SB-2/A

As filed with the Securities and Exchange Commission on October 3, 2002

Registration No. 333-98347

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

AMENDMENT NO. 1
TO

FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

OCEANIC EXPLORATION COMPANY
(Exact name of small business issuer in its charter)

Delaware
(State or jurisdiction of
incorporation or organization) 1330
(Primary Standard Industrial
Classification Code No.) 84-0591071
(I.R.S. Employer
Identification Number)

7800 East Dorado Place, Suite 250
Englewood, CO 80111
(303) 220-8330

(Address and telephone number of principal executive offices and principal place of business)

CHARLES N. HAAS, PRESIDENT
OCEANIC EXPLORATION COMPANY
7800 East Dorado Place, Suite 250
Englewood, CO 80111
(303) 220-8330
(Name, address and telephone number of agent for service)

Copies of communications to:
RICHARD T. BEARD, ESQ.
JEANENE F. PATTERSON, ESQ.
Callister Nebeker & McCullough
Gateway Tower East, Suite 900
10 East South Temple
Salt Lake City, UT 84133
(801) 530-7300

Approximate date of commencement of proposed sale to the public: Thirty days after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [   ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [   ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [   ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [   ]

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED OCTOBER 3, 2002

PROSPECTUS

OCEANIC EXPLORATION COMPANY
21,000,000 Shares of Common Stock
Issuable Upon Exercise of Subscription Rights

• Oceanic Exploration is distributing non-transferable, irrevocable subscription rights to purchase shares of common stock in this rights offering to persons who owned shares of our common stock on October      , 2002.

• You will receive 2.1177565 subscription rights for each share of common stock you owned on October _, 2002, rounded up to the next whole subscription right. Each whole subscription right entitles you to purchase one share of common stock for $.15.

• If you exercise all of your subscription rights, you may elect to purchase additional shares at the same price. The exercise of such over-subscription privilege is non-transferable and irrevocable. NWO Resources, Inc. and its major stockholder, Cordillera Corporation, two of our principal stockholders, have stated their intention to exercise their subscription rights, thereby purchasing 11,558,668 shares, and have also indicated that they may purchase any additional shares that are not subscribed for by other stockholders. They are, however, not obligated to exercise their subscription rights or to purchase additional shares.

• The subscription rights are exercisable beginning on the date of this prospectus and continuing until 5:00 p.m., Denver, Colorado Time, on November      , 2002. Common stock issued upon exercise of the rights will be delivered within 15 business days after the expiration of the rights offering. We reserve the right to extend the rights offering up to an additional 30 days and to cancel the rights offering at any time. If the rights offering is terminated, any funds you paid will be refunded within five business days. There is no minimum that we must sell in order to complete the offering. The rights offering is being made on an any or all basis, which means that Oceanic Exploration may accept any subscription received even if all 21,000,000 shares of common stock offered are not subscribed for in the rights offering.

• The subscription rights may not be sold or transferred and will not be listed for trading on any stock exchange. Our common stock is not listed on any exchange. The last sale price of our common stock on October      , 2002 was $.     .

The exercise of the subscription rights involves substantial risk. For a discussion of certain factors that should be considered in evaluating an investment in the securities offered, see “Risk Factors” beginning on page 7.

			Discount and
	Subscription Price		Commissions	Net Proceeds1
Per Share	$	.15	None	$	.15
Total2	$	3,150,000	None	$	3,150,000

¹ Before deducting estimated expenses of the offering of $100,000 payable by us.

² Up to 3,000 additional shares of common stock may be issued solely in connection with the rounding up of shares, if any. If these shares are issued in full the Net Proceeds will be $3,150,450.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Prospectus dated October __, 2002

TABLE OF CONTENTS

PROSPECTUS SUMMARY
	QUESTIONS AND ANSWERS ABOUT OCEANIC EXPLORATION
	QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
SUMMARY FINANCIAL INFORMATION
RISK FACTORS
	Risk Factors Relating to the Offering of Subscription Rights
	Risk Factors Relating to Oceanic Exploration
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
ABOUT THE RIGHTS OFFERING
	Reason for the Rights Offering
	The Subscription Rights
	Basic Subscription Privilege
	Over-Subscription Privilege
	No Recommendations
	Expiration Date
	Cancellation Right
	Non-transferability of Subscription Rights
	Exercise of Subscription Rights
	Method of Payment
	Shares Held for Others
	Ambiguities in Exercise of Subscription Rights
	Regulatory Limitation
	Our Decision Binding
	No Revocation
	Rights of Subscribers
	Shares of Common Stock Outstanding After the Rights Offering
	Fees and Expenses
	Important
IF YOU HAVE ANY QUESTIONS
PLAN OF DISTRIBUTION
FEDERAL INCOME TAX CONSIDERATIONS
	General
	Taxation of Stockholders
STATE AND FOREIGN SECURITIES LAWS
RESALE OF COMMON STOCK
USE OF PROCEEDS
DETERMINATION OF OFFERING PRICE
BUSINESS OF OCEANIC EXPLORATION
	Oil and Gas
	Alliance Employment Solutions
	Management Services
	Governmental Approvals and Regulations
	NWO Resources, Inc. Line of Credit
PROPERTIES
	Greece
	Republic of China (Taiwan)
	Timor Gap
	Finney County, Kansas
	Other
LEGAL PROCEEDINGS
MARKET FOR COMMON STOCK
	Penny Stock Regulation
CAPITALIZATION
DIVIDENDS
AVAILABILITY OF OIL AND GAS RESERVE INFORMATION
OIL AND GAS REVENUE AND COST INFORMATION
OTHER OIL AND GAS INFORMATION
SELECTED FINANCIAL DATA
	Statement Of Earnings Data
	Balance Sheet Data
	Goodwill and Other Intangible Assets — Adoption of Statement 142
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Critical Accounting Policies
	Liquidity and Capital Resources
	Results of Operations
	Effect of Recently Issued Accounting Standards
DESCRIPTION OF CAPITAL STOCK
	Common Stock
	Preferred Stock
	Penny Stock Regulation
	Transfer Agent
DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	Exercise of Subscription Rights and Over-Subscription Privilege by NWO Resources, Inc. and Cordillera Corporation
	Management Agreements
	Officer Fees
	Officer’s Family Compensation
	NWO Resources, Inc. Line of Credit
	Employee Benefit Plans
	Lease of Office Space
	General
INDEMNIFICATION OF OFFICERS AND DIRECTORS
LEGAL MATTERS
EXPERTS
IF YOU WOULD LIKE MORE INFORMATION
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
	Independent Auditors’ Report
		Consolidated Balance Sheets
		Consolidated Statements of Operations and Retained Earnings
		Consolidated Statements of Cash Flows
PART II — INFORMATION NOT REQUIRED IN PROSPECTUS
	Item 24. Indemnification of Directors and Officers.
	Item 25. Other Expenses of Issuance and Distribution.
	Item 26. Recent Sales of Unregistered Securities
	Item 27. Exhibits
SIGNATURES
EXHIBIT INDEX
EX-3.3 Amended/Restated Certificate of Incorp.
EX-5.1 Opinion/Consent of Callister Nebeker
EX-10.19 Participation Agreement
EX-10.20 Cordillera 401(k) Deferred Compensation
EX-10.21 Cordillera Money Purchase Pension Plan
EX-10.22 Cordillera 401(k) Restated Adoption Agrmt
EX-10.23 Cordillera Money Purchase Adoption Agrmt
EX-10.24 Cordillera Service Agreement
EX-23.1 Consent of KPMG LLP

     No person is authorized to give any rights offering information or to make any representations other than those contained or incorporated by reference in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the common stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of Oceanic Exploration since the date hereof or that the information contained by reference herein is correct as of any time subsequent to its date.

For California Residents:

     This rights offering is limited to stockholders who satisfy the following suitability standards:

     (i)  the stockholder has a net worth of $200,000 or more (exclusive of home, furnishings and automobile); or

     (ii)  the stockholder has at least $50,000 of annual gross income and $75,000 of liquid net worth.

TABLE OF CONTENTS

PROSPECTUS SUMMARY		1
	QUESTIONS AND ANSWERS ABOUT OCEANIC EXPLORATION	1
	QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING	2
	SUMMARY FINANCIAL INFORMATION	7
RISK FACTORS		7
	Risk Factors Relating to the Offering of Subscription Rights	7
	Risk Factors Relating to Oceanic Exploration	8
A WARNING ABOUT FORWARD-LOOKING STATEMENTS		12
ABOUT THE RIGHTS OFFERING		12
	Reason for the Rights Offering	12
	The Subscription Rights	12
	Basic Subscription Privilege	13
	Over-Subscription Privilege	13
	No Recommendations	14
	Expiration Date	14
	Cancellation Right	14
	Non-transferability of Subscription Rights	14
	Exercise of Subscription Rights	15
	Method of Payment	15
	Shares Held for Others	15
	Ambiguities in Exercise of Subscription Rights	15
	Regulatory Limitation	16
	Our Decision Binding	16
	No Revocation	16
	Rights of Subscribers	16
	Shares of Common Stock Outstanding After the Rights Offering	17
	Fees and Expenses	17
	Important	17

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IF YOU HAVE ANY QUESTIONS		17
PLAN OF DISTRIBUTION		17
FEDERAL INCOME TAX CONSIDERATIONS		18
	General	18
	Taxation of Stockholders	18
STATE AND FOREIGN SECURITIES LAWS		19
RESALE OF COMMON STOCK		19
USE OF PROCEEDS		20
DETERMINATION OF OFFERING PRICE		21
BUSINESS OF OCEANIC EXPLORATION		22
	Oil and Gas	22
	Alliance Employment Solutions	23
	Management Services	24
	Governmental Approvals and Regulations	25
	NWO Resources, Inc. Line of Credit	25
PROPERTIES		25
	Greece	26
	Republic of China (Taiwan)	27
	Timor Gap	27
	Finney County, Kansas	29
	Other	29
LEGAL PROCEEDINGS		29
MARKET FOR COMMON STOCK		30
CAPITALIZATION		33
DIVIDENDS		33
AVAILABILITY OF OIL AND GAS RESERVE INFORMATION		33
OIL AND GAS REVENUE AND COST INFORMATION		33
OTHER OIL AND GAS INFORMATION		34
SELECTED FINANCIAL DATA		35
	Statement Of Earnings Data	35
	Balance Sheet Data	35
	Goodwill and Other Intangible Assets — Adoption of Statement 142	35
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		36
	Critical Accounting Policies	36
	Liquidity and Capital Resources	36
	Results of Operations	37
	Effect of Recently Issued Accounting Standards	41
DESCRIPTION OF CAPITAL STOCK		41
	Common Stock	42
	Preferred Stock	42
	Penny Stock Regulation	42
	Transfer Agent	43
DIRECTORS AND EXECUTIVE OFFICERS		44
EXECUTIVE COMPENSATION		45
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		46
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		47
	Exercise of Subscription Rights and Over-Subscription Privilege by NWO Resources, Inc. and Cordillera Corporation	47
	Management Agreements	47
	Officer Fees	48
	Officer’s Family Compensation	49

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	NWO Resources, Inc. Line of Credit	49
	Employee Benefit Plans	49
	Lease of Office Space	50
	General	50
INDEMNIFICATION OF OFFICERS AND DIRECTORS		50
LEGAL MATTERS		51
EXPERTS		51
IF YOU WOULD LIKE MORE INFORMATION		51
CONSOLIDATED BALANCE SHEETS		F-1
APPENDIX I		I-1

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PROSPECTUS SUMMARY

     This section answers in summary form some questions you may have about Oceanic Exploration and this rights offering. The information in this section is a summary and therefore does not contain all of the information that you should consider before exercising your subscription rights. You should read the entire prospectus carefully, including the “Risk Factors” section and the documents listed under “If You Would Like More Information.”

QUESTIONS AND ANSWERS ABOUT OCEANIC EXPLORATION

What is Oceanic Exploration?

     We were established in 1969 as a Delaware corporation and historically have been engaged in the business of acquiring oil and gas concessions covering large blocks of acreage in selected areas of the world. Subsequent to purchase, we conduct exploration activities thereon, including seismic and other geophysical evaluation and exploratory drilling where appropriate. We are not currently conducting exploration activities. We are currently actively pursuing legal claims related to our disputed oil and gas concession in the Timor Gap between East Timor and Australia.

     Effective March 31, 2000, we purchased the employment operations and certain assets of Alliance Services Associates, Inc., an employment agency located in San Diego, California and a wholly owned subsidiary of Alliance Staffing Associates, Inc. We operate the business through our wholly owned division, Alliance Employment Solutions, through which we offer employment solutions to clients’ needs for executive search, professional and technical placement, human resources consulting, site management and contract staffing.

     We also provide management, bookkeeping and administrative services to San Miguel Valley Corporation. We provide management, professional and administrative services to Cordillera Corporation. Until September 1, 2002, when services were terminated by mutual agreement, we provided management services to Global Access Telecommunications, Inc. We provide bookkeeping services to Points Four World Travel, Inc. All services are provided on a cost plus 5% of the cost mark up basis. Our Chairman of the Board of Directors and Chief Executive Officer is affiliated with each of these corporations.

Where are we located?

     Our principal executive offices are located at

Oceanic Exploration Company
7800 East Dorado Place, Suite 250
Englewood, CO 80111
(303) 220-8330

Who Controls Oceanic Exploration?

     NWO Resources, Inc. and Cordillera Corporation own 49.55 and 5.5%, respectively, of our outstanding shares of common stock. Our Chief Executive Officer and Chairman of the Board of Directors, James N. Blue, is chairman of the board of directors and president of Cordillera Corporation, the major stockholder of NWO Resources, Inc. He is also chairman of the board of directors and president of NWO Resources, Inc. Through affiliates, Mr. Blue indirectly beneficially holds a majority of the common stock of Cordillera Corporation. If all stockholders fully exercise their subscription

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rights, the effective percentage ownership of each stockholder will remain unchanged. If the rights are not exercised by any other stockholder and NWO Resources, Inc. and Cordillera Corporation purchase all shares of common stock not purchased by other stockholders, NWO Resources, Inc. will control approximately 77.0% and Cordillera Corporation will control approximately 8.6% of the issued common stock.

QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

What is a rights offering?

     A rights offering is an opportunity for you to purchase additional shares of common stock at a fixed price and in an amount at least proportional to your existing interest, which enables you to maintain and possibly increase your current percentage ownership.

What is a subscription right?

     We are distributing to you, at no charge, 2.1177565 subscription rights for every share of our common stock that you owned as a holder of record on October      , 2002. We will not distribute any fractional subscription rights, but will round the number of subscription rights you receive up to the next largest whole number. Each whole subscription right entitles you to purchase one share of our common stock for $.15. When you “exercise” a subscription right that means that you choose to purchase the number of shares of common stock that the subscription right entitles you to purchase. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights. You cannot give away, transfer or sell your subscription rights. Only you may exercise your subscription rights. See “About the Rights Offering-The Subscription Rights.”

What is the basic subscription privilege?

     The basic subscription privilege of each whole subscription right entitles you to purchase one share of our common stock at a subscription price of $.15. See “About the Rights Offering-Basic Subscription Privilege.”

What is the over-subscription privilege?

     We do not expect that all of our stockholders will exercise all of their basic subscription privileges. By extending over-subscription privileges to our stockholders, we are providing for the purchase of those shares that are not purchased through exercise of basic subscription privileges. The over-subscription privilege of each subscription right entitles you, if and when you fully exercise your basic subscription privilege, to subscribe for additional shares of common stock at a subscription price of $.15 per share. See “About the Rights Offering-Over-Subscription Privilege.”

What are the limitations on the over-subscription privilege?

     If sufficient shares are available in the rights offering, we will honor all over-subscription requests in full. If over-subscription requests exceed the number of shares available, we will allocate the available shares among stockholders who over-subscribed in proportion to the number of shares purchased by those over-subscribing stockholders through the exercise of their basic subscription privilege. NWO Resources, Inc. and its major stockholder, Cordillera Corporation, two of our principal stockholders, have stated their intention to purchase any additional shares that are not subscribed for by other stockholders in the rights offering, to the extent such shares are available. They have indicated that there is no minimum number of shares that other stockholders must subscribe for before they will

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consider purchasing the additional shares. NWO Resources, Inc. and Cordillera Corporation are, however, not obligated to exercise their basic subscription rights or to purchase any additional shares that are not subscribed for by other stockholders and may decide not to do so. See “About the Rights Offering-Over-Subscription Privilege.”

Why are we engaging in a rights offering?

     We are making this rights offering with the intention of raising up to approximately $3,150,000. We intend to use the proceeds to (i) fund future operations, including those of our employment services division, (ii) pursue the claims of our subsidiary, Petrotimor Companhia de Petroléos, S.A.R.L. (which we refer to in this prospectus as “Petrotimor”), against the Commonwealth of Australia, the Joint Authority established under the Timor Gap Treaty and the Phillips Petroleum companies operating within the Timor Gap area, regarding Petrotimor’s oil and gas concession in the Timor Gap and (iii) continue to pursue commercial opportunity in East Timor. See “Use of Proceeds.” We want to give you the opportunity to participate in our equity fund-raising so that you will have the ability to maintain your proportional ownership interest in us.

What is the Board of Directors recommendation regarding the rights offering?

     We are not making any recommendation as to whether or not you should exercise your subscription rights. You should make your decision based on your own assessment of your best interests.

How many shares may I purchase?

     You will receive 2.1177565 subscription rights for each share of common stock that you owned on October _, 2002. We will not distribute fractional subscription rights, but will round the number of subscription rights you are to receive up to the next largest whole number. Each whole subscription right entitles you to purchase one share of common stock for $.15. See “About the Rights Offering-Basic Subscription Privilege.” If you exercise all of the subscription rights that you receive, you may have the opportunity to purchase additional shares of common stock. In your subscription agreement, you may request to purchase as many additional shares as you wish for $.15 per share. We may honor all of these over-subscription requests, but if not, you may not be able to purchase as many shares as you requested in your subscription agreement. We have the discretion to issue less than the total number of shares that may be available for over-subscription requests in order to comply with state securities laws. See “About the Rights Offering-Over-Subscription Privilege.”

How did we arrive at the $.15 per share subscription price?

     Independent members of our Board of Directors set all of the terms and conditions of the rights offering, including the subscription price. The $.15 subscription price was based on the strategic alternatives available to us for raising capital, the lack of trading volume in our stock, the market price of our common stock before and after the announcement of the rights offering, our business prospects and general conditions in the securities markets. See “Determination of Offering Price.”

How do I exercise my subscription rights?

     You must properly complete the attached subscription agreement and deliver it to Oceanic Exploration before 5:00 p.m., Denver, Colorado Time on November      , 2002 (the “Expiration Date”). The address for Oceanic Exploration is on page 1. See “About the Rights Offering-Exercise of Subscription Rights.”

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How do I pay for my shares?

     Your subscription agreement must be accompanied by proper payment for each share that you wish to purchase pursuant to both your basic and over-subscription privileges. See “About the Rights Offering-Method of Payment.”

How long will the rights offering last?

     You will be able to exercise your subscription rights only during a limited period. If you do not exercise your subscription rights before 5:00 p.m., Denver, Colorado Time, on the Expiration Date of November      , 2002, the subscription rights will expire. We may, in our discretion, decide to extend the rights offering up to an additional 30 days. See “About the Rights Offering-Expiration Date.”

What if my shares are not held in my name?

     If you hold your shares of our common stock in the name of a broker, dealer or other nominee, then your broker, dealer or other nominee is the record holder of the shares you own. The record holder must exercise the rights on your behalf for the shares of common stock you wish to purchase. Therefore, you will need to have your record holder act for you.

     If you wish to participate in this rights offering and purchase shares of common stock, please promptly contact the record holder of your shares. We will ask your broker, dealer or other nominee to notify you of this rights offering. See “About the Rights Offering-Shares Held for Others.”

After I exercise my subscription rights, can I change my mind and cancel my purchase?

