlord from time to time and shall be removed, and the surface it was
         located upon repaired and restored to the condition it was in prior to
         the installation of the same, by Tenant at its sole expense at or prior
         to the expiration of the Term. Tenant shall not inscribe or affix any
         sign, lettering, decal or design in the Premises or Building, which is
         visible from the exterior of the Building.

ARTICLE 8.00      TAXES

8.01     Tenant's Pro Rata Share. Tenant will reimburse Landlord for Tenant's
         pro rata share of Taxes (as defined in Exhibit B), as established as
         part of the Occupancy Costs set forth in Exhibit B attached hereto.

                                       11
<PAGE>

8.02     Tenant's Other Taxes. In addition to Tenant's pro rata share of Taxes,
         Tenant shall pay before delinquency every tax, assessment, license fee,
         excise and other charge, however described, which is imposed, levied,
         assessed or charged by any governmental or quasi-governmental authority
         having jurisdiction and which is payable in respect of the Term upon or
         on account of

         (a)      operations at, occupancy of, or conduct of business in or from
                  the Premises,

         (b)      fixtures or personal property in the Premises which do not
                  belong to Landlord, and

         (c)      the Rent paid or payable by Tenant to Landlord for the
                  Premises or for the use and occupancy of all or any part
                  thereof,

         provided that if Landlord so elects by notice to Tenant, Tenant shall
         add any amounts payable under this Article 8.02 to the monthly
         installments of Annual Rent payable under Article 4.01 and Landlord
         shall remit such amounts to the appropriate authorities.

8.03     Right to Contest. Tenant shall have the right to contest in good faith
         the validity or amount of any tax, assessment, license fee, excise fee
         and other charge which it is responsible to pay under Article 8.02, and
         to withhold payment of the same during the pendency of such contest,
         provided that no contest by Tenant may involve the possibility of
         forfeiture, sale or disturbance of Landlord's interest in the Premises,
         that Tenant provides to Landlord security for the taxes contested by
         Tenant adequate in the reasonable opinion of Landlord, and that, upon
         the final determination of any contest by Tenant, Tenant shall
         immediately pay and satisfy the amount found to be due, together with
         any costs, penalties and interest.

ARTICLE 9.00      INSURANCE

9.01     Landlord's Insurance. During the Term, Landlord shall maintain at its
         own expense (subject to contribution by Tenant of its pro rata share of
         Occupancy Costs under Article 4.02) liability insurance, fire insurance
         with extended coverage, boiler and pressure vessel insurance, and other
         insurance on the Building and all property and interest of Landlord in
         the Building with coverage and in amounts deemed reasonable by Landlord
         from time to time. Policies for such insurance shall waive, to the
         extent available from Landlord's carrier(s) at no additional cost to
         Landlord, any right of subrogation against Tenant and all individuals
         and entities for whom Tenant is responsible in law.

9.02     Tenant's Insurance. During the Term, Tenant shall maintain at its own
         expense

         (a)      fire insurance with extended coverage and water damage
                  insurance, in amounts sufficient to fully cover all leasehold
                  improvements, fixtures and property in the Premises, and

                                       12
<PAGE>

         (b)      liability insurance, with blanket contractual liability
                  coverage with Landlord and Landlord's agent named as an
                  additional insured, against claims for death, personal injury
                  and property damage in or about the Premises, in amounts which
                  are from time to time acceptable to a prudent tenant in the
                  community in which the Building is located and satisfactory to
                  Landlord but not less than $2,000,000 for death, illness or
                  injury to one or more persons, and $500,000 for property
                  damage, in respect of each occurrence.

         Policies for such insurance shall be in a form and with an insurer
         reasonably acceptable to Landlord, shall require at least fifteen days
         written notice to Landlord of termination or material alteration during
         the Term, and shall waive any right of subrogation against Landlord and
         all individuals and entities for whom Landlord is responsible in law
         and shall contain coverage for blanket contractual liability to cover
         indemnities included in this agreement. Tenant shall deliver to
         Landlord on the Commencement Date and on each anniversary thereof,
         evidence satisfactory to Landlord of such policies and that all
         premiums thereon have been paid and that the policies are in full force
         and effect.

ARTICLE 10.00     INJURY TO PERSON OR PROPERTY

10.01    Indemnity by Tenant. Tenant shall indemnify and hold harmless Landlord
         (and if Landlord requests, defend Landlord with counsel reasonably
         acceptable to Landlord) from and against liabilities, obligations,
         losses, damages, fines, penalties, demands, claims, causes of action,
         judgments, costs and expenses, including, without limitation,
         attorneys' fees, which may be imposed on or incurred, suffered or paid
         by or asserted against Landlord or the Building or any interest
         therein, arising from or by reason of or in connection with:

         (a)      the use, non-use, possession, occupation, condition, operation
                  or maintenance of the Premises by Tenant or any of its agents,
                  contractors, servants, employees, licensees or invitees;

         (b)      any negligent or tortious act on the part of Tenant or any of
                  its agents, contractors, servants, employees, licensees or
                  invitees;

         (c)      any accident, injury, death or damage to any person or
                  property occurring in, on or about the Premises;

         (d)      any theft, loss or damage to, however caused, to books,
                  records, data or information (computer generated or
                  otherwise), files, money, securities, negotiable instruments
                  or papers in or about the Premises;

         (e)      any loss or damage resulting from Tenant's negligent or
                  willful interference with or obstruction of deliveries to or
                  from the Premises;

         (f)      any pollutant, toxic or hazardous material, substance or
                  waste, or any other material which may adversely affect the
                  environment, whether or not now recognized to have such to
                  effect, which Tenant, its employees, agents,

                                       13
<PAGE>

                  contractors or invitees bring upon, keep, use or locate in, on
                  or about the Building, or any release or disposal of any such
                  material, substance or waste in, on, about or from the
                  Building by any of the foregoing; and

         (g)      any failure on the part of the Tenant to perform or comply
                  with any of the covenants, agreements, terms, provisions,
                  conditions or limitations contained in this Lease on its part
                  to be performed or with which to be complied.

         Nothing contained in this Article 10.01 shall be deemed to require
         Tenant to indemnify Landlord to any extent prohibited by law, or as a
         result of Landlord's gross negligence or willful misconduct.

10.02    Subrogation. The provisions of this Article 10.00 shall not abrogate or
         impair the waiver of any right of subrogation against Tenant in
         Landlord's insurance under Article 9.01 and the waiver of any right of
         subrogation against Landlord in Tenant's insurance under Article 9.02.

ARTICLE 11.00     ASSIGNMENT AND SUBLETTING

11.01    Assignment. Tenant, if an Event of Default does not then exist under
         this Lease and with Landlord's prior written consent, which consent
         shall not be unreasonably withheld, may assign this Lease, subject to
         Articles 11.03 and 11.04, to any assignee who, in Landlord's reasonable
         opinion, will not be inconsistent with the character of the Building
         and its other tenants, will use the Premises in a manner consistent
         with Article 5 thereof, has the financial capability of complying with
         the then remaining obligations of Tenant hereunder and who otherwise
         meets such other standards as Landlord may determine in its reasonable
         discretion. Without limiting the foregoing, provided there is no Event
         of Default then existing under this Lease, Tenant, with Landlord's
         prior written consent, which shall not be unreasonably withheld, may
         assign this Lease to an entity controlling, controlled by or under
         common control with Tenant (a "Tenant Affiliate"). For purposes of this
         Article 11.01, "control" means the direct or indirect ownership of more
         than fifty percent (50%) of an entity's equity.

11.02    Subleasing. Tenant, if an Event of Default does not then exist under
         this Lease and with Landlord's prior written consent, which consent
         shall not be unreasonably withheld, and subject to Articles 11.03 and
         11.04, may sublet all or any part of the Premises to a sublessee who,
         in Landlord's sole opinion, will not be inconsistent with the character
         of the Building and its other tenants, will use the Premises in a
         manner consistent with Article 5 thereof, has the financial capability
         of complying with its obligations set forth in the sublease and who
         otherwise meets such other standards as Landlord may determine in its
         reasonable discretion. Without limiting the foregoing, provided there
         is no Event of Default then existing under this Lease, Tenant, with
         Landlord's prior written consent, which shall not be unreasonably
         withheld, may sublet all or a part of the Premises to a Tenant
         Affiliate.

11.03    First Offer to Landlord. If Tenant wishes to sublet all or any part of
         the Premises for a term greater than 75% of the then remaining term,
         provided there is no Event of Default then existing under this Lease,
         to a named third party, other than a Tenant Affiliate, Tenant shall
         first offer in writing to sublet to ----------------------------------

                                       14
<PAGE>

         Landlord on the same terms and conditions as provided in this Lease
         except this Article 11.00, and for the same Rent as provided in this
         Lease or the rent offered to that third party, if lower. If Tenant
         wishes to assign this Lease (except as set out in Article 11.01) to a
         named third party, other than a Tenant Affiliate, Tenant shall first
         offer to Landlord in writing to surrender this Lease on the effective
         date of the proposed assignment by Tenant. Landlord will have fifteen
         (15) days from the receipt of Tenant's offer to sublease or assign
         either to accept or reject it. If Landlord accepts the offer, Tenant
         will then execute and deliver to Landlord, or to any party designated
         or named by Landlord, an assignment or sublease, as the case may be, in
         either case in form and substance reasonably satisfactory to Landlord.

11.04    Limitation. Except as specifically provided in this Article 11.00,
         Tenant shall not assign or transfer this Lease or any interest therein
         or sublet or in any way part with possession of all or any part of the
         Premises, or permit all or any part of the Premises to be used or
         occupied by any other person. Any assignment, transfer or subletting or
         purported assignment, transfer or subletting except as specifically
         provided herein shall be null and void and of no force and effect
         without limiting Landlord's right to approve or disapprove any
         assignment or sublease pursuant to Articles 11.01 and 11.02 hereof.
         Landlord shall not be required to consent to an assignment of this
         Lease or a sublease of all or part of the Premises by Tenant to, or the
         use or occupancy of all or part of the Premises by, any tenant in a
         building in the same city in which the Building is located and which is
         owned or managed by Landlord or any affiliate of Landlord, or any
         tenant to whom Landlord or an affiliate of Landlord has then made an
         outstanding offer to lease space in any such building, or at rental
         rates less than the current market rental rate for the Building as
         established by Landlord. The rights and interests of Tenant under this
         Lease shall not be assignable by operation of law without Landlord's
         written consent, which consent may be withheld in Landlord's absolute
         discretion. Tenant shall pay to Landlord immediately upon receipt by
         Tenant from time to time (a) all revenue from any approved assignment,
         or (b) 50% of all revenue from any approved sublease which exceeds the
         sum of all Annual Rent and Occupancy Costs payable by Tenant to
         Landlord under this Lease in respect of the Premises being subleased
         for the period of time to which such revenue under such sublease
         relates and less Tenant's reasonable out-of-pocket costs incurred by
         Tenant, including, but not limited to, leasing fees or commissions,
         tenant improvements, legal fees, and other reasonable concessions which
         shall be amortized over the term of the sublease for purposes of
         calculating the average. All such amounts shall constitute Rent and be
         subject to all terms and provisions of this Lease, including, without
         limitation, Article 19.00 hereof. Upon Landlord's approval of any
         assignment, use or occupation, Tenant shall pay to Landlord a
         reasonable charge to cover Landlord's administrative costs in
         connection with that approval.

11.05    Tenant's Obligations Continue. No assignment, transfer or subletting
         (or use or occupation of the Premises by any other person) which is
         permitted under this Article 11.00 shall in any way release or relieve
         Tenant of its obligations under this Lease.

11.06    Subsequent Assignments. Landlord's consent to an assignment, transfer
         or subletting (or use or occupation of the Premises by any other
         person) shall not be deemed to be a consent to any subsequent
         assignment, transfer, subletting, use or

                                       15
<PAGE>

         occupation, all of which shall be permitted only in accordance with the
         provisions of this Article 11.00.

11.07    Building Directory Changes. The listing or posting of any name, other
         than that of Tenant, whether on the door or exterior wall of the
         Premises, the Building's tenant directory in the lobby or elevator, or
         elsewhere, shall not:

         (a)      constitute a waiver of Landlord's right to withhold consent to
                  any sublet or assignment pursuant to this Article 11.00;

         (b)      be deemed an implied consent by Landlord to any sublet of the
                  Premises or any portion thereof, to any assignment or transfer
                  of the Lease, or to any unauthorized occupancy of the
                  Premises, except in accordance with the express terms of the
                  Lease; or

         (c)      operate to vest any right or interest in the Lease or in the
                  Premises.

ARTICLE 12.00        SURRENDER

12.01    Possession. Upon the expiration or other termination of the Term, all
         right, title and interest of Tenant in the Premises shall cease. Upon
         such expiration or other termination, Tenant shall immediately quit and
         surrender possession of the Premises in substantially the condition in
         which Tenant is required to maintain the Premises excepting only
         reasonable wear and tear, or if and to the extent Landlord requires,
         remove all improvements and fixtures from the Premises or any part of
         the Building not forming a part of the Premises and repair any damage
         caused by such removal whether or not the removal is at Landlord's
         request, all in accordance with the provisions of Article 7.00.

12.02    Trade Fixtures, Personal Property and Improvements. After the
         expiration or other termination of the Term, all of Tenant's trade
         fixtures, personal property and improvements remaining in the Premises
         shall be deemed conclusively to have been abandoned by Tenant and may
         be appropriated, sold, destroyed or otherwise disposed of by Landlord
         without notice or obligation to compensate Tenant or to account
         therefor, and Tenant shall pay to Landlord on written demand all costs
         incurred by Landlord in connection therewith.

12.03    Merger. The voluntary or other surrender of this Lease by Tenant or the
         cancellation of this Lease by mutual agreement of Tenant and Landlord
         shall not work a merger, and shall at Landlord's option terminate all
         or any subleases and subtenancies or operate as an assignment to
         Landlord of all or any subleases or subtenancies. Landlord's option
         hereunder shall be exercised by notice to Tenant and all known
         sublessees or subtenants in the Premises or any part thereof.

12.04    Payments After Termination or Notice. No payments of money by Tenant to
         Landlord after the expiration or other termination of the Term or after
         the giving of any notice (other than a demand for payment of money) by
         Landlord to Tenant, shall reinstate, continue or extend the Term or
         make ineffective any notice given to Tenant

                                       16
<PAGE>

         prior to the payment of such money. After the service of notice or the
         commencement of a suit, or after final judgment granting Landlord
         possession of the Premises, Landlord may receive and collect any sums
         of Rent due under this Lease, and the payment thereof shall not make
         ineffective any notice, or in any manner affect any pending suit or any
         judgment theretofore
         obtained.

ARTICLE 13.00     HOLDING OVER

13.01    Month-to-Month Tenancy. If with Landlord's prior written consent, which
         may be withheld in Landlord's sole discretion, Tenant remains in
         possession of the Premises after the expiration or other termination of
         the Term, Tenant shall be deemed to be occupying the Premises on a
         month-to-month tenancy only, at a monthly rental equal to 150% of the
         Rent as determined in accordance with Article 4.00 or such other rental
         as is stated in such written consent, and such month-to-month tenancy
         may be terminated by Landlord or Tenant on the last day of any calendar
         month by delivery of at least thirty (30) days advance notice of
         termination to the other.

13.02    Tenancy at Sufferance. If without Landlord's written consent, which may
         be withheld in Landlord's sole discretion, Tenant remains in possession
         of the Premises after the expiration or other termination of the Term,
         Tenant shall have committed an unlawful detention of the Premises and
         Landlord shall be entitled to all rights and remedies available at law
         or equity as a result thereof; provided, however, that if at any time
         after the expiration or termination of the Term, Landlord so notifies
         the Tenant in writing, Tenant shall be deemed to be occupying the
         Premises upon a tenancy at sufferance only, at a monthly rental equal
         to two (2) times the Rent for the last month of the Term determined in
         accordance with Article 4.00. Such tenancy at sufferance may be
         terminated by Landlord at any time by notice of termination to Tenant,
         and by Tenant on the last day of any calendar month by at least thirty
         (30) days advance notice of termination to Landlord. Notwithstanding
         the foregoing, Landlord shall also be entitled to such other remedies
         and damages provided under this Lease or at law as a result of such
         tenancy at sufferance.

13.03    General. Any month-to-month tenancy or tenancy at sufferance hereunder
         shall be subject to all other terms and conditions of this Lease except
         any right of extension and nothing contained in this Article 13.00
         shall be construed to limit or impair any of Landlord's rights of
         re-entry or eviction or constitute a waiver thereof.

ARTICLE 14.00     RULES AND REGULATIONS

14.01    Purpose. The Rules and Regulations in Exhibit C have been adopted by
         Landlord for the safety, benefit and convenience of all tenants and
         other persons in the Building.

14.02    Observance. Tenant shall at all times comply with, and shall cause its
         employees, agents, licensees and invitees to comply with, the Rules and
         Regulations from time to time in effect.

                                       17
<PAGE>

14.03    Modification. Landlord may from time to time, for the purposes set out
         in Article 14.01, amend, delete from, or add to the Rules and
         Regulations, provided that any such modification

         (a)      shall not be inconsistent with any other provision of this
                  Lease,

         (b)      shall be reasonable and have general application to all
                  similarly situated tenants in the Building,

         (c)      shall be effective only upon delivery of a copy thereof to
                  Tenant at the Premises, and

         (d)      shall not materially interfere with Tenant's business and
                  operations or with any rights specifically granted to Tenant
                  under this Lease.

14.04    Non-Compliance. Landlord shall use reasonable efforts to secure
         compliance by all tenants and other persons with the Rules and
         Regulations from time to time in effect, but shall not be responsible
         to Tenant for failure of any person to comply with such Rules and
         Regulations nor shall any such failure relieve Tenant of its obligation
         to comply with the Rules and Regulations.

ARTICLE 15.00     EMINENT DOMAIN

15.01    Taking of Premises. If during the Term, all of the Building or the
         Premises is permanently taken for any public or quasi-public use under
         any statute or by right of eminent domain, or purchased under threat of
         such taking, this Lease shall automatically terminate on the date on
         which the condemning authority takes possession of the Premises (the
         "date of such taking").

15.02    Partial Taking of Building. If during the Term, only part of the
         Building is taken or purchased as set out in Article 15.01, then

         (a)      if in the reasonable opinion of Landlord, substantial
                  alteration or reconstruction of the Building is necessary or
                  desirable as a result thereof, whether or not the Premises are
                  or may be affected and Landlord terminates all other similarly
                  situated leases in the Building, Landlord shall have the right
                  to terminate this Lease by giving Tenant at least thirty (30)
                  days written notice of such termination, which notice shall be
                  given within thirty (30) days after the date of such taking,
                  and

         (b)      if more than one-third (1/3) of the number of square feet in
                  the Premises is included in such taking or purchase, and
                  Landlord is unable to provide Tenant with comparable
                  replacement premises in the Project, Tenant shall have the
                  right to terminate this Lease by giving at least thirty (30)
                  days written notice thereof, which notice shall be given
                  within thirty (30) days after the date of such taking, if in
                  Tenant's reasonable judgement, the Premises cannot be operated
                  by Tenant in an economically viable fashion because of such
                  partial taking.

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<PAGE>

         If either party exercises its right of termination hereunder, this
         Lease shall terminate on the date stated in the notice, provided,
         however, that no termination pursuant to notice hereunder may occur
         later than sixty (60) days after the date of such taking.

15.03    Surrender. On any such date of termination under Article 15.01 or
         15.02, Tenant shall immediately surrender to Landlord the Premises and
         all interests therein under this Lease. Landlord may re-enter and take
         possession of the Premises and remove Tenant therefrom, and the Rent
         shall no longer accrue from the date of termination, except that if a
         portion of the Premises is included as a part of such taking, then that
         portion of the Rent attributable to such portion, determined by
         Landlord pro rata based on the number of rentable square feet contained
         within such portion, shall no longer accrue from the date of such
         termination. After such termination, and on notice from Landlord
         stating the Rent then owing, Tenant shall forthwith pay Landlord such
         Rent.

15.04    Partial Taking of Premises. If any portion of the Premises (but less
         than the whole thereof) is so taken, and no rights of termination
         herein conferred are timely exercised, the Term of this Lease shall
         expire with respect to the portion so taken on the date of such taking.
         In such event, the Rent payable hereunder with respect to such portion
         so taken shall no longer accrue from such date, and the Annual Rent and
         Occupancy Costs thereafter payable with respect to the remainder not so
         taken shall be adjusted pro rata by Landlord in order to account for
         the resulting reduction in the number of square feet in the Premises.

15.05    Awards. Upon any such taking or purchase, Landlord shall be entitled to
         receive and retain the entire award or consideration for the affected
         lands and improvements subject to the rights of any mortgagee of
         Landlord's interest in the Land or the Building as their respective
         interests may appear, and Tenant shall not have or advance any claim
         against Landlord or the condemning authority for the value of its
         property or its leasehold estate or the unexpired Term of this Lease,
         or, except as otherwise permitted in the next sentence, for costs of
         removal or relocation, or business interruption expense or any other
         damages arising out of such taking or purchase. Nothing herein shall
         give Landlord any interest in or preclude Tenant from seeking and
         recovering on its own account from the condemning authority any award
         or compensation attributable to the taking or purchase of Tenant's
         chattels or trade fixtures or attributable to Tenant's relocation
         expenses provided that any such separate claim by Tenant shall not
         reduce or adversely affect the amount of Landlord's award. If any such
         award made or compensation paid to either party specifically includes
         an award or amount for the other, the party first receiving the same
         shall promptly account therefor to the other.

ARTICLE 16.00     DAMAGE BY FIRE OR OTHER CASUALTY

16.01    Limited Damage to Premises. If all or part of the Premises are rendered
         untenantable by damage from fire or other casualty which in Landlord's
         sole opinion can be substantially repaired under applicable laws and
         governmental regulations within two hundred seventy (270) days from the
         later to occur of (a) the date of such casualty (employing normal
         construction methods without overtime or other premium) or (b) the date
         on which Landlord receives the insurance proceeds relating to such
         casualty, Landlord shall, but only to the extent that sufficient
         insurance proceeds are available

                                       19
<PAGE>

         therefor (and subject to the rights of any mortgagee of the Land or the
         Building in and to such insurance proceeds), repair such damage,
         including damage to the leasehold improvements in the Premises;
         provided that Landlord will not be required to repair any damage to
         such leasehold improvements in excess of the amount covered by proceeds
         from Tenant's insurance policy covering such improvements. Landlord
         will have no obligation to repair or restore any other property of
         Tenant (such as Tenant's furniture or trade fixtures), and Tenant, at
         its expense, will repair or restore such property to the extent Tenant
         elects..

16.02    Major Damage to Premises. If all or part of the Premises are rendered
         untenantable by damage from fire or other casualty which in Landlord's
         sole opinion, as set forth in a written notice given to Tenant within
         30 days after such casualty, cannot be substantially repaired under
         applicable laws and governmental regulations within one hundred eighty
         (180) days from the later to occur of (a) the date of such casualty
         (employing normal construction methods without overtime or other
         premium) or (b) the date on which Landlord receives the insurance
         proceeds relating to such casualty, then either Landlord or Tenant may
         elect to terminate this Lease as of the date of such casualty by
         written notice delivered to the other not more than thirty (30) days
         after Landlord gives Tenant such written notice, failing which Landlord
         shall, but only to the extent that sufficient insurance proceeds are
         available therefor (and subject to the rights of any mortgagee of the
         Land or the Building in and to such insurance proceeds), repair such
         damage other than damage to improvements, furniture, chattels or trade
         fixtures which do not belong to Landlord, which shall be repaired
         forthwith by Tenant at its own expense.

16.03    Abatement. If Landlord elects to repair damage to all or part of the
         Premises under Articles 16.01 or 16.02, the Annual Rent and Occupancy
         Costs payable by Tenant hereunder shall be proportionately reduced
         based on the number of square feet within the Premises which are
         thereby rendered untenantable from the date of such casualty until five
         (5) days after completion by Landlord of the repairs to the Premises
         (or the part thereof rendered untenantable) or until Tenant again uses
         the Premises (or the part thereof rendered untenantable) in its
         business, whichever first occurs.

16.04    Major Damage to Building. If all or a substantial part (whether or not
         including the Premises) of the Building is rendered untenantable by
         damage from fire or other casualty to such a material extent that
         Landlord determines not to repair the same, and Landlord terminates all
         other similarly situated leases in the Building, Landlord may elect to
         terminate this Lease as of the date of such casualty (or on the date of
         notice if the Premises are unaffected by such casualty) by written
         notice delivered to Tenant not more than sixty (60) days after the date
         of such casualty. If Landlord elects not to terminate this Lease,
         Landlord shall, but only to the extent that sufficient insurance
         proceeds are available therefor (and subject to the rights of any
         mortgagee of the Land or the Building in and to such insurance
         proceeds), commence repair of the damaged portion of the Building, and
         the Lease shall remain in full force and effect in accordance with its
         terms, subject to Article 16.03 above.

16.05    Limitation on Landlord's Liability. Except as specifically provided in
         this Article 16.00, there shall be no reduction of Rent and Landlord
         shall have no liability to Tenant by reason of any injury to or
         interference with Tenant's business or property arising

                                       20
<PAGE>

         from fire or other casualty, howsoever caused, or from the making of
         any repairs resulting therefrom in or to any portion of the Building or
         the Premises. Notwithstanding anything contained herein, Rent payable
         by Tenant hereunder shall not be abated under Article 16.03 if the
         damage is caused by any act or omission of Tenant, its agents,
         servants, employees or any other person entering upon the Premises
         under express or implied invitation of Tenant.

16.06    Demolition or Substantial Renovation. Notwithstanding anything
         contained in this Lease, Landlord may terminate this Lease at any time
         by giving Tenant written notice thereof at least twelve (12) months
         prior to the effective date of termination if, at the date of the
         notice, it is Landlord's intention to demolish or substantially
         renovate the Building and, in connection therewith, Landlord requires
         other similarly situated tenants in the Building to terminate their
         leases.