     No. Once you send in your subscription agreement and payment you cannot revoke the exercise of your subscription rights, even if you later learn information about us that you consider to be unfavorable and even if the market price of our common stock is below the $.15 per share purchase price. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at a price of $.15 per share. See “About the Rights Offering-No Revocation.”

Is exercising my subscription rights risky?

     The exercise of your subscription rights involves significant risks. Exercising your subscription rights means buying additional shares of our common stock and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the heading “Risk Factors,” beginning on page 7.

Must I exercise any subscription rights?

     No. You are not required to exercise your subscription rights or take any other action.

What happens if I choose not to exercise my subscription rights?

     You will retain your current number of shares of common stock even if you do not exercise your subscription rights. However, if other stockholders exercise their subscription rights and you do not, the percentage of Oceanic Exploration that you own will diminish, and your voting and other rights will be

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diluted. See “Risk Factors-Risks Associated With the Offering of Subscription Rights-Your percentage ownership of Oceanic Exploration may be diluted.”

Can I sell or give away my subscription rights?

     No. Should you choose not to exercise your rights, you may not sell, give away or otherwise transfer your rights. However, rights will be transferable by operation of law such as to the estate of a recipient upon the death of the recipient.

What happens to my rights if I sell or transfer my shares after the record date and prior to exercising my subscription rights?

     You may exercise your rights even if you have sold or transferred your shares of common stock after the record date and prior to exercising your subscription rights. Your subscription rights will not be forfeited.

What are the Federal Income Tax consequences of exercising my subscription rights?

     The receipt and exercise of your subscription rights are intended to be nontaxable events. You should seek specific tax advice from your personal tax advisor. See “Federal Income Tax Considerations-Taxation of Stockholders.”

When will I receive my new shares?

     If you purchase shares of common stock through the rights offering, you will receive certificates representing those shares within 15 business days after the Expiration Date, which Expiration Date may be extended up to 30 days.

Can the Board of Directors extend or cancel the rights offering?

     Yes. The Board of Directors may decide to extend the rights offering up to an additional 30 days or cancel the rights offering at any time, on or before November      , 2002, for any reason. If the rights offering is cancelled, any funds you paid will be refunded within 15 business days. See “About the Rights Offering-Cancellation Right.”

How much money will Oceanic Exploration receive from the rights offering?

     If we sell all the shares being offered, we will receive gross proceeds of approximately $3,150,000. We are offering shares in the rights offering with no minimum purchase requirement. The rights offering is being made on an any or all basis, which means that Oceanic Exploration may accept any subscription received even if all 21,000,000 shares of common stock offered are not subscribed for in the rights offering. As a result there is no assurance we will be able to sell all or any of the shares being offered. However, NWO Resources, Inc. and its major stockholder, Cordillera Corporation, two of our principal stockholders, have indicated their intention to exercise fully their basic subscription rights and to purchase all of the shares that are not subscribed for in the rights offering by other stockholders. NWO Resources, Inc. and Cordillera Corporation are, however, not obligated to exercise their basic subscription rights or to purchase any additional shares that are not subscribed for by other stockholders and may decide not to do so. See “About the Rights Offering-Over-Subscription Privilege.”

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How will we use the proceeds from the rights offering?

     We intend to use the proceeds to (i) fund future operations, including those of our employment services division, (ii) pursue the claims of our subsidiary, Petrotimor, against the Commonwealth of Australia, the Joint Authority established under the Timor Gap Treaty and the Phillips Petroleum companies operating within the Timor Gap area, regarding Petrotimor’s oil and gas concession in the Timor Gap and (iii) continue to pursue commercial opportunity in East Timor. See “Use of Proceeds.”

How many shares will be outstanding after the rights offering?

     The number of shares of common stock that will be outstanding after the rights offering will depend on the number of shares that are purchased in the rights offering. If we sell all of the shares being offered, then we will issue approximately 21,000,000 shares of common stock. In that case, we will have approximately 30,916,154 shares of common stock outstanding after the rights offering.

How do the “penny stock” rules affect my ability to resell shares after exercising my rights in the rights offering?

     Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks, like shares of our common stock, generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on Nasdaq. The burdens imposed upon stockbrokers under the penny stock rules discourage stockbrokers from effecting transactions in our common stock, which may limit the market liquidity and the ability of investors to trade our common stock. The lack of volume and transactions in our stock may reduce the overall market value of the common stock. See “Risk Factors-Risk Factors Relating to Oceanic Exploration-Because we are subject to the “penny stock” rules, the level of trading activity in our stock is reduced which may make it difficult for investors to sell their shares” and “Market for Common Stock-Penny Stock Regulation.”

What if I have more questions?

     If you have more questions about the rights offering, please contact our Secretary, Janet A. Holle, at 7800 East Dorado Place, Suite 250, Englewood, Colorado 80111 or by telephone at (303) 220-8330.

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SUMMARY FINANCIAL INFORMATION

     The following table sets forth our summary financial data. The summary financial data in the table is derived from our financial statements. You should read the data in conjunction with the financial statements, related notes and other financial information included therein.

	Year Ended December 31,					Six Months Ended June 30,
	2001			2000		2002			2001
Statement of Earnings Data
Revenue	$	3,410,915		$	12,637,197	$	1,622,293		$	1,692,465
Costs & Expenses		6,374,697			4,513,515		3,345,130			2,778,959
Income (Loss) before Income Taxes		(2,963,782	)		8,123,682		(1,722,837	)		(1,086,494	)
Net Income (Loss)		(2,927,559	)		7,901,385		(1,722,837	)		(1,051,679	)
Earnings (Loss) per Share of Common Stock		(0.30	)		0.80		(0.17	)		(0.11	)

	December 31, 2001		June 30, 2002
	Actual		Actual		As Adjusted1
Balance Sheet Data
Net working capital	$	1,974,499	$	297,126	$	3,347,126
Total Assets		3,739,180		1,890,916		4,940,916
Stockholders’ equity		2,655,407		932,570		3,982,570

¹As adjusted to give effect to the sale of 21,000,000 shares of common stock offered hereby at an assumed offering price of $.15 per share and the application of the estimated net proceeds therefore. See “Use of Proceeds” and “Capitalization.”

RISK FACTORS

     Investing in our common stock involves substantial risks. You should be able to bear a complete loss of your investment. You should carefully consider the following factors and other information in this prospectus before deciding to exercise your subscription rights and purchase our common stock.

Risk Factors Relating to the Offering of Subscription Rights

     The market price of our common stock may decline. We cannot assure you that the public trading market price of our common stock will not either increase or decline before the subscription rights expire. If you exercise your subscription rights and the market price of the common stock goes below $.15, then you will have committed to buy shares of common stock in the rights offering at a price that is higher than the price at which our shares could be purchased in the market. Moreover, we cannot assure you that you will ever be able to sell shares of common stock that you purchased in the rights offering at a price equal to or greater than the subscription price.

     Determination of the subscription price was not based on an independent valuation and may not be the true value of the shares. We did not set any of the terms and conditions of the rights offering, including the subscription price, based on an independent valuation of Oceanic Exploration. The $.15 subscription price was based on the strategic alternatives available to us for raising capital, the market price of our common stock before and after the announcement of the rights offering, the lack of

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trading volume in our stock, our business prospects and the general conditions in the securities markets. The subscription price does not necessarily bear any relationship to our past operations, cash flows, current financial condition, or any other established criteria for value. You should not consider the subscription price as an indication of the value of Oceanic Exploration or our common stock. See “Determination of Offering Price.”

     You will not be able to revoke your exercise of subscription rights. Once you exercise your subscription rights, you may not revoke the exercise.

     Your percentage ownership of Oceanic Exploration may be diluted. If you do not exercise all of your basic subscription rights, you may suffer significant dilution of your percentage ownership of Oceanic Exploration relative to stockholders who fully exercise their subscription rights. For example, if you own 100,000 shares of common stock before the rights offering, or approximately 1.0% of the equity of Oceanic Exploration, and you exercise none of your subscription rights while all other subscription rights are exercised through the basic subscription privilege or over-subscription privilege, then the percentage ownership represented by your 100,000 shares will be reduced to approximately 0.3%.

     You may not be able to sell your shares of common stock immediately upon expiration of the rights offering. Until certificates are delivered upon expiration of the rights offering, you may not be able to sell the shares of our common stock that you purchase in the rights offering. Certificates representing shares of our common stock that you purchased will be delivered within 15 business days after the November      , 2002 expiration of the rights offering, which may be extended up to 30 days.

     The rights offering may be canceled and funds returned without interest. If we elect to cancel the rights offering, we will have no obligation with respect to the subscription rights except to return, without interest, any subscription payments.

     You will not earn interest on any funds delivered to us to exercise the rights. We will not pay you interest on funds delivered to us pursuant to the exercise of rights.

     Our need for capital may not be satisfied by the rights offering. We intend to raise approximately $3,150,000 by making this rights offering, but no assurance can be given that we will be able to do so. Because there is no established minimum purchase requirement, we may complete the rights offering without having raised the full $3,150,000. If we do not raise the full $3,150,000, our ability to pursue the Petrotimor litigation will be limited and we will not be able to fund the ongoing operations to the extent contemplated in this prospectus, including our employment services business. Other than our demand promissory note with NWO Resources, Inc., which allows us to borrow up to $500,000, we do not have any commitments for raising either debt or equity capital. We cannot assure you that the funds from this rights offering will be sufficient to fund operations and pursue the Petrotimor litigation. Even if all of the $3,150,000 is raised in this rights offering, we will likely need more capital to fund our operations after 2004. Such additional financing will present additional risks to our stockholders, depending on the price and terms attached to such funding. See “Use of Proceeds.”

Risk Factors Relating to Oceanic Exploration

     We have suffered recurring material net losses. We have suffered recurring material net losses and losses from operations during the most recent interim period and in recent fiscal years. Cumulative net losses for the period from April 1, 1996 through December 31, 1999 were $1,231,397. Although we had net income of $7,901,385 for the year ended December 31, 2000 as a result of our

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settlement of litigation, we had a net loss of $2,927,559 for the year ended December 31, 2001 and a net loss of $1,722,837 for the first six months of 2002.

     Because we are subject to the “penny stock” rules, the level of trading activity in our stock may be reduced which may make it difficult for investors to sell their shares. Our common stock is penny stock as defined by the Exchange Act. Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks, like shares of our common stock, generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on Nasdaq. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The inability of institutional investors to trade our common stock and the additional burdens imposed upon stockbrokers by these requirements discourages stockbrokers from effecting transactions in our common stock, which may limit the market liquidity and the ability of investors to trade our common stock. The lack of volume and transactions in our stock may reduce the overall market value of the common stock.

     We face significant competition. The oil and gas industry is competitive, and we must compete with many long-established companies having far greater resources and operating experience. Furthermore, the demand for financing of oil and gas and mineral exploration and development programs substantially exceeds the available supply, and we compete with other exploration and development companies of far greater means for the available funds.

     The employment agency industry in San Diego is very competitive with several large international and national agencies doing business in the area in addition to multiple local and regional agencies.

     Our business in the oil and gas industry is subject to price volatility and foreign risks. Oil and gas exploration activities, especially in foreign areas, are subject to a wide variety of risks that affect not only the concessions themselves but also their salability (whether of partial interests or otherwise) to third parties. The industry is also subject to fluctuations in the price of and the demand for oil and gas.

     We currently have no oil and gas operations or revenues but have increasing costs associated with exploration activities, which are primarily legal expenses related to our concession in East Timor. Historically, our most significant source of revenue has been our 15% net profits interest in certain oil and gas producing properties offshore Greece, which was shut in during November 1998. We have not generated any revenues from oil and gas operations for the past three fiscal years and there is no assurance oil and gas revenue will be generated in the future.

     The employment agency business is focused in a narrow industry segment and subject to local and national economic conditions. The employment agency industry is affected, to a large extent, by trends in national or local economic conditions. During periods of slowing economic activity or high unemployment, many companies reduce their usage of temporary staffing employees before

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laying off regular employees. Our clients change on a regular basis and are not bound by any long term contracts to use our services. Substantially all of our revenues from our employment agency division are presently derived from operations in San Diego, California. Furthermore, our employment activities are currently focused in the light clerical and technical segments of the employment industry. Deteriorating economic conditions in the region or in this narrow industry segment could materially adversely affect Alliance Employment Solutions’ business, financial condition and results of operations.

     Foreign operations subject to risks such as nationalization, jurisdictional disputes, civil unrest, taxation and price and demand fluctuations. Our oil and gas concessions are generally located in territories controlled by foreign governments. As a result the concessions may be subject to the following risks:

• Potential expropriation or nationalization of concessions or facilities by foreign governments

• Jurisdictional disputes between foreign governments concerning areas in which our concessions are located

• Civil unrest or significant political changes in foreign countries in which we hold concessions

• Taxation by foreign governments of our income derived within their jurisdiction or other forms of tax combined with uncertainties over the availability in the United States of foreign tax credits for taxes actually paid to foreign governments

• Application of foreign procedural or substantive laws

• Fluctuations in the price of and the demand for oil and gas

     Certain of our properties, including those in Greece, Taiwan and the East Timor Gap, are subject to current disputes between foreign governments that have essentially, in addition to our lack of funds, precluded development of those properties. There is no assurance that such disputes will be resolved in a timely manner.

     We do not intend to pay dividends on the common stock in the foreseeable future. We have never paid a dividend on our common stock and do not intend to do so in the foreseeable future. Any future payment of dividends by us is subject to the discretion of the Board of Directors.

     We are controlled by our principal stockholders. Two of our principal stockholders, NWO Resources, Inc. and Cordillera Corporation, currently own 49.5% and 5.5% respectively of our common stock. If all stockholders fully exercise their subscription rights, the effective percentage ownership of each stockholder will remain unchanged. If the rights are not exercised by any other stockholder and NWO Resources, Inc. and Cordillera Corporation purchase all shares of common stock not purchased by other stockholders, NWO Resources, Inc. will control approximately 77.0% and Cordillera Corporation will control approximately 8.6 % of the issued common stock. In such event, NWO Resources, Inc. and Cordillera Corporation would substantially increase their ownership and all of our current shareholders, except for NWO Resources, Inc. and Cordillera Corporation, would be substantially diluted in percentage ownership of Oceanic Exploration. Our Chairman of the Board of Directors and Chief Executive Officer, Mr. Blue, is chairman of the board of directors, president and the indirect beneficial owner of a majority of the common stock of Cordillera Corporation, which is the major stockholder of NWO Resources, Inc. Mr. Blue is the chairman of the board and president of NWO Resources, Inc.

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     There are conflicts of interest between us and our management and their affiliates. There have been material transactions between Oceanic Exploration and our management and their affiliates, some of which cannot be deemed to have been the result of arm’s length negotiations. We provide services to Cordillera Corporation, Points Four World Travel, Inc. and San Miguel Valley Corporation and, until September 1, 2002 when services were terminated by mutual agreement, Global Access Telecommunications, Inc. James N. Blue, our Chairman of the Board of Directors and Chief Executive Officer, is affiliated with each of these corporations. In addition, Mr. Blue receives officers’ fees of $5,000 per month for his services as Chairman of the Board of Directors and Chief Executive Officer. He is president and a director of NWO Resources, Inc. and chairman of the board of directors, president and an indirect beneficial owner of a majority of the common stock of Cordillera Corporation, our major stockholders. Mr. Blue’s son, Karsten Blue, performs services for us on the East Timor project on a monthly basis for which we pay his employer, Cordillera Corporation, up to $65,000 per year. Karsten Blue provided and will continue to provide assistance in coordinating the various activities relating to the commercial opportunity in East Timor, including, but not limited to, coordinating public relations services in East Timor by assisting in the publicity of the Timor Gap issue seeking East Timor public opinion for an Oceanic concession. We also have a $500,000 demand promissory note establishing a line of credit with NWO Resources, Inc., our principal stockholder, which was established on August 15, 2002. The terms were not negotiated at arm’s length. We lease our office building in Englewood, Colorado from a company indirectly owned and controlled by Mr. Blue. See “Certain Relationships and Related Transactions” for further information about these conflicts.

     We may be unsuccessful with respect to our pending legal proceedings. No government of East Timor has recognized our concession in East Timor other than Portugal, which granted the concession in December 1974 when East Timor was under its control. Portugal has recognized the fact that Petrotimor’s contractual obligations under the concession were suspended on August 9, 1975 by force majeure when East Timor was illegally invaded and occupied by Indonesia. This force majeure status remained in effect until at least October 25, 1999. We brought suit in the Federal Court of Australia against the Commonwealth of Australia, the Joint Authority established under the Timor Gap Treaty and the Phillips Petroleum companies operating in the area to seek a ruling that entering into the Timor Gap Treaty by the government of Australia on December 11, 1989, was outside of the power of the Commonwealth of Australia with the result that the treaty, which claims to grant the concession to the Phillips Petroleum companies, and the legislation of the Australian Parliament is void or invalid. Our interest in East Timor is subject to this complex legal proceeding. In order to retain our interest or recover compensation for our interest, we must be successful in our current litigation. Concurrently with pursuing such litigation, we are endeavoring to achieve recognition of our rights by the new government in East Timor.

     If we are unsuccessful in our legal proceedings, do not receive damages for our claims, and do not achieve recognition in East Timor, we may have no further interest in East Timor and will have incurred substantial legal and other expenses over a protracted period of time in trying to protect our rights. The parties involved in the legal proceedings have substantial resources and have contested our claims. While we believe there is a reasonable possibility of prevailing in the litigation, the ultimate outcome of the lawsuit cannot be determined at this time. The Federal Court of Australia in which the litigation is filed has taken under advisement a motion to dismiss our suit on the basis that the court does not have jurisdiction over the subject of the suit. If we are not able to obtain a favorable outcome on this motion, our suit may be dismissed. It may take a substantial amount of time and resources to determine if we have a claim in the Australian court. Ultimately, we must obtain a final judgment or settlement of the suit or achieve recognition of our rights by the new government in East Timor in order to recover the benefits of our concession in East Timor.

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     If we are successful in having the Timor Gap Treaty declared void, we may be entitled to such damages as might be decided by the federal court. Alternatively, we may still establish an entitlement to the historical benefits of our concession with the current government of East Timor. At this time we are unable to assess the outcome of both the suit and the recognition of our concession with the current government of East Timor. See “Legal Proceedings.”

     Even if we are successful in obtaining recognition and entitlement to the benefits of the concession, the ultimate value of the concession cannot be determined at this time. See “Properties-Timor Gap.”

A WARNING ABOUT FORWARD-LOOKING STATEMENTS

     Any statements contained in this prospectus that are not statements of historical fact are forward-looking statements. You can identify these statements by words such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. These statements discuss future expectations, contain projections of results of operations or financial condition or state other forward-looking information and are based on certain assumptions and analyses made by Oceanic Exploration in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, including such factors as uncertainties in cash flow, expected costs of litigation, the volatility and level of oil and natural gas prices, production rates and reserve replacement, reserve estimates, drilling and operating risks, competition, litigation, environmental matters, the potential impact of government regulations, fluctuations in the economic environment and other such matters, many of which are beyond our control. You are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those expressed or implied in the forward-looking statements.

ABOUT THE RIGHTS OFFERING

     Before exercising any subscription rights, you should read carefully the information set forth under “Risk Factors” beginning on page 7.

Reason for the Rights Offering

     We are making this rights offering with the intention of raising up to approximately $3,150,000. We intend to use the proceeds to (i) fund future operations, including those of our employment services division, (ii) pursue the claims of our subsidiary, Petrotimor, against the Commonwealth of Australia, the Joint Authority established under the Timor Gap Treaty and the Phillips Petroleum companies operating within the Timor Gap area, regarding Petrotimor’s oil and gas concession in the Timor Gap and (iii) continue to pursue commercial opportunity in East Timor. We want to give you the opportunity to participate in our equity fund-raising so that you will have the ability to maintain your proportional ownership interest in us. See “Risk Factors-Risks Associated with the Offering of Subscription Rights-Risk of not raising the full $3,150,000.”

The Subscription Rights

     We are distributing to you, at no cost, non-transferable subscription rights as a holder of record of shares of our common stock on October      , 2002. We are giving you 2.1177565 subscription rights for each share of common stock that you owned on October      , 2002. You will not receive fractional subscription rights during the rights offering, but instead we have rounded your total number of subscription rights up to the next largest whole number. Each subscription right entitles you to purchase

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one share of common stock for $.15. If you wish to exercise your subscription rights, you must do so before 5:00 p.m., Denver, Colorado Time, on the Expiration Date. After that date, the subscription rights will expire and will no longer be exercisable. There is no minimum that we must sell to complete the offering. The rights offering is being made on an any or all basis, which means that we may accept any subscription received even if all 21,000,000 shares of common stock offered are not subscribed for in the rights offering.

Basic Subscription Privilege

     Each subscription right entitles you to receive one share of common stock upon payment of $.15 per share. You will receive certificates representing the shares that you purchase pursuant to your basic subscription privilege within 15 business days after November      , 2002, whether you exercise your subscription rights immediately prior to that date or earlier.

Over-Subscription Privilege

     Subject to the allocation described below, each subscription right also grants each stockholder an over-subscription privilege to purchase additional shares of common stock that are not purchased by other stockholders pursuant to their basic subscription privileges. You are entitled to exercise your over-subscription privilege only if you exercise your basic subscription rights in full.

     If you wish to exercise your over-subscription privilege, you should indicate the number of additional shares that you would like to purchase in the space provided in your subscription agreement. When you send in your subscription agreement, you must also send the full purchase price for the number of additional shares that you have requested to purchase (in addition to the payment due for shares purchased through your basic subscription privilege). If the number of shares remaining after the exercise of all basic subscription privileges is not sufficient to satisfy all requests for shares pursuant to over-subscription privileges, you will be allocated additional shares pro rata (subject to elimination of fractional shares), based on the number of shares you purchased through the basic subscription privilege in proportion to the total number of shares that you and other over-subscribing stockholders purchased through the basic subscription privilege. However, if your pro rata allocation exceeds the number of shares you requested on your subscription agreement, then you will receive only the number of shares that you requested, and the remaining shares from your pro rata allocation will be divided among other stockholders exercising their over-subscription privileges.

     For example, if after the exercise of the basic subscription rights (1) there remain 150,000 shares of common stock that were not subscribed for pursuant to basic subscription rights, (2) two stockholder each indicated that they wished to acquire additional common stock pursuant to the over-subscription privilege, (3) the first stockholder oversubscribed for 150,000 shares and the second stockholder oversubscribed for 200,000 shares and each tendered payment for that number of shares and (4) the first stockholder acquired 100,000 shares pursuant to its full basic subscription rights and the second stockholder acquired 200,000 shares pursuant to its full basic subscription rights, then the first stockholder would be entitled to one-third or 50,000 shares pursuant to the over-subscription privilege and the second stockholder would be entitled to two-thirds or 100,000 shares pursuant to the over-subscription privilege.

     We have the discretion to issue less than the total number of shares that may be available for over-subscription requests in order to comply with state securities laws.

     As soon as practicable after the Expiration Date, we will determine the number of shares of common stock that you may purchase pursuant to the over-subscription privilege. You will receive

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certificates representing these shares within 15 business days after the Expiration Date. We have the discretion to delay allocation and distribution of any and all shares to stockholders who are affected by state securities laws, if any, and elect to participate in the rights offering, including shares that we issue with respect to your basic or over-subscription privilege in order to comply with such regulations. If you request and pay for more shares than are allocated to you, we will refund that overpayment, without interest within 15 business days after the Expiration Date. In connection with the exercise of the over-subscription privilege, banks, brokers and other nominee holders of subscription rights who act on behalf of beneficial owners will be required to certify to Oceanic Exploration as to the aggregate number of subscription rights that have been exercised, and the number of shares of common stock that are being requested through the over-subscription privilege, by each beneficial owner on whose behalf the nominee holder is acting.

     NWO Resources, Inc. and its major stockholder, Cordillera Corporation, two of our principal stockholders, have stated their intention to fully exercise their basic subscription rights and, if the rights offering is under subscribed, to purchase additional shares that are not subscribed for by other stockholders in the rights offering, to the extent that shares are available. They have indicated that there is no minimum number of shares that other stockholders must subscribe for before they will consider purchasing the additional shares. NWO Resources, Inc. and Cordillera Corporation are not obligated to exercise their basic subscription privileges or purchase all unsubscribed shares and may later determine not to do so.

No Recommendations

     We are not making any recommendation as to whether or not you should exercise your subscription rights. You should make your decision based on your own assessment of your best interests.

Expiration Date

     The rights will expire at 5:00 p.m., Denver, Colorado Time, on the expiration date of November      , 2002 (“Expiration Date”), unless we decide to extend the rights offering up to an additional 30 days. If you do not exercise your basic subscription privilege and over-subscription privilege prior to that time, YOUR SUBSCRIPTION RIGHTS WILL BE NULL AND VOID. We will not be required to issue shares of common stock to you if we receive your subscription agreement or your payment after that time, regardless of when you sent the subscription agreement and payment.

Cancellation Right

     Our Board of Directors may cancel the rights offering in its sole discretion at any time prior to or on the Expiration Date for any reason (including a change in the market price of the common stock). If we cancel the rights offering, any funds you paid will be refunded within 15 business days, without interest.

Non-transferability of Subscription Rights

     Except in the limited circumstance described below, only you may exercise the basic subscription privilege and the over-subscription privilege. You may not sell, give away or otherwise transfer the basic subscription privilege or the over-subscription privilege.

     Notwithstanding the foregoing, your rights may be transferred by operation of law or through involuntary transfers. For example, a transfer of rights to the estate of the recipient upon the death of the

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recipient would be permitted. If the rights are transferred as permitted, evidence satisfactory to us that the transfer was proper must be received by us prior to the expiration date of the rights offering.

Exercise of Subscription Rights

     You may exercise your subscription rights by delivering to us on or prior to the Expiration Date

• a properly completed and duly executed subscription agreement; and

• payment in full of $.15 per share of common stock to be purchased through the basic subscription privilege and the over-subscription privilege.

      You should deliver your subscription agreement and payment to us at

Oceanic Exploration Company
Attention: Phylis J. Anderson, Chief Financial Officer
7800 East Dorado Place, Suite 250
Englewood, Colorado 80111
(303) 220-8330

     We will not pay you interest on funds delivered to us pursuant to the exercise of rights.

Method of Payment

     Payment for the shares must be made by certified check, bank draft (cashier’s check) drawn upon a U.S. bank or a money order payable to “Oceanic Exploration Company.” Payment will be deemed to have been received by us only upon receipt by us of any certified check or bank draft drawn upon a U.S. bank, or any postal, telegraphic or express money order.

     Sufficient mailing time should be allowed for the subscription agreement and payment to be received by us before the Expiration Date at 5:00 p.m., Denver, Colorado Time, November      , 2002, after which time the rights will be void and valueless.

Shares Held for Others

     If you are a broker, a trustee or a depository for securities, or you otherwise hold shares of common stock for the account of others as a nominee holder, you should notify the beneficial owner of such shares as soon as possible to obtain instructions with respect to their subscription rights, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should complete the subscription agreement and submit it to us with the proper payment.

     If you are a beneficial owner of common stock held by a nominee holder, such as a broker, trustee or a depository for securities, we will ask your broker, dealer or other nominee to notify you of this rights offering. If you wish to purchase shares through this rights offering, you should contact the holder and ask him or her to effect transactions in accordance with your instructions.

Ambiguities in Exercise of Subscription Rights

     If you do not specify the number of shares of common stock being subscribed for in your subscription agreement, or if your payment is not sufficient to pay the total purchase price for all of the

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shares that you indicated you wished to purchase, you will be deemed to have subscribed for the maximum number of shares of common stock that could be subscribed for with the payment that we receive from you. If your payment exceeds the total purchase price for all of the shares of common stock shown in your subscription agreement, your payment will be applied, until depleted, to subscribe for shares of common stock in the following order:

     (1) to subscribe for the number of shares, if any, that you indicated on the subscription certificate that you wished to purchase through your basic subscription privilege;

     (2) to subscribe for shares of common stock until your basic subscription privilege has been fully exercised;

     (3) to subscribe for additional shares of common stock pursuant to the over-subscription privilege (subject to any applicable proration). Any excess payment remaining after the foregoing allocation will be returned to you as soon as practicable by mail, without interest or deduction.

Regulatory Limitation

     We will not issue shares of common stock in the rights offering to California residents who do not meet the suitability requirements described on page i. State securities laws require an offering to be registered or exempt in each state where the offering is made. We believe we have complied with the registration or exemption requirements in all states where we know stockholders reside. If you are resident in another jurisdiction, we will not be required to issue common stock to you pursuant to the rights offering if we are advised by our counsel that the cost of compliance with the local securities laws will substantially exceed your subscription amount.

Our Decision Binding

     All questions concerning the timeliness, validity, form and eligibility of any exercise of subscription will be determined by us, and our determinations will be final and binding. In our sole discretion, we may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any subscription right by reason of any defect or irregularity in such exercise. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine in our sole discretion. We will not be under any duty to notify you of any defect or irregularity in connection with the submission of a subscription agreement or incur any liability for failure to give such notification.

No Revocation

     Once you have exercised your basic subscription privilege or over-subscription privilege, YOU MAY NOT REVOKE THAT EXERCISE EVEN IF THE SUBSCRIPTION PERIOD HAS NOT YET ENDED. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of common stock at the subscription price of $.15 per share.

Rights of Subscribers

     Your exercise of rights in this rights offering will give you no additional rights as a stockholder until the shares you have purchased in the rights offering are deemed issued to you.

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Shares of Common Stock Outstanding After the Rights Offering

     Assuming we issue all of the shares of common stock offered in the rights offering, approximately 30,916,154 shares of common stock will be issued and outstanding. This would represent an approximate 212% increase in the number of outstanding shares of common stock. IF YOU DO NOT FULLY EXERCISE YOUR BASIC SUBSCRIPTION PRIVILEGE BUT OTHERS DO, THE PERCENTAGE OF COMMON STOCK THAT YOU HOLD WILL DECREASE.

Fees and Expenses

     You are responsible for paying commissions, fees, taxes or other expenses incurred in connection with the exercise of the subscription rights. Oceanic Exploration will not pay these expenses.

Important

     Please carefully read the instructions accompanying the subscription agreement and follow those instructions in detail. You are responsible for choosing the payment and delivery method for your subscription agreement, and you bear the risks associated with such delivery. If you choose to deliver your subscription agreement and payment by mail, we recommend that you use registered mail, properly insured, with return receipt requested. We also recommend that you allow a sufficient number of days to ensure delivery to us prior to the Expiration Date.

IF YOU HAVE ANY QUESTIONS

     If you have questions or need assistance concerning the procedure for exercising subscription rights, or if you would like additional copies of this prospectus or the Instructions, you should contact

Oceanic Exploration Company
Attention: Janet A. Holle, Secretary
7800 East Dorado Place, Suite 250
Englewood, Colorado 80111
Tel: (303) 220-8330

PLAN OF DISTRIBUTION

     On or about October      , 2002, we will distribute the subscription rights and copies of this prospectus to all holders of record of our common stock as of October      , 2002. If you wish to exercise your subscription rights and purchase shares of common stock, you should complete the subscription agreement and return it with payment for the shares, to us at the address on page 12. See “About the Rights Offering-Exercise of Subscription Rights.” If you have any questions, you should contact Janet A. Holle, our Secretary, at the telephone numbers and address listed above.

     The shares of common stock offered pursuant to this rights offering are being offered by us directly to holders of our common stock.

     NWO Resources, Inc. and its major stockholder, Cordillera Corporation, two of our principal stockholders, have stated their intention to exercise their subscription rights, thereby purchasing 11,558,668 shares, and have also indicated that they may purchase any additional shares that are not

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subscribed for by other stockholders. They have indicated that there is no minimum number of shares that other stockholders must subscribe for before they will consider purchasing the additional shares. They are, however, not obligated to exercise their subscription rights or to purchase additional shares. They have indicated that there is no minimum number of shares that other stockholders must subscribe for before they will consider purchasing the additional shares. NWO Resources and Cordillera Corporation will receive no discounts or commissions on their purchases. There are no discounts and commissions to be allowed or paid to dealers. We have not entered into any agreement to indemnify NWO Resources or Cordillera Corporation against any underwriter liability arising under the Securities Act.

FEDERAL INCOME TAX CONSIDERATIONS

General

     The following summarizes the material federal income tax consequences to you as a United States stockholder of Oceanic Exploration as a result of the receipt, lapse, or exercise of the subscription rights distributed to you pursuant to the rights offering. This discussion does not address the tax consequences of the rights offering under applicable state, local or foreign tax laws. Moreover, this discussion does not address every aspect of taxation that may be relevant to a particular taxpayer under special circumstances or who is subject to special treatment under applicable law and is not intended to be applicable in all respects to all categories of investors. Other tax considerations may apply to investors who are, for example, insurance companies, tax-exempt persons, financial institutions, regulated investment companies, dealers in securities, persons who hold their shares of common stock as part of a hedging, straddle, constructive sale or conversion transaction, persons whose functional currency is not the U.S. dollar and persons who are not treated as a U.S. stockholder.

     This summary is based on the Internal Revenue Code of 1986, as amended (which we will refer to as the “Code”), the Treasury regulations promulgated thereunder, judicial authority and current administrative rules and practice, all of which are subject to change on a prospective or retroactive basis. This discussion assumes that your shares of common stock and the subscription rights and shares issued to you during the rights offering constitute capital assets within the meaning of Code Section 1221.

     Receipt and exercise of the subscription rights distributed pursuant to the rights offering is intended to be nontaxable to stockholders, and the following summary assumes you will qualify for such nontaxable treatment. If however, the rights offering does not qualify as nontaxable, you would be treated as receiving a taxable distribution equal to the fair market value of the subscription rights on the distribution date. The distribution would be taxed as a dividend to the extent made out of Oceanic Exploration’s current or accumulated earnings and profits; any excess would be treated first as a return of your basis (investment) in your common stock and then as a capital gain. Expiration of the subscription rights in that situation would result in a capital loss.

Taxation of Stockholders

     Receipt of a Subscription Right. You will not recognize any gain or other income upon receipt of a subscription right in respect of your common stock. Your tax basis in each subscription right will effectively depend on whether you exercise the subscription right or allow the subscription right to expire. Except as provided in the following sentence, the basis of subscription rights you receive as a distribution with respect to your common stock will be zero. If, however, either (i) the fair market value of the subscription rights on the date of issuance is 15% or more of the fair market value (on the date of issuance of the rights) of the common stock with respect to which they are received or (ii) you properly elect, in your federal income tax return for the taxable year in which the subscription rights are received,

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to allocate part of your basis in your common stock to the subscription rights, then upon exercise of the rights, your basis in the common stock will be allocated between the common stock and the rights in proportion to the fair market value of each on the date the rights are issued. Your holding period for a subscription right will include your holding period for the shares of common stock upon which the subscription right is issued.

     Expiration of Subscription Rights. You will not recognize any loss upon the expiration of a subscription right.

     Exercise of Subscription Rights. You generally will not recognize a gain or loss on the exercise of a subscription right. The tax basis of any share of common stock that you purchase through the rights offering will be equal to the sum of your tax basis (if any) in the subscription right exercised and the price paid for the share. The holding period of the shares of common stock purchased through the rights offering will begin on the date that you exercise your subscription rights.

THIS DISCUSSION IS INCLUDED FOR YOUR GENERAL INFORMATION ONLY. YOU SHOULD CONSULT YOUR TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES TO YOU OF THE RIGHTS OFFERING IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING ANY STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.

STATE AND FOREIGN SECURITIES LAWS

     The rights offering is not being made in any state or other jurisdiction in which it is unlawful to do so. We may delay the commencement of the rights offering in certain states or other jurisdictions in order to comply with the securities law requirements of such states or other jurisdictions. In our sole discretion, we may decline to make modifications to the terms of the rights offering requested by certain states or other jurisdictions, in which case stockholders who live in those states or jurisdictions will not be eligible to participate in the rights offering.

RESALE OF COMMON STOCK

     Upon completion of the rights offering, assuming all rights are exercised, we will have 30,916,154 shares of common stock outstanding. Subject to applicable state securities laws, stockholders who are not “affiliates” of Oceanic Exploration may generally resell, without restriction, the common stock acquired pursuant to the exercise of their rights. Stockholders who are deemed to be “affiliates” of Oceanic Exploration may resell common stock acquired pursuant to the exercise of their rights only pursuant to Rule 144 under the Securities Act or in a transaction otherwise exempt from registration under the Securities Act and subject to applicable state securities laws.

     NWO Resources, Inc. and Cordillera Corporation currently own 5,736,378 shares. They have stated their intention to exercise their subscription rights in full for an additional 11,558,668 shares. In addition, they may purchase any additional shares that are not subscribed for by other stockholders in the rights offering. NWO Resources, Inc. and Cordillera Corporation have no current intent to distribute any common stock they acquire pursuant to this offering. If they determine to sell all or a part of that common stock, they may do so at the market price through transactions with brokers or dealers or through one or more privately negotiated transactions. NWO Resources, Inc. and Cordillera Corporation will be required to deliver a prospectus in connection with any such sales. They are both affiliates of Oceanic Exploration for purposes of Rule 144 under the Securities Act. Accordingly, the resale of common stock acquired by them will be subject to the limitations set forth in Rule 144 with respect to amounts of securities sold by an affiliate and the manner of sale unless the common stock is

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sold by them in a transaction otherwise exempt from registration under the Securities Act and other applicable securities laws.

USE OF PROCEEDS

     The following table illustrates our current expectations as to the use of the proceeds from this offering if the rights offering is fully subscribed. We have no firm agreement concerning items listed and no binding budget has been established. If less than the full rights offering is subscribed for, we will pay the costs of the offering and apply any additional available funds in approximately the proportion indicated below. The amounts stated herein are approximate only and the actual expenditures may vary from the estimate.

     The Gross Proceeds do not take into account an additional $450 that would be raised if up to 3,000 additional shares of common stock are issued in connection with the rounding up of shares. The estimated costs of offering include professional fees incurred in the preparation of this prospectus and printing, copying and miscellaneous expenses. We believe the amount under “Fund Future Operations” should be sufficient to fund our operations, including those of Petrotimor, through December 2004. We believe the amount set forth under “Supplement Alliance Division Payroll” will be sufficient to fund Alliance’s operations through June 2003. The commercial opportunity in East Timor for which funds have been allocated in the table below, is the pursuit of the recognition by East Timor of PetroTimor’s previous concession granted by Portugal. Recognition of PetroTimor’s claim and assistance to East Timor by PetroTimor’s legal experts would be helpful in assisting East Timor achieve recognition of the maritime boundaries in the Timor Sea that East Timor is legally entitled to under international law.

     On August 15, 2002, we established a line of credit with NWO Resources, Inc. to fund our operations prior to the completion of the rights offering, if such funding is required. As of September 30, 2002, no amount was outstanding under the line of credit. We expect to draw down a total of approximately $150,000 before the closing of the rights offering. The line of credit provides for cumulative draws of up to $500,000 with interest on the outstanding balance at 2% over the U.S. Bank prime lending rate in effect on the date of each draw against the line of credit. The line of credit is evidenced by an unsecured demand promissory note that is due upon demand. We anticipate repaying any outstanding amounts due under the line of credit upon consummation of the rights offering, at which time the line of credit will be terminated.