ARTICLE 17.00     TRANSFERS BY LANDLORD

17.01    Sale, Conveyance and Assignment. Nothing in this Lease shall restrict
         the right of Landlord to sell, convey, assign or otherwise deal with
         the Building, subject only to the rights of Tenant under this Lease.

17.02    Effect of Sale, Conveyance, or Assignment. A sale, conveyance or
         assignment of the Building shall operate to release Landlord from
         liability from and after the effective date thereof upon all of the
         covenants, terms and conditions of this Lease, express or implied,
         except as such may relate to the period prior to such effective date,
         or a condition in existence prior to such effective date, and effective
         as of such effective date, Tenant shall look solely to Landlord's
         successor in interest in and to this Lease with respect to liability
         originating on and after such effective date. This Lease shall not be
         affected by any such sale, conveyance or assignment, and Tenant shall
         immediately and automatically attorn to Landlord's successor in
         interest thereunder. Such attornment shall be effective and
         self-operative upon Landlord's sale, conveyance or assignment of the
         Building, without the execution of any further instruments or the
         undertaking of any further acts.

ARTICLE 18.00     NOTICES, ACKNOWLEDGMENTS, AUTHORITIES FOR ACTION

18.01    Notices. All notices, demands, billings, consents or other instruments
         or communications provided for under this Lease shall be in writing,
         signed by the party giving the same, and shall be deemed properly given
         and received (a) when actually hand delivered and received or (b) three
         business days after placement in the United States mail, if sent by
         registered or certified mail, postage prepaid, or (c) the business day
         following delivery to an overnight carrier service, if such courier
         service obtains a written acknowledgement of receipt, addressed, if to
         Tenant, at the Premises (whether or not Tenant has departed from,
         vacated or abandoned the same) and, if to Landlord, at the address set
         forth in the first paragraph of this Lease, or at such other address as
         either party may notify the other of in writing in the manner provided
         in this Article 18.01.

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<PAGE>

18.02    Acknowledgments. Tenant shall at any time and from time to time, within
         twenty (20) days after Landlord's written request, execute, acknowledge
         and deliver a written statement, with the form and substance of such
         notice and the party or parties to whom it is addressed to be
         determined by Landlord, ratifying this Lease and, except as otherwise
         noted by Tenant in the statement, certifying as to the truth or untruth
         of the matters as are set forth in such statement. Any such statement
         may be relied upon by any prospective transferee or encumbrancer of all
         or any portion of the Building or any assignee of any such persons. If
         Tenant fails to timely deliver such statement, Tenant shall be deemed
         to have acknowledged that this Lease is in full force and effect,
         without modification except as may be represented by Landlord, and that
         there are no uncured defaults in Landlord's performance. Without
         limiting the foregoing, within twenty (20) days after Landlord's
         written request following the Commencement Date, Tenant agrees to
         execute and deliver to Landlord an Estoppel Certificate in the form of
         Exhibit F.

18.03    Authorities for Action. Landlord may act in any matter provided for
         herein by its property manager, or any of its officers or general
         partners and any other person who shall from time to time be designated
         by Landlord by notice to Tenant. Tenant shall designate in writing one
         or more persons to act on its behalf in any matter provided for herein
         and may from time to time change, by notice to Landlord, such
         designation. In the absence of any such designation, the person or
         persons executing this Lease for Tenant shall be deemed to be
         authorized to act on behalf of Tenant in any matter provided for
         herein.

ARTICLE 19.00     TENANT'S DEFAULT AND LANDLORD'S REMEDIES

19.01    Interest and Costs. Tenant shall pay monthly to Landlord interest at a
         rate equal to the lesser of 1% per month or 2% over the Prime Rate of
         Wells Fargo Bank (or its successor), on all Rent required to be paid
         hereunder from the due date for payment thereof until the same is fully
         paid and satisfied. Tenant shall indemnify Landlord against all costs
         and charges (including legal fees) lawfully and reasonably incurred in
         enforcing payment thereof, and in obtaining possession of the Premises
         after default of Tenant or upon expiration or earlier termination of
         the Term of this Lease, or in enforcing any covenant, proviso or
         agreement of Tenant herein contained.

19.02    Events of Default. Each of the following events will constitute a
         material breach by Tenant and an "Event of Default" under this Lease:

         (a)      Failure to Pay Rent. Tenant fails to pay Annual Rent,
                  Occupancy Costs or any Other Charges payable by Tenant under
                  the terms of this Lease when due, and such failure continues
                  for five (5) days after written notice from Landlord to Tenant
                  of such failure; provided that with respect to Annual Rent and
                  Occupancy Costs, Tenant will be entitled to only two (2)
                  notices of such failure during any calendar year and if, after
                  two (2) such notices are given in any calendar year, Tenant
                  fails, during such calendar year, to pay any such amounts when
                  due, such failure will constitute an Event of Default without
                  further notice by Landlord or additional cure period.

                                       22
<PAGE>

         (b)      Failure to Perform Other Obligations. Tenant breaches or fails
                  to comply with any other provision of this Lease applicable to
                  Tenant, and such breach or noncompliance continues for a
                  period of fifteen (15) days after notice by Landlord to
                  Tenant; or, if such breach or noncompliance cannot be
                  reasonably cured within such ten (10) day period, Tenant does
                  not in good faith commence to cure such breach or
                  noncompliance within such fifteen (15) day period, or does not
                  diligently complete such cure within sixty (60) days after
                  such notice from Landlord. However, if such breach or
                  noncompliance causes or results in (i) a dangerous condition
                  on the Premises or Building, (ii) any insurance coverage
                  carried by Landlord or Tenant with respect to the Premises or
                  Building being jeopardized, or (iii) a material disturbance to
                  another tenant, then an Event of Default will exist if such
                  breach or noncompliance is not cured as soon as reasonably
                  possible after notice by Landlord to Tenant, and in any event
                  is not cured within twenty (20) days after such notice. For
                  purposes of this Article 19.02(b), financial inability will
                  not be deemed a reasonable ground for failure to immediately
                  cure any breach of, or failure to comply with, the provisions
                  of this Lease.

         (c)      Non-occupancy of Premises. Tenant fails to occupy and use the
                  Premises within fifteen (15) days after the Commencement Date
                  or abandons substantially all of the Premises.

         (d)      Transfer of Interest Without Consent. Tenant's interest under
                  this Lease or in the Premises is transferred or passes to, or
                  devolves upon, any other party in violation of Article 11.00.

         (e)      Execution and Attachment Against Tenant. Tenant's interest
                  under this Lease or in the Premises is taken upon execution or
                  by other process of law directed against Tenant, or is subject
                  to any attachment by any creditor or claimant against Tenant
                  and such attachment is not discharged or disposed of within
                  thirty (30) days after levy.

         (f)      Bankruptcy or Related Proceedings. Tenant files a petition in
                  bankruptcy or insolvency, or for reorganization or arrangement
                  under any bankruptcy or insolvency laws, or voluntarily takes
                  advantage of any such laws by answer or otherwise, or
                  dissolves or makes an assignment for the benefit of creditors,
                  or involuntary proceedings under any such laws or for the
                  dissolution of Tenant are instituted against Tenant, or a
                  receiver or trustee is appointed for the Premises or for all
                  or substantially all of Tenant's property, and such
                  proceedings are not dismissed or such receivership or
                  trusteeship vacated within sixty (60) days after such
                  institution or appointment.

19.03    Landlord's Remedies. Time is of the essence. If any Event of Default
         occurs, Landlord will have the right, at Landlord's election, then or
         at any later time, to exercise any one or more of the remedies
         described below. Exercise of any of such remedies will not prevent the
         concurrent or subsequent exercise for any other remedy provided for in
         this Lease or otherwise available to Landlord at law or in equity.

                                       23
<PAGE>

         (a)      Cure by Landlord. Landlord may, at Landlord's option but
                  without obligation to do so, and without releasing Tenant from
                  any obligations under this Lease, make any payment or take any
                  action as Landlord deems necessary or desirable to cure any
                  Event of Default in such manner and to such extent as Landlord
                  deems necessary or desirable. Except as otherwise provided in
                  this Lease, Landlord may do so without additional demand on,
                  or additional written notice to Tenant and without giving
                  Tenant an additional opportunity to cure such an Event of
                  Default. Tenant covenants and agrees to pay Landlord, upon
                  demand, all advances, costs and expenses of Landlord in
                  connection with making any such payment or taking any such
                  action, including reasonable attorney's fees, together with
                  interest at the rate described in Article 19.01 from the date
                  of payment of any such advances, costs and expenses by
                  Landlord.

         (b)      Termination of Lease and Damages. Landlord may terminate this
                  Lease, effective at such time as may be specified by written
                  notice to Tenant, and demand (and, if such demand is refused,
                  recover) possession of the Premises from Tenant. Tenant will
                  remain liable to Landlord for damages in an amount equal to
                  the Annual Rent, Occupancy Costs and Other Charges which would
                  have been owing by Tenant for the balance of the Term had this
                  Lease not been terminated, less the net proceeds, if any, of
                  any reletting of the Premises by Landlord subsequent to such
                  termination, after deducting all Landlord's reasonable
                  expenses in connection with such recovery of possession or
                  reletting. Landlord will be entitled to collect and receive
                  such damages from Tenant on the days on which the Annual Rent,
                  Occupancy Costs and Other Charges would have been payable if
                  this Lease had not been terminated. Alternatively, at
                  Landlord's option, Landlord will be entitled to recover from
                  Tenant, as damages for loss of the bargain and not as a
                  penalty, an aggregate sum equal to (i) all unpaid Annual Rent,
                  Occupancy Costs and Other Charges for any period prior to the
                  termination date of this Lease (including interest from the
                  due date to the date of the award at the rate described in
                  Article 19.01), plus any other sum of money and damages owed
                  by Tenant to Landlord for events or actions occurring prior to
                  the termination date; plus (ii) the present value at the time
                  of termination (calculated at the Prime Rate of Wells Fargo
                  Bank, or its successor on the termination date) of the amount,
                  if any, by which (A) the aggregate of the Annual Rent,
                  Occupancy Costs, and all Other Charges payable by Tenant under
                  this Lease that would have accrued for the balance the Term
                  after termination (with respect to Occupancy Costs, such
                  aggregate will be calculated by assuming that Occupancy Costs
                  for the Fiscal Year in which termination occurs and for each
                  subsequent Fiscal Year remaining in the Term of this Lease had
                  not been terminated will increase by 8% per year over the
                  amount of Occupancy Costs for the prior Fiscal Year), exceeds
                  (B) the amount of such Annual Rent, Occupancy Costs and Other
                  Charges which Landlord will receive for the remainder of the
                  Term from any reletting of the Premises occurring prior to the
                  date of the award, or if the Premises have not been relet
                  prior to the date of the award, the amount, if any, of such
                  Annual Rent, Occupancy Costs and Other Charges which could
                  reasonably be recovered by reletting the Premises for the
                  remainder of the Term at the then-current fair rental value,
                  in either case taking into consideration loss of Rent while
                  finding a new tenant, tenant improvements and rent abatements

                                       24
<PAGE>

                  necessary to secure a new tenant, leasing brokers' commissions
                  and other costs which Landlord has incurred or might incur in
                  leasing the Premises to new tenant; plus (iii) interest on the
                  amount described in (ii) above from the termination date to
                  the date of the award at the rate described in Article 19.01.

         (c)      Repossession and Reletting. Landlord may reenter and take
                  possession of all or any part of the Premises, without
                  additional demand or notice, and repossess the same and expel
                  Tenant and any party claiming by, through or under Tenant, and
                  remove the effects of both using such force for such purposes
                  as may be necessary, without being liable for prosecution for
                  such action or being deemed guilty of any manner of trespass,
                  and without prejudice to any remedies for arrears of Rent or
                  right to bring any proceeding for breach of covenants or
                  conditions. No such reentry or taking possession of the
                  Premises by Landlord will be construed as an election by
                  Landlord to terminate this Lease unless a written notice of
                  such intention is given to Tenant. No notice from Landlord or
                  notice given under a forcible entry and detainer statute or
                  similar laws will constitute an election by Landlord to
                  terminate this Lease unless such notice specifically so
                  states. Landlord reserves the right, following any reentry or
                  reletting, to exercise its right to terminate this Lease by
                  giving Tenant such written notice, in which event the Lease
                  will terminate as specified in such notice. After recovering
                  possession of the Premises, Landlord may, from time to time,
                  but will not be obligated to, relet all or any part of the
                  Premises for Tenant's account, for such term or terms and on
                  such conditions and other terms as Landlord, in its
                  discretion, determines. Landlord may make such repairs,
                  alterations or improvements as Landlord considers appropriate
                  to accomplish such reletting, and Tenant will reimburse
                  Landlord upon demand for all costs and expenses, including
                  attorneys' fees, which Landlord may incur in connection with
                  such reletting. Landlord may collect and receive the rents for
                  such reletting but Landlord will in no way be responsible or
                  liable for any failure to relet the Premises or for any
                  inability to collect any rent due upon such reletting.
                  Regardless of Landlord's recovery of possession of the
                  Premises, Tenant will continue to pay on the dates specified
                  in this Lease, the Annual Rent, Occupancy Costs, and Other
                  Charges which would be payable if such repossession had not
                  occurred, less a credit for the net amounts, if any, actually
                  received by Landlord through any reletting of the Premises.
                  Alternatively, at Landlord's option, Landlord will be entitled
                  to recover from Tenant, as damages for loss of the bargain and
                  not as a penalty, an aggregate sum equal to (i) all unpaid
                  Annual Rent, Occupancy Costs and Other Charges for any period
                  prior to the repossession date (including interest from the
                  due date to the date of the award at the rate described in
                  Article 19.01), plus any other sum of money and damages owed
                  by Tenant to Landlord for events or actions occurring prior to
                  the repossession date; plus (ii) the present value at the time
                  of repossession (calculated at the Prime Rate of the Wells
                  Fargo Bank Denver, N. A. or its successor on the repossession
                  date) of the amount, if any, by which (A) the aggregate of the
                  Annual Rent, Occupancy Costs and all Other Charges payable by
                  Tenant under this Lease that would have accrued for the
                  balance of the Term after repossession (with respect to
                  Occupancy Costs, such aggregate will be calculated by assuming
                  that Occupancy Costs for the Fiscal Year in which

                                       25
<PAGE>

                  repossession occurs and for each subsequent Fiscal Year
                  remaining in the Term if Landlord had not repossessed the
                  Premises will increase by 8% per year over the amount of
                  Occupancy Costs for the prior Fiscal Year), exceeds (B) the
                  amount of such Annual Rent, Occupancy Costs and Other Charges
                  which Landlord will receive for the remainder of the Term from
                  any reletting of the Premises occurring prior to the date of
                  the award, the amount, if any, of such Annual Rent, Occupancy
                  Costs and Other Charges which could reasonably be recovered by
                  reletting the Premises for the remainder of the Term at the
                  then-current fair rental value, in either case taking into
                  consideration loss of Rent while finding a new tenant, tenant
                  improvements and rent abatements necessary to secure a new
                  tenant, leasing brokers' commissions and other costs which
                  Landlord has incurred or might incur in leasing the Premises
                  to a new tenant; plus (iii) interest on the amount described
                  in (ii) above from the repossession date to the date of the
                  award at the rate described in Article 19.01.

         (d)      Bankruptcy Relief. Nothing contained in this Lease will limit
                  or prejudice Landlord's right to prove and obtain as
                  liquidated damages in any bankruptcy, insolvency,
                  receivership, reorganization or dissolution proceeding, an
                  amount equal to the maximum allowable by any laws governing
                  such proceeding in effect at the time when such damages are to
                  be proved, whether or not such amount be greater, equal or
                  less than the amounts recoverable, either as damages or Rent,
                  under this Lease.

         (e)      Notwithstanding anything contained in this Lease to the
                  contrary, Landlord shall have the duty to mitigate its damages
                  in accordance with Colorado law.

19.04    Effect on Subleases. Whether or not Landlord elects to terminate this
         Lease on account of any default by Tenant, if Landlord retakes
         possession of the Premises, Landlord shall have the right to terminate
         any and all subleases, licenses, concessions or other consensual
         arrangements for possession entered into by Tenant and affecting the
         Premises or may, in Landlord's sole discretion, succeed to Tenant's
         interest in such subleases, licenses, concessions or arrangements. In
         the event of Landlord's election to succeed to Tenant's interest in any
         such subleases, licenses, concessions or arrangements, Tenant shall, as
         of the date of notice by Landlord of such election, have no further
         right to or interest in the rent or other consideration receivable
         thereunder.

ARTICLE 20.00     BANKRUPTCY

20.01    Bankruptcy.

         (a)      In the event a petition is filed by or against Tenant under
                  the Bankruptcy Code, Tenant, as debtor and debtor in
                  possession, and any trustee who may be appointed, agree to
                  adequately protect Landlord as follows:

                  (i)      to pay monthly in advance on the first day of each
                           month as reasonable compensation for use and
                           occupancy of the Premises an amount equal to all Rent
                           due pursuant to this Lease; and

                                       26
<PAGE>

                  (ii)     to perform each and every obligation of Tenant under
                           this Lease until such time as this Lease is either
                           rejected or assumed by order of a court of competent
                           jurisdiction; and

                  (iii)    to determine within sixty (60) days after the filing
                           of such petition whether to assume or reject this
                           lease; and

                  (iv)     to give Landlord at least thirty (30) days prior
                           written notice, unless a shorter notice period is
                           agreed to in writing by the parties, of any
                           proceeding relating to any assumption of this Lease;
                           and

                  (v)      to give at least thirty (30) days prior written
                           notice of any vacation or abandonment (including any
                           vacation or abandonment specifically described in
                           Article 5.03) of the Premises, any such vacation or
                           abandonment to be deemed a rejection of this Lease;
                           and

                  (vi)     to do all other things of benefit to Landlord
                           otherwise required under the Bankruptcy Code.

                  Tenant shall be deemed to have rejected this Lease in the
                  event of the failure to comply with any of the above.

         (b)      If Tenant or a trustee elects to assume this Lease subsequent
                  to the filing of a petition under the Bankruptcy Code, Tenant,
                  as debtor and as debtor in possession, and any trustee who may
                  be appointed agree as follows:

                  (i)      to cure each and every existing breach by Tenant
                           within not more than ninety (90) days of assumption
                           of this Lease; and

                  (ii)     to compensate Landlord for any actual pecuniary loss
                           resulting from any existing breach, including without
                           limitation, Landlord's reasonable costs, expenses and
                           attorney's fees incurred as a result of the breach,
                           as determined by a court of competent jurisdiction,
                           within ninety (90) days of assumption of this Lease;
                           and

                  (iii)    in the event of an existing breach, to provide
                           adequate assurance of Tenant's future performance,
                           including without limitation:

                           (A)      the deposit of an additional sum equal to
                                    three (3) months' Rent to be held (without
                                    any allowance for interest thereon) to
                                    secure Tenant's obligations under the Lease;
                                    and

                           (B)      the production to Landlord of written
                                    documentation establishing that Tenant has
                                    sufficient present and anticipated financial
                                    ability to perform each and every obligation
                                    of Tenant under this Lease; and

                                       27
<PAGE>

                           (C)      assurances, in a form acceptable to
                                    Landlord, as may be required under any
                                    applicable provision of the Bankruptcy Code;
                                    and

                  (iv)     the assumption will not breach any provision of this
                           Lease; and

                  (v)      the assumption will be subject to all of the
                           provisions of this Lease unless the prior written
                           consent of Landlord is obtained; and

                  (vi)     the prior written consent to the assumption of any
                           mortgagee or ground lessor to which this Lease has
                           been assigned as collateral security is obtained.

         (c)      If Tenant assumes this Lease and proposes to assign the same
                  pursuant to the provisions of the Bankruptcy Code to any
                  person or entity who shall have made a bona fide offer to
                  accept any assignment of this lease on terms acceptable to
                  Tenant, then notice of such proposed assignment, setting
                  forth:

                  (i)      the name and address of such person,

                  (ii)     all the terms and conditions of such offer, and

                  (iii)    the adequate assurance to be provided Landlord to
                           assure such person's future performance under the
                           Lease, including without limitation, the assurances
                           referred to in any applicable provision of the
                           Bankruptcy Code,

                  shall be given to Landlord by Tenant no later than twenty (20)
                  days after receipt by Tenant, but in any event no later than
                  ten (10) days prior to the date that Tenant shall make
                  application to a court of competent jurisdiction for authority
                  and approval to enter into such assignment and assumption, and
                  Landlord shall thereupon have the prior right and option, to
                  be exercised by notice to Tenant given at any time prior to
                  the effective date of such proposed assignment, to accept an
                  assignment of this Lease upon the same terms and conditions
                  and for the same consideration, if any, as the bona fide offer
                  made by such person, less any brokerage commissions which may
                  be payable out of the consideration to be paid by such person
                  for the assignment of this Lease. The adequate assurance to be
                  provided Landlord to assure the assignee's future performance
                  under the Lease shall include without limitation:

                           (A)      the deposit of a sum equal to one (1)
                                    month's Rent to be held (without any
                                    allowance for interest thereon) as security
                                    for performance hereunder; and

                           (B)      a written demonstration that the assignee
                                    meets all reasonable financial and other
                                    criteria of Landlord as did Tenant and its
                                    business at the time of execution of this
                                    Lease, including the production of the most
                                    recent audited financial statement of the
                                    assignee prepared by a certified public
                                    accountant; and

                                       28
<PAGE>

                           (C)      the assignee's use of the Premises will be
                                    in compliance with the terms of Article 5.00
                                    of this Lease; and

                           (D)      assurances, in a form acceptable to
                                    Landlord, as to all matters identified in
                                    any applicable provision of the Bankruptcy
                                    Code.

ARTICLE 21.00     MISCELLANEOUS

21.01    Relationship of Parties. Nothing contained in this Lease shall create
         any relationship between the parties hereto other than that of landlord
         and tenant, and it is acknowledged and agreed that Landlord does not in
         any way or for any purpose become a partner of Tenant in the conduct of
         its business, or a joint venturer or a member of a joint or common
         enterprise with Tenant.

21.02    Consent Not Unreasonably Withheld. Except as otherwise specifically
         provided, whenever consent or approval of Landlord or Tenant is
         required under the terms of this Lease, such consent or approval shall
         not be unreasonably withheld or delayed. If either party withholds any
         consent or approval, such party shall on written request deliver to the
         other party a written statement giving the reasons therefor.

21.03    Name of Building and Project. Landlord shall have the right in its sole
         discretion after thirty (30) days notice to Tenant, to change the name,
         number or designation of the Building or the Project (if any), or both,
         during the Term without liability to Tenant.

21.04    Applicable Law and Construction. This Lease shall be governed by and
         construed under the laws of the jurisdiction in which the Building is
         located, and its provisions shall be construed as a whole according to
         their common meaning and, because this Lease has been negotiated by
         both Landlord and Tenant, shall not be interpreted strictly for or
         against Landlord or Tenant. The words Landlord and Tenant shall include
         the plural as well as the singular. If this Lease is executed by more
         than one tenant, Tenant's obligations hereunder shall be joint and
         several obligations of such executing tenants. Time is of the essence
         of this Lease and each of its provisions. The captions of the Articles
         are included for convenience only, and shall have no effect upon the
         construction or interpretation of this Lease.

21.05    Entire Agreement. This Lease contains the entire agreement between the
         parties hereto with respect to the subject matter of this Lease and
         shall supersede all prior agreements or understandings between Landlord
         and Tenant with respect to the subject matter hereof. Tenant
         acknowledges and agrees that it has not relied upon any statement,
         representation, agreement or warranty except such as are set out in
         this Lease.

21.06    Offer Irrevocable. Tenant hereby offers to lease from Landlord the
         Premises under the terms and conditions of this Lease. Landlord shall
         not be deemed to have made an offer to Tenant by preparing this Lease
         and no agreement respecting the Premises shall arise or exist between
         the parties except through the making of this offer by Tenant and the
         acceptance by Landlord by delivering to Tenant a copy hereof which has
         been executed by Landlord. This offer shall be irrevocable and open for

                                       29
<PAGE>

         acceptance by Landlord until 5:00 p.m. on the sixtieth (60th) day after
         execution hereof by Tenant, and if not accepted by then may be
         withdrawn.

21.07    Amendment or Modification. Except to the extent as may otherwise
         specifically be provided in this Lease, no amendment, modification, or
         supplement to this Lease shall be valid or binding unless set out in
         writing and executed by the parties hereto in the same manner as the
         execution of this Lease.

21.08    Construed Covenants and Severability. All of the provisions of this
         Lease are to be construed as covenants and agreements as though the
         words imparting such covenants and agreements were used in each
         separate Article hereof. Should any provision of this Lease be or
         become invalid, void, illegal or not enforceable, it shall be
         considered separate and severable from the Lease and the remaining
         provisions shall remain in force and be binding upon the parties hereto
         as though such provision had not been included.

21.09    No Implied Surrender or Waiver. No provisions of this Lease shall be
         deemed to have been waived by Landlord or Tenant unless such waiver is
         in writing signed by the waiving party. Landlord's waiver of a breach
         of any term or condition of this Lease shall not prevent a subsequent
         act, which would have originally constituted a breach, from having all
         the force and effect of any original breach. Landlord's receipt of Rent
         with knowledge of a breach by Tenant of any term or condition of this
         Lease shall not be deemed a waiver of such breach. Landlord's failure
         to enforce against Tenant or any other tenant in the Building any of
         the Rules and Regulations made under Article 14.00 shall not be deemed
         a waiver of such Rules and Regulations. No act or thing done by
         Landlord, its agents or employees during the Term shall be deemed an
         acceptance of a surrender of the Premises, and no agreement to accept a
         surrender of the Premises shall be valid, unless in writing signed by
         Landlord. Neither the delivery of keys to nor the acceptance thereof by
         any of the Landlord's agents or employees, nor the taking possession of
         the Premises by Landlord after any vacation thereof by Tenant, shall
         operate as a termination of this Lease or a surrender of the Premises.
         No payment by Tenant, or receipt by Landlord, of a lesser amount than
         the Rent due hereunder shall be deemed to be other than on account of
         the earliest stipulated Rent, nor shall any endorsement or statement on
         any check or any letter accompanying any check, or payment as Rent, be
         deemed an accord and satisfaction, and Landlord may accept such check
         or payment without prejudice to Landlord's right to recover the balance
         of such Rent or pursue any other remedy available to Landlord.