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Gross Proceeds			$	3,150,000
Cost of Offering				(100,000	)
		Net Proceeds	$	3,050,000
Repay Line of Credit			$	150,000
Fund Future Operations:
	Net payroll cost			475,000
	Rent, officer and director fees			320,000
	Other general and administrative costs			240,000
Petrotimor Litigation Expenses				1,400,000
Continue to Pursue Commercial Opportunity in East Timor				185,000
Supplement Alliance Division payroll costs				280,000
		Net Proceeds	$	3,050,000

     We reserve the right to allocate our resources in a different manner if necessary or appropriate.

DETERMINATION OF OFFERING PRICE

     The independent members of our Board of Directors set all of the terms and conditions of the rights offering, including the subscription price. In establishing the $.15 per share subscription price, the directors considered the following factors in establishing the subscription price:

• strategic alternatives available to us for raising capital, such as debt financing, merger or acquisition with another entity, sale of a portion of our assets, a loan from our major stockholders or another affiliated entity, or private placements of equity to affiliates or third parties;

• market price of our common stock before and after the announcement of the rights offering;

• the lack of trading volume in our stock; and

• our business prospects and general conditions in the securities markets.

     The $.15 subscription price, however, does not necessarily bear any relationship to our past or expected future results of operations, cash flows, asset values, current financial condition, or any other established criteria for value.

     We did not seek or obtain any opinion of financial advisors or investment bankers in establishing the subscription price for the offering. You should not consider the $.15 per share subscription price as an indication of the value of Oceanic Exploration or our common stock. We cannot assure you that you will be able to sell shares purchased during this offering at a price equal to or greater than $.15 per share. On October      , 2002, the last reported sale price of our common stock was $.     per share.

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BUSINESS OF OCEANIC EXPLORATION

     We historically have been engaged in the business of acquiring oil and gas concessions covering large blocks of acreage in selected areas of the world. The term “concession” is used to mean exploration, development and production rights with respect to a specific area, which rights may be created by agreement with a government, governmental agency or corporation. Subsequent to purchase, we conduct exploration activities thereon, including seismic and other geophysical evaluation and exploratory drilling where appropriate. We are not currently conducting exploration activities. We are currently actively pursuing legal claims to protect the disputed oil and gas concession we have to acreage in the Timor Gap between East Timor and Australia.

     Effective March 31, 2000, we purchased the employment operations and certain assets of Alliance Services Associates, Inc., an employment agency located in San Diego, California and a wholly owned subsidiary of Alliance Staffing Associates, Inc. We operate the business through our wholly owned division, Alliance Employment Solutions, through which we offer employment solutions to clients’ needs for executive search, professional and technical placement, human resources consulting, site management and contract staffing.

     We also provide management services to various entities with which our Chairman of the Board of Directors and Chief Executive Officer is affiliated. All services are provided on a cost plus 5% of the cost mark up basis. We provide bookkeeping and administrative services, in addition to management services, to San Miguel Valley Corporation and management, professional and administrative services to Cordillera Corporation, which together constitute approximately 17% of our total revenues. We provide an immaterial amount of bookkeeping services to Points Four World Travel, Inc. and, until September 1, 2002 when services were terminated by mutual agreement, performed management services for Global Access Telecommunications, Inc.

     We were incorporated as a Delaware corporation in December 1968. As of August 31, 2002, we had seven permanent employees in Colorado who provide services to both the oil and gas operations and management services. We have eight permanent employees plus 80 to 100 temporary employees in California engaged in our employment operations.

Oil and Gas

     We conduct our oil and gas operations directly or through wholly owned subsidiaries. Historically, when a discovery of oil or gas occurs, we will pursue the development of reserves and the production of oil or gas to the extent considered economically feasible by farming out, or selling, a portion of our interest in the discovery to finance development. Property interests are located in the North Aegean Sea, offshore Greece, in the East China Sea and in the Timor Gap, a strait that lies between East Timor and Australia. Since 1994 we have not been able to participate in exploration and development in any of these areas for various reasons.

     We have generally undertaken exploration of concessions through various forms of joint arrangements with unrelated companies, whereby the parties agree to share the costs of exploration, as well as the costs of, and any revenue from, a discovery. Such arrangements do not always equate the proportion of expenditures undertaken by a party with the share of revenues to be received by such party.

     We usually obtained concessions directly from a government or governmental agency. We then enter into arrangements with other participants whereby we receive cash payments and have our share of

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exploration expenditures paid (either before or after being expended) in whole or in part by other participants.

     Historically, sales of partial interest in our concessions have been part of our normal course of business and have provided funds for the acquisition of further concessions and for exploration of existing concessions. Some of the competition and risk factors relating to this method of doing business are referred to above in “Risk Factors.”

     In order to maintain our concessions in good standing, we are usually required to expend substantial sums for exploration and, in many instances, for surface rentals or other cash payments. Additionally, the development of any discoveries made upon concessions in which we hold an interest generally involves the expenditure of substantial sums of money. We have, in the past, satisfied required expenditures on our concessions. We cannot be certain that our revenues in the future will be sufficient to satisfy expenditures required to be made on our concessions and we continue to pursue other opportunities from alternative sources that would enhance our liquidity.

     Historically, our most significant source of revenue has been our 15% net profits interest in certain oil and gas producing properties offshore Greece (the “Prinos Interest”). Denison Mines, Ltd. had a contractual obligation to make payments to us under the Prinos Interest. We commenced an action against Denison Mines, Ltd. claiming they had failed to pay the full amount due under an agreement dated August 30, 1976. The suit was settled in our favor and on January 27, 2000 and February 9, 2000, respectively, we received $8,614,789 and $15,868. The payment consisted of $6,739,342 (net of Greek taxes) for net profits interest payments from January 1, 1993 through December 31, 1997, $118,255 for court costs and accrued interest of $1,773,060 (net of Canadian withholding taxes). We received no revenue from this source in 2001 and do not expect to receive any revenue from this source in 2002 or in the foreseeable future.

     In 1974, Petrotimor, our wholly owned subsidiary, was granted an exclusive offshore concession from Portugal to explore for and develop oil and gas in approximately 14.8 million acres in the Timor Gap. This concession and the attendant litigation is the major focus of our oil and gas activities. See “Properties” and “Legal Proceedings.”

     On September 19, 2000, we entered into a Participation Agreement with Mariah Energy, LLC giving Oceanic Exploration a 75% working interest in certain oil and gas property in Finney County, Kansas at a cost of $33,600. The agreement provided for participation in the drilling and testing of an exploration test well. The test well was drilled in October 2000 and determined to be a dry hole. At December 31, 2000, an impairment reserve was recorded for the full amount of the working interest. The cost and related impairment reserve were written off at December 31, 2001 as all rights under the Participation Agreement had expired.

     We did not receive any revenue from any other oil and gas properties in 2001 and do not expect to receive any revenue from any of our oil and gas properties in 2002.

Alliance Employment Solutions

     Effective March 31, 2000, we purchased the employment operations and certain assets of Alliance Services Associates, Inc., an employment agency located in San Diego, California, for $581,000. We operate the business through Alliance Employment Solutions, which is a wholly owned division of Oceanic Exploration. The purchase price was paid to the stockholders of Alliance Services Associates, Inc., Karsten N. Blue and Linden P. Blue, who are the sons of our Chairman of the Board of Directors and Chief Executive Officer.

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     Alliance Employment Solutions is located in San Diego, California. The operation offers employment services in executive search, professional and technical placement, human resources consulting, site management and contract staffing.

     Employment services are priced to cover the cost of payroll for the temporary employees, plus a markup of payroll costs intended to cover employer taxes, workers compensation, benefits of temporary employees, direct administrative costs and profit. Markups are a function of volume, level of position being filled and market conditions. The employment operations currently employ 80 to 100 temporary employees.

     Contracts for employment services normally specify the obligations of each party along with contract staffing fees, billing terms, early conversion options, direct placement fees and term of contract. The nature of the employment industry is such that contracts are generally used only for large, long-term arrangements. It is not uncommon to provide long-term or short-term services without a contract.

     The employment agency industry in San Diego is very competitive, with several large international and national agencies doing business in the area, in addition to multiple local regional agencies.

Management Services

     We provide management, bookkeeping and administrative services to San Miguel Valley Corporation. We provide management, professional and administrative services to Cordillera Corporation. Until September 1, 2002, when services were terminated by mutual agreement, we provided management services to Global Access Telecommunications, Inc. We provide bookkeeping services to Points Four World Travel, Inc. Payments to Points Four World Travel, Inc. are immaterial as a percentage of our total revenue. All services are provided on a cost plus 5% of the cost mark up basis. Our Chairman of the Board of Directors and Chief Executive Officer is affiliated with each of these corporations. See “Certain Relationships and Related Transactions.”

     The purpose for such agreements is to avoid duplication of functions and costs for the economic benefit of all of the companies involved.

     We provide to San Miguel Valley Corporation bookkeeping and administrative services, in addition to being responsible for the day-to-day management services of San Miguel Valley Corporation, resulting in approximately 6% of our current total revenue.

     We also provide management, professional and administrative services to Cordillera Corporation that currently account for approximately 11% of our total revenue. Our management is responsible for the day-to-day management of subsidiaries of Cordillera Corporation.

     Through August 31, 2002, Karsten Blue, son of our Chairman of the Board of Directors and Chief Executive Officer, performed management services for Global Access Telecommunications, Inc., which accounted for approximately 6 % of total revenue for 2002. Effective September 1, 2002, we no longer perform management services for Global Access Telecommunications, Inc. nor employ Karsten Blue. We currently utilize Karsten Blue’s services to assist coordinating the various activities relating to the commercial opportunity in East Timor, including but not limited to coordinating the publicity of the Timor Gap issue seeking East Timor public opinion for an Oceanic concession, on a monthly basis by paying his current employer, Cordillera Corporation. On September 1, 2002, we entered into a Service Agreement with Cordillera Corporation, pursuant to which we compensate and reimburse Cordillera

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Corporation for Karsten Blue’s services at the rate of $1,250 per week, not to exceed $65,000 per year, and out-of-pocket business expenses incurred by him. See “Certain Relationships and Related Transactions—Officer’s Family Compensation.”

Governmental Approvals and Regulations

     Other than obtaining the concessions from foreign and U.S. governments for oil and gas exploration, no material governmental approvals are required for our businesses. Currently, no oil and gas concessions are being developed. Historically, we have entered into participation agreements with other entities who conduct exploration and drilling activities. Such other entities obtain any governmental approvals and comply with any governmental regulations required to conduct such activities. There are no material governmental regulations that affect our employment services and management services.

NWO Resources, Inc. Line of Credit

     On August 15, 2002, we established a line of credit with NWO Resources, Inc. to fund our operations prior to the completion of the rights offering, if such funding is required. As of September 30, 2002, no amount was outstanding under the line of credit. We expect to draw down a total of approximately $150,000 before the closing of the rights offering. The line of credit provides for cumulative draws of up to $500,000 with interest on the outstanding balance at 2% over the U.S. Bank prime lending rate in effect on the date of each draw against the line of credit. The line of credit is evidenced by an unsecured demand promissory note that is due upon demand. We anticipate repaying any outstanding amounts due under the line of credit upon consummation of the rights offering, at which time the line of credit will be terminated. If the rights offering is unsuccessful, we will seek other financing. See “Risk Factors—Risks Associated With the Offering of Subscription Rights-Our need for capital.”

PROPERTIES

     We hold various interests in concessions or leases for oil and gas exploration that are described below. Oil and gas property interests as reflected in the accompanying financial statements include costs attributable to the Prinos Interest and certain other oil and gas interests. Costs on all other concessions or leases have been charged to expense in prior years.

     We are not currently conducting exploration activities other than litigation activities and the application to expand the East Timor concession. We are currently actively pursuing legal claims to protect the disputed oil and gas concession we have in the Timor Gap between East Timor and Australia. Except for the Prinos Oil Field described below, no currently held concessions have been developed into operational oil or gas fields.

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Greece

     Prinos Oil Field. Prior to March 1999 we owned a 15% net profits interest (“Prinos Interest”) in an oil and gas concession in areas totaling approximately 430,000 acres in the North Aegean Sea, offshore Greece. “Development areas” for the Prinos Oil Field covering 23,390 gross acres and for the Kavala Gas Field covering 11,787 gross acres were defined by the Greek government and given “development status.” The term of each “development” license is 26 years, with an automatic 10-year renewal. We own a 15% interest in the remaining exploration area adjoining Prinos and South Kavala covering 153,316 acres and an exploration area east of the island of Thasos covering an additional 243,367 acres.

     In 1992, the consortium operating the Prinos Oil Field, believing that the Greek operation was at its economic break-even point, commenced negotiations with senior Greek officials to obtain relief from the high level of government taxes and royalties. In 1993, an agreement was reached resulting in an amendment to the License Agreement that regulates the operation of the field. Denison Mines, Ltd., who has the contractual obligation to pay the Prinos Interest, asserted that the calculation of the amounts due Oceanic Exploration should be based on the amended 1993 agreement with the Greek government. The amended agreement provided for higher cost recoveries than the License Agreement before the 1993 amendment. If higher cost recoveries are used in calculating the amount due under the Prinos Interest, the amount will be significantly lower than the amount calculated under the License Agreement before the 1993 amendment. We disagreed with this interpretation and commenced legal action seeking a declaration by the court that amounts due us attributable to its Prinos Interest be calculated based on the terms of the License Agreement before the 1993 amendment.

     The trial began in September 1996. In December 1996, we received a favorable judgment from the Court. However, Denison filed a Notice of Appeal requesting that the judgment be set aside. The Appellate Court hearing before the Ontario Court of Appeal was held in June 1999. On December 16, 1999, we received notification that the Appellate Court had upheld the lower court’s decision. On January 27, 2000 and February 9, 2000, respectively, we received $8,614,789 and $15,868 from Denison Mines, Ltd. This amount consisted of $6,749,342 (net of Greek taxes) for net profits interest payments from January 1, 1993 through December 31, 1997, $118,255 for court costs and accrued interest of $1,773,060 (net of Canadian withholding taxes).

     The net profits interest payments due to us for the period from January 1, 1993 through December 31, 1997, based on the agreement that was in effect prior to the 1993 amendment (lower cost recoveries) was $9,031,359 as compared to $2,252,371 based on the 1994 amendment (higher cost recoveries). The amount received from Denison pursuant to the judgment, which was $6,739,342, was the difference between these two amounts, less an additional $39,646 that Denison had paid in 1998.

     In December 1998, we were notified by Denison Mines, Ltd. that April 1, 1998 through March 31, 1999 would be the final year of production for the Prinos property. In the final year of production, Denison Mines is entitled to 100% cost recovery; consequently, we did not receive any net profits interest payments for this period. Subsequently, it was determined that calendar year 1998 was the final year of production for the Prinos property. Therefore, net profits interest payments to us were only payable through December 31, 1997. The Prinos oil field was shut in during November 1998 primarily because of lower oil prices and declining production. Effective March 31, 1999, the consortium operating the Greek properties relinquished its license to operate the Prinos Oil Field in Greece.

     Thasos Island. The termination of the Prinos Oil Field license does not affect the extensive exploration area east of Thasos Island where no exploration is currently permitted due to territorial

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disputes between Greece and Turkey. It is impossible for us to determine at this time when exploration activities might be commenced in that area. If the territorial disputes are resolved, we are uncertain of the term of concession because the concession is controlled by Denison and we have limited access to information regarding the concession. Should the territorial dispute be resolved and the consortium drill and successfully develop any additional prospects, we would be entitled to once again receive our 15% net profits interest, applicable to the working interest of Denison Mines, Ltd. Denison Mines, Ltd. has not advised us as to whether they have any intention of drilling. There is no assurance that we will receive net profit interest from these properties in the future. Management does not know when the sovereignty issues will be resolved but they may not be resolved in the foreseeable future. We intend to retain our interest for the life of the concession and cannot predict when further activity with respect to the concession may occur.

Republic of China (Taiwan)

     We hold a 22.23% working interest in a concession located north of Taiwan in the East China Sea, covering 3,706,560 gross acres. The exploration license for this concession had a nominal term extending to 1979, requiring exploration activity and minimum expenditures. Preparations for initial exploratory drilling were suspended in 1977 under a claim of force majeure, pending resolution of a territorial dispute among the Republic of China (Taiwan), the Government of Japan and the People’s Republic of China. We have made an application to the Chinese Petroleum Corporation (Taiwan) each year to continue the suspension and have received confirmation of the suspension through December 31, 2002. There is no assurance that the Chinese Petroleum Corporation (Taiwan) will continue to suspend obligations under this concession in the future. If the force majeure were lifted, the exploration phase of the contract would be resumed subject to the threat of future cancellation in the event no commercial discovery is made.

     During fiscal 1990, we entered into a farm out agreement with Enterprise Oil Exploration Limited, a United Kingdom company, and NMX Resources (Overseas) Limited, a Bermuda company, conveying two-thirds of our original 66.67% interest in the concession. We received $1,471,156 representing two-thirds of past expenditures in the area pursuant to the farm out agreement.

     Due to the uncertainty of sovereignty in the area, no immediate development expenditures, as required under the terms of the concession agreement, are anticipated. If the force majeure is lifted, we intend to pursue activities related to our obligations under the agreement.

     In fiscal year 1994, we reported that the People’s Republic of China was indicating its intention to open up adjacent concession areas for bidding and that a resolution to the sovereignty issues may result. Nothing occurred in fiscal year 2002 to indicate that the lifting of the current force majeure status is imminent. Management does not know when the sovereignty issues will be resolved but they may not be resolved in the foreseeable future. We intend to hold the concession for the life of the concession and cannot predict when further activity with respect to the concession may occur.

Timor Gap

     In 1974 Petrotimor, our wholly owned subsidiary, was granted an exclusive offshore concession by Portugal to explore for and develop oil and gas in an approximately 14.8 million acre area between East Timor and Australia in an area known as the “Timor Gap.” At that time Portugal had administrative control over East Timor. On January 5, 1976, following Indonesia’s unlawful invasion and occupation of East Timor, Petrotimor applied for and obtained on April 14, 1976 Portugal’s consent to a suspension of performance under the concession agreement based upon force majeure. This force majeure status remained in effect until at least October 25, 1999.

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     On December 11, 1989, Australia and Indonesia, ignoring Petrotimor’s rights under its concession from Portugal, signed the Timor Gap Treaty, purporting to create a joint zone of cooperation, whereby these two countries could control the exploration and development of hydrocarbons in an area over which both countries claimed rights. A portion of this area, designated as Zone A, falls largely within the area where Petrotimor holds rights under its concession agreement with Portugal.

     The treaty created a Joint Authority that purported to grant and enter into production sharing contracts with various companies who have carried out exploration activities in the joint zone of cooperation. According to the 2001 Annual Report of Phillips Petroleum Company (one of the companies that has carried out exploration activities in the Timor Gap and an affiliate of the Phillips companies in our suit), Phillips and other participants in the production sharing contracts discovered gas and gas condensate in the Timor Gap area that we claim. Their drilling in 1995 confirmed that the discovery extended across two production sharing contract areas designated as the Bayu-Undan field. This field is being developed in two phases by Phillips and the other participants. As reported by Phillips, the first phase is a gas-recycle project, where condensate and natural gas liquids will be separated and removed and the dry gas reinjected into the reservoir. This phase is expected by Phillips to begin full commercial production in 2004, at an anticipated net rate of 50,000 barrels of liquids per day from proved reserves. The second phase would involve the production, export and sale of the natural gas from the field, which would be transported by pipeline to Australia for domestic markets or liquefied for shipment elsewhere. In July 2001, Phillips and its co-venturers announced that they had deferred an investment decision on the second phase of the project, pending resolution of certain critical legal (which we believe includes our litigation), fiscal and taxation issues.

     According to the 2000 Annual Report of Petroz N.L., which was acquired by Phillips in December 2000, there are proven 297 million barrels of condensate and natural gas liquids and 2.7 trillion cubic feet of gas in the Bayu-Undan field alone, with another 107 million barrels and .7 trillion cubic feet possible.