21.10    Successors Bound. Except as otherwise specifically provided, the
         covenants, terms and conditions contained in this Lease shall apply to
         and bind the heirs, successors, executors, administrators and assigns
         of the parties hereto.

21.11    Relocation - Substitute Premises. Landlord shall have the right at any
         time, upon reasonable notice to Tenant (the "Relocation Notice"), to
         relocate Tenant from all or, in accordance with this paragraph, a
         portion, of the Premises to different premises in the Project (the
         "Substitute Premises"). If Landlord elects to relocate only a portion,
         rather than all, of the Premises, and prior to the proposed relocation,
         no portion of the Premises to be relocated is contiguous to any portion
         of the Premises not to be relocated, then the Substitute Premises may
         be located in such part of the Project as

                                       30
<PAGE>

         Landlord may elect in its sole discretion. For purposes of this
         paragraph, "contiguous" shall mean that the portion of the Premises to
         be relocated and the portion of the Premises not to be relocated are
         (a) adjacent to each other within the same floor or (b) located on
         adjacent floors. The Substitute Premises shall be of approximately the
         same size and comparable finish as the Premises or the portion thereof
         to be relocated. Landlord will reimburse Tenant for all reasonable out-
         of-pocket expenses incurred by Tenant as a result of the relocation.
         Tenant shall relocate to the Substitute Premises within the time set
         forth in the Relocation Notice. On the date on which Tenant takes
         possession of the Substitute Premises, this Lease shall be deemed
         amended to provide for the Substitute Premises, and all other terms and
         conditions of the Lease shall remain in full force and effect. Tenant
         agrees to execute any document reasonably required by Landlord to
         reflect the relocation to the Substitute Premises.

21.12    Lease Approval. The execution of this Lease shall be subject to the
         approval of Landlord's Management Committee and, if required, by
         Landlord's lender for the Building.

21.13    Nondiscrimination. Tenant covenants that this Lease is made and
         accepted upon and subject to the condition that there shall be no
         discrimination against or segregation of any person or group of persons
         on account of sex, marital status, race, color, creed, religion,
         national origin or ancestry. In the leasing, subleasing, transferring,
         use or enjoyment of the Premises nor shall Tenant itself, or any person
         claiming under or through it, establish or permit any such practice or
         practices of discrimination or segregation with reference to the
         selection, location, number, use or occupancy of tenants, lessees,
         sublessees, subtenants or vendees in the Premises.

21.14    Deposit. A deposit of $59,403.10, which is equal to (1) month's Annual
         Rent and Occupancy Costs based on the first month of the Term, payable
         to Landlord, is delivered herewith to be held without accruing
         interest, at Landlord's option in a separate account or commingled with
         other funds to be held by Landlord through the term of the Lease. If
         Tenant fails to comply with the provisions hereof, such deposit shall
         be retained by Landlord in payment for its expenses or damages or any
         amounts payable under the Lease, but such retention shall not limit or
         preclude Landlord's right of action for damages or other remedies for
         breach of the provisions of this Lease.

21.15    {Intentionally Omitted}

21.16    Personal Liability. The obligations of Landlord under this Lease do not
         constitute personal obligations of the Landlord or the individual
         partners, members, directors, officers, agents or shareholders of
         Landlord, disclosed or undisclosed. Tenant shall look solely to
         Landlord's estate in the Land and Building for satisfaction of any
         liability under or in respect of this Lease or for the satisfaction of
         Tenants remedies for the collection of a judgment (or other legal
         process) requiring the payment of money by Landlord and no other
         property and assets of such Landlord or any partner, member, officer,
         director, agent or shareholder, disclosed or undisclosed, shall be
         subject to levy, execution or other enforcement procedure for the
         satisfaction of Tenant's remedies under or in respect of this Lease,
         the relationship of Landlord and Tenant under this Lease or Tenant's
         use of the Land or Building or the use or occupancy of the Premises.

                                       31
<PAGE>

21.17    Brokerage Commission. Landlord and Tenant each agree to indemnify and
         hold the other harmless from and against all broker's or other real
         estate commissions or fees incurred by the indemnifying party or
         arising out of its activities with respect to the Lease. The provisions
         of this Article 21.17 shall survive the expiration or sooner
         termination of this Lease. Landlord and Tenant each hereby represent
         and warrant to the other that it does not recognize and has not used
         any broker with respect to this Lease and the negotiation hereof.

21.18    Unavoidable Delay. As used in this Lease, "Unavoidable Delay" means
         fire, explosion and other casualties; war, invasion, insurrection,
         riot, sabotage, and malicious mischief; strikes, work stoppages or
         slowdowns and lockouts; condemnation; rules, regulations or orders of
         civil or military or naval authorities adopted after the date hereof;
         impossibility of or delay in obtaining materials or reasonable
         substitutes from suppliers for reasons other than unavailability of
         funds (excluding any special materials selected by Tenant which are not
         generally available or for which there are not reasonable substitutes);
         or any other cause, the occurrence of which, or the extent and duration
         of the occurrence of which, is not within the reasonable control of the
         party in question. An Unavoidable Delay shall exist only for the period
         in which it is not within the reasonable control of the party in
         question to prevent, control or correct such event.

         Except as otherwise provided in this Lease, (a) if Landlord or Tenant
         shall, due to Unavoidable Delay, fail punctually to perform any
         obligation on its part to be performed under this Lease, then such
         failure shall be excused and not be a breach of this Lease by the party
         in question, but only to the extent caused by Unavoidable Delay; or (b)
         if any right or option of either party to take any action under or with
         respect to this Lease is conditioned upon the same being exercised
         within any prescribed period of time or some specified date, then such
         prescribed period of time and such specified date shall be deemed to be
         extended or delayed, as the case may be, for a period equal to the
         period of the Unavoidable Delay. Notwithstanding the foregoing,
         Unavoidable Delay shall not be applicable to determining the date of
         commencement of, or the continuance of, Tenant's obligation to pay Rent
         or its obligations to pay any other sums, moneys, costs, charges or
         expenses required to be paid by Tenant hereunder (whether or not
         Tenant's Work is thereby delayed beyond the Construction Period) or to
         the date by which Tenant must exercise any right or option under this
         Lease, including without limitation to terminate this Lease or to
         extend the Term.

21.19    Hazardous Materials. Tenant shall not (either with or without
         negligence) cause or permit the escape, disposal or release of any
         biologically or chemically active or other hazardous substances, or
         materials on or about the Premises or any other portion of the Project,
         nor shall Tenant allow the storage or use of such substances or
         materials on or about the Premises or any other portion of the Project,
         nor allow to be brought into the Premises or any other portion of the
         Project any such materials or substances; provided, however, that the
         foregoing shall not be construed to preclude Tenant from using any
         materials or substances typically found in offices, so long as the
         quantities used are typical and they are kept in usual containers.
         Without limitation, hazardous substances and materials shall include
         those described in the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980, the Resource Conservation and
         Recovery Act, the Superfund Amendments and Re-authorization Act

                                       32
<PAGE>

         of 1986, the Occupational Safety and Health Act, the Clean Water Act,
         any amendments to such Acts, and any federal, state or municipal laws,
         ordinances, regulations or common law which may now or hereafter impose
         liability on Landlord with respect to hazardous substances. Tenant will
         be solely responsible for and will defend, indemnify and hold Landlord,
         its agents and employees harmless from and against all claims, costs
         and liabilities, including attorneys' fees, court costs, and other
         expenses of litigation (i) arising out of or in connection with any
         breach of this Article, or (ii) arising out of or in connection with
         the removal, clean-up and restoration work and materials necessary to
         return the Premises and the Project and any other property of whatever
         nature located therein to their condition existing prior to the
         introduction of hazardous materials in or about the Premises or
         Project. If, as a result of Tenant's breach, any lender or governmental
         agency shall ever require testing to ascertain whether or not there has
         been any hazardous materials on or about the Premises (or, as a result
         of Tenant's actions, on or about other portions of the Project), then
         the costs thereof shall be reimbursed by Tenant to Landlord upon demand
         additional charges. In addition, Tenant shall execute affidavits,
         representations and the like from time to time at Landlord's request
         concerning Tenant's knowledge and belief regarding the presence of
         hazardous substances or materials on the Premises. The within covenants
         and indemnity shall survive the expiration or earlier termination of
         the Term.

21.20    Authorization. If Tenant is a corporation or partnership, each
         individual executing this Lease on behalf of Tenant hereby covenants
         and warrants that Tenant is, as applicable, a duly qualified
         corporation or partnership authorized and/or qualified to do business
         in the state in which the Land is located and that each such individual
         is, as applicable, an officer or partner of Tenant duly authorized and
         empowered to execute and deliver this Lease on behalf of Tenant, all
         corporate or partnership action necessary thereto having been duly
         taken.

21.21    No Air Rights. This Lease does not grant any easements or rights for
         light, air or view. Any diminution or blockage of light, air or view by
         any structure or condition now or later erected will not affect this
         Lease or impose any liability on Landlord.

21.22    Recording; Confidentiality. Tenant will not record this Lease, or a
         short form memorandum. Tenant agrees to keep the Lease terms,
         provisions and conditions confidential and will not disclose them to
         any other person. However, Tenant may disclose Lease terms, provisions
         and conditions to Tenant's accountants, attorneys, managing employees
         and others in privity with Tenant, as reasonably necessary for Tenant's
         business purposes.

21.23    Alternate Electricity Provider. Tenant shall not have the right to
         utilize services of an alternative electricity provider other than the
         public utility that is servicing the Building as of the date of
         Tenant's execution of this Lease unless Landlord makes an alternative
         electricity provider available to any other tenant of the Project.

21.24    Non-Severability. The rights of Tenant under this Lease shall not be
         severed from this Lease or separately sold, assigned, or otherwise
         transferred, and shall expire on the expiration or earlier termination
         of this Lease.

                                       33
<PAGE>

IN WITNESS OF THIS LEASE, Landlord and Tenant have properly executed it as of
the date set out on page one.

LANDLORD:                                     TENANT:
BROOKFIELD DENVER INC.                        PATINA OIL & GAS CORPORATION
a Colorado corporation                        a Delaware corporation

By:  /s/  David W. Morrison                   By:  /s/  David J. Kornder
   -------------------------------------         ------------------------------

Name:  David W. Morrison                      Name:  David J. Kornder
     -----------------------------------           ----------------------------

Title:  Vice President                        Title:   Vice President
      ----------------------------------            ---------------------------

By:  /s/  Richard A. Czoski                   By:   /s/  Jay W. Dec
   -------------------------------------         ------------------------------

Name:   Richard A. Czoski                     Name:   Jay W. Decker
     -----------------------------------           ----------------------------

Title:   Vice President                       Title:    President
      ----------------------------------            ---------------------------

                                               ________________________________
                                               Witness to the signature of
                                               Tenant if not incorporated

                                               ________________________________

                                               ________________________________

                                               Address of Witness

                                               Actual date of Tenant's execution

                                                           December 20, 2000
                                               -----------------------

Note: The names and titles of the persons executing or witnessing the execution
of this Lease should be typewritten or legibly printed on the lines indicated
above.

                                       34
<PAGE>

                                   EXHIBIT B

                                 1625 BROADWAY
                            DENVER, COLORADO 80202

SECTION 1.00     WORDS AND PHRASES

1.01  Definitions.

      In the Lease, including this Exhibit

      (a)   "Architect" means such firm of professional architects or engineers
            as Landlord may from time to time engage for preparation of
            construction drawings for the Building or for general supervision of
            architectural and engineering aspects and operations thereof and
            includes any consultant(s) from time to time appointed by Landlord
            or the Architect whenever such consultant(s) is acting within the
            scope of his appointment and specialty.

      (b)   "Land" means those lands in the City and County of Denver, State of
            Colorado, legally described as:

            All of lots 17 through 24, together with part of the vacated alley
            adjacent to said Lots, all in Block 230, EAST DENVER, the plat of
            which is recorded in Plat Book 1, Page 1, in the records of the
            Clerk and Recorder's Office for the City and County of Denver,
            Colorado, and part of Side Lot 3, together with part of the vacated
            alley adjacent to said Side Lot 3, H.C. BROWN'S ADDITION TO DENVER,
            COLORADO, being more particularly described as follows: Beginning at
            the southerly corner of Said Block 230, EAST DENVER, Thence
            northwesterly along the southwesterly line of said Block, 138.29
            feet to a point; Thence northeasterly on a deflection to the right
            of 90(Degree) 2'28" a distance of 236.07 feet to a point on the
            easterly line of said Side Lot 3; Thence southerly along said
            easterly line of said Side Lot 3, 195.90 feet to the southeasterly
            line of said Side Lot 3; Thence southwesterly along said
            southeasterly line of said Side lot 3 and the southeasterly line of
            said Block 297.21 feet to the Point of Beginning; AND the air rights
            estate above the lower of (a) Elevation 60.229 feet, based on Denver
            Datum Elevation 53.01 feet, or (b) the top of the structural slab
            covering the Parking Concourse in the entire area thereof, said air
            rights estate being over and across that portion of Lot 12, and all
            of Lots 13 to 16, Block 230, EAST DENVER, together with part of the
            vacated alley in said Block 230, described as follows; Beginning at
            the most westerly corner of said Block 230; Thence northeasterly
            along the northwesterly line of said Block 230 a distance of 115.00
            feet; Thence southeasterly on a deflection to the right of
            90(Degree)00'00" a distance of 128.71 feet; Thence southwesterly on
            a deflection to the right of 90(Degree)00'00" a distance of 114.91
            feet to a point on the southwesterly line of said Block 230; Thence
            along said southwesterly line, 128.71 feet to the Point of
            Beginning; TOGETHER WITH AND SUBJECT TO those mutual, reciprocal and
            non-exclusive easements as established and defined in that certain
            Declaration of Easement executed by Oxford-Anschutz Development
            Company, a Colorado general partnership, on July 21, 1978, and
            recorded July 26, 1978, in Book 1712 at Page 651 of said records.

                            Exhibit B - Page 1 of 8
<PAGE>

     (c)  "Project" means those developments and improvements forming part of
          the World Trade Center which are constructed from time to time on the
          city block legally described as: All of Block 230, together with all
          of the vacated alley in said Block 230, EAST DENVER; and all of Side
          Lot 3, together with all of the vacated alley in said Side Lot 3, H.C.
          BROWN'S ADDITION TO DENVER, COLORADO, all in the City and County of
          Denver, Colorado.

     (d)  "Building" means the building in which the Premises are located, as
          named in the Lease and constructed or installed on the Land and on the
          adjacent public right-of-way, together with all attendant common,
          public and service areas thereof.

     (e)  "Common Areas" means at any time those portions of the Project which
          are not leased or designated for lease to tenants but are provided to
          be used in common by (or by the sublessees, agents, employees,
          customers or licensees of) Landlord, Tenant, and other tenants of the
          Project, whether or not the same are open to the general public, and
          shall include any fixtures, chattels, systems, decor, signs,
          facilities, or landscaping contained therein or maintained or used in
          connection therewith, and shall be deemed to include any city
          sidewalks adjacent to the Land and any pedestrian walkway system,
          park, or other public facility in respect of which Landlord is from
          time to time subject to obligations in its capacity as owner or lessee
          of the Land and/or Building.

     (f)  "Delivery Facilities" means those portions of the Common Areas on or
          below the street level thereof which from time to time are designated
          by Landlord as facilities to be used in common by Landlord, tenants of
          the Project and others for purposes of loading, unloading, delivery,
          dispatch and holding of merchandise, goods and materials entering or
          leaving the Project, and giving vehicular access to the Project.

     (g)  "1675 Broadway" means the 28-story office tower constructed as part of
          the Project on property other than the Land.

     (h)  "Parking Facilities" means those portions of the Project on or below
          the street level thereof which from time to time are designated by
          Landlord for vehicular parking.

     (i)  "Rentable Components of the Project" means the Building, 1675
          Broadway, the Parking Facilities and such other portions of the
          Project as from time to time are leased or designated for lease to
          tenants.

     (j)  "Section" means a section of this Exhibit B.

     (k)  "Special Commercial Structure" means the low level business, banking
          or commercial facility constructed as part of the Project within the
          "air rights estate" referred to in Section 1.01(b).

                            Exhibit B - Page 2 of 8
<PAGE>

1.02  Normal Business Hours. Except as otherwise specifically provided in the
      Lease, normal business hours for the Building shall be from 7:30 a.m. to
      6:00 p.m., Monday through Friday of each week, and 8:00 a.m. to 2:00 p.m.
      on Saturday, excluding days which are legal or statutory holidays in the
      jurisdiction in which the Building is located.

SECTION 2.00        DETERMINATION OF OCCUPANCY COSTS

2.01  Definitions  In this Section 2.00

      (a)   "Taxes" means the aggregate of all taxes, rates, charges, levies,
            and assessments imposed by any governmental or quasi-governmental or
            other taxing authority upon or in respect of the Land and all
            improvements on the Land including any tax imposed on the capital
            invested in the Land. In determining Taxes, any income, profits or
            excess profits tax imposed upon the income of Landlord and any other
            tax of a personal nature charged or levied against the Landlord
            shall be excluded, except to the extent that such is levied in lieu
            of taxes, rates, charges, or assessments in respect of the Land or
            improvements on the Land.

      (b)   "Tax Cost" means that portion of Taxes accruing in respect of the
            calendar year in which the Fiscal Year begins multiplied by a
            fraction the numerator of which is the rentable area of the Building
            and the denominator of which is the aggregate of the rentable area
            of the Rentable Components.

      (c)   "HVAC Cost" means a percentage of the costs attributable to the
            Building in the Fiscal Year for the operation, repair and
            maintenance of the systems for heating, ventilating and air
            conditioning the Project, as established by Landlord from time to
            time on a fair and equitable basis which reflects load and hours of
            operation.

      (d)   "General Project Expense" means all costs, charges and expenses in
            respect of a Fiscal Year directly attributable to the operation,
            repair and maintenance of the Project but not attributable solely to
            the operation, repair and maintenance of any of the Rentable
            Components.

      (e)   "Common Areas Expense" means all costs, charges, and expenses in
            respect of a Fiscal Year attributable to the operation, repair, and
            maintenance of the Common Areas.

      (f)   "Square Feet in the Building" means the aggregate of the rentable
            areas of the Building calculated on a single tenancy floor basis
            provided that if from time to time there is a material change in the
            rentable space in the Building, Square Feet in the Building shall
            from the effective date of the change until any further change mean
            the number of square feet in the Building determined on completion
            of that change on the basis set out in Section 3.00.

      (g)   "Square Feet in the Premises" means the aggregate of the numbers of
            square feet set out in the definition of Premises under Article 1.01
            of the Lease.

                            Exhibit B - Page 3 of 8
<PAGE>

2.02  "Occupancy Costs" Occupancy Costs for any Fiscal Year is an amount equal
      to Operating Cost (as defined in Section 2.03) in respect of that Fiscal
      Year multiplied by the Square Feet in the Premises.

2.03  Determination of Operating Cost "Operating Cost" means a per square foot
      amount in respect of a Fiscal Year established in accordance with
      generally accepted accounting principles and confirmed in a certificate of
      Landlord, and equal to the sum of the following costs, divided by the
      Square Feet in the Building:

      (a)  all costs, charges, and expenses directly attributable to the
           operation, repair and maintenance of the Building, including without
           limitation Tax Cost and HVAC Cost, and all indirect costs that are
           reasonably attributable to the operation, repair and maintenance of
           the Building including without limitation accounting, administrative
           and legal costs; and

      (b)  a portion of Common Areas Expense as established by Landlord from
           time to time on a fair and equitable basis; and

      (c)  that proportion of General Project Expense which the rentable area of
           the Building is of the aggregate rentable area of the Rentable
           Components;

      (d)  a charge for property management services equal to four percent of
           Landlord's gross revenue from the Building in such Fiscal Year,
           excluding revenues under this Section 2.03(d), but not less than 15%
           of the total of Section 2.03 (a), (b), (c) and (e). For purposes of
           this Section 2.03(d), Rent shall be deemed to be paid for not less
           than 95% of the Square Feet in the Building at a rate equal to the
           average Rent of the leases in place during the Fiscal Year; and

      (e)  all expenses properly allocable to the Fiscal Year for any capital
           improvement or structural repair incurred to reduce or limit
           increases in Operating Cost, or required by Landlord's insurance
           carrier or by any change in the laws, rules, regulations or orders of
           any governmental or quasi-governmental authority having jurisdiction,
           or capital expenses resulting from repair, replacement or
           maintenance, which expenses shall be repaid in equal monthly
           installments together with interest at the prime rate plus 2.5
           percent amortized over the lesser of the useful capital life of the
           capital improvement or structural repair or the operational savings
           payback period.

2.04  Limitation on Operating Cost In determining Operating Cost, the cost (if
      any) of the following shall be excluded except as specifically provided in
      Section 2.03:

      (a)  major repairs to the Building's structure;

      (b)  repair and replacement resulting from inferior or deficient
           workmanship, materials, or equipment in the initial construction of
           the Project or for which Landlord is reimbursed by insurers;

      (c)  ground or master lease rent (if any), depreciation, amortization, and
           interest on and capital retirement of debt;

                            Exhibit B - Page 4 of 8
<PAGE>

      (d)  operation, repair and maintenance which is attributable solely to any
           of the Rentable Components of the Project other than the Building;

      (e)  tenant improvements and leasing commissions;

      (f)  attorney's fees, costs and disbursements and other expenses incurred
           in connection with leasing or other negotiations or disputes with
           tenants, other occupants, or prospective tenants or other occupants
           of the Building;

      (g)  costs incurred in renovating or otherwise improving or decorating or
           redecorating space for tenants or other occupants of the Building;

      (h)  costs (including penalties and/or fines) incurred due to the
           violation by Landlord or any tenant of the terms and conditions of
           any lease pertaining to the Building or of any valid applicable
           building code, regulation or law or incurred due to the Building
           being in violation of any such code, regulation or law;

      (i)  except for the management charge, referenced in Section 2.03(d)
           herein, amounts paid to affiliates of Landlord for services on or to
           the Project, to the extent that such amounts exceed competitive costs
           for such services rendered by persons or entities of similar skill,
           competence and experience;

      (j)  marketing costs incurred in advertising and promotional activities
           for attracting new tenants to the Building;

      (k)  salaries and other employee costs for personnel above the grade of
           Vice President of Operations or the then equivalent position;

      (l)  political or charitable contributions;

      (m)  costs in excess of $5,000 for purchasing art, sculptures, paintings,
           wall hangings or other objects of art;

      (n)  lease takeover costs incurred by Landlord in connection with tenant
           leases in the Building or other buildings; and

      (o)  costs incurred in connection with acquisition or sale of air rights.

2.05  When Services Are Not Provided Notwithstanding Section 2.03, when and if
      any service (such as janitorial service) which is normally provided by
      Landlord to tenants of the Building in their premises:

      (a)  is not provided by Landlord in the Premises under the specific terms
           of this Lease, then in determining Occupancy Costs for Tenant, the
           cost of that service [except as it relates to Common Areas, and to
           those areas of the Building from time to time not designated for
           leasing or designated by Landlord for use by or for the benefit of
           Tenant (or by or for the benefit of the sublessees, agents,
           employees, customers or licensees of Tenant) in common with all other
           tenants and other persons in the Building] shall be excluded, and

                            Exhibit B - Page 5 of 8
<PAGE>

      (b)   is not provided by Landlord in a significant portion of the
            Building, then in determining Occupancy Costs (excluding Tax Cost)
            for Tenant, the cost of that service shall be divided by the
            difference between the Square Feet in the Building and the number of
            square feet in the Building in which Landlord does not provide such
            service, determined on the basis set out in Section 3.01.

2.06  Partial Fiscal Year If the Term commences after the beginning of or
      terminates before the end of a Fiscal Year, any amount payable by Tenant
      or Landlord under Section 2.02 shall be adjusted proportionately.

2.07  Shared Facilities, Services and Utilities If any facilities, services or
      utilities:

      (a)   for the operation, repair and maintenance of the Project are
            provided from another building or other buildings owned or operated
            by Landlord or any affiliate of Landlord or any agent of Landlord,
            or

      (b)   for the operation, repair and maintenance of another building or
            other buildings owned or operated by Landlord or any affiliate of
            Landlord, or any agent of Landlord are provided from the Project,

      the net costs, charges and expenses therefor shall, for the purposes of
      Section 2.03, be allocated by Landlord between the Project and the other
      building or buildings on a fair and equitable basis.

2.08  Separate Assessment of Taxes Notwithstanding Sections 2.02 and 2.03, if
      Taxes for the Premises and all other portions of the Land and Building
      leased or designated for lease to tenants are assessed separately for each
      tenant by any competent authority:

      (a)   the amount payable in respect of the Premises shall be included in
            Occupancy Costs, and

      (b)   the amount payable in respect of the Premises and on all other
            portions of the Land and Building leased or designated for lease to
            tenants shall be excluded from Taxes for the purpose of determining
            Operating Cost.

SECTION 3.00      DETERMINATION OF SQUARE FEET IN THE PREMISES

3.01  Office Space - Single Tenancy Floors. The number of square feet of office
      space in the Premises on a single tenancy floor in the Building (if any),
      whether above or below grade, shall be calculated from dimensioned
      Architect's drawings to the inside face of the glass of the permanent
      exterior building walls, or to the inside finish of those walls if they
      contain no glass. It shall include all space within exterior building
      walls except for stairs, elevator shafts, flues, pipe shafts, vertical
      ducts, air conditioning rooms and fan closets forming part of the basic
      building service areas and their enclosing walls. No deduction shall be
      made for washrooms, janitor closets, or electrical or telephone cupboards
      within and servicing only that floor or for any other rooms, corridors, or
      areas available to the tenant on that floor for its use, furnishings or
      personnel, or for any columns located wholly or partially within the
      space, or for any

                            Exhibit B - Page 6 of 8
<PAGE>

      enclosures around the periphery of the Building used for the purpose of
      cooling, heating or ventilating.