     A portion of the area known as Greater Sunrise, which includes the Sunrise, Sunset and Troubadour areas, is also within the Timor Gap area claimed by Petrotimor and has substantial potential gas reserves. Woodside Energy Limited estimated reserves of 9.16 trillion cubic feet of gas in the Greater Sunrise Fields in November 2000. However, there can be no assurance that such amounts can be produced or recovered at an economical price.

     We submitted an application for an Expansion of Seabed Concession to the transitional government of East Timor in October 2001 requesting that Petrotimor’s 1974 concession area be expanded to include the additional maritime areas within the properly determined seabed delimitation of East Timor. We believe East Timor is entitled under international law to exercise sovereign jurisdiction over its seabed and to have an Exclusive Economic Zone as codified in the 1982 United Nations convention on the law of the sea. We believe that by so doing, East Timor could acquire jurisdiction over hydrocarbon reserves containing approximately 12 trillion cubic feet of natural gas and associated condensate based upon the Petroz N. L. and Woodside information discussed above. We have not received a response to this application for an Expansion of Seabed Concession.

     The status of our concession is in dispute and subject to current legal proceedings, pursuant to which we will be claiming losses of approximately $2.85 billion Australian dollars, or approximately $1.5 billion U.S. dollars based on the exchange rate as of August 13, 2002. The amount, expressed in U.S. Dollars, will fluctuate based on the exchange rate.

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     The current government of East Timor has not thus far recognized our concession in East Timor. We submitted an application for an Expansion of Seabed Concession to the transitional government in East Timor and received no response. We are not aware of the status of the application and whether it is being considered by the new East Timor government. The application, if granted, would expand the 1974 Petrotimor concession to correspond with the offshore area over which East Timor is entitled to claim sovereign rights under international law. We have sponsored a seminar in East Timor for the purpose of explaining appropriate maritime boundaries under applicable international law and the resulting benefits to East Timor if such boundaries are enforced. There is no assurance even if we are successful in the Australian litigation that East Timor will recognize our concession. See “Risk Factors-Risks Factors Relating to Oceanic Exploration-Pending legal proceedings” and “Legal Proceedings.”

Finney County, Kansas

     We entered into a Participation Agreement with Mariah Energy, LLP that was effective for the period September 5, 2000 to December 31, 2001. Under the terms of the agreement, we purchased a 75% working interest in certain oil and gas property in Finney County, Kansas, covering 1,280 net acres, for $33,600. Further, we agreed to participate in the drilling of an exploration test well. The test well was drilled in October 2000 and determined to be a dry hole. The cost of the working interest, plus the related impairment reserve was written off at December 31, 2001 as all rights under the Participation Agreement had expired.

Other

     Oceanic Exploration leases approximately 4,990 square feet of office space in an office building located at 7800 East Dorado Place, Suite 250, Englewood, Colorado 80111. The office building is owned by a related party. The lease expires on August 31, 2005. See “Certain Relationships And Related Transactions.”

     Oceanic Exploration also leases from a third party for Alliance approximately 5,215 square feet of office space in an office building located at 6125 Cornerstone Court East, Suite 100, San Diego, California 92121. The lease expires on November 16, 2004.

     We believe our facilities are adequate for our currently anticipated needs.

LEGAL PROCEEDINGS

     In 1974 Petrotimor, our wholly owned subsidiary, was granted an exclusive offshore concession by Portugal to explore for and develop oil and gas in an approximately 14.8 million acre area between East Timor and Australia in an area known as the “Timor Gap.” At that time Portugal had administrative control over East Timor. On January 5, 1976, following Indonesia’s unlawful invasion and occupation of East Timor, Petrotimor applied for and obtained on April 14, 1976 Portugal’s consent to a suspension of performance under the concession agreement based upon force majeure. This force majeure status remained in effect until at least October 25,1999.

     On December 11, 1989, Australia and Indonesia, ignoring Petrotimor’s rights under its concession from Portugal, signed the Timor Gap Treaty, purporting to create a joint zone of cooperation, whereby these two countries could control the exploration and development of hydrocarbons in an area over which both countries claimed rights. A portion of this area, designated as Zone A, falls largely within the area where Petrotimor holds rights under its concession agreement with Portugal. The treaty created a Joint Authority that purported to enter into production sharing contracts with various companies who have carried out exploration activities.

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     During 1999 the people of East Timor voted for independence from Indonesia and the United Nations initiated a transition of East Timorese independence under the authority of the United Nations Transitional Administration in East Timor. On August 30, 2001, East Timor elected representatives to the Constituent Assembly to prepare a constitution for an independent and democratic East Timor. A constitution was approved by the Constituent Assembly and East Timor became an independent nation on May 20, 2002.

     On August 21, 2001, Oceanic Exploration and Petrotimor issued a Statement of Claim (as amended) out of the Federal Court of Australia against the Commonwealth of Australia, the Joint Authority established under the Timor Gap Treaty and the Phillips Petroleum companies operating within the Timor Gap area. Oceanic Exploration and Petrotimor claim that the Timor Gap Treaty and the related legislation of the Australian Parliament was void or invalid for a number of reasons including (i) the Timor Gap Treaty and the legislation sought to claim significant portions of the continental shelf over which it had no sovereign rights for Australia, which we believe under international law belonged to East Timor, and (ii) the Timor Gap Treaty and the legislation attempted to extinguish the property interest and rights granted by the then legitimate power, Portugal, to Oceanic Exploration and Petrotimor, without providing for just compensation as required by Australian law. The ultimate value from a favorable ruling by the Federal Court cannot be determined at this time, but we believe that the value could be substantial. We estimate our losses could be as high as $2.85 billion Australian dollars (U.S.$1.5 billion at the August 13, 2002 exchange rate of .5399).

     There have been several preliminary hearings in the Federal Court of Australia. A hearing by the court on the question of whether the court has jurisdiction over our claim was held on May 16 and 17, 2002. The court has taken under advisement a motion to dismiss our suit on the basis that the court does not have jurisdiction over the claim. If we are not able to obtain a favorable order on this motion, our suit may be dismissed and we would be forced to appeal the decision in order to continue with our claim in Australia.

     While we believe there is a reasonable possibility of prevailing in the litigation, the ultimate outcome of the lawsuit cannot be determined at this time. Due to the preliminary status of the claims and the complexity of the issues, our Australian counsel is unable to assess the outcome of the litigation. It may take a substantial amount of time and resources to achieve a final determination in the litigation. Ultimately, we must obtain a final judgment or settlement of the suit or achieve recognition of our rights by the new government in East Timor in order to recover the benefits of the concession originally granted to us in East Timor.

     The current government of East Timor has not thus far recognized our concession in East Timor. We submitted an application for an Expansion of Seabed Concession to the transitional government in East Timor and received no response. We are not aware of the status of the application and whether it is being considered by the new East Timor government. The application, if granted, would expand the 1974 Petrotimor concession to correspond with the offshore area over which East Timor is entitled to claim sovereign rights under international law. We have sponsored a seminar in East Timor for the purpose of explaining appropriate maritime boundaries under applicable international law and the resulting benefits to East Timor if such boundaries are enforced. There is no assurance even if we are successful in the Australian litigation that East Timor will recognize our concession.

MARKET FOR COMMON STOCK

     Our common stock is not listed on any exchange. However, it is quoted on the OTC Bulletin Board under the symbol OCEX. The common stock was previously traded on the Pacific Stock

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Exchange under the symbol OXC. However, we failed to maintain the minimum standards required by the Pacific Stock Exchange to maintain our listing of the common stock as a Tier II Security on the Exchange. On August 25, 1995, we were notified that we were subject to the initiation of delisting procedures. On October 3, 1995, our listing status was reviewed by the Pacific Stock Exchange at a meeting of the Equity Listing Committee and we were informed the next day that our common stock was suspended from trading. The Committee based its decision upon the Company’s deficiencies with respect to the following components of the Exchange’s listing maintenance requirements: net tangible assets of at least $500,000, aggregate market value of publicly held shares of at least $500,000, a minimum bid price per share of at least $1, and the Committee’s serious doubts about our ability to meet the requirements for an ongoing concern. On December 8, 1995, our representatives appealed the decision to delist the stock before the Board Appeals Committee of the Pacific Stock Exchange. Finding no compelling evidence to recommend that the October 3, 1995 decision of the Committee be revised, the decision to delist was upheld and affirmed.

Penny Stock Regulation

     Shares of our common stock are subject to rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00, except for securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission, which contains the following:

• a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

• a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws;

• a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the “bid” and “ask” price;

• a toll-free telephone number for inquiries on disciplinary actions;

• definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and

• such other information and in such form, including language, type, size and format, as the Securities and Exchange Commission shall require by rule or regulation.

     Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:

• the bid and offer quotations for the penny stock;

• the compensation of the broker-dealer and its salesperson in the transaction;

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• the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

• monthly account statements showing the market value of each penny stock held in the customer’s account.

     In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. The additional burdens imposed upon stockbrokers by these requirements discourages stockbrokers from effecting transactions in our common stock, which may limit the market liquidity and the ability of investors to trade our common stock. The lack of volume and transactions in our stock may reduce the overall market value of the common stock.

     As reported by the OTC Bulletin Board, the range of bid prices in our common stock over the last two years and through June 30, 2002 (which are not necessarily representative of actual transactions) is set forth below. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

	2002				2001				2000
Three Months Ended	High		Low		High		Low		High		Low
March 31		.45		.18		.34		.28		.30		.19
June 30		.30		.20		.40		.20		.47		.28
September 30		.40		.08		.57		.25		.44		.34
December 31						.61		.25		.45		.34

     The reported last sale price of the common stock on October     , 2002 was $.     .

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CAPITALIZATION

     The following table sets forth as of June 30, 2002 (i) the actual capitalization of Oceanic Exploration and (ii) capitalization of Oceanic Exploration as adjusted for the sale of 21,000,000 shares of common stock in this offering at an assumed offering price of $.15 per share. See “Use of Proceeds.”

	June 30, 2002
Stockholders' Equity	Actual		As Adjusted
Common stock authorized 50,000,000 shares of $.0625 par value, 9,916,154 issued and outstanding actual, 30,916,154 issued and outstanding as adjusted 1		619,759		1,932,259
Additional Paid in Capital		155,696		1,893,196
Accumulated Earnings		157,115		157,115
Total stockholders’ equity		932,570		3,982,570

¹ On or prior to the closing of the rights offering, 50,000,000 shares of common stock will be authorized.

     Our authorized capital stock also includes 600,000 shares of preferred stock, par value $10.00 per share. Our Board of Directors, without further action by the stockholders, is authorized to issue the shares of preferred stock in one or more series and to determine the voting rights, preferences as to dividends, and the liquidation, conversion, redemption and other rights of each series. The issuance of a series with voting and conversion rights may adversely affect the voting power of the holders of common stock. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of Oceanic Exploration without further action by the stockholders. We have no present plans to issue any shares of preferred stock. See “Description of Capital Stock.”

DIVIDENDS

     We have never paid a dividend. We do not anticipate paying dividends in the future. Any future payment of dividends is subject to the discretion of our Board of Directors.

AVAILABILITY OF OIL AND GAS RESERVE INFORMATION

     We do not currently have any producing oil and gas properties. Our proved properties consist of the Prinos Interest. This interest is no longer in production, having been fully depleted by 1998. Accordingly, we have no proved oil and gas reserves.

OIL AND GAS REVENUE AND COST INFORMATION

     We had a net profit interest in the Prinos Oil Field. We were compensated through our net profit interest and therefore do not have information as to average sales price per unit of oil or gas produced or average production cost. Revenue from and costs incurred in oil and gas producing activities for the fiscal years ended December 31, 2001, 2000 and the nine months ended December 31, 1999 are as follows:

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	Year Ended December 31,
Oil & Gas Revenue1	2001			2000			19992
Net profits interest proceeds, net of Greek income taxes	$	0		$	6,739,342		$	0
Properties
Unproved properties (domestic)	$	0		$	33,600		$	0
Proved properties (foreign)		39,000,000			39,000,000			39,000,000
Less accumulated depreciation, depletion, amortization and impairment allowance		(39,000,000	)		(39,033,600	)		(39,000,000	)

¹ Gross revenues from the Prinos Interest are burdened only by Greek income taxes. We have no production costs since its Prinos Interest is a net profits interest.

² Information is from the 9-month transition period ended December 31, 1999.

As of March 31, 1999 the Prinos Interest was fully depleted.

OTHER OIL AND GAS INFORMATION

     During October 2000, we drilled one dry hole in our Finney County, Kansas property in which we held a 75% working interest. We have not drilled any other exploratory or other wells in the past three years. We have no delivery commitments.

     As of July 31, 2002, our undeveloped acreage consisted of the following:

Acreage1	Gross Acreage		Net Acreage		Concession Ends
Republic of China		3,706,560		826,563			12/31/02
Timor Gap		14,800,000		14,800,000		2

¹ The table does not include a 15% net profits interest in the Thasos Island exploration area related to the Prinos Interest. The concession for this area is being extended due to force majeure.

² The expiration of the concession is suspended due to force majeure. See “Properties” and “Legal Proceedings.”

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SELECTED FINANCIAL DATA

     The following table sets forth our summary financial data. The summary financial data in the table is derived from our financial statements. The data should be read in conjunction with the financial statements, related notes and other financial information included therein.

Statement Of Earnings Data

	Year Ended December 31,					Six Months Ended June 30,
	2001			2000		2002			2001
Revenue	$	3,410,915		$	12,637,197		1,622,293			1,692,465
Costs and Expenses		6,374,697			4,513,515		3,345,130			2,778,959
Income (Loss) before Income Taxes		(2,963,782	)		8,123,682		(1,722,837	)		(1,086,494	)
Net Income (Loss)		(2,927,559	)		7,901,385		(1,722,837	)		(1,051,679	)
Basic and Diluted Earnings (Loss) per Share of Common Stock		(0.30	)		0.80		(0.17	)		(0.11	)

Balance Sheet Data

	December 31, 2001		June 30, 2002
	Actual		Actual		As Adjusted1
Net working capital	$	1,974,499	$	297,126	$	3,347,126
Total assets		3,739,180		1,890,916		4,940,916
Stockholders’ equity		2,655,407		932,570		3,982,570

¹ As adjusted to give effect to the sale of 21,000,000 shares of common stock offered in the rights offering at an assumed offering price of $.15 per share and the application of the estimated net proceeds therefrom. See “Use of Proceeds” and “Capitalization.”

Goodwill and Other Intangible Assets — Adoption of Statement 142

		Year Ended December 31,						Six Months Ended June 30,
		2001			2000			2002			2001
Reported net income (loss)		$	(2,963,782	)	$	7,901,385		$	(1,722,837	)	$	(1,051,679	)
Add back: Goodwill amortization			42,020			31,515			0			21,010
Adjusted net income (loss)			(2,921,762	)		7,932,900			(1,722,837	)		(1,030,669	)
Basic earnings per share:
	Reported net income (loss)	$	(0.30	)	$	0.80		$	(0.17	)	$	(0.11	)
	Goodwill amortization		0.00			0.00			0.00			0.00
	Adjusted net income (loss)	$	(0.30	)	$	(0.30	)	$	(0.17	)	$	(0.11	)

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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies

     Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses. On an on-going basis, we evaluate our estimates including those related to the collectibility of accounts receivable, the realizability of goodwill, and income taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. We believe the following critical accounting policies affect the significant judgments and estimates used in the preparation of our consolidated financial statements.

     We maintain an allowance for doubtful accounts for estimated losses resulting from customers failing to pay amounts we have billed them. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, or if customers were to express dissatisfaction with the services we have provided, additional allowances may be required.

     We assess the impairment of goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment would potentially be considered to exist when the estimated fair value of the reporting unit is less than the carrying amount, including goodwill. Considerable management judgment is necessary to estimate fair value and an impairment would be recorded in the period such determination is made.

     To record income tax expense, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This involves estimating our actual current tax exposure together with assessing temporary differences that result in deferred tax assets and liabilities and expected future tax rates. We record a valuation allowance to reduce our deferred tax assets to an amount we believe is more likely than not to be realized. We consider future taxable income and prudent and feasible tax planning strategies in assessing the need for a valuation allowance. If we subsequently determine that we will realize more or less of our net deferred tax assets in the future, such adjustment would be recorded as an increase or reduction of income tax expense in the period such determination is made.

Liquidity and Capital Resources

     Oceanic Exploration has historically addressed long-term liquidity needs for oil and gas exploration and development through the use of farmout agreements. Under such agreements, Oceanic Exploration sells a portion of its ownership interest in the concession to an outside party who is then responsible for the exploration activities. This is a strategy that Oceanic Exploration intends to continue in the event it becomes feasible to proceed with further exploration in any of the areas where Oceanic Exploration currently owns concessions.

     Currently, primary sources of liquidity are cash and cash equivalents, employment operations and management agreements. Cash needs are for the operation of an employment agency, corporate expenses, costs associated with actions relating to East Timor and the payment of trade payables.

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Operations of the Company are presently being financed by internally generated cash flow and cash and cash equivalents on hand. We have issued a $500,000 demand promissory note establishing a line of credit with NWO Resources, Inc., which was established on August 15, 2002. The line of credit is unsecured. As of September 30, 2002, no amount was outstanding under the line of credit. We expect to draw down a total of approximately $150,000 before the closing of the rights offering. See “Business of Oceanic Exploration-NWO Resources, Inc. Line of Credit.” The capital expenditure budget is periodically reviewed and is a function of necessity and available cash flow.

     Cash Flow: Cash used in operating activities for the six months ended June 30, 2002 and 2001 was $1,712,099 and $723,128, respectively. Ongoing legal and professional fees associated with the litigation in the Australian courts and the application for an Expansion of Seabed Concession in East Timor has required substantial expenditures. During the six months ended June 30, 2002 and 2001, respectively, Oceanic Exploration incurred expenses of $1,121,446 and $333,235 related to legal and commercial activities in Australia and the Timor Gap area. These costs are included in exploration expenses resulting in an increase over what exploration expenses have been historically. Until we obtain a final judgment or settlement of the suit or achieve recognition of our rights by the new government in East Timor, exploration expenses will continue to be high.

     During the six months ended June 30, 2002, operations of the employment agency in San Diego, California, produced a net loss of approximately $307,000, and resulted in cash used in operating activities of approximately $165,500. Staffing revenue generated by Alliance during the first six months of 2002 averaged approximately $194,500 per month compared to approximately $216,000 during the first six months of 2001.

     Oceanic Exploration currently receives approximately $540,000 per year in connection with services provided to Cordillera Corporation and San Miguel Valley Corporation, pursuant to management agreements, compared to $448,000 for the year ended December 31, 2001. The level of services provided to San Miguel Valley Corporation decreased approximately $10,000 per month during 2001 as are result of a change in employees providing services under the management contract. During 2002, the level of service has increased approximately $4,000 per month. Because the level of service is dependent upon the needs of the corporation and available employees, it is normal to see fluctuations from year to year. In addition, Oceanic Exploration has management agreements with Points Four World Travel, Inc. and, until September 1, 2002 when services were terminated by mutual agreement, Global Access Telecommunications, Inc. Amounts received from Global Access Telecommunications, Inc. through August 31, 2002 were approximately $134,000. Amounts received from Points Four World Travel, Inc. are expected to be immaterial in 2002. The amount received under these two contracts during the year ended December 31, 2001 was approximately $66,800. Our Chairman of the Board and Chief Executive Officer is affiliated with each of these corporations. See “Certain Relationships and Related Transactions.” Amounts received under the management agreements are based on costs relating to employee salaries and other operating expenses, plus an additional fee up to 5% of the total amount.

     Oceanic Exploration had $748,677 in cash and cash equivalents and working capital of $297,126 at June 30, 2002 compared with $2,462,692 in cash and cash equivalents and working capital of $1,974,499 at December 31, 2001.

Results of Operations

     Three-Month Comparison. Total revenue for the three months ended June 30, 2002 is 10% less than total revenue for the three months ended June 30, 2001. Staffing revenue is down 16% for the three months ended June 30, 2002 compared to the three months ended June 30, 2001. The decrease in revenue is mainly due to loss of revenue from Alliance’s largest customer, Chicago Title, who ceased

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using our services. Revenue from this customer amounted to $18,165 for the three months ended June 30, 2002 compared to $191,574 for the same three months in 2001. In the employment industry it is not uncommon for customers, both large and small, to come and go on a regular basis. Frequently the decision is a result of a change in account managers or a corporate choice. We have taken steps to mitigate the loss of this customer by continuing our marketing efforts to add new customers and it is not expected to have a material adverse effect on the Alliance Division. Alliance’s net loss for the three months ended June 30, 2002 was $176,897 compared to a net loss of $170,729 for the three months ended June 30, 2001.

     Interest income for the three months ended June 30, 2002 is substantially less than the three months ended June 30, 2001 due to lower cash balances and a decrease in interest rates.

     Management revenue for the three months ended June 30, 2002 is 51% higher than for the three months ended June 30, 2001 due to an increase in fees charged to Cordillera and San Miguel Valley Corporation and the addition of management fees from Points Four World Travel, Inc. and Global Access Telecommunications, Inc.

     Other revenue consists mainly of gains and losses on the disposal of fixed assets, foreign exchange rate gains and other minor miscellaneous items.

     Exploration expenses for the three months ended June 30, 2002 are $152,292 or 50% higher than during the comparable three months of 2001. The increase is due to ongoing legal fees associated with the legal action commenced in Australia, as described in “Legal Proceedings” and the application to expand an offshore oil and gas concession located in an area between Australia and East Timor known as the Timor Gap. See “Properties.”

     Staffing direct costs are 17% less for the three months ended June 30, 2002 compared to the three months ended June 30, 2001. This is related to the reduction in staffing revenues.

     Amortization and depreciation for the three months ended June 30, 2002 is 29% less than the three months ended June 30, 2001. This is mainly due to implementation of Statement of Financial Accounting Standards (SFAS) No. 142, Accounting for Goodwill and Intangible Assets. Pursuant to SFAS 142, net goodwill of $346,659 as of December 31, 2001, associated with the acquisition of Alliance, is no longer being amortized but will be tested for impairment annually. Oceanic Exploration has completed its transitional impairment analysis and has determined there was no impairment of goodwill as of January 1, 2002. There can be no assurance there will not be an impairment of goodwill at a later date. We will continue to monitor the carrying value of our goodwill and will record an impairment write-down as required. Amortization expense related to goodwill was $10,505 during the three months ended June 30, 2001.

     Total general and administrative costs for the three months ended June 30, 2002 are 15% less than for the three months ended June 30, 2001. This is mainly due to the payment of severance to the outgoing President and Human Resources Director of Alliance during the three months ended June 30, 2001.

     Other costs and expenses for the three months ended June 30, 2002 relate to foreign exchange rate losses.

     Six-Month Comparison. Total revenue for the six months ended June 30, 2002 is 8% less than total revenue for the six months ended June 30, 2001. Staffing revenue is down 10% for the six months ended June 30, 2002 compared to the six months ended June 30, 2001. The decrease in revenue is

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mainly due to loss of revenue from Alliance’s largest customer, Chicago Title, who ceased using our services. Revenue from this customer amounted to $235,832 for the six months ended June 30, 2002 compared to $322,153 for the same six months in 2001. Alliance’s net loss for the six months ended June 30, 2002 was $307,102 compared to a net loss of $360,329 for the six months ended June 30, 2001.

     Interest income for the six months ended June 30, 2002 is substantially less than the six months ended June 30, 2001 due to lower cash balances and a decrease in interest rates.

     Management revenue for the six months ended June 30, 2002 is 59% higher than for the six months ended June 30, 2001 due to an increase in fees charged to CordilleraCorporation and San Miguel Valley Corporation and the addition of management fees from Points Four World Travel, Inc. and Global Access Telecommunications, Inc.

     Other revenue for the six months ended June 30, 2002 is 75% lower than for the six months ended June 30, 2002 mainly due to exchange rate fluctuations.

     Exploration expenses for the six months ended June 30, 2002 are $791,384 or 235% higher than during the comparable six months of 2001. The increase is due to ongoing legal fees associated with the legal action commenced in Australia and the application to expand an offshore oil and gas concession located in an area between Australia and East Timor known as the Timor Gap, as described in “Legal Proceedings.”

     Staffing direct costs are 13% less for the six months ended June 30, 2002 compared to the six months ended June 30, 2001. This is related to the reduction in staffing revenue.

     Amortization and depreciation for the six months ended June 30, 2002 is 29% less than the six months ended June 30, 2001. This is mainly due to implementation of Statement of Financial Accounting Standards (SFAS) No. 142, Accounting for Goodwill and Intangible Assets as discussed in the Three-Month Comparison. Amortization expense related to goodwill was $21,010 during the six months ended June 30, 2001.

     Total general and administrative costs for the six months ended June 30, 2002 are 10% less than for the six months ended June 30, 2001. During 2001 Oceanic Exploration made severance payments to the outgoing President and Human Resources Director of Alliance and during 2002 expenses were reduced due to the write-off of a previous accrual that we believe is no longer due and payable. We had accrued $60,000 during the period 1985 to 1991 relating to security costs for a loan that we had during that period. The underlying loan was paid off in 1992 and we believe we are no longer liable for this amount because the statute of limitations regarding this matter has expired.

     2001 Compared to 2000. We had a 73% decrease in revenues during the year ended December 31, 2001 compared to the year ended December 31, 2000. This was due to receipt of a substantial payment in 2000 in connection with the Denison lawsuit. Early in 2000 we received $6,739,342 (net of taxes) for net profits interest payments for the period January 1, 1993 through December 31, 1997, $118,255 for court costs, and accrued interest of $1,773,060 (net of Canadian withholding taxes).

     Staffing revenue of $2,682,027 for the year ended December 31, 2001 was offset by staffing direct costs of $2,283,875 resulting in a gross margin of 15%. Because the operations of Alliance were acquired March 31, 2000, the amount of staffing revenue and staffing direct costs for the year ended December 31, 2000 represents only nine months of revenue and expenses. The gross margin during 2000 was 17%. The difference in gross margin is mainly attributable to a change in policy under new

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management. Effective July 1, 2001, the employment operations record 3% of gross staffing payroll as administrative costs in order to more accurately reflect the direct costs of generating staffing revenue.

     The accrued interest payment received as part of the Denison Mines, Ltd. payment was recorded as interest income at the gross amount of $1,970,066, before Canadian withholding taxes. Excess cash was invested in Government Agency discount notes. Large invested cash balances in 2000, combined with higher interest rates, produced additional interest income of $330,215 compared to total interest income of $181,068 during 2001 when cash balances were lower and interest rates were also much lower.

     Management revenue for the year ended December 31, 2001 is 10% less than for the year ended December 31, 2000. The level of services provided to San Miguel Valley Corporation decreased approximately $10,000 per month during 2001 due a change in employees providing services under the management contract. Because the level of service is dependent upon the needs of the corporation and available employees, it is normal to see fluctuations from year to year. The loss of revenue from San Miguel Valley Corporation was partially offset by the addition of management fees from Points Four World Travel, Inc. and Global Access Telecommunications, Inc.

     Other revenue for the year ended December 31, 2001 is 89% lower than for the year ended December 31, 2000 for two reasons. First, we received court costs of $118,255 during 2000 that was recorded as other revenue. Second, during 2000 we took into revenue approximately $148,620, which had been deferred. We had originally sold seismic data and deferred a portion of the revenue because of a potential payment that may have been required to a third party. The payment was never requested and the statute of limitations has passed on any liability. Accordingly, the $148,620 that had been deferred has been booked as other revenue.

     Costs and expenses for the year ended December 31, 2001 increased 41% in total compared to costs and expenses for the year ended December 31, 2000. The increase is mainly due to ongoing legal and professional fees associated with the litigation in the Australian courts and the application for an Expansion of Seabed Concession in East Timor. $1,511,625 was paid in relation to these endeavors during 2001 compared to $122,608 during 2000.

     Interest and financing costs for the year ended December 31, 2001 are 32% less than during the year ended December 31, 2000 due to the repayment of stockholder and affiliate debt during 2000.

     Amortization and depreciation expense for the year ended December 31, 2001 and 2000 is mainly associated with the acquisition of Alliance. Because Alliance was acquired March 31, 2000, related expenses for the year ended December 31, 2001 are proportionately higher than during the comparable period of 2000.

     General and administrative costs associated with Alliance for the year ended December 31, 2001 and 2000 were $1,071,307 and $842,517, respectively. Due to the acquisition of Alliance occurring on March 31, 2000, only nine months of expenses are included in 2000. General and administrative costs for corporate and the oil and gas operations for the year ended December 31, 2001 represents an increase of 31% over the year ended December 31, 2000. The increase is mainly attributable to increased rent and costs associated with the transition in management at Alliance.

     We have recorded an income tax benefit of $36,223 for the year ended December 31, 2001 compared to tax expense of $222,297 for the year ended December 31, 2000. Included in tax expense at December 31, 2000 was $197,007 for Canadian taxes paid on proceeds from Denison. We intend to carry back the loss generated in fiscal year 2001 for a refund of taxes paid for fiscal year 2000.

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Effect of Recently Issued Accounting Standards

     Intangible assets consist of goodwill related to the purchase of Alliance, which is being amortized on a straight-line basis over an estimated useful life of 10 years, as well as amounts paid to former affiliates of Alliance in exchange for non-compete agreements. In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.142, Accounting for Goodwill and Intangible Assets. SFAS No. 142 provides that an intangible asset with a finite life may be amortized over its respective estimated useful life to its estimated residual value in proportion to the economic benefits consumed. The method of amortization should be systematic and rational but need not necessarily be the straight-line method. Amortization is not required for intangible assets that are determined to have an indefinite useful life. Useful lives of amortizable intangible assets are required to be re-evaluated each reporting period. The Company has completed its transitional impairment analysis and has determined there is no impairment of goodwill as of January 1, 2002. There can be no assurance there will not be an impairment of goodwill at a later date. Oceanic will continue to monitor the carrying value of its goodwill and will record an impairment write-down as required.

     In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets. Adoption of SFAS No. 143 may result in increases in liabilities, assets, and expense recognition in financial statements. We do not anticipate that implementing this standard will have a material impact on our financial condition or operations. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002.

     The Financial Accounting Standards Board recently issued FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. Statement No. 144 supersedes the accounting and reporting provisions of Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, with respect to when certain asset impairment losses must be measured and recorded. Statement No. 144 also supersedes the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations— Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business. However, it retains the requirement in Opinion 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. We do not anticipate a material impact on our financial condition or results of operations as a result of implementing this standard. Statement No. 144 is effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years.

DESCRIPTION OF CAPITAL STOCK

     On or prior to the closing of the rights offering, our authorized capital stock will consist of 50,000,000 shares of common stock, par value $.0625 per share, and 600,000 shares of preferred stock, par value $10.00 per share. The relative rights of our common stock and preferred stock are defined by our Articles of Incorporation, as described below, as well as by our Bylaws and the General Corporation Law of the State of Delaware.

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Common Stock

     Subject to the rights of holders of any series of preferred stock that may from time to time be issued, holders of common stock are entitled to one vote per share on matters acted upon at any stockholders’ meeting, including the election of directors, and to dividends when, as and if declared by the Board of Directors out of funds legally available therefor. There is no cumulative voting and the common stock is not redeemable. In the event of any liquidation, dissolution or winding up of Oceanic Exploration, each holder of common stock is entitled to share ratably in all assets of Oceanic Exploration remaining after the payment of liabilities and any amounts required to be paid to holders of preferred stock, if any. Holders of common stock have no preemptive or conversion rights and are not subject to further calls or assessments by Oceanic Exploration. All shares of common stock now outstanding, and all shares to be outstanding upon the completion of this rights offering, are and will be fully paid and nonassessable.

     The common stock is not currently listed on any exchange. However, it is quoted on the OTC Bulletin Board under the symbol OCEX. As of July 30, 2002, there were approximately 445 holders of record of common stock. This number was derived from our stockholder records, and does not include owners of our common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers, and other fiduciaries. We believe that the number of beneficial owners of common stock exceeds 550.

Preferred Stock

     The Board of Directors, without further action by the stockholders, is authorized to issue the shares of preferred stock in one or more series and to determine the voting rights, preferences as to dividends, and the liquidation, conversion, redemption and other rights of each series. The issuance of a series with voting and conversion rights may adversely affect the voting power of the holders of common stock. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of Oceanic Exploration without further action by the stockholders. We have no present plans to issue any shares of preferred stock.

Penny Stock Regulation

     Shares of our common stock are subject to rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00, except for securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission, which contains the following:

• a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

• a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws;

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• a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the “bid” and “ask” price;

• a toll-free telephone number for inquiries on disciplinary actions;

• definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and

• such other information and in such form, including language, type, size and format, as the Securities and Exchange Commission shall require by rule or regulation.

       Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:

• the bid and offer quotations for the penny stock;

• the compensation of the broker-dealer and its salesperson in the transaction;

• the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

• monthly account statements showing the market value of each penny stock held in the customer’s account.

     In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. The additional burdens imposed upon stockbrokers by these requirements discourages stockbrokers from effecting transactions in our common stock, which may limit the market liquidity and the ability of investors to trade our common stock. The lack of volume and transactions in our stock may reduce the overall market value of the common stock.

Transfer Agent

     Our Transfer Agent is Mellon Investor Services, 400 South Hope Street, Fourth Floor, Los Angeles, CA 90071-3401.

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DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth the names and ages of the members of the Board of Directors and our executive officers, and sets forth the position with Oceanic Exploration held by each:

Name	Age		Position
James N. Blue		67	Director, Chairman of the Board and Chief Executive Officer
Charles N. Haas		64	Director and President
John L. Redmond		72	Director and Vice President, International Exploration
Gene E. Burke, M.D.		73	Director
Sidney H. Stires		72	Director
Janet A. Holle		51	Vice President/Secretary
Phylis J. Anderson		53	Treasurer and Chief Financial Officer

     Directors hold these positions until their respective successors are elected and qualified. The current directors, except for John L. Redmond, were elected in 1982 and no meeting of the stockholders has been held since that date. Mr. Redmond was appointed in 1994 by the remaining directors to fill a vacancy on the Board of Directors. There is no audit committee of the Board of Directors.

     James N. Blue. Mr. Blue has been a director and officer since 1981. He has also been chairman of the board of directors of General Atomic Technologies Corporation in San Diego, California, president and a director of NWO Resources, Inc. and chairman of the board of directors and president of Cordillera Corporation for in excess of the last five years.

     Charles N. Haas. Mr. Haas has been a director and officer since 1981. He has also been a director and vice president of Cordillera Corporation for in excess of the last five years.

     John L. Redmond. Mr. Redmond has been a director since 1994. He has been Vice President, International Exploration since 1990.

     Gene E. Burke, M.D. Dr. Burke has been a director since 1972. He has been a physician in sole practice in Houston, Texas for in excess of the last five years.

     Sidney H. Stires. Mr. Stires has been a director since 1980. During that time Mr. Stires has been the President of Stires & Co., Inc., an investment banking company in New York, NY.

     On August 11, 1998, an SEC Administrative Judge entered an order finding that Stires, O’Donnell & Co., Inc., and Sidney H. Stires willfully violated, and willfully aided and abetted the violation by certain promoters, the antifraud provision of the Federal Securities laws. The Judge further found that Stires, O’Donnell failed to supervise its employees as required by Federal Securities law in connection with the proposed sale of non-existent securities known as “Euro-GICs.” A civil penalty of $300,000 was imposed on Stires, O’Donnell and a civil penalty of $100,000 was imposed on Mr. Stires. In addition, Mr. Stires was suspended from activity as a securities dealer for 90 days. Mr. Stires paid the $100,000 civil penalty and has served his suspension. On June 24, 1999, the Commission issued an order reducing the $300,000 civil penalty to $150,000 and otherwise declaring the decision final.

     Janet A. Holle. Ms. Holle has been an officer since 1987.

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     Phylis J. Anderson. Ms. Anderson has been an officer of Oceanic Exploration since April 2000. Previously she was controller of jetCenters, Inc., an affiliate of Cordillera Corporation, for one year and in public accounting for four years before that.

EXECUTIVE COMPENSATION

     The following information summarizes compensation paid to James N. Blue, Chief Executive Officer and Charles N. Haas, President.

SUMMARY COMPENSATION TABLE

				Annual Compensation						Long Term Compensation
										Awards
											Securities
									Other		Under-	Payouts
									Annual	Restricted	lying		All Other
									Compen-	Stock	Options/	LTIP	Compen-
Name and	Fiscal			Salary			Bonus		sation	Awards	SARS (#)	Payouts	sation
Principal Position	Year			($)			($)		($)	($)	($)	($)	($)
James N. Blue, Chairman		2001			60,000	1
of the Board and CEO		2000			60,000	1
		1999	2		45,000	1
Charles N. Haas, President		2001			175,000	3		1,300						24,461	4
		2000			175,000	3,								22,470	4
		1999	2		116,564	3,

¹ Monthly officer’s fee of $5,000.

² Oceanic Exploration changed its fiscal year to December 31 from March 31, effective December 1999. Accordingly, fiscal year 1999 refers to the nine months ended December 31, 1999.

³ A portion of the salary and other compensation paid to Mr. Haas has been reimbursed based on cost sharing arrangements with other companies. See “Certain Relationships And Related Transactions-Management Agreements.”

⁴ Oceanic Exploration is a participant in the Cordillera and Affiliated Companies’ Money Purchase Pension Plan and 401(k) Plan, covering all qualified employees of Oceanic Exploration. The pension plan is a non-contributory defined contribution plan. Oceanic Exploration contributions to this plan are based on 6% of total compensation not exceeding the limit established annually for the Federal Insurance Contribution Act (FICA) and 11.7% of compensation in excess of this limit. Vesting begins after two years of service at a rate of 20% annually with full vesting subsequent to six years of service or upon retirement, death or permanent disability. The 401(k) plan provides for discretionary employee contribution of up to 10% of annual pre-tax earnings, subject to the maximum amount established annually under Section 401(k) of the Internal Revenue Code. Oceanic Exploration is required to match contributions to the extent of 6% of annual employee compensation.

     Members of the Board of Directors who are not employees of Oceanic Exploration or any of its affiliates receive directors’ fees of $500 per month. Members of the Board of Directors who are employees do not receive directors’ fees. Mr. Blue receives a monthly fee of $5,000 for services as an officer of Oceanic Exploration.

     We have one material employment contract, which is with Maureen Sullivan, the President of the Alliance Division. We entered into the employment agreement with Ms. Sullivan, dated December 22, 2000, that is effective January 1, 2001, for a period of three years. Ms. Sullivan took over as president of the Alliance Division on March 26, 2001. Under the terms of the agreement, Ms. Sullivan receives a base salary of $150,000 plus a bonus. The quarterly bonus is initially 20% of the improvement in net loss from the previous quarter. Once the Alliance Division is no longer in a net loss position, the quarterly bonus is 25% of the pretax net profit of the Alliance Division for such quarter.

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     We have no compensation committee. James N. Blue and Charles N. Haas participated in all deliberations concerning executive officer compensation.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of July 31, 2002 there were issued and outstanding 9,916,154 shares of common stock, which is our only outstanding class of voting securities. Holders of common stock are entitled to one vote per share on each matter upon which stockholders may be entitled to vote.

     The following table sets forth information regarding shares of common stock beneficially owned as of July 31, 2002 by (i) each person known by us to beneficially own 5% or more of the outstanding common stock, (ii) by each director, (iii) by each person named in the summary compensation table and (iv) by all officers and directors as a group. If all stockholders fully exercise their subscription rights, the percentage owned by each stockholder will not change.