3.02  Office Space - Multiple Tenancy Floors. The number of square feet of
      office space in the Premises on a multiple tenancy floor in the Building
      (if any), whether above or below grade, shall be calculated from
      dimensioned Architect's drawings to the inside finish of permanent
      exterior building walls or to the inside face of the glass as described in
      Section 3.01 for a single tenancy floor, to the face of permanent interior
      walls and to the center line of demising partitions. No deductions shall
      be made for any columns located wholly or partially within the rentable
      space, or for any enclosures around the periphery of the Building used for
      the purpose of cooling, heating, or ventilating.

3.03  Retail Space. The number of square feet of retail space in the Premises
      (if any), whether above or below grade, shall be calculated from
      dimensioned Architect's drawings to the inside face of permanent exterior
      walls, to the center line of demising partitions, and to the center line
      of a pre-determined lease line (usually referred to as the storefront
      line) in the case of retail space facing onto either an interior public
      mall or corridor or on to a public street or lane. No deduction shall be
      made for vestibules inside the permanent exterior building walls or inside
      the pre-determined lease line, or for any columns located wholly or
      partially within the rentable space.

SECTION 4.00      LOADING AND UNLOADING

4.01  The delivery and shipping of merchandise, supplies, fixtures, and other
      materials or goods of whatsoever nature to or from the Premises and all
      loading, unloading, and handling thereof shall be done only at such times,
      in such areas, by such means, and through such elevators, entrances,
      malls, and corridors, as are designated by Landlord.

4.02  Landlord accepts no liability and is hereby relieved and released by
      Tenant in respect of the operation of the Delivery Facilities, or the
      adequacy thereof, or of the acts or omissions of any person or persons
      engaged in the operation thereof, or in the acceptance, holding, handling,
      delivery or dispatch, or failure of any acceptance holding, handling or
      dispatch, or any error, negligence or delay therein.

4.03  Landlord may from time to time make and amend regulations for the orderly
      and efficient operation of the Delivery Facilities, and may require the
      payment of reasonable and equitable charges for delivery services and
      demurrage provided by Landlord.

SECTION 5.00      SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE

5.01  Subordination. This Lease is subject and subordinate to all ground or
      underlying leases (including any master lease between Landlord and the
      tenant under a ground lease), mortgages and deeds of trust which now
      affect the real property of which the Premises forms a part or affect the
      ground or underlying

                            Exhibit B - Page 7 of 8
<PAGE>

      leases, and to all extensions, modifications, consolidations, replacements
      and extensions thereof. It is further agreed that this Lease may, at the
      option of the Landlord, be made subordinate to any such ground or
      underlying leases, mortgages, or deeds of trust which may hereafter affect
      the real property of which Premises forms a part or affect the ground or
      underlying leases, and that Tenant, or Tenants, successors in interest,
      will execute and deliver upon the demand of Landlord any and all
      reasonable instruments desired by Landlord subordinating in the manner
      requested by Landlord this Lease to any such lease, mortgage or deed of
      trust.

5.02  Attornment.

      (a)   Leases. Tenant agrees that, at the option of the lessor under any
            ground or underlying lease now or hereafter affecting the real
            property of which Premises forms a part, Tenant shall attorn to said
            lessor in the event of the termination or cancellation of such
            ground or underlying lease, and if requested by said lessor, enter
            into a new lease with said lessor (or a successor designated by said
            lessor) for the balance of the term then remaining hereunder upon
            the same terms and conditions as those herein provided.

      (b)   Mortgages. In the event of foreclosure or exercise of power of sale
            under any mortgage or deed of trust now or hereafter affecting the
            real property of which Premises forms a part, the holder of any such
            mortgage or deed of trust (or purchaser at any sale pursuant
            thereto) shall have the option (i) supplementing this Section to
            require Tenant to attorn to such holder or purchaser, and to enter
            into a new lease with such holder or purchaser (as Landlord) for the
            balance of the term then remaining hereunder upon the same terms and
            conditions as those herein provided, or (ii) notwithstanding this
            Section to elect that this lease become or remain, as the case may
            be, superior to said mortgage or deed of trust. Tenant shall upon
            request by any such holder or purchaser, execute and deliver any and
            all instruments desired by such holder or purchaser evidencing the
            superiority of this lease to any said mortgage or deed of trust.

5.03  Non-Disturbance. In the event of any attornment by Tenant pursuant to this
      Section 5.00 it is understood and agreed that this Lease and Tenant's
      rights hereunder shall continue undisturbed while Tenant is not in default
      hereunder, subject however to the provisions of Section 5.04.

5.04  Limitation. Notwithstanding any other provisions hereof, in the event of
      any attornment by Tenant pursuant to this Section 5.00 or under Article
      17.02 of the Lease, such lessor, holder, purchaser or successor in
      interest shall not be

      (a)  liable for any act or omission of Landlord, or

      (b)  subject to any offsets or defenses which Tenant might have against
           Landlord, or

      (c)  bound by any prepayment by Tenant of more than one month's
           installment of Rent, or by any previous modifications of this Lease,
           unless such prepayment or modification shall have been approved in
           writing by such lessor, holder, purchaser or successor, or by any
           predecessor in interest except Landlord.

                           Exhibit B - Page 8 of 8
<PAGE>

                                   EXHIBIT C

                             RULES AND REGULATIONS

1.   Security. Landlord may from time to time adopt appropriate systems and
     procedures for the security or safety of the Building, any persons
     occupying, using or entering the same, or any equipment, finishings or
     contents thereof, and Tenant shall comply with Landlord's reasonable
     requirements relative thereto.

2.   Locks. Landlord may from time to time install and change locking mechanisms
     on entrances to the Building, common areas thereof, and the Premises, and
     (unless 24-hour security is provided by the Building) shall provide to
     Tenant a reasonable number of keys and replacements therefor to meet the
     bona fide requirements of Tenant. In these rules keys include any device
     serving the same purpose. Tenant shall not add to or change existing
     locking mechanisms on any door in or to the Premises without Landlord's
     prior written consent. If with Landlord's consent, Tenant installs lock(s)
     incompatible with the Building master locking system:

     (a)      Landlord, without abatement of Rent, shall be relieved of any
              obligation under the Lease to provide any service to the affected
              areas which require access thereto,

     (b)      Tenant shall indemnify Landlord against any expense as a result of
              forced entry thereto which may be required in an emergency, and

     (c)      Tenant shall at the end of the Term and at Landlord's request
              remove such lock(s) at Tenant's expense.

3.   Return of Keys. At the end of the Term, Tenant shall promptly return to
     Landlord all keys for the Building and Premises which are in possession of
     Tenant, its employees, agents or invitees.

4.   Windows. Tenant shall observe Landlord's rules with respect to maintaining
     window coverings at all windows in the Premises so that the Building
     presents a uniform exterior appearance, and shall not install any window
     shades, screens, drapes, covers or other materials on or at any window in
     the Premises without Landlord's prior written consent. Tenant shall ensure
     that window coverings are closed on all windows in the Premises while they
     are exposed to the direct rays of the sun.

5.   Repair, Maintenance, Alterations and Improvements. Tenant shall carry out
     Tenant's repair, maintenance, alterations and improvements in the Premises
     only during times agreed to in advance by Landlord and in a manner which
     will not interfere with the rights of other tenants in the Building.

6.   Water/Restroom Fixtures. Tenant shall not use water or restroom fixtures
     for any purpose for which they are not intended, nor shall water be wasted
     by tampering with such fixtures. Any cost or damage resulting from such
     misuse by Tenant shall be paid for by Tenant.

7.   Personal Use of Premises. The Premises shall not be used or permitted to be
     used for residential, lodging or sleeping purposes or for the storage of
     personal effects or property not required for business purposes.

                            Exhibit C - Page 1 of 3
<PAGE>

8.   Heavy Articles. Tenant shall not place in or move about the Premises
     without Landlord's prior written consent any safe or other heavy article
     which in Landlord's reasonable opinion may damage the Building or the
     Premises, and Landlord may designate the location of any heavy articles in
     the Premises.

9.   Bicycles, Animals. Tenant shall not bring any animals, with the exception
     of working animals to assist the disabled, or birds into the Building, and
     shall not permit bicycles or other vehicles inside or on the sidewalks
     outside the Building except in areas designated from time to time by
     Landlord for such purposes.

10.  Deliveries. Tenant shall ensure that deliveries of materials and supplies
     to the Premises are made through such entrances, elevators and corridors
     and at such times as may from time to time be designated by Landlord, and
     shall promptly pay or cause to be paid to Landlord the cost of repairing
     any damage in the Building caused by any person making such deliveries.

11.  Furniture and Equipment. Tenant shall ensure that furniture and equipment
     being moved into or out of the Premises is moved through such entrances,
     elevators and corridors and at such times as may from time to time be
     designated by Landlord, and by movers or a moving company approved by
     Landlord, and shall promptly pay or cause to be paid to Landlord the cost
     of labor for repairing any damage in the Building caused thereby.

12.  Solicitations. Landlord reserves the right to restrict or prohibit
     canvassing, soliciting or peddling in the Building.

13.  Food and Beverages. Only persons approved from time to time by Landlord may
     prepare, solicit orders for, sell, serve or distribute foods or beverages
     in the Building, or use the elevators, corridors or common areas for any
     such purpose. Except with Landlord's prior written consent and in
     accordance with arrangements approved by Landlord, Tenant shall not permit
     on the Premises the use of equipment for dispensing food or beverages or
     for the preparation, solicitation of orders for, sale, serving or
     distribution of food or beverages. Tenant shall not permit cooking within
     the Premises, except for microwave ovens, coffee makers, etc. for the use
     of their employees, agents or invitees.

14.  Refuse. Tenant shall place all refuse in proper receptacles provided by
     Tenant at its expense in the Premises or in receptacles (if any) provided
     by Landlord for the Building, and shall keep sidewalks and driveways
     outside the Building, and lobbies, corridors, stairwells, ducts and shafts
     of the Building, free of all refuse.

15.  Obstructions. Tenant shall not obstruct or place anything in or on the
     sidewalks or driveways outside the Building or in the lobbies, corridors,
     stairwells or other common areas of the Building, or use such locations for
     any purpose except access to and exit from the Premises without Landlord's
     prior written consent. Landlord may remove at Tenant's expense any such
     obstruction or thing (unauthorized by Landlord) without notice or
     obligation to Tenant.

16.  Dangerous, Immoral or Illegal Activities. Tenant shall not make use of the
     Premises which involves the danger or injury to any person, nor shall the
     same be used for any immoral or illegal purpose.

17.  Proper Conduct. Tenant shall not conduct itself in any manner which is
     inconsistent with the character of the Building as a first quality building
     or which will impair the comfort and convenience of other tenants in the
     Building.

                            Exhibit C - Page 2 of 3
<PAGE>

18.  Employees, Agents and Invitees. In these Rules and Regulations, the term
     "Tenant" includes the employees, agents, invitees and licenses of Tenant
     and others permitted by Tenant to use or occupy the Premises.

19.  Housekeeping. Tenant shall prevent paper, books, magazines, and other
     obstructions from being placed on heat, ventilating and air conditioning
     convectors, or within 18 inches of the ceiling, and any other interference
     with the heat, ventilating and/or air conditioning system within the
     Premises.

20.  Energy Conservation. Tenant shall make every effort to practice energy
     conservation within the Premises including turning off lights and
     equipment, etc. at the end of the day, and will cooperate with Landlord in
     establishing and implementing such conservation programs as Landlord may
     from time to time develop.

21.  Weapons and Explosives. Tenant, its employees, agents and invitees shall
     not bring any weapons and/or explosives into the Project for any reason.

22.  Tenant's Telecommunications Equipment. Tenant may utilize the telephone
     closet located in the Building core for the necessary connections to the
     Riser system. All of Tenant's telecommunications equipment shall be located
     in Tenant's Premises. Tenant shall not utilize the telephone closet for its
     equipment.

23.  Tobacco Use. If Tenant or its employees, agents, invitees, construction
     workers, or vendors smoke tobacco products in the Premises and cause
     complaints from adjacent tenants, and the behavior continues after written
     notice from Landlord, Landlord may make the necessary changes to the
     improvements in order to eliminate the migration of tobacco smoke and/or
     odors to the adjacent premises at Tenant's sole expense, which shall be
     considered Rent due hereunder.

                            Exhibit C - Page 3 of 3
<PAGE>

                                   EXHIBIT D

                       SUPPLEMENTAL TERMS AND CONDITIONS

BETWEEN:            BROOKFIELD DENVER INC.                       ("Landlord")

AND:                PATINA OIL & GAS CORPORATION                 ("Tenant")

Articles 22.00 through 27.00 are added to this Lease as follows:

ARTICLE 22.00       TENANT IMPROVEMENT

22.01    Tenant Improvement Allowance. Landlord shall provide a tenant
         improvement allowance not to exceed $229,008.00 ("Tenant Improvement
         Allowance"), as increased or decreased on the basis of $8.00 per
         rentable square foot, for the purpose of contributing toward the cost
         of Tenant's design, engineering, and construction of real property
         improvements within the Premises (the "Tenant Improvements") based on a
         space plan ("Space Plan") to be mutually agreed upon by Landlord and
         Tenant. The Tenant Improvement Allowance may also be spent on computer
         cabling and telephone wiring.

         Tenant shall be responsible for any costs that exceed the above stated
         Tenant Improvement Allowance, and Landlord's approval shall be required
         if there are any changes or additions to the Space Plan and such
         modifications increase the costs of Tenant Improvements above the
         Tenant Improvement Allowance. Tenant shall be required to sign a tenant
         authorization form ("TAF") no later than five (5) business days after
         Tenant receives the TAF, acknowledging responsibility for such costs,
         prior to commencement of any work and Tenant shall pay to Landlord such
         costs within ten (10) days of such written notice from Landlord.

         The Tenant Improvement Allowance shall be used by Tenant no later than
         December 15, 2002. Provided Tenant has notified Landlord in writing and
         is not in default hereunder, and a portion of the Allowance still
         remains unspent after the completion of the Tenant Improvements,
         Landlord shall issue a credit (not to exceed $2.00 per rentable square
         foot) to Tenant against the next successive months' Annual Rent to be
         paid under the Lease for the difference between the unspent Allowance
         and the total amount spent on the Tenant Improvements. However, in no
         event shall this credit be applicable after December 15, 2002.

ARTICLE 23.00       PARKING

23.01    Parking.   Tenant shall have the option exercisable sixty (60) days
         before the Commencement Date to rent four (4) unreserved parking spaces
         underneath the Building at rates set by Landlord from time to time. The
         current monthly rental rate is $185.00 per space.

         Tenant shall have the option exercisable sixty (60) days before the
         Commencement Date to rent nineteen (19) unreserved guaranteed parking
         spaces and (19) unreserved month-to-month parking spaces at the 15th
         and Tremont Parking Garage, located at

                            Exhibit D - Page 1 of 4
<PAGE>

         15th and Tremont streets, at rates set by Landlord from time to time.
         The current monthly rental rate is $130.00 per space for unreserved
         spaces.

         In the event Tenant fails to exercise the above options or discontinues
         the use or payment for any of the above month-to-month or guaranteed
         parking spaces for a period of thirty (30) days or more, such spaces
         shall no longer be deemed guaranteed nor available and shall return to
         Landlord as its available inventory.

ARTICLE 24.00     RIGHT OF FIRST OFFER

24.01    Notice of Availability. Provided there is no Event of Default by Tenant
         under this Lease and Tenant is not subleasing the Premises other than
         to a Tenant Affiliate, Landlord shall give Tenant written notice of the
         availability of any unoccupied space on the twenty-first (21st) floor
         of the Building, whenever the Offer Space first becomes available to
         Landlord for releasing. Said notice may be given to Tenant prior to the
         Commencement Date. Offer Space shall be deemed available for releasing
         when the existing lease (or the first lease of presently vacant Offer
         Space) expires or terminates and tenants in the Building (if any) with
         prior rights to lease and the tenant or subtenant then in possession of
         the Offer Space have no desire to enter into a lease of the Offer Space
         with Landlord. As of the date of this Lease, the Offer Space is leased
         by three tenants: Bostrom & Sands, McDermott & Associates, LLC, d.b.a.
         Altira Group, & Devon Energy. The notice shall set out the rent which
         Landlord would at that time offer to other possible tenants of the
         Offer Space and the date(s) (if any) that another tenant of the
         Building has prior rights to lease the Offer Space.

24.02    Right of First Offer. Tenant may lease Offer Space upon the terms and
         conditions set out in this Article 24.00, only if

         (a)      Tenant delivers to Landlord written notice exercising its
                  right to lease the Offer Space within seven (7) days of
                  Landlord's notice of availability of the Offer Space, and

         (b)      There is no Event of Default by Tenant under this Lease and
                  Tenant is not subleasing its Premises other than to a Tenant
                  Affiliate at the time Landlord gives its notice or at the
                  commencement of the lease of Offer Space.

         (c)      At least three (3) years of the Term are remaining on Tenant's
                  Lease so that the term of the Offer Space shall be no less
                  than thirty-six (36) months.

         If Tenant fails to exercise its right to lease the Offer Space, Tenant
         shall have no further right to lease the Offer Space under this Article
         24.00.

24.03    Terms.  A lease of space under this Article 24.00 shall contain the
                 following:

         (a)     Annual Rent shall be equal to the amount set out in Landlord's
                 notice of the availability of the Offer Space;

         (b)     Occupancy Costs shall be determined in the manner set out in
                 Landlord's then current standard form of lease for the
                 Building;

                            Exhibit D - Page 2 of 4
<PAGE>

         (c)     the term shall begin on the date the Offer Space becomes
                 available to Landlord for releasing and end on the expiration
                 or earlier termination of this Lease, subject to the minimum
                 term set forth above and subject to the same option to renew
                 (if any) as this Lease;

         (d)     Tenant shall take the Offer Space in an "as-is" condition with
                 all improvements to be Tenant's responsibility at Tenant's
                 cost; and

         (e)     the other terms and conditions shall be as set out in
                 Landlord's then-current standard form of lease for the
                 Building.

24.04    Documentation. Within fifteen (15) days of receipt from Landlord,
         Tenant shall execute and deliver to Landlord those instruments Landlord
         may request to evidence any lease of space under this Article 24.00.

ARTICLE 25.00     MARKET RENT

25.01    Definition. "Market Rent" means the annual amount per square foot
         (exclusive of Occupancy Costs) that a willing Tenant would pay and a
         willing Landlord would accept in arm's length bona fide negotiations,
         without any additional inducements, for a lease of the Premises on the
         same terms and conditions for the specified period of time. No
         allowance shall be made for the value of existing improvements and
         finishes provided by Tenant.

25.02    Notice of Market Rent. At least thirty (30) days prior to the date that
         Annual Rent is to be determined, Landlord shall give Tenant notice (the
         "Market Rent Notice") of the determination of Annual Rent and the basis
         on which Landlord made its determination of such amount.

25.03    Disagreement on Market Rent.

         (a)     If Tenant does not agree with Landlord's determination of
                 Market Rent, Tenant shall give notice to Landlord of that
                 disagreement within ten (10) days of receipt of the Market Rent
                 Notice.

         (b)     If Tenant gives Landlord notice of disagreement, the matter
                 shall be promptly referred to an individual who is a real
                 estate professional not affiliated with either party and has
                 relevant experience in leasing of office space in the Denver
                 Central Business District during the past five years (the
                 "Expert") selected by Landlord and reasonably acceptable to
                 Tenant. The Expert shall be deemed to be acting as an expert
                 for both parties and not as an arbitrator and shall make a
                 determination of Market Rent as quickly as possible and shall
                 certify to both parties as to its determination.

         (c)     If the Market Rent as determined by the Expert is greater than
                 the amount in the Market Rent Notice, Tenant shall pay to
                 Landlord the Annual Rent set forth in the Market Rent Notice.

         (d)     If the Market Rent as determined by the Expert is less than 95%
                 of the amount set out in the Market Rent Notice, Landlord shall
                 bear the costs and reasonable expenses of the Expert. If the
                 Market Rent as determined by the Expert is 95%

                            Exhibit D- Page 3 of 4
<PAGE>

                 or more of the amount set out in the Market Rent Notice, Tenant
                 shall bear the costs and reasonable expenses of the Expert.

ARTICLE 26.00     INTERNAL STAIRWELL

26.01    Internal Stairwell. There is currently an internal stairwell within the
         Premises which connects Floors 19, 20, 21, and 22. As of the date of
         this Lease, Tenant does not lease Floors 21 or 22. Therefore, the
         stairwell door on Floor 20 will be locked prohibiting ingress from
         Floor 20, and a push bar alarm will be installed allowing egress from
         the stairwell. Provided Tenant does not lease the 21st floor premises,
         which contains the stairwell, Landlord, at its option and cost, may
         remove the stairwell between Floors 20 and 21. Additionally, the cost
         of installing the locking hardware and alarm on the stairwell shall be
         Landlord's responsibility.

ARTICLE 27.00     NONDISTURBANCE

27.01    Nondisturbance. Upon receipt of a signed Estoppel Certificate from
         Tenant, Landlord shall use commercially reasonable efforts in
         requesting of its Lender on behalf of Tenant a Nondisturbance
         Agreement.
<PAGE>

                                   EXHIBIT F

                       STATEMENT OF TENANT IN RE: LEASE
                       --------------------------------

                                                     Date: ___________, 200__

New York Life Insurance Company
51 Madison Avenue
New York, NY 10010

     Re:  1625/1675 Broadway
          Denver, CO

Gentlemen:

     It is our understanding that you are the holder of a deed of trust upon the
subject Premises and have required this certificate by the undersigned.

     The undersigned has been informed that New York Life Insurance Company (the
"Lender") is the holder of a Deed of Trust which constitutes a lien on 1625/1675
Broadway. We further understand that the Lender, in connection with its loan,
has received an assignment of all leases (including the Lease) from Brookfield
Denver Inc. (the "Lessor") as security for its loan. We further understand that
the Lender will be acting in reliance upon this Estoppel Certificate.

     The undersigned, as Lessee, under that certain Lease dated _____________,
_____, made with Brookfield Denver Inc. as Lessor, hereby ratifies the said
Lease and certifies that:

          1.   the undersigned has entered into occupancy of the Premises
     described in said Lease on _______________; and

          2.   the undersigned is presently open and conducting business in the
     Premises; and

          3.   the operation and use of the Premises by the undersigned do not
     involve the generation, treatment, storage, disposal or release of a
     hazardous substance or a solid waste into the environment and that the
     Premises are being operated by the undersigned in accordance with all
     applicable environmental laws, zoning ordinances and building codes; and

          4.   the minimum rental in the annual amount of $___________ was
     payable from the date of occupancy; and

                            Exhibit F - Page 1 of 2
<PAGE>

          5.   that said Lease is in full force and effect and has not been
     assigned, modified, supplemented or amended in any way (except by
     agreement(s) dated ____________), and neither party thereto is in default
     thereunder; and

          6.   that the same represents the entire agreement between the parties
     as to this leasing; and

          7.   that the term of said Lease expires on ____________; and

          8.   there are ______ renewal periods of ____ years each; and

          9.   that all conditions under said Lease to be performed by the
     Lessor have been satisfied; and

          10.  all required contributions by Lessor to Lessee on account of
     Lessee's improvements have been received; and

          11.  on this date there are no existing defenses or offsets which the
     undersigned has against the enforcement of said Lease by the Lessor; and

          12.  check the applicable provision and fill in the blank where
     appropriate.

          ( )  that no rental has been paid more than one month in advance and
     no security has been deposited with Lessor; and

          ( )  rental in the amount of $________ for the period ____________ to
     ____________ has been paid in advance by Lessee; and

          ( )  security in the amount of $_________ has been deposited with
     Lessor; and

          ( )  security in the form of a Guarantee by ______________________ is
     in full force and effect through _______________; and

          13.  there are no concessions, allowances, rebates or refunds or rent
     free occupancies to which the undersigned is entitled except as follows:
     ___________________________________________________________________________
     _________________________________________________________; and

          14.  that Lessee's floor area is _____ square feet; and

          15.  that rental for __________, _____ has been paid.

          Very truly yours,

          ______________________________

          By:___________________________

                            Exhibit F - Page 2 of 2
<PAGE>

                                   EXHIBIT G

                              WORLD TRADE CENTER
                              TELECOMMUNICATIONS

SECTION 1.00      LIMITATION OF RESPONSIBILITY

1.01     Limitation of Responsibility. Tenant acknowledges and agrees that all
         telephone and telecommunications services desired by Tenant shall be
         ordered and utilized at the sole expense of Tenant. Unless Landlord
         otherwise requests or consents in writing, all of Tenant's
         telecommunications equipment (other than connections) shall be and
         remain solely in Tenant's Premises, in accordance with rules and
         regulations adopted by Landlord from time to time. Unless otherwise
         specifically agreed to in writing, Landlord shall have no
         responsibility for the maintenance of Tenant's telecommunications
         equipment, including wiring; nor for any wiring or other infrastructure
         to which Tenant's telecommunications equipment may be connected. Tenant
         agrees that, to the extent any such service is interrupted, curtailed,
         or discontinued, Landlord shall have no obligation or liability with
         respect thereto, unless due to Landlord's gross negligence or willful
         misconduct, and it shall be the sole obligation of Tenant at its
         expense to obtain substitute service.

SECTION 2.00      NECESSARY SERVICE INTERRUPTIONS

2.01     Necessary Service Interruptions. Landlord shall have the right, upon
         reasonable prior notice to Tenant, to interrupt or turn off
         telecommunications facilities in the event of emergency or as necessary
         in connection with repairs to the Building or Project or installation
         of telecommunications equipment for other tenants of the Building or
         Project. In the event of an emergency, Landlord shall provide Tenant as
         much advance notice as possible. Landlord shall exercise commercially
         reasonable efforts to perform any scheduled shutdowns during
         non-business hours.