			Nature of
Names and Addresses of Officers,	Amount of Common		Beneficial
Directors and Principal Stockholders	Stock		Ownership		Percentage of Class
Allen & Company and various affiliates1 711 Fifth Avenue New York, NY 10022		824,200	Sole voting and investment power			8.3	%
NWO Resources, Inc.2 c/o Samuel C. Randazzo 21 E. State Street, Suite 1700 Columbus, OH 43215		4,912,178	Sole voting and investment power			49.5	%
Cordillera Corporation2 7800 E. Dorado Place, Suite 250 Englewood, CO 80111		545,800	Sole voting and investment power			5.5	%
James N. Blue3, 5 7800 E. Dorado Place, Suite 250 Englewood, CO 80111	None			2, 3		N/A
Charles N. Haas4, 5 7800 E. Dorado Place, Suite 250 Englewood, CO 80111	None			4		N/A
Sidney H. Stires5 12 East 44th Street New York, NY 10017		74,500	As Trustee		less than 1%
Gene E. Burke, M.D5 3555 Timmons #660 Houston, TX 77027	None					N/A
John L. Redmond5 7800 E. Dorado Place, Suite 250 Englewood, CO 80111	None					N/A
All Directors and Officers as a group (7 persons)		74,500		2.3.4	less than 1%

¹ The information regarding common stock owned by Allen & Company is based on the information contained in the Amendment No. 1 to Schedule 13D filed April 25, 1989 by the persons and entities identified below, which reports the following ownership of the common stock (not adjusted for the issuance of 21,000,000 shares of common stock pursuant to this rights offering):

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Names	Common Stock		Percentage
Allen & Company		165,000		1.7
American Diversified Enterprises, Inc.		232,500		2.3
Herbert Anthony Allen, Susan Kathleen Wilson and Herbert Allen, as Successor Trustees of Trust created by Herbert Allen pursuant to Agreement dated 12/1/64		47,917		.5
Terry Allen Kramer and Irwin H. Kramer as Trustees U/A for Issuer of Terry Allen Kramer pursuant to Agreement dated 4/5/63		70,000		.7
Toni Allen Goutal		55,500		.6
Angela Frances Allen Kramer		43,700		.4
Nathaniel Charles Allen Kramer		56,000		.6
Bruce Allen		20,000		.2
C. Robert Allen, IV		5,000		.1
John Godwin Allen		5,000		.1
Luke Andrew Allen		5,000		.1
Thaddeus Mack Allen		5,000		.1
Evelyn Henry		52,000		.5
Marjorie Bisgood		59,500		.6
Bradley Roberts		2,083		*

*Less than .1%

²Mr. Blue is chairman of the board of directors and president of Cordillera Corporation, the major stockholder of NWO Resources, Inc., which owns 49.5% of our stock. Through affiliates, Mr. Blue indirectly beneficially holds a majority of the common stock of Cordillera Corporation, which owns an additional 5.5% of our stock.

³Mr. Blue is chairman of the board of directors and president of NWO Resources, Inc.

⁴Mr. Haas is a director and vice president of Cordillera Corporation.

⁵Director of Oceanic Exploration.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Exercise of Subscription Rights and Over-Subscription Privilege by NWO Resources, Inc. and Cordillera Corporation

     NWO Resources, Inc. and its major stockholder, Cordillera Corporation, two of our principal stockholders, have stated their intention to exercise their subscription rights, thereby purchasing 11,558,668 shares, and have also indicated that they may purchase any additional shares that are not subscribed for by other stockholders. They are, however, not obligated to exercise their subscription rights or to purchase additional shares. NWO Resources, Inc. and Cordillera Corporation currently own 55% of our outstanding shares of common stock. If all stockholders fully exercise their subscription rights, the effective percentage ownership of each stockholder will remain unchanged. If the rights are not exercised by any other stockholder and NWO Resources, Inc. and Cordillera Corporation purchase all shares of common stock not purchased by the other stockholders, NWO Resources, Inc. will control approximately 77.0% and Cordillera Corporation will control approximately 8.6% of the issued common stock.

Management Agreements

     We provide services to Cordillera Corporation, Points Four World Travel, Inc. and San Miguel Valley Corporation pursuant to written management agreements. Until September 1, 2002, when services were terminated by mutual agreement, we provided services to Global Access

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Telecommunications, Inc. pursuant to an oral management agreement. James N. Blue, our Chairman of the Board of Directors and Chief Executive Officer, is affiliated with each of these corporations. Amounts received under the agreements are based on costs relating to employee salaries and other operating expenses, plus an additional fee of 5% of the total amount. During the years ended December 31, 2001 and 2000, management fees received from such entities were approximately $448,000 and $571,000, respectively.

     The purpose for such agreements is to avoid duplication of functions and costs for the economic benefit of all of the companies involved.

     We provide to San Miguel Valley Corporation bookkeeping and administrative services, in addition to being responsible for the day-to-day management of San Miguel Valley Corporation, resulting in approximately 6% of our current total revenue. During the year ended December 31, 2001 and the nine months ended December 31, 2000, fees received from San Miguel Valley Corporation were approximately $132,000 and $ 238,900, respectively, and are expected to be $180,000 during 2002. The agreement with San Miguel Valley Corporation was entered into January 1, 2000 and continues from year to year until it is terminated upon not less than 60 days written notice from either party. San Miguel Valley Corporation is owned by affiliates of James N. Blue.

     We also provide management, professional and administrative services to Cordillera Corporation that currently account for approximately 11% of our total revenue. Our management is responsible for the day-to-day management of subsidiaries of Cordillera Corporation. During the year ended December 31, 2001 and the nine months ended December 31, 2000, fees received from Cordillera Corporation were approximately $ 315,600 and $187,700, respectively, and are expected to be approximately $360,000 in 2002. The agreement with Cordillera Corporation was entered into January 1, 2000 and continues from year to year until it is terminated upon not less than 60 days written notice from either party. James N. Blue is the chairman of the board of directors, president and the indirect beneficial owner of a majority of the common stock of Cordillera.

     We provide bookkeeping services to Points Four World Travel, Inc. Their payments are immaterial as a percentage of our total revenue. During the year ended December 31, 2001, fees received from Points Four WorldTravel, Inc. were approximately $15,533, and are expected to be approximately $1,000 during 2002. The agreement with Points Four World Travel, Inc. was entered into April 1, 2001 and continues from year to year until it is terminated upon not less than 60 days written notice from either party. Points Four World Travel, Inc. is owned by James N. Blue’s sons, Karsten Blue and Linden P. Blue.

     Through August 31, 2002, Karsten Blue, son of our Chief Executive Officer, performed management services as an officer for Global Access Telecommunications, Inc. pursuant to an oral agreement, which accounted for approximately 6% of total revenue for 2002. Effective September 1, 2002, we no longer perform management services for Global by mutual agreement. During the years ended December 31, 2002, 2001 and 2000, fees received from Global Access Telecommunications, Inc. were approximately $134,000, $205,000, and $139,700, respectively.

Officer Fees

     James N. Blue receives officers’ fees of $5,000 per month for his services as Chairman of the Board of Directors and Chief Executive Officer. Mr. Blue received $60,000 for each of the years ended 2001 and 2000. Mr. Blue is chairman of the board of directors and president of NWO Resources, Inc., which owns approximately 49.5% of our common stock. Mr. Blue is also chairman of the board of directors, president and the indirect beneficial owner of a majority of the common stock of Cordillera

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Corporation, the major stockholder of NWO Resources, Inc. Through Cordillera Corporation and affiliates, Mr. Blue additionally beneficially holds approximately 5.5% of our common stock.

Officer’s Family Compensation

     Since April 2000 we have employed Karsten N. Blue, a son of James N. Blue, for the East Timor project and to provide services to Global Access Telecommunications, Inc. pursuant to the management agreement described above. Karsten Blue is an officer of Global Access Telecommunications, Inc. We paid Karsten Blue approximately $33,750 in 2001 and $42,500 in the first eight months of 2002 for his services to us for assistance in coordinating the various activities relating to the commercial opportunity in East Timor, including but not limited to coordinating public relations services in East Timor by assisting in the publicity of the Timor Gap issue seeking East Timor public opinion for an Oceanic concession. In addition, we have received approximately $139,700, $205,000 and $134,000 in 2000, 2001 and 2002, respectively, from Global with respect to Karsten Blue’s services pursuant to our management agreement with Global. Global is indirectly controlled by James N. Blue. Karsten Blue received approximately an additional $115,400, $169,500 and $110,900 in 2000, 2001 and 2002, respectively, from us from the Global payments. Effective September 1, 2002 we no longer employ Karsten Blue. We utilize Karsten Blue’s services to assist on the East Timor project on a monthly basis by paying his current employer, Cordillera Corporation. On September 1, 2002, we entered into a Service Agreement with Cordillera Corporation, pursuant to which we compensate and reimburse Cordillera Corporation for Karsten Blue’s services at the rate of $1,250 per week, not to exceed $65,000 per year, and out-of-pocket business expenses incurred by him. The Agreement continues from year to year and may be terminated by either party on not less than 30 days written notice. Karsten Blue has provided and will continue to provide public relations services in East Timor by assisting in the publicity of the Timor Gap issue seeking East Timor public opinion for an Oceanic concession.

NWO Resources, Inc. Line of Credit

     On August 15, 2002, we established a line of credit with NWO Resources, Inc., our principal stockholder, to fund our operations prior to the completion of the rights offering, if such funding is required. As of September 30, 2002, no amount was outstanding under the line of credit. We expect to draw down a total of approximately $150,000 before the closing of the rights offering. The line of credit provides for cumulative draws of up to $500,000 with interest on the outstanding balance at 2% over the U.S. Bank prime lending rate in effect on the date of each draw against the line of credit. The line of credit is evidenced by an unsecured demand promissory note that is due upon demand. We anticipate repaying any outstanding amounts due under the line of credit upon consummation of the rights offering, at which time the line of credit will be terminated.

Employee Benefit Plans

     Cordillera Corporation has a defined contribution pension plan and a 401(k) plan covering all qualified employees of Oceanic Exploration. The plans are not limited to officers and directors. Employees must be at least 21 years of age and have one year of service. Collective bargaining employees, nonresident aliens who receive no income from U.S. sources and leased employees are the only employees not eligible to participate. Contributions to the pension plan are based on a percentage of employee compensation ranging from 6% to 11.7%. We are required to match employee 401(k) contributions up to 6% of annual compensation. For the years ended December 31, 2001 and 2000, we recorded $83,019 and $78,884, respectively, as pension expense and 401(k) expense under these plans. Mr. Blue, the Chairman of the Board of Directors and Chief Executive Officer, is chairman of the board of directors, president and the indirect beneficial owner of a majority of the common stock of Cordillera Corporation.

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     Additionally, we have taken over as plan sponsor for the Alliance 401(k) plan that was established July 1, 1993. According to plan documents, employer contributions are discretionary. Oceanic Exploration did not record any pension plan expense under this plan for the years ended December 31, 2001 and 2000.

     Effective December 31, 2001, the Alliance 401(k) plan has been terminated. The Internal Revenue Code of 1986, as amended, provides for a transition period, subsequent to an acquisition, for purposes of meeting minimum coverage requirements. The transition period for Oceanic Exploration, subsequent to the acquisition of Alliance, ended on December 31, 2001. The Cordillera Corporation plans have been amended, effective as of January 1, 2002, to cover eligible employees of Alliance

Lease of Office Space

     We lease our office building at 7800 East Dorado Place, Suite 250, Englewood, Colorado 80111 from Sorrento West Properties, Inc., a company indirectly owned and controlled by Mr. Blue, our Chairman of the Board of Directors and Chief Executive Officer, and his family. We believe that, with respect to the lease, we obtained terms no less favorable than those that could have been obtained from unrelated parties in arms-length transactions. The lease was entered into on September 1, 2000 and expires September 1, 2005. The minimum monthly rent for the first three years of the lease is $18.00 per square foot or $ 7,485 and for the final two years of the lease is $18.50 per square foot or $7,693. The lease provides for additional rent to cover tenant’s pro rata share of insurance, taxes, common area maintenance and other charges, subject to change annually.

General

     All future affiliated transactions will be entered into on terms at least as favorable as could be obtained from unaffiliated independent third parties. Options, warrants or grants of stock will not be issued to officers, directors, employees, 5% shareholders or affiliates with an exercise price of less than 85% of the fair market value.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

     Under Sections 145 of the Delaware General Corporation Law and our bylaws, our directors and officers may be indemnified against liabilities that they may incur in their capacities as such. An officer or director may be indemnified by us against the expenses actually and reasonably incurred by him in connection with the defense of any action by reason of being or having been a director or officer, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to our best interests. In addition, with respect to criminal actions or proceedings, he must also have had no reason to believe his conduct was unlawful. If such action is by or in the right of Oceanic Exploration, no indemnification may be provided as to any claim, issue or matter as to which a person is adjudged to have been liable to Oceanic Exploration, unless a court determines otherwise.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions or otherwise, we have been advised that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit

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to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

LEGAL MATTERS

     The validity of the shares of common stock offered by this prospectus will be passed upon for us by Callister Nebeker & McCullough, a professional corporation, Salt Lake City, Utah.

EXPERTS

     Our consolidated financial statements as of and for each of the two years ended December 31, 2001 and 2000 and the related financial statement schedules have been included in this prospectus and in the Registration Statement in reliance upon the reports of KPMG LLP, independent certified public accountants, appearing elsewhere in this prospectus, and upon the authority of KPMG LLP as experts in accounting and auditing.

IF YOU WOULD LIKE MORE INFORMATION

     We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy this information at the SEC’s public reference room, which is located at the following address:

450 Fifth Street, N.W

Washington, DC 20549

     Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. This information is also available online through the SEC’s Electronic Data Gathering, Analysis, and Retrieval System (EDGAR), located on the SEC’s web site (http://www.sec.gov).

     Also, we will provide (free of charge) any of our documents filed with the SEC, as you reasonably may request. To get your free copies, please call or write to

Patricia Ward, Administrative Assistant

Oceanic Exploration Company

7800 East Dorado Place, Suite 250

Englewood, CO 80111

(303) 220-8330

     You should rely only on the information in this prospectus. We have not authorized anyone to provide you with any different information.

     This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any state where the offer or sale is not permitted. This prospectus is not an offer to sell nor is it seeking an offer to buy securities other than the shares of common stock to be issued pursuant to the rights offering. The information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of these securities.

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OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

			June 30, 2002			December 31, 2001
Assets
Cash and cash equivalents			$	748,677		$	2,462,692
Trade accounts receivable, net of allowance for doubtful accounts of $12,585 and $7,968, respectively				179,062			273,544
Due from affiliates				10,599			14,340
Accounts receivable-miscellaneous				221,089			195,922
Prepaid expenses and other				70,569			85,038
		Total current assets		1,229,996			3,031,536
Oil and gas property interests, full-cost method of accounting				39,000,000			39,000,000
	Less accumulated amortization and depreciation			(39,000,000	)		(39,000,000	)
				—			—
Furniture, fixtures and equipment				193,731			193,329
	Less accumulated depreciation			(102,195	)		(80,351	)
				91,536			112,978
Restricted cash				185,225			185,507
Goodwill, net of accumulated amortization of $73,534 (note 2)				346,659			346,659
Other intangible assets, net of accumulated amortization of $112,500 and $87,500, respectively				37,500			62,500
			$	1,890,916		$	3,739,180

(Continued)

F- 1

OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS CONTINUED
(Unaudited)

				June 30, 2002		December 31, 2001
Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable			$	240,139		$	321,965
	Accounts payable to affiliates				—			60,000
	United Kingdom taxes payable, including
			accrued interest		511,057			495,156
	Accrued expenses				181,674			179,916
			Total current liabilities		932,870			1,057,037
Other non-current liabilities					25,476			26,736
			Total liabilities		958,346			1,083,773
Stockholders’ equity:
		Preferred stock, $10 par value. Authorized 600,000 shares; none issued			—			—
		Common stock, $.0625 par value. Authorized 12,000,000 shares; 9,916,154 shares issued and outstanding			619,759			619,759
		Capital in excess of par value			155,696			155,696
		Retained earnings			157,115			1,879,952
			Total stockholders’ equity		932,570			2,655,407
				$	1,890,916		$	3,739,180

See accompanying notes to consolidated financial statements.

F- 2

OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2002			2001			2002			2001
Revenues:
	Staffing revenue		$	486,305			578,452		$	1,166,524			1,295,583
	Management revenue-related parties			186,450			123,149			372,969			235,049
	Interest income			6,484			52,301			14,700			129,767
	Other			455			5,185			8,100			32,066
				679,694			759,087			1,562,293			1,692,465
Costs and expenses:
	Interest and financing costs			5,906			4,833			11,138			9,682
	Exploration expenses (note 3)			458,635			306,343			1,128,213			336,829
	Staffing direct costs			408,599			489,863			968,201			1,114,380
	Amortization and depreciation			23,762			33,512			47,449			66,981
	General and administrative			578,024			682,099			1,130,129			1,251,087
	Other			23,688			—			—			—
				1,498,614			1,516,650			3,285,130			2,778,959
Loss before income taxes				(818,920	)		(757,563	)		(1,722,837	)		(1,086,494	)
Income tax benefit				—			34,815			—			34,815
		Net loss	$	(818,920	)		(722,748	)		(1,722,837	)		(1,051,679	)
Loss per common share			$	(0.08	)		(0.07	)		(0.17	)		(0.11	)

See accompanying notes to consolidated financial statements.

F- 3

OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

						Six Months Ended
						June 30,
						2002			2001
Cash flows from operating activities:
	Net loss					$	(1,722,837	)		(1,051,679	)
	Adjustments to reconcile net loss to cash used in operating activities:
			Amortization and depreciation				47,449			66,981
			Loss on disposal of fixed assets				909			2,616
			Changes in operating assets and liabilities:
				Accounts receivable and due from affiliates			73,056			17,926
				Prepaid expenses and other assets, including restricted cash			14,751			(3,436	)
				Accounts payable and due to affiliates			(141,826	)		132,382
				United Kingdom taxes payable, including accrued interest payable and accrued expenses			17,659			112,082
				Other non-current liabilities			(1,260	)		—
					Cash used in operating activities		(1,712,099	)		(723,128	)
Cash flows from investing activities:
		Purchase of fixed assets					(2,216	)		(18,853	)
		Sale of fixed assets					300			—
					Cash used in investing activities		(1,916	)		(18,853	)
					Net decrease in cash		(1,714,015	)		(741,981	)
Cash at beginning of period							2,462,692			5,475,156
Cash at end of period						$	748,677			4,733,175

See accompanying notes to consolidated financial statements.

F- 4

OCEANIC EXPLORATION COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2002

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The consolidated balance sheet as of December 31, 2001 that has been derived from audited financial statements, and the unaudited interim consolidated financial statements included herein, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to those rules and regulations, although Oceanic Exploration Company (“Oceanic” or “the Company”) believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments consisting of normal recurring accruals have been made which are necessary for the fair presentation of the periods presented. Certain amounts recorded in prior periods have been reclassified to conform with current presentation. Interim results are not necessarily indicative of results for a full year. The information included herein should be read in conjunction with the financial statements and notes thereto included in the December 31, 2001 Form 10-KSB.

(2) GOODWILL

     In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” which was adopted by the Company effective January 1, 2002. Under SFAS No. 142, goodwill and intangible assets with indefinite useful lives will no longer be amortized, but will instead be tested periodically for impairment. SFAS No. 142 also requires that intangible assets with finite lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed periodically for impairment. As of January 1, 2002, goodwill previously recorded in connection with the acquisition of Alliance, the net balance of which was $346,659 as of December 31, 2001, will no longer be amortized and will be reviewed for impairment at least annually. The Company has completed its transitional impairment analysis and has determined there was no impairment of good will as of January 1, 2002. There can be no assurance there will not be an impairment of goodwill at a later date. Oceanic will continue to monitor the carrying value of its goodwill and will record an impairment write-down as required. The impact of adopting SFAS 142 in 2002 was a reduction in expense during the first three and six months of 2002 of approximately $10,500 and $21,000, respectively, as compared to the first three and six months of 2001.