SECTION 3.00      REMOVAL OF EQUIPMENT, WIRING, AND OTHER FACILITIES

3.01     Removal of Equipment, Wiring, and Other Facilities. Any and all
         telecommunications equipment installed in Tenant's Premises or
         elsewhere in the Project, by or on behalf of Tenant, including wiring,
         or other facilities for telecommunications transmittal, shall be
         removed prior to the expiration or earlier termination of the Lease
         term by Tenant at its sole cost or, at Landlord's election, by Landlord
         at Tenant's sole cost, with the cost thereof to be paid as additional
         rent. Landlord shall have the right, however, upon written notice to
         Tenant given no later than thirty (30) days prior to the expiration or
         earlier termination of the Lease term, to require Tenant to abandon and
         leave in place, without additional payment to Tenant or credit against
         rent, any and all telecommunications wiring and related infrastructure,
         or selected components thereof, whether located in Tenant's Premises or
         elsewhere in the Project.

                            Exhibit G - Page 1 of 4
<PAGE>

SECTION 4.00      NEW PROVIDER INSTALLATIONS

4.01     New Provider Installations. In the event that Tenant wishes at any time
         to utilize the services of a telephone or telecommunications provider
         whose equipment is not then servicing the Project, or to materially
         expand the services or infrastructure of a provider currently providing
         service to the Project, no such provider shall be permitted to install
         its lines or other equipment within the Project without first securing
         the prior written approval of Landlord. Landlord's approval shall not
         be deemed any kind of warranty or representation by Landlord,
         including, without limitation, any warranty or representation as to the
         suitability, competence, or financial strength of the provider. Without
         limitation of the foregoing standard, it shall be reasonable for
         Landlord to refuse to give its approval unless all of the following
         conditions are satisfied to Landlord's satisfaction:

         (a)   Landlord shall incur no expense whatsoever with respect to any
               aspect of the provider's provision of its services, including,
               without limitation, the costs of installation, materials, and
               services;

         (b)   prior to commencement of any work in or about the Project by the
               provider, the provider shall supply Landlord with such written
               indemnities, insurance, financial statements, and such other
               items as Landlord reasonably determines to be necessary to
               protect its financial interests and the interests of the Building
               relating to the proposed activities of the provider;

         (c)   the provider agrees to abide by such rules and regulations,
               building and other codes, job site rules, and such other
               requirements as are reasonably determined by Landlord to be
               necessary to protect the interests of the Project, the tenants in
               the Project, and Landlord, in the same or similar manner as
               Landlord has the right to protect itself and the Project with
               respect to proposed alterations as described in Exhibits D and E
               of this Lease;

         (d)   Landlord reasonably determines that there is sufficient space in
               the Project for the placement of the provider's equipment and
               materials;

         (e)   the provider agrees to abide by Landlord's requirements, if any,
               that provider use existing building conduits and pipes or use
               building contractors (or other contractors approved by Landlord);

         (f)   Landlord receives from the provider such compensation as is
               reasonably determined by Landlord to compensate it for space used
               in the Building and/or Project for the storage and maintenance of
               the provider's equipment, for the fair market value of a
               provider's access to the Building and/or Project, and the costs
               which may reasonably be expected to be incurred by Landlord;

         (g)   the provider agrees to deliver to Landlord detailed "as built"
               plans immediately after the installation of the provider's
               equipment is complete; and

         (h)   all of the foregoing matters are documented in a written license
               agreement between Landlord and the provider, the form and content
               of which are reasonably satisfactory to Landlord.

                            Exhibit G - Page 2 of 4
<PAGE>

SECTION 5.00      PROVIDER LICENSE EXPIRATION

5.01     Provider License Expiration. If the license between any provider and
         Landlord shall terminate by natural expiration, Landlord shall exercise
         reasonable efforts to notify Tenant at least thirty (30) days before
         the expiration so Tenant may arrange for alternative service. If
         Landlord does not receive advance notice from the provider, or the
         license expires for any other reason, Landlord shall have no obligation
         to notify Tenant.

SECTION 6.00      LIMIT OF DEFAULT OR BREACH

6.01     Limit of Default or Breach. Notwithstanding any provision of the
         proceeding paragraphs to the contrary, the refusal of Landlord to grant
         its approval to any prospective telecommunications provider shall not
         be deemed a default or breach by Landlord of its obligation under this
         Lease unless and until Landlord is adjudicated to have acted recklessly
         or maliciously with respect to Tenant's request for approval, and in
         that event, Tenant shall still have no right to terminate the Lease or
         claim an entitlement to rent abatement, but may, as Tenant's sole and
         exclusive recourse, seek a judicial order of specific performance
         compelling Landlord to grant its approval as to the prospective
         provider in question. The provisions of this paragraph may be enforced
         solely by Tenant and Landlord, are not for the benefit of any other
         party (including any subtenant), and specifically, but without
         limitation, no telephone or telecommunications provider shall be deemed
         a third party beneficiary of this Lease.

SECTION 7.00      INSTALLATION AND USE OF WIRELESS TECHNOLOGIES

7.01     Installation and Use of Wireless Technologies. Tenant shall not utilize
         any wireless communications equipment (other than usual and customary
         cellular telephones), including antennae and satellite receiver dishes,
         within Tenant's Premises, the Building, and/or the Project without
         Landlord's prior written consent. Such consent may be conditioned in
         such a manner so as to protect Landlord's financial interests and the
         interests of the Project, and the other tenants therein, in a manner
         similar to the arrangements described in the immediately preceding
         paragraphs.

SECTION 8.00      LIMITATION

8.01     Limitation. Except as otherwise agreed to in writing between Landlord
         and Tenant, Tenant shall not use or permit the use of the Premises for
         the sale, lease, license, or otherwise of electronic commerce services
         to any tenants or occupants in the Building, other than Tenant
         Affiliates, including, but not limited to, hardware and software
         services that allow users to conduct business-to-business or
         business-to-consumer services over networks utilizing, by way of
         example, e-mail, electronic data interchange, data archiving, e-forms,
         electronic file transfer, facsimile transfers, and similar services or
         any other services not expressly permitted under the Lease.

                            Exhibit G - Page 3 of 4
<PAGE>

SECTION 9.00      LIMITATION OF LIABILITY FOR EQUIPMENT INTERFERENCE

9.01     Limitation of Liability For Equipment Interference. In the event that
         telecommunications equipment, wiring, and facilities or satellite and
         antennae equipment of any type installed by or at the request of Tenant
         within Tenant's Premises, on the roof, or elsewhere within the Building
         causes interference to equipment used by another party, Tenant shall
         assume all liability related to such interference. Tenant shall use
         reasonable efforts, and shall cooperate with Landlord and other
         parties, to promptly eliminate such interference. In the event that
         Tenant is unable to do so, Tenant will substitute alternative equipment
         which remedies the situation. If such interference persists, Tenant
         shall discontinue the use of such equipment and, at Landlord's
         discretion, remove such equipment according to foregoing
         specifications.

                            Exhibit G - Page 4 of 4
<PAGE>

                                   EXHIBIT H
                              WORLD TRADE CENTER
               GENERAL CLEANING SPECIFICATIONS FOR TENANT SPACE

NIGHTLY
-------

1.       Empty all ash trays and clean with damp cloth.

2.       Empty all trash containers and wipe clean with a damp cloth replacing
         liner if provided. Trash containers are to be placed back in there
         proper place.

3.       Remove other boxes and trash that is clearly marked TRASH.

4.       Dust all wood, metal, glass or laminated office furniture and cleared
         desk surfaces.

5.       Clean and sanitize all drinking fountains.

6.       Remove spills, fingerprints and smudges from walls, woodwork and light
         switch plates.

7.       Dust mop tiled surfaces with treated dust mop. Damp mop all spots and
         spills.

8.       Clean all counter tops in kitchen areas. (No dishes or cups will be
         cleaned or removed from sinks.)

9.       Vacuum carpeted floor surfaces picking up all debris from the floor as
         needed.

WEEKLY
------

1.       Dust all picture frames, charts, glass covers on pictures and similar
         hangings.

2.       Dust all chair legs, bases of all furniture, door frames and sills.

3.       Move, vacuum and clean underneath all furniture that can be moved. This
         does not include desks or other large furniture items. Vacuum available
         floor areas under the desks without moving them.

4.       Wet all tile floor surfaces.

5.       Dust ventilating and convector covers.

6.       Remove dirt and lint from upholstered furniture with a lint brush.

MONTHLY
-------

1.       Spot clean all partition glass.

2.       Dust the top of door frames, sides of desks, cabinets, high shelving,
         tops of partitions and all other high areas.

3.       Vacuum upholstered furniture, chair cushions and under chair cushions.

4.       Remove plastic mats, wash and vacuum underneath (if applicable).

SEMI-ANNUALLY
-------------

1.       Mop, strip and refinish resilient floor tile semi-annually or if
         needed.

DAY PORTER SERVICE AND SPECIAL SERVICES
---------------------------------------

In addition to the nightly cleaning, day porters will be present during weekdays
to perform the following services:

1.       All restrooms will be serviced daily.

2.       Public areas will be serviced and patrolled; emergency services will be
         performed as required upon request.

3.       Special services, for example, cleaning of partition glass and carpet
         shampooing available upon request at tenant cost.<PAGE>

                                                                   Exhibit 10.13

                          FIRST AMENDED AND RESTATED
                              OPERATING AGREEMENT

                                      OF

                            ELYSIUM ENERGY, L.L.C.

                     a New York Limited Liability Company

                               November 27, 2000

                                                                    CONFIDENTIAL
<PAGE>

                          FIRST AMENDED AND RESTATED
                              OPERATING AGREEMENT
                                      OF
                            ELYSIUM ENERGY, L.L.C.

     THIS FIRST AMENDED AND RESTATED OPERATING AGREEMENT (the "Agreement") is
                                                               ---------
made and entered into effective as of November 27, 2000 (the "Effective Date"),
                                                              --------------
by and between Elysium Energy, L.L.C., a New York limited liability company (the
"Company") and Francesco Galesi, an individual (herein, "Galesi"), and Rotterdam
 -------                                                 ------
Ventures, Inc., a New York corporation (herein, ("Rotterdam Ventures")
                                                  ------------------
(collectively, Galesi and Rotterdam Ventures may be referred to as the "Galesi
                                                                        ------
Members") and Patina Oil & Gas Corporation, a Delaware corporation (herein,
-------
"Patina") (each of Galesi, Rotterdam Ventures and Patina may be referred to,
 ------
individually, as a "Member" and, collectively, as the "Members").  This
                    ------                             -------
Agreement amends, supercedes and replaces the Operating Agreement of the Company
entered into as of April 20, 2000.

                               R E C I T A L S:

     A.   WHEREAS, on April 20, 2000, the Galesi Members created a limited
liability company known as East River Energy, L.L.C. (the "Company") by causing
                                                           -------
Articles of Organization to be filed with the New York State Department of State
on April 20, 2000;

     B.   WHEREAS, on May 3, 2000, the Company, as buyer, entered into an Asset
Purchase and Sale Agreement with Equinox Oil Company, Inc., Alma Energy Corp.,
E&B Natural Resources Management Corporation, Oil California Exploration and
Lower Lafourche, L.L.C, as sellers, by which the Company has the right to
purchase certain oil and gas producing properties and related assets from the
sellers pursuant to that agreement and the bankruptcy plan of reorganization of
Equinox Oil Company, Inc. and Alma Energy Corp.;

     C.   WHEREAS, on October 4, 2000, the Galesi Members filed a Certificate of
Amendment of the Articles of Organization with the New York State Department of
State, which certificate changed the name of the Company to Elysium Energy,
L.L.C.;

     D.   WHEREAS, the Galesi Members and Patina have agreed that Patina will
contribute capital to the Company in the amount of Twenty-One Million Dollars
($21,000,000) and, upon such capital contribution, will own a fifty percent
(50%) Membership Interest in the Company, and the Galesi Members will own the
remaining fifty percent (50%);

     E.   WHEREAS, upon Patina becoming a Member, the Company will proceed to
close the transaction described in Recital B;

     F.   WHEREAS, the Galesi Members and Patina have also agreed that the
admission of Patina as a Member will result in a revaluation of Company property
as allowed under Treasury Regulation 1.704-1(b)(2)(f), resulting in Capital
Account balances as of the Effective Date as set forth on Exhibit "A"; and
                                                          -----------

     G.   WHEREAS, the Galesi Members and Patina desire to amend and restate the
existing Operating Agreement of the Company to add Patina as a Member and to
incorporate the terms and conditions contained herein.

     NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants and agreements contained herein, the parties agree as follows:

                                       1
<PAGE>

                                  ARTICLE I.
                                  DEFINITIONS
                                  -----------

     The following terms used in this Operating Agreement shall have the
following meanings:

     1.1.      "Additional Member" or "Additional Interests" or "Additional
                -----------------      --------------------      ----------
Member Interests" shall have the meaning set forth in Section 13.8.
----------------                                      ------------

     1.2.      "AFE" and "Authority For Expenditure" means an authority for
                ---       -------------------------
expenditure detailing the estimated costs of a Project or other proposed
expenditure.

     1.3.      "Adjusted Capital Account Deficit" means, with respect to any
                --------------------------------
Member, the deficit balance, if any, in the Member's Capital Account as of the
end of the relevant taxable period, after giving effect to the following
adjustments:

               (a)  the deficit shall be increased by any amounts which the
     Member is obligated to restore or is deemed obligated to restore pursuant
     to the penultimate sentences of Treasury Regulations 1.704-2(g)(1) and
     1.704-2(i)(5); and

               (b)  the deficit shall be increased by the items described in
     Treasury Regulation 1.074-1(b)(2)(ii)(d)(4), (5) and (6).

     1.4.      "Affiliate" means, with respect to any Person:  (a) any other
                ---------
Person directly or indirectly controlling, controlled by or under common control
with such Person; (b) any other Person owning or controlling ten percent (10%)
or more of the outstanding voting interests of such Person; (c) any officer,
director, general partner, manager or relative of such Person; or (d) any other
Person who is an officer, director, general partner, manager, trustee, relative
or holder of ten percent (10%) or more of the voting interests of any Person
described in clauses (a), (b) or (c).

     1.5.      "After-Acquired Interests" shall mean, for purposes of Article
                ------------------------                              -------
VIII, interests acquired by the Company after the Effective Date.
----

     1.6.      "Agreement" means this Operating Agreement of the Company, as it
                ---------
may be amended from time to time.  This Agreement is sometimes referred to as
the "Operating Agreement."
     -------------------

     1.7.      "Annual Budget" means the annual budget actually approved by a
                -------------
Majority of the Board of Managers covering capital expenses and operational
expenses of the Company for the upcoming calendar year that is prepared by the
Managing Director, President and the Chief Financial Officer and their delegates
and presented to the Board of Managers for review, revision, if necessary, and
approval.

     1.8.      "Area of Mutual Interest" and "AMI" shall be the areas of
                -----------------------       ---
operations of the Company as of the Effective Date which shall be delineated as
all areas within the leasehold or unit boundaries of the Company as of the
Effective Date plus two (2) miles beyond such boundaries and, with respect to
the Company's operations in Brazoria County, Texas, an area within the leasehold
or unit boundaries plus five (5) miles.  With respect to After-Acquired
Interests, the AMI surrounding such After-Acquired Interests shall be delineated
as all areas within the leasehold or unit boundaries of such After-Acquired
Interests plus two (2) miles beyond such boundaries.

                                       2
<PAGE>

     1.9.      "Articles of Organization" means the Articles of Organization of
                ------------------------
the Company, as filed with the New York State Department of State on April 20,
2000, as amended by Certificate of Amendment of Articles of Organization filed
with the New York State Department of State on October 4, 2000, and as the same
may be amended from time to time.

     1.10.     "Board of Managers" means the committee appointed by the Members
                -----------------
to oversee the management of the Company.

     1.11.     "Capital Account" means, with respect to any Member, the Capital
                ---------------
Account maintained for such Member in accordance with the following provisions:

               (a)  To each Member's Capital Account there shall be credited
     such Member's Capital Contributions and such Member's distributive share of
     Profits.

               (b)  To each Member's Capital Account there shall be debited the
     amount of cash and the net fair market value of any property distributed to
     such Member pursuant to any provision of this Agreement and such Member's
     distributive share of Losses.

               (c)  If any Membership Interest in the Company is transferred in
     accordance with the terms of this Agreement, the transferee shall succeed
     to the Capital Account of the transferor to the extent it relates to the
     transferred Membership Interest.

This definition and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury Regulations
in order to give substantial economic effect to all transactions, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
If the Board of Managers shall determine that it is prudent to modify the manner
in which the Capital Accounts, or any debits or credits thereto (including,
without limitation, debits or credits relating to liabilities that are secured
by contributed or distributed property or that are assumed by the Company or the
Members), are computed in order to comply with the Treasury Regulations, the
Board Managers may make such modification, provided that it is not likely to
have a material effect on the amounts distributable to any Interest Owner upon
the dissolution of the Company.

     1.12.     "Capital Contribution" means, with respect to any Member,
                --------------------
the amount of money and the net fair market value of any property (other than
money) contributed to the Company with respect to the Membership Interests held
by such Member.  The value of any property other than money that is contributed
to the Company shall be as agreed upon by the Board of Managers; provided,
however, that if the Board of Managers cannot agree, the value shall be
determined by appraisal at the expense of the Company.  The Capital Account of
the contributing Member will be credited with the amount of the contribution,
net of liabilities encumbering the Property at the time of the contribution.

     1.13.     "Code" means the Internal Revenue Code of 1986, as amended from
                ----
time to time (or any corresponding provisions of succeeding law).

     1.14.     "Commencement Date" means the date the Articles of Organization
                -----------------
were filed with the New York State Department of State.

     1.15.     "Company" means Elysium Energy, L.L.C., a limited liability
                -------
company formed under the Law.

                                       3
<PAGE>

     1.16.     "Designated Galesi Member" shall mean Rotterdam Ventures.
                ------------------------

     1.17.     "Designated Patina Member" shall mean Patina.
                ------------------------

     1.18.     "Disposition" means any sale, exchange, gift, distribution,
                -----------
assignment, Transfer or other disposition by a Member of all or any of its
Interests.

     1.19.     "Effective Date" means November 27, 2000.
                --------------

     1.20.     "Entity" means any general or limited partnership, corporation,
                ------
trust, business trust, limited liability company, company, cooperative,
association or any other entity.

     1.21.     "Extraordinary Circumstances" means extremely unusual, unforeseen
                ---------------------------
circumstances that endanger life or property and includes, without limitation,
any circumstance in which expenses incurred by the Company unexpectedly,
unforeseeably and unavoidably exceed the AFE authorization for the operation due
to geologic or environmental conditions, labor and/or material shortages or
emergencies such as fires, floods, storms, earthquakes, landslides, explosions
or other natural disasters.

     1.22.     "Galesi" means Francesco Galesi, an individual.
                ------

     1.23.     "Galesi Members" means Rotterdam Ventures and Galesi and any
                --------------
Affiliates or transferees thereof.

     1.24.     "Interest" means a Membership Interest.
                --------

     1.25.     "Interest Owner" means the owner of a Membership Interest.
                --------------

     1.26.     "Law" means the New York Limited Liability Company Law, N.Y.
                ---
Limited Liability Company Law, Chapter 34, et seq., as amended from time to
time.

     1.27.     "Major Decision" means those decisions of the Board of Managers
                --------------
set forth in Section 5.11 of this Agreement.
             ------------

     1.28.     "Majority" shall mean a simple majority, i.e., greater than
                --------
fifty percent.  In the case of a vote of the Members, the term shall mean
greater than fifty percent (50%) of the votes held by the Members.  In the case
of a vote of the Board of Managers, the term shall mean greater than fifty
percent (50%) of the Managers.

     1.29.     "Manager" means any Person or Persons appointed by a Member
                -------
to the Board of Managers in accordance with this Agreement to manage the
business and affairs of the Company on the terms provided in this Agreement.

     1.30.     "Member" means Galesi, Rotterdam Ventures and Patina and each of
                ------
the parties who hereafter becomes a Member in accordance with the terms hereof.

     1.31.     "Membership Interest" means a Member's entire interest in the
                -------------------
Company, including the right to its share of profits of the Company, and such
other rights and privileges that the Member may enjoy by virtue of being a
Member, as granted pursuant to the Articles of Organization, this Operating
Agreement or the Law. The Membership Interests of each of the Members shall be
stated as a percentage as provided in Section 3.3 of this Agreement.
                                      -----------

                                       4
<PAGE>

     1.32.     "Operating Agreement" means this Operating Agreement as
                -------------------
originally executed and as amended from time to time.  The Operating Agreement
is sometimes referred to as the "Agreement."
                                 ---------

     1.33.     "Patina" means Patina Oil & Gas Corporation.
                ------

     1.34.     "Patina Members" means Patina and any Affiliates or transferees
                --------------
thereof.

     1.35.     "Person" shall have the meaning assigned to it in the Law, and
                ------
shall include any natural person and any Entity.

     1.36.     "Profits" and "Losses" means, for each fiscal year or other
                -------       ------
period, an amount equal to the Company's profit or loss for such year or period,
determined in accordance with Code Section 703(a), including all items required
to be separately stated under Code Section 702(a)(1), and specifically including
any tax exempt income or gain and any gain or loss resulting from any
revaluation of assets as permitted by the Regulations, or any gain or loss with
respect to property whose book value differs from its adjusted tax basis.

     1.37.     "Profits Interest" and "Profits Interest Owner" shall have the
                ----------------       ----------------------
meaning set forth in Article XII.
                     -----------

     1.38.     "Project" means any exploration, development or production
                -------
activity or other activity related thereto located within the AMI, including,
without limit, the drilling of new wells, re-entry of existing wells,
implementation of secondary or tertiary recovery methods, the installation of
gathering systems, pipelines, compression facilities, dehydration facilities and
saltwater disposal facilities or the acquisition of properties.

     1.39.     "Reserves" means, with respect to any fiscal period, funds
                --------
set aside or amounts allocated during such period to reserves which shall be
maintained in amounts deemed sufficient by the Board of Managers for working
capital or other costs or expenses incident to the ownership or operation of the
Company's business.

     1.40.     "Rotterdam Ventures" means Rotterdam Ventures, Inc.
                ------------------

     1.41.     "Sale" means the sale or other Disposition of all or
                ----
substantially all of the assets of the Company.

     1.42.     "Securities Laws" means the Securities Act of 1933 and any
                ---------------
applicable state securities laws.

     1.43.     "Sharing Ratio" means the ratio of the percentage of Membership
                -------------
Interests held by a Member to the aggregate percentage of Membership Interests
held by all of the Interest Owners.

     1.44.     "Simulated Basis" means, with respect to any property subject to
                ---------------
Section 613A(c)(7)(D) of the Code, the "simulated basis" of the property
determined according to Section 1.704-1(b)(2)(iv)(k)(1), (2) and (4) of the
Treasury Regulations.

     1.45.     "Simulated Depletion" means, with respect to any property subject
                -------------------
to Section 613A(c)(7)(D) of the Code, the "simulated depletion" of the property
determined according to Section 1.704-1(b)(2)(iv)(k)(1), (2) and (4) of the
Treasury Regulations using the cost method of calculating depletion.

                                       5
<PAGE>

     1.46.     "Simulated Gain" means, with respect to any property subject to
                --------------
Section 613A(c)(7)(D) of the Code, the "simulated gain" of the property
determined according to Section 1.704-1(b)(2)(iv)(k)(1), (2) and (4) of the
Treasury Regulations.

     1.47.     "Simulated Loss" means, with respect to any property subject to
                --------------
Section 613A(c)(7)(D) of the Code, the "simulated loss" of the property
determined according to Section 1.704-1(b)(2)(iv)(k)(1), (2) and (4) of the
Treasury Regulations.

     1.48.     "Substituted Member" means any Person admitted to the Company as
                ------------------
a Member in connection with the acquisition of another Member's Membership
Interest pursuant to the terms of this Agreement.

     1.49.     "Tax Basis" means the adjusted tax basis for federal income tax
                ---------
purposes.

     1.50.     "Transfer" means, as a noun, any voluntary or involuntary
                --------
transfer, sale, pledge, hypothecation, encumbrance or other Disposition and, as
a verb, to voluntarily or involuntarily transfer, sale, pledge, hypothecate,
encumber or otherwise dispose of.

     1.51.     "Treasury Regulations" or "Treas. Regs." means the Income Tax
                --------------------      -----------
Regulations, including Temporary Regulations, promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

                                  ARTICLE II.
                          FORMATION AND ORGANIZATION
                          --------------------------

     2.1.      Formation and Name of the Company.  The Members hereby ratify and
               ---------------------------------
approve the Articles of Organization and the Certificate of Amendment of the
Articles of Organization filed with the New York State Department of State and
agree that the Company shall be organized and operated pursuant to and in
accordance with the Articles of Organization and the Certificate of Amendment of
Articles of Organization, the provisions of this Agreement and the Law, as such
may be amended from time-to-time.

     2.2.      Name.  The business of the Company shall be operated under the
               ----
name Elysium Energy, L.L.C., or such other trade name or names as may be
selected by the Board of Managers, subject to applicable law.

     2.3.      Purpose. The purpose of the Company shall be to
               -------

               (a)  explore for, develop and produce oil and natural gas;

               (b)  to sell, lease, assign, encumber, abandon, or transfer
     properties or assets of the Company or any interest therein as provided in
     this Agreement;

               (c)  to exercise all other powers necessary to or reasonably
     connected with the Company's business which may be legally exercised by
     limited liability companies under the Law; and

               (d)  to engage in all activities necessary, customary, convenient
     or incident to any of the foregoing.

                                       6
<PAGE>

     2.4.      Principal Place of Business.  The principal place of business of
               ---------------------------
the Company shall be located at 10077 Grogans Mill Road, The Woodlands, Texas.
The Board of Managers may change the principal place of business of the Company
to any other place.

     2.5.      Registered Office.  The registered office of the Company shall be
               -----------------
695 Rotterdam Industrial Park, Schenectady, New York 12306.  The Board of
Managers may change the registered office of the Company.

     2.6.      Term.  The term of the Company commenced on the Commencement Date
               ----
and shall continue thereafter until terminated as provided in this Agreement or
by operation of law.

                                 ARTICLE III.
                       MEMBERS AND CAPITAL CONTRIBUTIONS
                       ---------------------------------

     3.1.      Members.  The names and mailing addresses of the Members of the
               -------
Company are as follows:

                    PATINA OIL & GAS CORPORATION
                    1625 Broadway, Suite 2000
                    Denver, CO 80202

                    FRANCESCO GALESI
                    P.O. Box 98
                    Guilderland Center, NY 10085

                    ROTTERDAM VENTURES, INC.
                    P.O. Box 98
                    Guilderland Center, NY 10085

A Member may change its address for all purposes under this Agreement by giving
written notice of such change to the Company and to each of the Managers of the
Company.

     3.2.      Additional Members.  Except as otherwise set forth herein, no
               ------------------
Additional or substituted Member (including a transferee or other successor to
all or any portion of the Membership Interest of a Member) may be admitted as a
Member of the Company without the written consent of a Majority of the Members.
By execution hereof, the Galesi Members hereby consent to the admission of
Patina as a Member.

     3.3.      Membership Interests. The Membership Interests of the Members are
               --------------------
as follows:

                    Member               Membership Interest
                    ------               -------------------

                    Patina                         50.00%
                    Galesi                         40.00%
                    Rotterdam Ventures             10.00%

                                       7
<PAGE>

                                  ARTICLE IV.
                                    MEMBERS
                                    -------

     4.1.      Limitation of Liability.  Each Member's liability shall be
               -----------------------
limited as set forth in this Agreement, the Law and other applicable law.

     4.2.      Company Debt Liability.  A Member will not be personally liable
               ----------------------
for any debts or losses of the Company beyond his respective Capital
Contributions and any obligation of the Member under this Agreement to make
additional Capital Contributions, except as provided herein or as otherwise
required by law.

     4.3.      Company Books.  The Board of Managers shall cause the Company to
               -------------
maintain and preserve, during the term of the Company, and for five (5) years
thereafter, all accounts, books, and other relevant Company documents.  In
addition to those rights afforded Members under the Law, upon reasonable notice,
each Member shall have the right, during ordinary business hours, to inspect and
copy such Company documents at the expense of the requesting Member.

     4.4.      Priority and Return of Capital.  Except as may be expressly
               ------------------------------
provided in this Agreement, no Member shall have priority over any other Member,
either as to the return of Capital Contributions or as to Net Profits, Net
Losses or any distributions; provided that this Section shall not apply to loans
(as distinguished from Capital Contributions) which a Member has made to the
Company.

     4.5.      Liability of a Member to the Company.  A Member who receives any
               ------------------------------------
distribution is liable to the Company only to the extent now or hereafter
provided by the Law.

     4.6.      Appointment of Designated Galesi Member.  Rotterdam Ventures
               ---------------------------------------
shall be the "Designated Galesi Member".  Any action required or permitted
              ------------------------
herein by the Galesi Members, including, without limitation, voting at annual or
special meetings of the Members, the appointment of Managers and any other
business to come before the Members of the Company shall be taken by the
Designated Galesi Member on behalf of and for the benefit or detriment of all
Galesi Members.

     4.7.      Appointment of Designated Patina Member.  Patina shall be the
               ---------------------------------------
"Designated Patina Member."  Any action required or permitted herein by the
 ------------------------
Patina Members, including, without limitation, voting at annual or special
meetings of the Members, the appointment of Managers and any other business to
come before the Members of the Company shall be taken by the Designated Patina
Member on behalf of and for the benefit or detriment of all Patina Members.

     4.8.      Annual Meeting of Members.  An annual meeting of the Members for
               -------------------------
the transaction of all business that may come before the Members may be called
by the Board of Managers and may be held on such day and at such time during the
period within six (6) months after the close of each business year of the
Company.  If the annual meeting of Members is not held within the period above
specified, either the Designated Galesi Member or the Designated Patina Member
may call a special meeting of the Members in lieu thereof to be held no sooner
than five (5) days but not more than thirty (30) days following written notice
of a special meeting, and any business transacted or election held at such
meeting shall be valid as if held at the annual meeting.  Failure to hold the
annual meeting at the designated time shall not cause a dissolution of the
Company.

     4.9.      Notice of Meeting.  Written notice stating the place, day and
               -----------------
hour of the meeting, and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be

                                       8
<PAGE>

delivered not less than five (5) days before the date of the meeting,
personally, by mail or overnight courier, by or at the direction of the Board of
Managers or the Member calling the meeting, to each Member of record entitled to
vote at such meeting.

     4.10.     Place of Meeting.  The Board of Managers may designate any place
               ----------------
as the place for any annual meeting or for any special meeting of Members. If no
designation is made, or if a special meeting shall be called otherwise than by
the Board of Managers, the place of meeting shall be the principal place of
business of the Company.

     4.11.     Telephonic Meetings.  The Members may participate in and hold any
               -------------------
meeting of the Members by means of telephonic conference or similar
communications equipment and presence by telephone or other communication method
shall constitute attendance for all purposes. Meetings of the Members shall be
held in a location that will permit participation by telephone.

     4.12.     Quorum.  The presence in person, by telephone or by proxy of
               ------
Members holding collectively at least fifty-one percent (51%) of the Membership
Interests entitled to vote shall constitute a quorum of Members at any meeting
of Members.

     4.13.     Manner of Acting.  If a quorum is present, the affirmative vote
               ----------------
of a Majority shall be the act of the Members, unless the vote of a greater
proportion, number or voting per capita or by classes is required by the Law,
the Articles of Organization, or this Agreement. The Designated Galesi Member
and the Designated Patina Member shall each vote.

     4.14.     Voting.  Each Member shall be entitled to cast one vote for each
               ------
one percent (1%) of Membership Interest in the Company owned by such Member, but
only through the Designated Galesi Member and the Designated Patina Member. Any
vote cast by a Member that is an Entity shall be cast by an officer of such
Member seated at the Vice President level or higher. Any Membership Interest of
a fraction of a percentage shall also hold an equal fraction of one vote. Unless
the decision requires other than Majority approval as required by the Law, the
Articles of Organization or this Agreement, decisions concerning the Company by
the Members must be approved by a Majority.

     4.15.     Actions Without a Meeting.  Subject to this Agreement and all
               -------------------------
applicable laws, any action required by the Law to be taken at any annual or
special meeting of the Members, or any action which may be taken at any annual
or special meeting of the Members, may be taken without a meeting, without prior
notice, and without a vote, if consent or consents in writing, setting forth the
action so taken, shall have been signed by a Majority. Prompt notice of such
consents shall be provided to all non-consenting Members.

     4.16.     Proxies.  At all meetings of Members, by execution hereof, all
               -------
Patina Members hereby provide their proxy to the Designated Patina Member;
likewise, all Galesi Members hereby provide their proxy to the Designated Galesi
Member.

     4.17.     No Conflicting Agreements.  No Member shall grant nor be a party
               -------------------------
to any proxy, voting trust or other agreement that is inconsistent with or
conflicts with the provisions of this Agreement.

     4.18.     Waiver of Notice.  When any notice is required to be given to any
               ----------------
Member, waiver thereof in writing signed by the Member entitled to such notice,
whether before, at or after the time of the meeting stated in the notice, shall
be equivalent to the giving of such notice.

                                       9
<PAGE>

     4.19.     Actions Reserved to Members.  Notwithstanding anything in this
               ---------------------------
Agreement to the contrary, the Majority vote of the Members shall be required
for the Company to take any of the following actions:

               (a)  Any Sale, lease or other Transfer or Disposition of all or
     substantially all of the assets of the Company as part of a single
     transaction or plan;

               (b)  Any merger or consolidation of the Company with or into any
     other Entity;

               (c)  On or before December 31, 2002, dissolution of the Company;

               (d)  Except as set forth in Section 13.2 or 13.4, the admission
                                           --------------------
     of any Person as an Additional Member;

               (e)  The issuance of additional Interests to existing Members or
     Additional Members;

               (f)  The Transfer of an Interest by any Member pursuant to
     Section 13.1;
     ------------

               (g)  Any redemption, purchase or other acquisition, directly or
     indirectly, of all or part of any Membership Interest;

               (h)  Any amendment of this Agreement; and

               (i)  Any amendment of the Articles of Organization of the
     Company.

     4.20.     Audit.  Upon notice in writing to the Board of Managers, each
               -----
Member shall have the right to audit the Company's accounts and records relating
to the accounting hereunder for any calendar year requested within the later of
(a) nine (9) months after receipt by the Member of the annual audited financial
statements of the Company, or (b) the end of the calendar year following the
calendar year covered by such audited financial statements. Any audit conducted
hereunder by a Member shall be completed and any claims by a Member shall be
presented to the Board of Managers on or before June 30 of the second calendar
year after the calendar year covered by the annual audited financial statements
described herein.

     4.21.     Management of the Assets.  The business affairs and assets of the
               ------------------------
Company shall be managed by Members through the Board of Managers as set forth
in this Agreement. Absent authorization pursuant to this Agreement, no Member
shall have the authority to bind the Company. The Board of Managers shall have
sole authority over Major Decisions of the Company. As set forth herein, the
day-to-day operations of the Company shall be directed by the Officers of the
Company, who shall serve at the direction and control of the Board of Managers.

                                  ARTICLE V.
                               BOARD OF MANAGERS
                               -----------------

     5.1.      Responsibilities.  The overall management and control of the
               ----------------
Company shall be vested in the Board of Managers.  No individual Manager
appointed hereunder shall have, by reason of that Person's status as a Manager,
have any authority to act for or bind the Company but shall have only the right
to vote on or approve the actions herein specified to be voted on or approved by
such Manager.

                                       10
<PAGE>

     5.2.      Composition of Board of Managers.  The Board of Managers shall
               --------------------------------
consist of no more than six (6) representatives appointed by the Members.
Patina and Galesi each shall appoint up to three (3) Managers to the Board of
Managers.  Additional Members shall only have the right to appoint Managers to
the Board of Managers if, at the time such Additional Members join the Company,
the existing Members agree by a Majority to allow the Additional Member
representation on the Board of Managers.  For purposes hereof, the Board of
Managers appointed under this Operating Agreement shall consist of the following
Persons:

               Galesi Board of Managers Appointees:    Francesco Galesi
                                                       Steven K. Porter
                                                       David M. Buicko

               Patina Board of Managers Appointees:    Thomas J. Edelman
                                                       Jay W. Decker
                                                       David J. Kornder

     5.3.      Removal of Manager. A Manager may be removed from the Board of
               ------------------
Managers only by the Member that appointed such Manager.  In the event a Member
removes a Manager it shall provide written notification of such action to the
other Members. Any vacancy created by the removal of a Manager may be filled
only by the Member that was entitled to appoint such former Manager.

     5.4.      Vacancy.  In the event a vacancy is created on the Board of
               -------
Managers by reason of the death, disability or resignation of a Manager or for
any other reason, such vacancy shall be filled only by the Member having
authority to appoint such former Manager.

     5.5.      Voting.  Each Manager shall have one (1) vote on all matters
               ------
presented for vote of the Board of Managers.  Except when the terms of the
Articles of Organization, this Agreement or applicable law requires a unanimous
vote, the Board of Managers shall make decisions for the Company on a Majority
vote.  The Managers will work in good faith to resolve deadlocks; in the event
of a deadlock, the Managers shall exhaust all reasonable options, including
mediation, to break a deadlock.

     5.6.      Proxies.  At all meetings of the Board of Managers, a Manager may
               -------
vote by proxy executed in writing by the Manager.  Such proxy shall be filed
with any Manager of the Company before or at the time of the meeting.

     5.7.      Meetings of Board of Managers.  Meetings of the Board of Managers
               -----------------------------
shall be held quarterly or at such other interval and in such manner and
location as the Board of Managers may decide.  Meetings, unless otherwise
agreed, shall be held at the Company's principal place of business.  The
Designated Galesi Member or Designated Patina Member may call a special meeting
of the Board of Managers upon five (5) days prior written notice to each
Manager.  The Company shall reimburse each Manager for all proper and necessary
costs and expenses incurred in connection with such Manager's attendance and
participation at meetings of the Board of Managers.

     5.8.      Telephonic Meetings.  The Board of Managers may participate in
               -------------------
and hold any meeting by means of telephonic conference or similar communications
equipment and presence by telephone or other communication method shall
constitute attendance for all purposes.  Board of Managers meetings shall be
held at facilities allowing participation by telephone.

                                       11
<PAGE>

     5.9.      Quorum.  The presence in person, by telephone or by proxy of at
               ------
least fifty-one percent (51%) of the Managers shall constitute a quorum.

     5.10.     Actions Without a Meeting.  Any matter under this Agreement
               -------------------------
requiring a decision of the Board of Managers may be submitted to the Board of
Managers for consideration and vote without holding a meeting, without prior
notice, and without a vote, if consent or consents in writing, setting forth the
action so taken, shall have been signed by a Majority.  Prompt notice of such
consents shall be provided to non-consenting Managers.

     5.11.     Major Decisions.  Except as otherwise provided herein, no act
               ---------------
shall be taken, money expended nor an obligation incurred on behalf of the
Company with respect to a matter within the scope of any of the Major Decisions
described immediately below unless such Major Decision shall have been approved
by a Majority of the Board of Managers. Major Decisions include the following:

               (a)  Any call for additional Capital Contributions;

               (b)  Except for borrowings or advances under the existing $60
     million credit facility of the Company, any replacement credit facility
     approved by the Board of Managers, or establishing a Letter of Credit or
     bonding in connection with the closing of the transaction described in
     Recital "B", financing by the Company, including the borrowing of money or
     -----------
     encumbering of Company property, in excess of One Hundred Thousand Dollars
     ($100,000.00);

               (c)  Any Project involving a capital expenditure in excess of One
     Million Five Hundred Thousand Dollars ($1,500,000.00) that was approved by
     the Board of Managers in an Annual Budget;

               (d)  Any Project involving a capital expenditure in excess of
     Seven Hundred Fifty Thousand Dollars ($750,000.00) that was not approved by
     the Board of Managers in an Annual Budget;

               (e)  The sale, lease or other transfer of assets of the Company
     with an aggregate value greater than One Million Five Hundred Thousand
     Dollars ($1,500,000.00) or any sale, lease or other transfer of assets of
     the Company exceeding Five Hundred Thousand Dollars ($500,000.00) after the
     aggregate of all sales, leases or other transfers of assets by the Company
     during the calendar year is greater than Five Million Dollars
     ($5,000,000.00);

               (f)  Any contract, agreement, lease or other instrument creating
     an aggregate obligation upon the Company exceeding One Million Dollars
     ($1,000,000.00);

               (g)  The annual approval of hedging strategies of the Company as
     part of the Annual Budget and any liability or agreements to effectuate
     hedging strategies;

               (h)  The prosecution, defense or settlement of any claims by or
     against third parties, lawsuits, arbitration, mediation or administrative
     actions related to the activities of the Company where the amount in
     controversy exceeds or the cost and expense is expected to exceed Five
     Hundred Thousand Dollars ($500,000.00);

                                       12
<PAGE>

               (i)  The hiring of engineering, accounting, legal or consulting
     firms when the cost of a project is expected to exceed Two Hundred Fifty
     Thousand Dollars ($250,000.00);

               (j)  The confessing of a judgment against the Company, except in
     connection with mortgages on assets of the Company located in Louisiana for
     purposes of executory process;

               (k)  Approval of the Annual Budget or any amendments thereto;

               (l)  Approval of any AFE in an amount greater than One Million
     Five Hundred Thousand Dollars ($1,500,000.00) if such AFE is for a Project
     approved by the Board of Managers in the Annual Budget or Seven Hundred
     Fifty Thousand Dollars ($750,000) if such AFE is for a Project not approved
     by the Board of Managers in the Annual Budget;

               (m)  The amendment of this Agreement;

               (n)  The amendment of the AMI;

               (o)  Approval of the opening of accounts for the Company by an
     Officer and the designation of the individuals having signature authority
     on the account;

               (p)  Authorizing any Member to compete with the Company within
     the AMI as further described in Section 8.3; and
                                     -----------

               (q)  Any other matters which the Board of Managers hereafter
     determines shall require the consent of the Board of Managers as a Major
     Decision.

The Board of Managers and the Managing Director and President shall aggregate
similar or related projects and/or contracts for purposes of determining whether
the threshold amount of any Major Decision described in subsections (a) through
(q) above is met for the purpose of requiring Board of Manager approval.  Upon
Board of Manager approval of any such projects or contracts or aggregated
projects or contracts, the amounts for such projects or contracts or the
aggregated amounts for such projects or contracts for purposes of determining
the threshold amounts will be cleared to a zero balance.

     5.12.     Liability and Indemnification of Board of Managers.  The
               --------------------------------------------------
management, conduct and operation of the Company's business shall be at the
expense and risk of the Company and not at the expense or risk of any Manager
seated on the Board of Managers.  No Manager shall be liable, responsible or
accountable in damages or otherwise to the Company or any Member for any action
taken or failure to act (even if such action or failure to act constitute simple
negligence) on behalf of the Company within the scope of the authority conferred
on the Board of Managers by this Agreement or by law, unless such act or
omission was performed or omitted fraudulently, in bad faith or constituted
gross negligence.  Each Manager shall be entitled to indemnification by the
Company from liabilities for damages to the maximum extent permitted under the
Law unless such liability arises out of an act or omission that was performed or
omitted fraudulently, in bad faith or constituted gross negligence.

     5.13.     Delegation of Duties to Officers.  The Board of Managers may
               --------------------------------
expressly delegate day-to-day duties to the Officers in addition to those
specifically delegated herein.  In the event a

                                       13
<PAGE>

Manager is also an Officer, such Officer shall excuse himself from Board of
Managers decisions regarding appointment and employment matters concerning such
Officer.

                                  ARTICLE VI.
                                   OFFICERS

     6.1. Officers.  The Board of Managers may appoint Officers of the Company,
          --------
as agents of the Company, to carry out the day-to-day activities of the Company
and to implement decisions and policies of the Board of Managers.  Such Officers
may be, at the discretion of the Board of Managers, the Managing Director,
President, Vice President, Secretary and Treasurer.  The Board of Managers may
also appoint other Officers in accordance with the provisions of Section 6.3 of
                                                                 -----------
this Article VI.  Any number of offices may be held by the same person.
     ----------
Notwithstanding any other provisions of this Agreement, all actions and
authorities of the Officers shall be subject to the direction, review and
control of the Board of Managers.

     6.2. Election of Officers.  The Officers of the Company shall be chosen by
          --------------------
the Board of Managers and each shall serve at the pleasure of the Board of
Managers without prejudice to any contract of employment between the Officer and
the Company.

     6.3. Additional Officers.  The Board of Managers may appoint and may
          -------------------
empower the Managing Director and/or President to appoint such additional
Officers as the business of the Company may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in this Agreement or as the Board of Managers (or, to the extent the
power to prescribe authorities and duties of additional Officers is delegated to
them, the Managing Director and President) may from time to time determine.

     6.4. Removal and Resignation of Officers.  Without prejudice to any
          -----------------------------------
contract of employment, any Officer may be removed, with or without cause, by
the Board of Managers (or, to the extent the power to prescribe authorities and
duties of additional Officers is delegated to them, the Managing Director and
President) at any regular or special meeting of the Board of Managers or by such
Officer, if any, upon whom such power of removal may be conferred by the Board
of Managers.  Any Officer may resign at any time by giving written notice to the
Company.  Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice, and unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective.  Any resignation is without prejudice to the
rights, if any, of the Company under any employment contract to which the
Officer is a party.

     6.5. Vacancies in Offices.  A vacancy in any office because of death,
          --------------------
resignation, removal, disqualification or other cause shall be filled by the
Board of Managers.  The President and Managing Director may, jointly, make
temporary appointments to a vacant office reporting to the President pending
action by the Board of Managers.

     6.6. Managing Director.  The Managing Director, subject to the control of
          -----------------
the Board of Managers and this Agreement, shall have the joint responsibility
with the President over the general supervision, direction and control of the
business of the Company.  The Managing Director shall have no singular authority
to incur expenses associated with the normal operating and maintenance of the
Company.  The Managing Director shall have such other responsibilities and
authorities as the Board of Managers may prescribe.  The Managing Director and
the President shall have the authority to jointly approve all capital
expenditures and AFE's of the Company with a cost

                                       14
<PAGE>

greater than One Hundred Thousand Dollars but less than the Major Decision
spending levels set forth in Section 5.11.
                             ------------

     6.7. President.  The President, subject to the control of the Board of
          ---------
Managers, shall have the joint responsibility with the Managing Director over
the general supervision, direction and control of the business of the Company
and shall have the responsibility over the Officers of the Company.  He or she
shall have the general powers and duties of management usually vested in the
office of President of a business entity and shall have such other powers and
duties as may be prescribed by the Board of Managers or this Agreement.  The
President shall have the singular authority to incur expenses associated with
the normal operating and maintenance of the Company up to One Hundred Thousand
Dollars ($100,000).  The President shall have the joint authority with the
Managing Director to approve all capital expenditures and AFE's of the Company
with a cost greater than One Hundred Thousand Dollars but less than the Major
Decision spending levels set forth in Section 5.11.  The duties of the President
                                      ------------
shall include compliance with the following items, certain of which items are
subject to the concurrence of the Managing Director as set forth in Section 6.6
                                                                    -----------
and all of which are subject to review and/or change by the Board of Managers:

          (a) Execution, performance and implementation of contracts affecting
     the Company in accordance with this Agreement;

          (b) Acquisition of any and all rights-of-way, permits, authorizations
     and licenses that may be necessary or useful for the conduct of the
     business of the Company;

          (c) Rendering for payment of all severance and ad valorem taxes,
     assessments, and other impositions applicable to the property owned by the
     Company;

          (d) Maintenance of all books of accounts and other records of the
     Company;

          (e) Retaining on behalf of the Company and coordinating the rendering
     of services by all consultants, engineers, accountants and attorneys
     (except as to matters arising out of a disagreement among the Members)
     necessary or appropriate;

          (f) Payment of all debts and other obligations of the Company to the
     extent funds are available;

          (g) Execution on behalf of the Company of all instruments and
     documents (subject to the direction of the Board of Managers if such
     instruments or documents constitute Major Decisions or the concurrence of
     the Managing Director if such instruments and documents require joint
     execution), including, without limitation, checks, drafts, notes and other
     negotiable instruments; mortgages or deeds of trust; security agreements;
     financing statements; documents providing for the acquisition, mortgaging
     or Disposition of the Company's property; assignments; bills of sale;
     leases; partnership agreements, operating agreements of other limited
     liability companies; and any other instruments or documents necessary, in
     the opinion of the President, to the business of the Company;

          (h) Distribution of funds to the Members in accordance with the
     provisions of this Agreement;

                                       15
<PAGE>

            (i) Performance of other routine business functions, operations and
     management of the day-to-day business and affairs of the Company in
     accordance with and as limited by the provisions of this Agreement;

            (j) Preparation of the Annual Budget;

            (k) Operation and maintenance of the assets of the Company in
     compliance with all applicable rules and regulations of the governmental
     authorities having jurisdiction;

            (l) Acquisition and maintenance of policies of insurance on behalf
     of the Company; and

            (m) In the event of an Extraordinary Circumstance, the taking of
     such action and the making of such expenditures as may be necessary and
     proper, in the President's judgment, for the protection of life and
     property; provided, however, as soon as practicable, the President shall
     notify the Board of Managers of the nature of the Extraordinary
     Circumstance and any actions taken.

     6.8.   Senior Vice President, Chief Financial Officer and Treasurer.  The
            ------------------------------------------------------------
Senior Vice President, Chief Financial Officer and Treasurer of the Company
shall initially be the same person and such person shall keep and maintain or
cause to be kept and maintained adequate and correct books and records of
accounts of the properties and business transactions of the Company. The books
of account shall at all reasonable times be open to inspection by each Manager
and each Member.  The Senior Vice President, Chief Financial Officer and
Treasurer shall deposit all monies and other valuables in the name and to the
credit of the Company with such depositaries as may be designated by the Board
of Managers.  He or she shall disburse the funds of the Company as may be
ordered by the Board of Managers, shall render to the President and the Board of
Managers, whenever they request it, an account of all of his or her transactions
as chief financial officer and of the financial condition of the Company and
shall have other powers and perform such other duties as may be prescribed by
the Board of Managers, President or this Agreement.

     6.9.   Vice President.  The Vice President, if any, or, if there are more
            --------------
than one, the Vice Presidents in the order determined by the Board of Managers
or President shall be the Officer or Officers next in order of authority after
the President.  Each Vice President shall have such authority and duties as are
prescribed by the Board of Managers, President or this Agreement.

     6.10.  Secretary.  The Secretary shall keep or cause to be kept at the
            ---------
principal place of business of the Company, or such other place as the Board of
Managers may direct, a book of minutes of all meetings and actions of the Board
of Managers, committees or other delegates of the Board of Managers.  The
Secretary shall keep or cause to be kept at the principal place of business of
the Company a register or a duplicate register showing the names of all Members
and their addresses, the class and percentage interests in the Company held by
each, the number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for cancellation.  The
Secretary may, and upon request, shall give or cause to be given notice of all
meetings of the Members and of the Board of Managers (or committees or other
delegates thereof) required to be given by this Agreement or by applicable law
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Managers, President or this Agreement.

                                       16
<PAGE>

     6.11.  Indemnification of Officers.  The Officers will be indemnified by
            ---------------------------
the Company against all costs and expenses incurred by them in connection with
the defense of any action, suit or proceeding in which they may be involved or
to which they may be made a party by reason of being or having been an Officer,
agent or employee of the Company to the fullest extent permitted by the Law, as
is now or hereafter amended.

                                  ARTICLE VII
                           ANNUAL BUDGETS AND AFE's
                           ------------------------

     7.1.   Annual Budgets.  The Company shall prepare and the Board of Managers
            ---------------
shall review, revise, if necessary, and approve Annual Budgets as follows:

            (a) Each budget period shall be for twelve (12) consecutive months
     expiring on December 31 of each year.  During the thirty (30) day period
     prior to November 1 of each calendar year, the President, in cooperation
     with the Managing Director and the Chief Financial Officer, and his or her
     delegees will consult with the Board of Managers concerning the proposed
     budget for the next calendar year. The President, in cooperation with the
     Managing Director and the Chief Financial Officer, shall submit to the
     Board of Managers not later than December 1 of each year a proposed Annual
     Budget for the next calendar year showing (i) the Projects and other work
     to be undertaken along with the projected costs of such Projects; (ii)
     employees and contract personnel required; (iii) projected operating
     expenses for ongoing maintenance and operation of the assets of the
     Company; and (iv) such other information as the Board of Managers may
     reasonably require.  Each proposed Annual Budget shall be subject to
     consideration, revision and approval by the Board of Managers.  The Board
     of Managers shall consider such proposed Annual Budget and approve the same
     with such revisions thereto as the Board of Managers may require as soon as
     practicable but in any event not later than December 15/th/.  The Board of
     Managers' approval of an Annual Budget shall authorize and oblige the
     Company to proceed with such Annual Budget.  The parties recognize that the
     foregoing schedule will be modified, as necessary, for the 2001 budget
     year.

            (b) The Annual Budgets provided for herein are for planning purposes
     and to allow each Member and the Board of Managers to anticipate the level
     of activity that may be proposed for the budget year.  During the course of
     the budget year, the President shall present AFE's for the Projects to the
     Board of Managers for approval subject to the provisions of the subsequent
     provisions of this Agreement.

     7.2.   Authorization for Expenditure.
            -----------------------------

            (a) AFE Approvals.  Except for Extraordinary Circumstances, the
                -------------
     President, before incurring any expenditure or entering into any commitment
     for the account of the Company which would be considered a Major Decision,
     shall submit an AFE to the Board of Managers for approval.  To the extent
     the Board of Managers approves an AFE, the President shall be authorized
     and obliged, in accordance with this Agreement, to proceed with such
     commitment or expenditure on behalf of the Company.  In case of
     Extraordinary Circumstances, the President may take such steps and incur
     such expenses as in its reasonable opinion are required to deal with the
     Extraordinary Circumstance to safeguard life and property, but the
     President, as promptly as possible, shall report the Extraordinary
     Circumstance to the Board of Managers and, to the extent the further work
     or other operations necessary in connection with such Extraordinary
     Circumstance constitutes a

                                       17
<PAGE>

     Major Decision or is outside of the then approved Annual Budget, submit an
     AFE for such further work or operations to the Board of Managers for
     approval.

          (b) AFE Response Time.  The Board of Managers shall have fifteen (15)
              ------------------
     days from receipt of an AFE covering a Major Decision in an approved Annual
     Budget within which to approve or disapprove the amount of the AFE and
     fifteen (15) days from receipt of an AFE related to a Major Decision not in
     an approved Annual Budget within which to approve or disapprove or such
     lesser time as may be required under the circumstances.  The Board of
     Managers' failure to approve an AFE shall be deemed the disapproval of such
     AFE.

     7.3. Board of Managers Disapproval.  In the event the Board of Managers
          -----------------------------
decides not to approve a Project, a Member whose Board of Managers
representatives voted to approve such Project may elect to undertake such
Project on its own or with other Members. In such event, such Member may
undertake such Project for its own account, free from interference or
accountability to the other Member. In such an event, however, nothing within
this Agreement shall preclude or prohibit such Member from contracting with the
Company for services related to such interests.

                                 ARTICLE VIII
                            AREA OF MUTUAL INTEREST
                            -----------------------

     8.1. Creation of AMI.  The Members hereto create an Area of Mutual Interest
          ---------------
comprised of the areas identified in Section 1.8.
                                     -----------

     8.2. Term.  The term of the AMI will extend for so long as Patina and its
          ----
Affiliates, in the aggregate, own at least fifteen percent (15%) of the
Membership Interests to the Company and Galesi and Rotterdam Ventures and their
respective Affiliates own, collectively and in the aggregate, at least fifteen
percent (15%) of the Membership Interests to the Company.

     8.3. Non-Compete Within the AMI.  Except as provided herein, during the
          --------------------------
term of the AMI, a Member may not compete with the Company in the exploration,
development or production of oil or gas or their constituents (including coalbed
methane) within the AMI without the approval of a Majority of the Board of
Managers, nor may such Member allow an Affiliate to so compete.  For purposes
hereof, the term "compete with the Company" shall mean the ownership or
                  ------------------------
operation of an interest in an exploration, development or production activity
within the AMI or of an interest in any business or venture engaged in an
exploration, development or production activity within the AMI; provided,
                                                                --------
however, that nothing within this Article VIII is intended nor shall it preclude
-------                           ------------
a Member from acquiring any such interests on the condition that such Member
complies with the terms of this Article VIII with respect to such interests.
                                ------------

     8.4. Activities Within the AMI.  If, during the term of the AMI, any Member
          -------------------------
or its Affiliate acquires or is contemplating the acquisition of an interest
(including, without limitation, the acquisition of a controlling interest in an
Entity with interests within the AMI) that competes with the Company (as defined
in Section 8.3), such Member (the "Acquiring Member") shall notify the Board of
   -----------                     ----------------
Managers representatives of the non-acquiring Members (the "Non-Acquiring
                                                            -------------
Member") of the acquisition or contemplation of the acquisition of such
interests.  Such notice shall be in writing and shall include the following:

          (a) A statement of the acquisition costs of the interests within the
     AMI;

                                       18
<PAGE>

          (b) A plat setting forth the location of the interests;

          (c) A summary of existing and potential wells comprising the
     interests;

          (d) A summary of reserve data and proposed future drilling which
     support the investment in the interests;

          (e) A financial report setting forth projected profitability of the
     interests including projected operating costs and revenues;

          (f) If the acquisition is a part of a larger acquisition or is of a
     controlling interest in an Entity, a fair and reasonable allocation of the
     value ascribed to the interests acquired or to be acquired that are within
     the AMI or that are held or to be held by the Entity that are within the
     AMI; and

          (g) Any other projections, evaluations or other information deemed
     useful to the Board of Managers to evaluate the investment in the
     interests.

After receiving the information described in subsections (a) through (f) above,
the Non-Acquiring-Member shall have thirty (30) days within which to determine
whether the Company shall acquire all or none of such interests located within
the AMI.  If the Non-Acquiring Member elects to have the Company acquire all of
such interests, then, within sixty (60) days of the Acquiring Member's
acquisition, the Acquiring Member shall cause the Company to acquire such
interests on the noticed terms and conditions.  If the Non-Acquiring Member
elects not to have the Company acquire all of such interests, the Acquiring
Member shall be permitted to acquire such interests for its own account and own
and operate such interests without interference or accountability to the
Company.  In such an event, however, nothing within this Agreement shall
preclude or prohibit such Member from contracting with the Company for services
related to such interests.  Notwithstanding the foregoing, in the event the
Acquiring Member provides the notice described above to the Non-Acquiring Member
prior to the acquisition of the interests and the Non-Acquiring Member elects
not to have the Company acquire all of the interests within the AMI and upon
closing of such transaction the terms and conditions of such acquisition are
materially different than those previously noticed to the Non-Acquiring Member,
the Acquiring Member shall re-notify the Non-Acquiring Member, which
notification and the Non-Acquiring Member's rights following such re-
notification shall be the same as those set forth above.

     8.5. Outside the AMI.  The terms and conditions of this Article VIII shall
          ---------------                                    ------------
apply to any interests situated within the boundaries of the AMI.  Any interests
situated outside of the boundaries of the AMI shall not be subject to this
Article VIII and a Member shall be free to undertake any activities located
------------
outside the AMI for its own account free from interference or accountability to
the other Member.  In such an event, however, nothing within this Agreement
shall preclude or prohibit such Member from contracting with the Company for
services related to such interests.

     8.6. After-Acquired Interests.  The AMI shall be expanded after the
          ------------------------
Effective Date to apply to all After-Acquired Interests of the Company;
provided, however, that the non-competition restriction set forth in Section 8.3
--------  -------                                                    -----------
above shall not apply to any interests owned or operated by a Member within the
AMI as of the date the Company acquires such After-Acquired Interests.

                                       19
<PAGE>

                                  ARTICLE IX
                       ADDITIONAL CAPITAL CONTRIBUTIONS
                       --------------------------------

     9.1.  Additional Capital Contributions. Each Member shall contribute its
           --------------------------------
proportionate share of any additional Capital Contribution, based upon its
Sharing Ratio, of the funds approved by a Majority of the Board of Managers, in
cash, wired to the Company account within ten (10) days after written request
therefor made by the Board of Managers.  Such Capital Contributions shall be
credited to the Members' respective capital accounts.

     9.2.  Capital Contribution Default/Non-Consent. If a Member fails to make a
           ----------------------------------------
Capital Contribution within ten (10) days after it is due, the Board of Managers
(excluding the representatives of such defaulting Member) may cause the Company
to abandon the Project or operations. Alternatively, the remaining Member (the
"Consenting Member") may declare that the non-paying Member (the "Non-Consenting
 -----------------                                                --------------
Member") has elected to "Non-Consent" the Project or operations. The Consenting
------                   -----------
Member may elect to proceed with the Project or operations and pay all of the
Capital Contributions that the Non-Consenting Member failed to pay. In such
event, the Non-Consenting Member shall forfeit the right to participate in the
Project or operations and shall forego its proportionate share of all income
from the Project until the Consenting Member has recovered three hundred percent
(300%) of the Capital Contributions the Non-Consenting Member failed to or
elected not to pay. All tax attributes relating to any such Capital Contribution
shall be allocated to the Consenting Member.

                                  ARTICLE X.
                               CAPITAL ACCOUNTS
                               ----------------

     10.1. Separate Capital Accounts. A separate Capital Account shall be
           -------------------------
maintained for each Member.  Capital Accounts shall be maintained in a manner
corresponding to the capital of the Members as reported by the Company for
federal income tax purposes, and in accordance with the requirements of Treas.
Reg. (S)1.704-1(b)(2)(iv).  The Capital Accounts of the Members as of the date
first stated above shall be as set forth in Exhibit "A".  Patina shall make a
                                            -----------
Capital Contribution of $21 million contemporaneous with the closing of the
transaction described in Recital "B", which Capital Contribution is reflected in
                         -----------
Exhibit "A".
-----------

     10.2. Transfer of Interest.  In the event of a permitted sale or exchange
           --------------------
of an Interest in the Company in accordance with Article XII of this
Agreement, the Capital Account of the transferor shall become the Capital
Account of the transferee to the extent it relates to the transferred Interest
in accordance with Section 1.704-1(b)(2)(iv) of the Treas. Regs.

     10.3. Compliance with Code. The manner in which Capital Accounts are to be
           --------------------
maintained pursuant to this Agreement is intended to comply with the
requirements of Section 704(b) of the Code and the Treas. Regs. promulgated
thereunder. If, in the opinion of the Company's accountants, the manner in which
the Capital Accounts are to be maintained pursuant to the preceding provisions
of this Article should be modified in order to comply with Section 704(b) of the
Code and the Treas. Regs., then notwithstanding anything to the contrary
contained in this Article, the method in which Capital Accounts are maintained
shall be so modified; provided, however, that any change in the manner of
maintaining Capital Accounts shall not materially alter the economic agreement
between or among the Members.

                                       20
<PAGE>

     10.4.     Allocations of Profits and Losses.
               ---------------------------------

               (a)  Definitions and Special Rules. For purposes of this
                    -----------------------------
     Agreement, allocations of income, gain, loss, deduction or credit (or cost
     of purchased assets or other amount on which a tax credit is based) of the
     Company, shall include each component of such item to be allocated, as
     determined for purposes of the Company's income tax reports and returns.
     Notwithstanding any other provision of this Agreement, accounting for the
     Company's capital and income, gain, loss, deductions, credits and
     distributions shall comply with Section 704 of the Code and the Treas.
     Regs. thereunder. Any Company income, gain, loss, deduction or credit (or
     cost of purchased assets or other amount on which a tax credit is based),
     as initially determined and allocated for any year, shall be redetermined
     and reallocated if necessary to correct any errors, or to reflect the
     result of any tax audit, or to take account of other pertinent factors.

               (b)  Contributed and Revalued Property.  Income, gain, loss and
                    ---------------------------------
     deduction with respect to property contributed to the Company by a Member
     or revalued pursuant to Treas. Reg. 1.704-1(b)(2)(f) shall be allocated
     among the Members as required by Section 704(c) of the Code and Treas.
     Regs. thereunder.  The preceding sentence shall be administered in
     accordance with the "traditional method with curative allocations"
     described in Section 1.704-3(b) and (c) of the Treasury Regulations;
     provided that curative allocations shall be limited to allocations of
     depreciation, depletion, gain and loss computed with respect to the oil and
     gas properties described in Recital B of this Agreement.

               (c)  Tax Basis. Except as otherwise provided in subsection (b) of
                    ---------
     this Section, for federal income tax purposes, the Tax Basis of each
     property subject to Section 613A(c)(7)(D) of the Code shall be allocated
     between the Members in the same proportions as their respective Sharing
     Ratios.

               (d)  Simulated Depletion.  For purposes of computing Simulated
                    -------------------
     Depletion, Simulated Gain and Simulated Loss with respect to properties
     subject to Section 613A(c)(7)(D) of the Code, Simulated Basis shall be
     allocated between the Members in the same proportions as their Sharing
     Ratios.

               (e)  Other Allocations.  Except as otherwise provided in this
                    -----------------
     Agreement, all income, gain, loss, deduction and credit of the Company
     shall be allocated among the Members in proportion to their respective
     Sharing Ratios.

     10.5.     Deficit Balance. Except as otherwise required in the Law (and
               ---------------
subject to the terms of this Article), no Member shall have any liability to
restore all or any portion of a deficit balance in such Member's Capital
Account.

     10.6.     Qualified Income Offset. Any Member who unexpectedly receives an
               -----------------------
adjustment, allocation or distribution described in Treas. Reg. (S)1.704-
1(b)(2)(ii)(d)(4), (5) or (6) that results in such Member's Capital Account
having an Adjusted Capital Account Deficit after all other allocations pursuant
to this Article X have been made will be allocated items of income and gain
        ---------
(consisting of a pro rata portion of each item of Company income, including
gross income, and gain for such year) in an amount and manner sufficient to
eliminate any resulting deficit balance as quickly as possible.

     10.7.     Minimum Gain Chargeback. Beginning in the first taxable year in
               -----------------------
which there are "nonrecourse deductions" or a distribution is made of proceeds
of a nonrecourse liability that are

                                       21
<PAGE>

allocable to an increase in the minimum gain of the Company, as determined under
the rules of Section 1.704-2(c)(3) of the Treasury Regulations, and thereafter
throughout the full term of the Company, "minimum gain chargeback" rules in
accordance with Section 1.704-2(f) of the Treasury Regulations shall apply with
respect to the allocation of income and gain in those year(s). If there is a net
decrease during a taxable year of partner nonrecourse debt minimum gain within
the meaning of Treas. Reg. 1.704-2(i)(3), then the chargeback rules of Treas.
Reg. 1.704-2(i)(4) shall apply.

     10.8.     Nonrecourse Deductions. Nonrecourse deductions under Treas. Reg.
               ----------------------
1.704-2(c) for any fiscal year shall be allocated among the Members in
proportion to their respective Sharing Ratios, except that nonrecourse
deductions attributable to nonrecourse debt for which any Member bears the
economic risk of loss shall be allocated to such Member.

     10.9.     Allocations with Respect to Deficit Capital Account of a Member.
               ---------------------------------------------------------------
Except as otherwise provided in this Article X, if during any fiscal year of the
                                     ---------
Company the allocation of any deduction to a Member would cause or increase a
negative balance in the Member's Capital Account as of the end of that fiscal
year, only the amount of such deduction that reduces the balance to zero shall
be initially allocated to the Member.  The remaining amount shall first be
allocated to other Members with positive Capital Account balances.

     10.10.    Curative Allocations. Any special allocations of income or
               --------------------
deductions pursuant to Sections 10.6 through 10.9 shall, to the extent
                       --------------------------
consistent with those Sections, be taken into account in computing subsequent
allocations of income and deductions so that the resulting Capital Account
balance of each Member shall, to the maximum extent possible, be equal to the
balance that would have existed if such special allocations had not occurred,
provided the character (as ordinary or capital) of any item allocated under this
sentence shall, to the extent reasonably feasible, be the same as the character
of the item of deduction or income subject to such special allocation.

     10.11.    Limitation on Return of Capital. Each Member shall be entitled to
               -------------------------------
recover the amount of such Member's Capital Account only at the time or times
provided for herein and solely from the assets of the Company. The Capital
Accounts of the Members shall not bear interest.

                                  ARTICLE XI
                                 DISTRIBUTIONS
                                 -------------

     11.1.     Distributions in General. Except for distributions made upon
               ------------------------
liquidation of the Company and subject to Section 17.5 below, the Company shall
                                          ------------
make distributions to its Members at such times and in such amounts as the Board
of Managers shall determine. Distributions shall be made to Members in
proportion to their respective Sharing Ratios as of the date of the
distribution.  All amounts withheld pursuant to the Code or any provisions of
state or local tax law with respect to any payment or distribution to the
Members from the Company shall be treated as amounts distributed to the relevant
Member pursuant to this Section.

     11.2.     Limitation on Distributions. No Member has any right to demand or
               ---------------------------
receive distributions in any form other than cash.  The Board of Managers
may, in their discretion, make distributions in cash or in kind, or partially in
each, provided that no Member shall be compelled to accept a distribution of any
asset in kind to the extent that the percentage of the asset distributed to such
Member exceeds the Interest of such Member.

     11.3.     Restriction Upon Distributions. No non-liquidating distributions
               ------------------------------
shall be declared and paid unless, after the distribution is made, the fair
value of the assets of the Company are in

                                       22
<PAGE>

excess of all liabilities of the Company, except liabilities to Members on
account of their contributions.

     11.4.     Distributions for Tax Liabilities. Subject to any restrictions
               ---------------------------------
imposed under credit obligations of the Company, the Board of Managers shall use
reasonable efforts to distribute to each Member in accordance with each Member's
Sharing Ratio, a cash amount equal to the estimated annual federal and state
income tax attributable to the estimated taxable income and gains of the Company
allocated to each Member.  The distributions to each Member under this Section
shall be calculated using the highest federal and state income tax rate of any
single Member.

                                  ARTICLE XII
                            PROFITS INTEREST OWNERS
                            -----------------------

     12.1.     Creation. A "Profits Interest Owner" is an Interest Owner who
               --------     ----------------------
acquires his Interest in the Company through a Transfer when:  (a) a Member
Transfers all or part of such Member's Interest in the Company and a Majority of
the non-transferring Members of the Company do not approve in writing of the
Transfer and the admission of the transferee as a Substituted Member; (b) the
Board of Managers is required to recognize a Transfer that does not comply with
the Transfer conditions set forth in this Agreement; (c) if the Board of
Managers, in its sole discretion, elects to recognize a Transfer that does not
comply with the Transfer conditions set forth in this Agreement; (d) the
Transfer is the Transfer of a Profits Interest; or (e) any other Transfer
creates a Profits Interest as provided in this Agreement.  Upon the Transfer of
a Profits Interest separate and apart from a Membership Interest, all voting
rights that were previously appurtenant to such Interest shall terminate unless
such Transfer is to an Affiliate of the Member or a Transfer described in
Section 13.2(e), in which case the voting rights shall remain with the Member.
---------------

     12.2.     Rights of Profits Interest Owner. A Profits Interest Owner shall
               --------------------------------
be entitled only to receive the share of Profits or other compensation by way of
income and the return of contributions to which the transferor Member under
which the Profits Interest was created would otherwise have been entitled with
respect to the interest transferred, and a Profits Interest Owner shall be
allocated the share of Company income, gain, loss, deduction and credit that
would otherwise be allocated to the transferor Member with respect to such
interest.  A Profits Interest Owner shall not be entitled to vote on Company
matters and shall not have any of the other rights of a Member under the Law or
the Agreement.  A Profits Interest Owner shall be entitled to receive financial
information of the Company that is prepared in the ordinary course of business
as is described in Section 14(a) hereof.
                   -------------

     12.3.     Distributions. If there are any Profits Interest Owners in the
               -------------
Company, any provision of this Agreement for distributions to Members shall be
deemed to mean distributions to Interest Owners in proportion to their
respective Sharing Ratios.

     12.4.     Relation to Membership Interest. Each Profits Interest shall
               -------------------------------
relate back to the original Membership Interest from which it was created for
purposes of determining the rights and obligations of the Profits Interest Owner
including, but not limited to:  (a) liability to the Company for the return of
the Capital Contribution of such Membership Interest as may be required under
this Agreement; and (b) the right of the Company to satisfy the debts,
obligations or liabilities for damages that the Transferor or Transferee of such
Membership Interest may have to the Company including, but not limited to, the
right to satisfy same through any allocations and distributions that would
otherwise be made with respect to the Membership Interest.

     12.5.     Liability to the Company. A Profits Interest Owner who
               ------------------------
rightfully receives the return in whole or in part of a Capital Contribution, as
defined in the Law, may be liable to the

                                       23
<PAGE>

Company for the return of the contribution, but only to the extent now or
hereafter provided by the Law.

     12.6.     Reduction of Profits Interests. If the Members elect to
               ------------------------------
contribute additional capital to the Company and the Board of Managers determine
that such additional Capital Contributions are necessary or appropriate in
connection with the conduct of the Company's business (including, without
limitation, expansion or diversification), the Interests of the Profits Interest
Owners shall be automatically reduced based upon the proportionate increase in
the value of all Interests directly attributable to the additional Capital
Contributions as determined by the Board of Managers.

                                 ARTICLE XIII
                   SALE, TRANSFER OR ASSIGNMENT OF INTERESTS
                   -----------------------------------------

     13.1.     Transfers. Except as otherwise provided herein, any Member may
               ---------
only sell, assign, or otherwise Transfer its interest in the Company with the
Majority consent of the Members.  Such approval will not be unreasonably
withheld and may be conditioned upon the transferring Member's satisfaction of
all outstanding financial and accounting issues affecting the transferring
Member.  Any sale of a Member's Interest shall be subject to the terms hereof.
To be admitted to the Company as an additional or substitute Member, the
transferee shall be required to ratify this Agreement pursuant to which such
transferee assumes a proportionate share of the obligations of its transferor
under this Agreement and agrees to be bound by all the terms thereof.  Following
the date of Transfer by a Member of all of its interest, the transferor shall
have no further interest in the Company, nor shall it be entitled to participate
in the management of the Company.

     13.2.     Transfers or Assignments Without Approval. A Member may, without
               -----------------------------------------
the approval of the other Members:

               (a)  Transfer a Profits Interest;

               (b)  Transfer all or part of its rights and interests in the
     Company by sale or Transfer of all or part of such interests to an another
     Member or an Affiliate of a Member, or pursuant to the Member's merger,
     reorganization, consolidation or sale of all or substantially all of its
     assets; provided, however, that in the event of the merger of Patina into
     an acquiring entity or a sale of all or substantially all of its assets,
     Patina shall make all reasonable efforts to obtain an offer from the
     acquiring entity to acquire the Galesi Members' Interests, provided that
     such obligation shall not result in a diminution in the value to be
     received by Patina;

               (c)  Transfer all or part of a Member's Membership Interests for
     estate planning purposes, provided that the voting rights for any such
     transferred Member Interest shall remain at the direction and control of
     the Designated Galesi Member or Designated Patina Member, as the case may
     be;

               (d)  Transfer a portion of its Membership Interest to key
     directors, officers or employees of a Member or an Affiliate, provided that
     the voting rights for any such transferred Member Interest shall remain at
     the direction and control of the Designated Galesi Member or Designated
     Patina Member, as the case may be; and

               (e)  Mortgage, pledge hypothecate or otherwise encumber all or a
     part of its Interest in favor of a bona fide financial institution;
     provided, however, it the event the

                                       24
<PAGE>

     secured party forecloses against such Interest, such action shall be
     subject to the rights of the other Members as set forth in Section 13.4.
                                                                ------------

In the event of any Transfer or Transfers permitted under this Section, the
interest so transferred shall be and remain subject to all terms and provisions
of this Agreement; the assignee or transferee shall be deemed to have assumed
all the obligations relating to the interests or rights so transferred.  No
change in ownership or rights under this Agreement shall be binding upon any
other Member until copies of all instruments executed and delivered in
connection with such Transfer or assignment shall have been delivered to such
other Member and the Board of Managers.

     13.3.     Involuntary Transfer. In the event the interest of any party to
               --------------------
this Agreement is transferred by operation of law, including, without
limitation, by execution of judgment or upon the Bankruptcy of the party, such
action shall be subject to Section 13.4 hereof and the transferee shall obtain
                           ------------
only a right to receive the distributions to which the transferor party would
have been entitled and shall not become a substituted Member.

     13.4.     Right to First Refusal. If, at any time during the term hereof,
               ----------------------
the Patina Members or, as the case may be, the Galesi Members, desire to
Transfer all or any part of their Membership Interest, such transferring Member
shall promptly give written notice to the other Member with full information
concerning the proposed Transfer, including copies of all agreements concerning
the proposed Transfer, which shall include the name, address of the prospective
purchaser, the purchase price and all other material terms and conditions
thereof.  The non-transferring Member shall then have a prior, optional right,
for a period of thirty (30) days after receipt of written notice, to exercise
its right to purchase the Membership Interest for cash and consistent with the
terms and conditions on which the transferring Member has agreed to sell.  In
the event the non-transferring Member elects not to purchase the transferring
Member's Interest, the transferring Member shall have ninety (90) days to
complete the sale of the Interest to the prospective purchaser or any third
party on the same terms and conditions as described in the notice to the non-
transferring Member.  If no transfer occurs within such period, the right of
last refusal described herein shall again take effect.  The rights set forth in
this Section shall not apply to a Transfer described in Section 13.2, except as
                                                        ------------
described in Section 13.2(e).  For purposes of operation of this Section, the
             ---------------
Patina Members shall constitute a single Member and the Galesi Members shall
constitute a single Member.

     13.5.     Option to Purchase. At any time after January 1, 2003, the Patina
               ------------------
Members or the Galesi Members may offer to purchase the Membership Interests of
the other Member (the "Initial Purchase Offer"). Such Initial Purchase Offer
                       ----------------------
shall be in writing. Within sixty (60) days following the receipt of the Initial
Purchase Offer, the receiving Member shall either accept such Initial Purchase
Offer or agree to purchase the offering Member's Interest at the price and under
the same terms as set forth in the Initial Purchase Offer. The purchasing Member
hereunder shall have ninety (90) days after the sixty (60) day response period
or, if a response prior to the end of such sixty (60) day period, ninety (90)
days following receipt of such response, in which to close on the purchase of
the other Member's Interest. For purposes of operation of this Section, the
Patina Members shall constitute a single Member and the Galesi Members shall
constitute a single Member.

     13.6.     Effective Date of Transfer. Each Transfer shall become effective
               --------------------------
as of the first day of the calendar month following the calendar month during
which the Members approve such Transfer (if such approval is required under the
terms hereof) and the President receives a copy of the instrument of Transfer
and all such documents evidencing the Transfer which the President may request.

                                       25
<PAGE>

     13.7.     Invalid Transfer. No Transfer of Interests which is in violation
               ----------------
of this Article shall be valid or effective, and the Company shall not recognize
the same for the purposes of making any allocation or distribution. The Company
may enforce the provisions of this Article either directly or indirectly or
through its representatives by entering an appropriate stop-transfer order on
its books or otherwise refusing to register or transfer or permit the
registration or transfer on its books of any proposed Transfers not in
accordance with this Article.

     13.8.     Admission of Additional Members; Issuance of Additional
               -------------------------------------------------------
Membership Interests. Additional Interests may be authorized and issued by the
--------------------
Company to existing Members upon such terms and conditions as may be approved by
a Majority of the Members.  Additional Membership Interests may be authorized
and issued by the Company to any Additional Member in connection with the
receipt of new Capital Contributions from, and the admission to the Company of,
such Additional Members upon such terms and conditions as may be approved by a
Majority of the Members.  In addition, no new Person may be admitted as an
Additional Member in connection with new Capital Contributions or issuance of
additional Interests unless the applicable requirements of this Article relating
to Transfers of Interests have been satisfied in connection with the issuance
and acquisition of the new Interests and the admission of the Additional Member.
The admission of an Additional Member shall be effective as of the first day of
the calendar month following the calendar month during which (a) the Members
approve such admission, (b) the Additional Member executes an instrument
reasonably satisfactory to the Board of Managers accepting the terms and
provisions of this Agreement and any agreement required hereunder, (c) the
Additional Member pays any reasonable expenses in connection with its admission
as an Additional Member (including legal and accounting expenses), and (d) the
Board of Managers receives consents, opinions of counsel and other documents
required as provided above and all of the other conditions set forth above have
been satisfied.

                                 ARTICLE XIV.
                                 ADMINISTRATION
                                 --------------

     14.1.     Bank Accounts. The Board of Managers may authorize any Officer to
               -------------
establish Company bank accounts on such signature or signatures as approved by
the Board of Managers. All funds of the Company not otherwise employed shall be
deposited from time to time to the credit of the Company in such depositories.
Company funds shall not be commingled with the funds of any Member, Manager or
any other Person.

     14.2.     Company Records.
               ---------------

               (a)  Reports to the Board of Managers. Within forty five (45)
                    --------------------------------
     days from the end of each calendar month, the Company shall determine and
     report to the Board of Managers the revenues and expenditures of the
     Company during such month. Such report shall be prepared on an accrual
     basis including the net income before depreciation and amortization, any
     gains and losses on the sale, use or operation of Company properties or
     assets for the preceding month. The Company shall prepare and distribute to
     the Board of Managers on quarterly basis a good faith estimate of the
     Company's working capital requirements for the upcoming business quarter
     and a pro-forma balance sheet. The statements shall identify expenses
     incurred in the prior quarter summarized by appropriate classifications of
     investment and expense, and items of controllable material and unusual
     charges and credits shall be identified and fully described.

                                       26
<PAGE>

               (b)  Records. The Company shall maintain complete and accurate
                    -------
     records of all costs and documentation of items which are chargeable to the
     Company and retain such records for the minimum period necessary in order
     to comply with all state and federal record retention requirements but not
     less than two (2) years from the end of the calendar year in which the
     costs were incurred. The records of the Company shall be deemed to contain
     confidential information and all parties agree to respect that
     confidentiality.

               (c)  Annual Audited Financials. The Company will prepare, or
                    -------------------------
     cause to be prepared, annual audited financial statements of the Company.
     Unless otherwise decided by the Board of Managers, the audited financial
     statements of the Company shall be prepared by Arthur Andersen and
     delivered to the Members on or before March 31 of the calendar year
     following the calendar year covered by such audited financial statements.

               (d)  Adjustments. Payment of any bill shall not prejudice the
                    -----------
     right of any Member to protest or question the correctness thereof. Subject
     to a Member's right to conduct an audit as provided herein, all statements
     rendered to any Member during any calendar year shall be conclusively be
     presumed to be true and correct twenty-four (24) months following the end
     of such calendar year, unless within such twenty-four (24) month period a
     Member makes written exception thereto and makes a claim upon the Company
     for adjustment. Failure on the part of a Member to make claim adjustment
     within such period shall establish the correctness thereof and preclude the
     filing of exceptions thereto or making of claims for adjustment thereon.

     14.3.     Accounting Period.  The Company's accounting period shall be the
               -----------------
calendar year.

     14.4.     Records, Audits and Reports.  At the expense of the Company, the
               ---------------------------
Treasurer shall maintain records and accounts of all operations and expenditures
of the Company. At a minimum, the Company shall keep at its principal place of
business such records as required pursuant to the Law.

     14.5.     Returns and Other Elections.  The Board of Managers shall cause
               ---------------------------
the preparation and timely filing of all tax returns required to be filed by the
Company pursuant to the Code, state and local tax laws, and all other tax
returns deemed necessary and required in each jurisdiction in which the Company
does business. Copies of such returns, or pertinent information therefrom, shall
be furnished to the Members within a reasonable time after the end of the
Company's fiscal year. All elections permitted to be made by the Company under
any federal, state or local tax laws shall be made by the Board of Managers as
they shall deem to be in the best interests of the Company, provided that the
Board of Managers shall make any tax election which has been approved by a vote
of the Members.

     14.6.     Nonresident Members.  Each Member shall execute and deliver to
               -------------------
the Board of Managers such forms as may be necessary for the Company to fulfill
its reporting requirements under any federal, state or local tax laws. Each
Member who is a nonresident of New York shall execute and deliver to the Board
of Managers all necessary non-resident tax forms. The Board of Managers shall
file such agreements, returns and other forms in such manner as required by the
applicable tax laws.

     14.7.     Management Agreement with Patina.  Patina shall provide to the
               --------------------------------
Company the services of the Managing Director and the Chief Financial Officer at
a fully loaded cost allocation basis, with no profit component. Such costs shall
be subject to review by independent auditors upon the request of the Designated
Galesi Member. For a period of ninety (90) days following the

                                       27
<PAGE>

closing of the transaction described in Recital "B", the Managing Director and
                                        -----------
the Chief Financial Officer may utilize Patina's employees for services,
including, without limitation, accounting, land, engineering, finance and other
management and administrative services.  Costs for such services will be
invoiced to the Company on a fully loaded cost allocation basis, with no profit
component.  Such costs shall be subject to review by independent auditors upon
the request of the Designated Galesi Member.  Thereafter, the Company may enter
into a more detailed management agreement with Patina for management services
and administrative services such as accounting, tax, human resources, management
information systems and assistance in the supervision of engineering.  Again,
costs for such services, including those of the Managing Director and Chief
Financial Officer, would be invoiced to the Company on a fully loaded cost
allocation basis, with no profit component, which costs shall be reviewed by
independent auditors upon the request of the Designated Galesi Member.

     14.8.     Management Incentive Bonus. Upon a Majority vote of the Board of
               --------------------------
Managers, Patina may earn a "Management Incentive Fee" if, substantially as a
result of its efforts, the Company's performance exceeds specific performance
targets established by the Board of Managers.

     14.9.     Transaction Costs. All costs incurred by the Members subsequent
               -----------------
to October 20, 2000 (the execution date of the letter of intent between Patina
and Galesi) relating to the acquisition of the oil and gas properties and
related assets from Equinox Oil Company, Inc., Alma Energy Corp., E&B Natural
Resources Management Corporation, Oil California Exploration and Lower
Lafourche, L.L.C., the credit facility and related instruments and the
organization of the Company shall be reimbursed by the Company to the Member,
which costs shall be reviewed by the Board of Managers. Notwithstanding the
foregoing, a Member may request that the Board of Managers approve reimbursement
of certain of its costs incurred on or before October 20, 2000, which
reimbursement may occur upon a Majority vote of the Board of Managers in favor
of such reimbursement.

     14.10.    Tax Matters Member. Patina shall be the "tax matters partner" of
               ------------------
the Company, as defined in the Code, and shall be indemnified and held harmless
by the Company for acting in such capacity to the maximum extent permitted under
the Law. The Members shall jointly make the election provided in Section
6231(a)(1)(B)(ii) of the Code to be subject to the rules for consolidated audit
procedures. Patina shall prepare and file tax returns for the Company, which
returns and related Schedule K-1's shall be provided to the Members on or before
March 31 of the calendar year immediately following the tax year.

                                       28
<PAGE>

                                  ARTICLE XV
                                   INSURANCE
                                   ---------

     The Company shall secure and maintain during the term of this Agreement
with insurance companies satisfactory to the Board of Managers, insurance to
cover the assets of the Company and the Company's operations, as follows:

Type of Coverage                        Liability Limits of Not Less Than -
----------------                        --------------------------------------

(A)  Worker's Compensation and          Worker's Compensation:  Statutory
Employer's Liability                    Benefits
                                        Employer's Liability:
                                             $1,000,000 each accident
                                             $1,000,000 disease, policy limits
                                             $1,000,000 disease, each employee

(B)  Comprehensive General Liability    Bodily Injury and Property Damage
and Pollution Liability (including      (combined):
contractual and underground                  $1,000,000 each occurrence
resources)                                   $2,000,000 general aggregate

(C)  Comprehensive Automobile           Bodily Injury and Property Damage
Liability                               (combined):
                                             $1,000,000 each occurrence

(D)  Umbrella Liability Insurance/1/    $10,000,000 each occurrence
                                        $10,000,000 aggregate
/1/and additional $24 million of
Excess Liability Coverage for Lake
Washington Field

(E)  Property & Inland Marine           As deemed necessary

(F)  Control of Well                    As deemed necessary

(G) Such other or additional            As deemed necessary
insurance with such coverages and in
such amounts as the Company may from
time to time require.

Certificates evidencing the above shown types and amounts of insurance shall be
required by the Board of Managers and the President shall endeavor to obtain
certificates from all contractor(s) or subcontractor(s).

Each policy of insurance shall provide that the insurer shall provide not less
than thirty (30) days written notice to the Company and each Member of the
intended modification or cancellation of the required insurance.

                                       29
<PAGE>

                                 ARTICLE XVI.
                        COMPLIANCE WITH SECURITIES LAWS
                        -------------------------------

     16.1.     No Registration.  Each Interest Owner understands that the
               ---------------
Interests evidenced by this Operating Agreement have not been registered under
the Securities Laws because the Company is issuing these Interests in reliance
upon exemption from the registration requirements of the Securities Laws
providing for issuance of securities not involving a public offering; the
Company has relied upon the fact that the Interests are to be held by each
Member and Profits Interest Owner for investment; and exemption from the
Securities Laws would not be available if the Interests were acquired by an
Interest Owner with a view to distribution.

     16.2.     Investment Representation. Each Interest Owner hereby confirms to
               -------------------------
the Company that such Interest Owner is acquiring the Interests for such own
Interest Owner's account, for investment and not with a view to the resale or
distribution thereof. Each Interest Owner agrees not to transfer, sell or offer
for sale any portion of the Membership Interest unless there is an effective
registration or other qualification relating thereto under all applicable
Securities Laws, or unless the Interest Owner delivers to the Company an opinion
of counsel satisfactory to the Company, that such registration or other
qualification under the Securities Laws is not required in connection with such
transfer, offer or sale. Each Interest Owner understands that the Company is
under no obligation to register the Interests, or to assist such Interest Owner
or any transferee in complying with any exemption from registration under the
Securities Laws if such Interest Owner should, at a later date, wish to dispose
of the Membership Interest. Each Interest Owner acknowledges that the Membership
Interests and Profits Interests are unlikely to qualify for disposition under
Rule 144 of the Securities and Exchange Commission unless such Interest Owner is
not an "affiliate" of the Company and the Membership Interest has been
beneficially owned and paid for by such Interest Owner for at least three years.

     16.3.     Right to Review. Prior to acquiring an Interest in the Company,
               ---------------
each Interest Owner shall confirm that it has made an investigation with the
Company and its business and have had made available to them all information
with respect to the Company and its business which such Interest Owner needed to
make an informed decision to acquire the Interest and that it considers itself
to be a Person possessing experience and sophistication as an investor which are
adequate for the evaluation of the merits and risks of such Interest Owner's
investment in the Interest.

     16.4.     Confirmation. By executing this Agreement, each of the original
               ------------
Members confirms its understanding and agreement as to the terms of this Article
with respect to its Membership Interest. By agreeing to be bound by this
Agreement, any Person acquiring any Interest in the Company shall be deemed to
have confirmed its understanding and agreement to be bound by all of the terms
of this Article with respect to the Interest being acquired.

                                 ARTICLE XVII.
                   RESIGNATION, CONTINUATION AND DISSOLUTION
                   -----------------------------------------

     17.1.     Dissolution. The Company shall be dissolved upon the occurrence
               -----------
of any of the following events:

               (a)  By written agreement of a Majority of all the Members;

               (b)  After December 31, 2002, at the request of any Member
     representing at least thirty five percent (35%) of the Membership
     Interests; or

                                       30
<PAGE>

               (c)  The Sale of all or substantially all of the assets of the
     Company, provided that if the Company receives any deferred or non-cash
     consideration in conjunction with such Sale, the Company shall not be
     dissolved until the Board of Managers determines that the continued
     existence of the Company is no longer necessary to collect or hold such
     deferred non-cash consideration.

     17.2.     Resignation With Consent. A Member may rightfully resign from the
               ------------------------
Company only with the prior written consent of all other Members. Any
resignation of a Member shall be in writing delivered to the other Members. If a
Member resigns with such prior written consent, such Member shall be entitled to
any distribution that may be agreed upon in writing by all the Members, which
distribution shall be in full payment and satisfaction of all rights of the
withdrawn Member to any distribution from the Company as a result of such
withdrawal. Any distribution may be conditioned upon the withdrawing Member's
execution of appropriate receipts, releases and indemnifications.

     17.3.     Resignation Without Consent. If a Member resigns without written
               ---------------------------
consent of all of the Members, the resigning Member shall be entitled to receive
any distribution to which he was entitled under this Agreement prior to
resignation, but no further distributions shall be made to the resigning Member
until the dissolution of the Company, at which time the distributions which
would have otherwise been made to the resigning Member shall be distributed,
without interest, to such resigning Member. It is understood that prior to
dissolution the Company will continue to make distributions to other Interest
Owners and the resigning Member will not participate in those interim
distributions. A Member who resigns without the consent of all Members shall be,
effective as of the date of resignation, a Profits Interest Owner, provided no
distributions shall be made with respect to such Profits Interest until
dissolution of the Company. Further, if by reason of such resignation the
Company shall incur any costs, expenses, damages or fees, then such resigning
Member shall be liable to the Company for damages for breach of this Agreement
by reason of resigning as a Member, in the amount of all such costs, expenses,
damages, or fees (including reasonable attorney fees) incurred by the Company,
and such damages may be offset against any distributions that would otherwise
have been made to the resigning Member.

     17.4.     Dissolution. Upon the dissolution of the Company, the Board of
               -----------
Managers shall proceed to wind up the Company's affairs within a reasonable time
and shall file a statement of intent to dissolve and articles of dissolution as
required by the Law. All the provisions of this Agreement shall continue to
apply throughout the dissolution process. Nothing herein is intended to limit
the rights or remedies of the Company or other Members against any Member
wrongfully dissolving or attempting to dissolve the Company.

     17.5.     Winding Up and Distribution of Assets. Upon dissolution, the
               -------------------------------------
Company's independent accountants shall make an accounting of the accounts of
the Company and of the Company's assets, liabilities and operations through the
date of dissolution, and the Board of Managers shall immediately proceed to wind
up the affairs of the Company. Throughout the dissolution process, all of the
provisions of this Agreement shall continue to apply, except as limited by the
Law. If the Company is dissolved and its affairs are to be wound up, the Board
of Managers shall first attempt to agree upon a plan of winding up and
distribution, which plan must provide that all distributions to the Members are
made in accordance with their positive Capital Accounts, as adjusted after all
allocations pursuant to Article X of this Agreement have been made. If the Board
                        ---------
of Managers is unable to agree, the entire matter shall be submitted to
arbitration conducted in accordance with Section 17.7 below. During the winding
                                         ------------
up and distribution of the assets, the Board of Managers shall at all times
comply with the requirements

                                       31
<PAGE>

of any applicable law pertaining to the winding up of the affairs of the Company
and the final distribution of its assets.

     17.6.     Articles of Dissolution. When all the debts, liabilities and
               -----------------------
obligations of the Company have been paid or discharged or adequate provisions
have been made therefor, and all the remaining property and assets have been
distributed to the Members, the Company shall be deemed terminated and Articles
of Dissolution shall be executed and filed with the New York State Department of
State in accordance with the Law.

     17.7.     Arbitration. In the event the Board of Managers is unable to
               -----------
agree upon the plan of winding up and distribution as described in Section 17.5
                                                                   ------------
above, the plan of winding up and distribution shall be determined by an
arbitration panel consisting of three members. One arbitrator shall be appointed
by each of the Patina Members and the Galesi Members and the third arbitrator
shall be appointed by the arbitrators appointed by the Patina Members and the
Galesi Members. The arbitration shall be conducted as follows:

               (a)  The arbitration shall be administered according to the
     American Arbitration Association ('AAA") Commercial Arbitration Rules and
                                        ---
     Procedures;

               (b)  The arbitrators shall have broad discretion to determine all
     aspects of the winding up and dissolution process (including without
     limitation any distribution of assets in kind, sale of assets, allocation
     of operating rights, payments to creditors, and/or allocation of
     liabilities, and all issues as to timing and procedures, terms and
     conditions) in accordance with equity and fairness in light of all of the
     circumstances, within the bounds permitted by law and with a view toward
     the best interests of the Members, the maximization of value to the
     Members, the minimization of taxes, and the feasibility and efficiency of
     operations, provided that, in all events, the arbitrators shall ensure that
     all distributions to the Members are made in accordance with their positive
     Capital Accounts, as adjusted after all allocations pursuant to Article X
                                                                     ---------
     of this Agreement have been made.

               (c)  The decision of the Arbitrator shall be final and binding;

               (d)  The arbitration shall be held at the principal offices of
     the Company or such other location mutually agreed upon by the Members;

               (e)  The arbitrators shall decide which party, if any, is the
     prevailing party. If a prevailing party is determined, that party shall be
     entitled to recover from the other party any fees paid by it to the AAA and
     its reasonable attorney fees.  If the arbitrators determine that there is
     not a prevailing party, the parties shall share equally the fees paid to
     AAA and each party shall be responsible for its own attorneys' fees; and

               (f)  In the event that suit is brought to enforce the
     arbitrators' decision, the party prevailing in the suit shall be entitled
     to recover as an element of its costs of suit its reasonable attorneys'
     fees incurred in bringing the suit.

                                       32
<PAGE>

                                ARTICLE XVIII.
                                 MISCELLANEOUS
                                 -------------

     18.1.     Modification. No modification or amendment to this Agreement
               ------------
shall be effective unless such modification or amendment shall be in writing and
signed by all of the Members.

     18.2.     Benefit. Subject to the restrictions on transfer set forth
               -------
herein, this Agreement shall be binding upon, and inure to the benefit of, the
Members and Profits Interest Owners (if any), and their respective heirs,
permitted assigns, executors, administrators, and successors.

     18.3.     Applicable Law. This Agreement shall be deemed to be made under,
               --------------
and shall be construed in accordance with, the laws of the State of New York.

     18.4.     Waiver of Partition. Each of the Members hereby waives any right
               -------------------
he may have to partition any property now held or hereafter acquired by the
Members.

     18.5.     Execution in Counterparts. This Agreement may be executed in any
               -------------------------
number of counterparts with the same effect as if all parties had signed the
same document. All counterparts shall be construed together and shall constitute
one agreement.

     18.6.     Severability. Should any of the provisions of this Agreement to
               ------------
any extent be held to be invalid or unenforceable, the remainder of this
Agreement shall continue in full force and effect to the full extent possible.

     18.7.     Entire Agreement. This Agreement embodies the entire
               ----------------
understanding and agreement among the parties relative to the matters contained
herein, and supersedes all prior negotiations, understandings or agreements in
regard thereto, whether written or oral.

     18.8.     Waiver. No provision of this Agreement may be waived, except by
               ------
an agreement in writing signed by all of the parties hereto. A waiver of any
term or provision shall not be construed as a waiver of any other term or
provision.

     18.9.     Headings.  The subject headings used in this Agreement are
               --------
included for purposes of reference only, and shall not affect the construction
or interpretation of any of its provisions.

     18.10.    Notices. All notices required or permitted by this Agreement
               -------
shall be in writing and shall be given by personal delivery, U.S. mail or
overnight courier. Notices shall be deemed received on the earlier of the date
of actual receipt or, in the case of notice by mail, three (3) days after
mailing. Rejection or refusal to accept or the inability to deliver because of
change of address of which no notice was given shall be deemed to be received as
of the date such notice was deposited in the mail or delivered to the courier.
Any party may change its address to which notices should be sent to it by giving
the Company and the Members written notice of the new address in the manner set
forth in this paragraph.

     18.11.    Confidentiality. Each Member shall ensure that any information
               ---------------
regarding the business, assets, customers, processes, and methods of the Company
and other Members which it may learn in the course of negotiations for, or
performance under this Agreement shall be treated by it in strict confidence and
shall not make use of such information, unless such information: (a) is known to
the party prior to learning of it by virtue of this Agreement; (b) is obtained
by such party from a source other than the Company or Member, which source (i)
did not require such party to hold such secrets or information in confidence and
(ii) did not limit or restrict such party's use

                                       33
<PAGE>

thereof; (c) became public knowledge otherwise than through the fault of the
party seeking to use or disclose such knowledge; or (d) is the subject of a
court order, subpoena or the disclosure thereof is required by law.

     18.12.    Construction. Throughout this Agreement, the singular shall
               ------------
include the plural, the plural shall include the singular, and all genders shall
be deemed to include other genders, wherever the context so requires.

     18.13.    Further Acts. Upon reasonable request from a party hereto, from
               ------------
time to time, each party shall execute and deliver such additional documents and
instruments and take such other actions as may be reasonably necessary to give
effect to the intents and purposes of this Agreement.

     18.14.    Attorneys' Fees. In the event of any litigation or arbitration
               ---------------
proceedings between the parties hereto concerning the subject matter of this
Agreement, the prevailing party in such litigation or proceeding shall be
awarded, in addition to the amount of any judgment or other award entered
therein, the costs and expenses, including reasonable attorneys' fees, incurred
by the prevailing party in the litigation or proceeding.

     18.15.    Authority. Each of the parties hereto represents to the other
               ---------
that such party has full power and authority to execute, deliver and perform
this Agreement, and that the individuals executing this Agreement on behalf of
the party are fully empowered and authorized to do so.

     18.16.    No Beneficiaries. No third parties (including but not limited to
               ----------------
creditors of Members and Profits Interest Owners) are intended to benefit by the
covenants, agreements, representations, warranties or any other terms or
conditions of this Agreement.

     18.17.    References to Laws, Rules and Regulations. All references in this
               -----------------------------------------
Agreement to laws, statutes, rules, regulations, ordinances and other
promulgations of governmental authorities shall refer to those in effect as of
the date of this Agreement or corresponding provisions of subsequent superseding
provisions of such promulgations.

     18.18.    Remedies. All rights and remedies set forth in this Agreement are
               --------
intended to be cumulative and not exclusive.

     18.19.    Counterparts. This Agreement may be executed in counterparts and
               ------------
each counterpart shall be considered an original agreement and enforceable
against all parties.

     18.20.    Facsimile Signatures. Facsimile signatures shall be considered
               --------------------
original signatures and enforceable.

                        [SIGNATURES ON FOLLOWING PAGE]

                    [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       34
<PAGE>

     IN WITNESS WHEREOF, this Agreement is executed effective as of the day and
year first above written.

                                        PATINA OIL & GAS CORPORATION

                                        By:    /s/ Thomas J. Edelman
                                           ------------------------------------
                                        Name:  Thomas J. Edelman
                                             ----------------------------------
                                        Title: Chairman
                                              ---------------------------------
                                        Date:  November 27, 2000
                                             ----------------------------------

                                        FRANCESCO GALESI

                                               /s/ Francesco Galesi
                                        ---------------------------------------
                                        Date:     November 27, 2000
                                             ----------------------------------

                                        ROTTERDAM VENTURES, INC.

                                        By:    /s/ David M. Buicko
                                           ------------------------------------
                                        Name:  David M. Buicko
                                             ----------------------------------
                                        Title: Authorized Representative
                                              ---------------------------------
                                        Date:  November 22, 2000
                                             ----------------------------------

                                       35
<PAGE>

                                   EXHIBIT A

               Capital Account Balances as of the Effective Date

                      Member                   Capital Account
                      ------                   ---------------

                      Patina                     $21,000,000

                      Galesi                     $16,800,000

                Rotterdam Ventures               $ 4,200,000

                                       36

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]