(3) EXPLORATION EXPENSES

     As discussed in the December 31, 2001 Form 10-KSB, in 1974, Portugal granted an exclusive offshore concession to Petrotimor Companhia de Petróleos, S.A.R.L. (“Petrotimor”), a subsidiary of Oceanic, to explore for and develop oil and gas in the Timor Gap area. On January 5, 1976, subsequent to Indonesia’s unlawful invasion and occupation of East Timor, Portugal agreed to a suspension of performance under the concession agreement, based upon force majeure.

     On December 11, 1989, Australia and Indonesia, ignoring Petrotimor’s rights under the concession from Portugal, signed the Timor Gap Treaty (the “Treaty”), purporting to create a joint zone of cooperation whereby these two countries could control the exploration and development of

F- 5

hydrocarbons in an area over which both countries claimed rights. A portion of this area, designated as Zone A, falls largely within the area where Petrotimor holds rights under its concession agreement with Portugal. The Treaty created a Joint Authority that purported to enter into production sharing contracts with various companies who have carried out exploration activities.

     During 1999 the people of East Timor voted for independence from Indonesia and the United Nations initiated a transition of East Timorese independence under the authority of the United Nations Transitional Administration in East Timor. On August 30, 2001, East Timor elected representatives to the Constituent Assembly to prepare a constitution for an independent and democratic East Timor. A constitution was approved by the Constituent Assembly and East Timor became an independent nation on May 20, 2002.

     On August 21, 2001, Oceanic and Petrotimor issued a Statement of Claim out of the Federal Court of Australia against the Commonwealth of Australia, the Joint Authority established under the Treaty, and the Phillips Petroleum companies operating within the Timor Gap area. Oceanic and Petrotimor claim that the Treaty and the pursuant legislation of the Australian Parliament was illegal for a number of reasons including: (1) the Treaty and the legislation sought to claim significant portions of the continental shelf for Australia, which, under international law, belonged to East Timor, and (2) the Treaty and the legislation attempted to extinguish the property interest and rights granted by the then legitimate sovereign power, Portugal, to Oceanic and Petrotimor, without providing for just compensation. As the case involves complex issues of international and Australian constitutional law, it is expected that it will take a considerable period before the case is resolved.

     In addition to the Statement of Claim issued in Australia, Oceanic has submitted an application for an Expansion of Seabed Concession to the transitional government in East Timor, which would, if granted, expand the 1974 Petrotimor concession to correspond with the offshore area East Timor is entitled to claim under international law. The Company has received no response to this application.

     On March 23 and 24, 2002, Petrotimor sponsored a seminar in Dili, the capital of East Timor, for the purpose of explaining to local government representatives, and other interested parties, the maritime boundaries to which East Timor is entitled under current international law and the substantial economic benefits that would be derived by East Timor from claiming such expanded boundaries.

     During the six months ended June 30, 2002 and 2001, respectively, the Company incurred expenses of $1,121,446 and $333,235, respectively, related to its activities in the Timor Gap area which are included in exploration expense.

     In connection with the Company’s litigation over the Timor Gap area, the Company was required to escrow certain funds in a separate bank account as security for court costs in the event the Company’s litigation proves unsuccessful. The funds have been designated as restricted cash.

(4) INCOME TAXES

     A valuation allowance was provided for the entire deferred income tax asset attributable to the net operating loss incurred during the six months ended June 30, 2002.

(5) INFORMATION CONCERNING BUSINESS SEGMENTS

     The Company has operations in two business segments, oil and gas exploration and employment operations. The Company’s oil and gas exploration activities have generally consisted of exploration of

F- 6

concessions through various forms of joint arrangements with unrelated companies, whereby the parties agree to share the costs of exploration, as well as the costs of, and any revenue from, a discovery. The objective of the Company’s employment operations is to provide services consisting of executive search, professional and technical placement, human resources consulting, site management and contract staffing to companies primarily in the San Diego area.

     The table below presents certain financial information for the Company’s operating segments as of and for the three and six months ended June 30, 2002 and 2001.

	Oil and gas
	exploration,
	including			Employment
	corporate			Operations			Total
Three Months Ended June 30, 2002
Revenues		193,838			485,856			679,694
Loss before taxes		(642,023	)		(176,897	)		(818,920	)
Total assets		974,509			916,407			1,890,916
Three Months Ended June 30, 2001
Revenues		171,371			587,716			759,087
Loss before taxes		(586,834	)		(170,729	)		(759,563	)
Total assets		4,821,273			840,766			5,662,039
Six Months Ended June 30, 2002
Revenue		453,787			1,168,506			1,622,293
Loss before taxes		(1,415,735	)		(307,102	)		(1,722,837	)
Total assets		974,509			916,407			1,890,916
Six Months Ended June 30, 2001
Revenue		384,638			1,307,827			1,692,465
Loss before taxes		(726,165	)		(360,329	)		(1,086,494	)
Total assets		4,821,273			840,766			5,662,039

F- 7

OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001 and 2000

(With Independent Auditors’ Report Thereon)

F- 8

Independent Auditors’ Report

The Board of Directors and Stockholders

Oceanic Exploration Company:

We have audited the accompanying consolidated balance sheets of Oceanic Exploration Company and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations and retained earnings and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly the financial position of Oceanic Exploration Company and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

KPMG LLP

Denver, Colorado

March 1, 2002

F- 9

OCEANIC EXPLORATION COMPANY
AND SUBSIDIARIES

Consolidated Balance Sheets
December 31, 2001 and 2000

				2001			2000
Assets
Cash and cash equivalents, unrestricted				$	2,462,692			5,475,156
Trade accounts receivable, net of allowance for doubtful accounts of $7,968 and $0, respectively					273,544			271,147
Due from affiliates					14,340			6,113
Accounts receivable— miscellaneous (note 6)					195,922			66,591
Prepaid expenses and other					85,038			32,698
			Total current assets		3,031,536			5,851,705
Oil and gas property interests, full-cost method of accounting (notes 2, 3, and 7)					39,033,600			39,033,600
		Less accumulated amortization, depreciation, and impairment allowance			(39,033,600	)		(39,033,600	)
					—			—
Furniture, fixtures, and equipment					193,329			161,019
	Less accumulated depreciation				(80,351	)		(44,649	)
					112,978			116,370
Restricted cash					185,507			—
Goodwill, net of accumulated amortization of $161,034 and $69,014, respectively (note 5)					409,159			501,179
			Total assets	$	3,739,180			6,469,254
Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable			$	321,965			150,483
	Accounts payable to affiliates				60,000			60,000
	United Kingdom taxes payable, including accrued interest (note 12)				495,156			488,323
	Accrued expenses				179,916			185,274
			Total current liabilities		1,057,037			884,080
Deferred income taxes (note 7)					—			2,208
Other non-current liabilities					26,736			—
			Total liabilities		1,083,773			886,288
Stockholders’ equity (note 8):
	Preferred stock, $10 par value. Authorized 600,000 shares; no shares issued				—			—
	Common stock, $.0625 par value. Authorized 12,000,000 shares; issued and outstanding 9,916,154 shares				619,759			619,759
	Capital in excess of par value				155,696			155,696
	Retained earnings				1,879,952			4,807,511
			Total stockholders’ equity		2,655,407			5,582,966
Commitments and contingencies (notes 4, 6, 8 and 12)
			Total liabilities and stockholders’ equity	$	3,739,180			6,469,254

See accompanying notes to consolidated financial statements.

F-10

OCEANIC EXPLORATION COMPANY
AND SUBSIDIARIES

Consolidated Statements of Operations and Retained Earnings

Years ended December 31, 2001 and 2000

			2001			2000
Revenue:
	Net profit interest proceeds (note 2)		$	—			6,739,342
	Staffing revenue (note 5)			2,682,027			2,721,012
	Management revenue — related parties (note 8)			514,418			570,920
	Interest income (note 2)			181,068			2,300,281
	Other			33,402			305,642
				3,410,915			12,637,197
Costs and expenses:
	Interest and financing costs			19,863			29,181
	Exploration expenses (note 4)			1,517,272			273,591
	Staffing direct costs			2,283,875			2,245,683
	Amortization and depreciation			134,798			94,535
	General and administrative			2,418,889			1,870,525
				6,374,697			4,513,515
		Income (loss) before income taxes		(2,963,782	)		8,123,682
Income tax benefit (expense) (note 6)				36,223			(222,297	)
		Net income (loss)		(2,927,559	)		7,901,385
Accumulated earnings (deficit) at beginning of year				4,807,511			(3,093,874	)
Retained earnings at end of year			$	1,879,952			4,807,511
Basic and diluted earnings (loss) per common share			$	(0.30	)		0.80
Weighted average number of common shares outstanding				9,916,154			9,916,154

F-11

OCEANIC EXPLORATION COMPANY
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2001 and 2000

					2001			2000
Cash flows from operating activities:
	Net income (loss)				$	(2,927,559	)		7,901,385
	Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
		Amortization and depreciation				134,798			94,535
		Impairment of oil and gas working interest				—			33,600
		Loss on disposal of fixed assets				8,049			3,077
		Deferred income taxes				(2,208	)		(10,325	)
		Changes in operating assets and liabilities:
			Accounts receivable and due from affiliates			(139,955	)		(333,409	)
			Prepaid expenses and other assets			(237,847	)		(19,495	)
			Increase (decrease) in accounts payable			171,482			(11,648	)
			Increase (decrease) in United Kingdom taxes payable, including accrued interest payable; and accrued expenses			1,475			(133,071	)
			Other noncurrent liabilities			26,736			—
				Cash provided by (used in) operating activities		(2,965,029	)		7,524,649
Cash flows from investing activities:
	Purchase of operations and certain assets of Alliance					—			(682,232	)
	Purchase of oil and gas property interests					—			(33,600	)
	Purchases of fixed assets					(47,435	)		(42,687	)
	Sale of fixed assets					—			200
				Cash used in investing activities		(47,435	)		(758,319	)
Cash flows from financing activities:
	Repayments to shareholder and affiliates, net					—			(1,357,636	)
				Net increase (decrease) in cash		(3,012,464	)		5,408,694
Cash at beginning of year						5,475,156			66,462
Cash at end of year					$	2,462,692			5,475,156
Cash paid for interest					$	696			106,789
Cash paid for income taxes						88,193			89,000

See accompanying notes to consolidated financial statements.

F-12

(1) Summary of Significant Accounting Policies

(a)	General
	Oceanic Exploration Company (the Company) was historically engaged in a worldwide search for oil and gas reserves. The Company’s investment in oil and gas properties consists primarily of a nonoperated net profit interest in proven reserves offshore Greece (the Prinos Property). Effective March 31, 1999, the Consortium operating the Greek property relinquished its license pertaining to the development area to the Greek government. Amounts paid to the Company for its net profits interest were remitted in U.S. dollars.
	Effective March 31, 2000, the Company purchased the employment operations and certain assets of Alliance Services Associates, Inc., the wholly owned subsidiary of Alliance Staffing Associates, Inc. (collectively, Alliance) for $581,000. Alliance is an employment agency located in San Diego, California. The acquisition was accounted for using the purchase method of accounting.
	The Company also provides services to two related entities pursuant to management agreements. The amounts received under the agreements are based on costs relating to employee salaries and other operating expenses, plus an additional fee of 5% of the total amount.
(b)	Principles of Consolidation
	The consolidated financial statements include the accounts of the Company and its wholly owned domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
(c)	Oil and Gas Properties
	Oil and gas properties are accounted for using the full-cost method of accounting in accordance with the rules prescribed by the Securities and Exchange Commission (SEC). Under this method, all acquisition, exploration, and development costs are capitalized on a country-by-country basis as incurred. Gains or losses on disposition of oil and gas properties are recognized only when such dispositions involve significant reserves within the individual country cost pools.
	Capitalized costs less related accumulated amortization may not exceed the sum of (1) the present value of future net revenue from estimated production, computed using current prices, and costs and a discount rate of 10%; plus (2) the cost of producing properties not being amortized, if any; plus (3) the lower of cost or fair value of unproved properties included in costs being amortized; less (4) income tax effects related to differences in the book and tax basis of oil and gas properties. Any excess costs are recorded as additional depletion expense.
	The Company’s offshore Greece oil and gas property interests represent a 15% net profit interest in such properties. The property was fully depleted for book purposes as of March 31, 1999.
	The cost of undeveloped properties is excluded from amortization pending a determination of the existence of proved reserves. Such undeveloped properties are assessed periodically for impairment. The amount of impairment, if any, is added to the costs to be amortized.
(d)	Income Taxes
	Income taxes are provided for using the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

F-13

	Because many types of transactions are susceptible to varying interpretations under federal and state income tax laws and regulations, the amount reported may be subjected to change at a later date upon final determination by the taxing authorities.
(e)	Earnings (Loss) Per Share
	Earnings (loss) per share is based on the weighted average number of common shares outstanding during the period.
(f)	Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management reviews its estimates, including those related to the recoverability and useful lives of assets as well as liabilities for income taxes. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates.
(g)	Revenue Recognition
	We recognize revenues from oil and gas interests as such revenues are earned, pursuant to contracts that provide for such interests. We provide employment services to customers that are billed on a per hour basis. Our employment service revenues are recognized as billable hours are incurred. We recognize management service revenues pursuant to contracts under which we provide management services to related parties. Management service revenues are recognized as such revenues are earned, in accordance with the related contracts. Such contracts generally provide for an annual fee which is recognized ratably over the service period.
(h)	Statement of Stockholders’ Equity
	The accompanying financial statements do not include a separate statement of stockholders’ equity. During the two-year period ended December 31, 2001, there were no changes in any equity accounts other than retained earnings. The statement of operations and retained earnings reflects changes in retained earnings during the two-year period ended December 31, 2001.
(i)	Reclassifications
	Certain amounts recorded in prior periods have been reclassified to conform to the current period presentation.

(2)	Net Profits Interest Proceeds
	Effective January 1, 1993, the operator of the Greek properties negotiated an agreement with the Greek government which amended the original license agreement. The amendment provided for a sliding scale for calculating the operator’s recoverable costs and expenses and for the calculation of the Greek royalty interest. The working interest owner who has the contractual obligation to the Company for the 15% net profits interest asserted that the calculation of the amounts due to the Company should be based on the amended agreement with the Greek government. The Company disagreed with this interpretation and commenced a legal action in Canada seeking a declaration by the Ontario Court of Justice (General Division) in Toronto, Canada (the Court) that amounts due the Company attributable to its 15% net profits interest be calculated based on the terms of the license agreement before this amendment. In December 1996, the Company received notification that the Court had rendered a judgment in the Company’s favor.
	The defendant subsequently filed a Notice of Appeal requesting that the judgment be set aside. The Appellate Court hearing before the Ontario Court of Appeal was held in June 1999. On December 16, 1999, the Company received notification that the Appellate Court had upheld the lower court’s decision.

F-14

	On January 27, 2000 and February 9, 2000, the Company received $8,614,789 and $15,868, respectively, from the defendant. These amounts consisted of $6,739,342 (net of Greek taxes of $4,492,895) for net profits interest payments from January 1, 1993 through December 31, 1997, $118,255 for court costs and accrued interest of $1,773,060 (net of $197,007 of Canadian withholding taxes).
	Effective March 31, 1999, the Consortium operating the Greek properties has relinquished its license to operate the Prinos oil field in Greece. However, they have retained the exploration rights in the area of the Aegean Sea over which there has been an ongoing ownership dispute between Greece and Turkey. Should the dispute be resolved and the Consortium drill and successfully develop any additional prospects, the Company would be entitled to once again receive its 15% net profits interest applicable to the working interest owner’s share. However, as the Company considers this to be unlikely under current circumstances, the Company has fully depleted its investment in Greece.
(3)	Oil and Gas Property
	On September 19, 2000, the Company entered into a Participation Agreement with Mariah Energy, LLC giving the Company a 75% interest in potential oil and gas properties in Finney County, Kansas at a cost of $33,600. The agreement provided for participation in drilling an obligation test well to be spudded prior to December 15, 2000. The test well was drilled in October 2000 and determined to be a dry hole. Drilling costs of $108,750 have been expensed, as no reserves were discovered. As of December 31, 2000, an impairment reserve was recorded for the full amount of this working interest.
	On December 31, 2001, all rights under the Participation Agreement expired and the cost of the working interest, plus the related impairment reserve, was written off.
(4)	Exploration Expenses
	In 1974, Portugal granted an exclusive offshore concession to Petrotimor Companhia de Petroleos, S.A.R.L. (Petrotimor), a subsidiary of Oceanic, to explore for and develop oil and gas in the Timor Gap area. On January 5, 1976, subsequent to Indonesia’s unlawful invasion and occupation of East Timor, Portugal agreed to a suspension of performance under the concession agreement, based upon force majeure.
	On December 11, 1989, Australia and Indonesia, ignoring Petrotimor’s rights under the concession from Portugal, signed the Timor Gap Treaty (the Treaty), purporting to create a joint zone of cooperation whereby these two countries could control the exploration and development of hydrocarbons in an area over which both countries claimed rights. A portion of this area, designated as Zone A, falls largely within the area where Petrotimor holds rights under its concession agreement with Portugal. The Treaty created a Joint Authority that purported to enter into production sharing contracts with various companies who have carried out exploration activities.
	During 1999, the people of East Timor voted for independence from Indonesia and, the United Nations initiated a transition of East Timorese independence under the authority of the United Nations Transitional Administration in East Timor. On August 30, 2001, East Timor elected representatives to the Constituent Assembly to prepare a constitution for an independent and democratic East Timor. A draft constitution has been approved by the Constituent Assembly and East Timor will become an independent nation on May 20, 2002.
	On August 21, 2001, Oceanic and Petrotimor issued a Statement of Claim out of the Federal Court of Australia against the Commonwealth of Australia, the Joint Authority established under the Treaty, and the Phillips Petroleum companies operating within the Timor Gap area. Oceanic and Petrotimor claim that the Treaty and the pursuant legislation of the Australian Parliament was illegal for a number of reasons, including: (1) the Treaty and the legislation sought to claim significant portions of the continental shelf for Australia, which, under international law, belonged to East Timor, and (2) the Treaty and the legislation attempted to extinguish the property interest and rights granted by the then legitimate sovereign power, Portugal, to Oceanic and Petrotimor, without providing for just compensation. As the case involves complex issues of international and Australian constitutional law, it is expected that it will take a considerable period before the case is resolved.

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	In addition to the Statement of Claim issued in Australia, Oceanic has submitted an application for an Expansion of Seabed Concession to the transitional government in East Timor, which would, if granted, expand the 1974 Petrotimor concession to correspond with the offshore area East Timor is entitled to claim under international law.
	During the years ended December 31, 2001 and 2000, respectively, the Company incurred exploration expenses of $1,511,625 and $122,608 related to activity in the Timor Gap area.
	In connection with the Company’s litigation over the Timor Gap area, the Company was required to escrow $185,507 in a separate bank account during 2001 as security for court costs in the event the Company’s litigation proves unsuccessful. The $185,507 has been designated as restricted cash.
(5)	Alliance Acquisition
	As noted in note 1(a), the Company recorded the acquisition of Alliance using the purchase method of accounting. Under this method, the excess of the purchase price over the net assets acquired is first allocated to adjust the recorded value of the tangible and identified intangible assets acquired to their fair market value. Any excess is then recorded as goodwill. The purchase price, legal fees, and other professional fees incurred have been allocated as follows:

Cash	$	34,373
Prepaid assets		10,998
Fixed assets		101,041
Goodwill		570,193
	$	716,605

	The purchase price of $581,000 was paid to the shareholders of Alliance Staffing Associates, Inc., Karsten N. Blue and Linden P. Blue, who are the sons of James N. Blue, the Chairman of the Board and Chief Executive Officer of the Company.
(6)	Income Taxes
	Income tax benefit (expense) consists of the following:

			2001			2000
Current:
	Foreign — Canada		$	—			(197,007	)
	U.S. federal			35,615			(35,615	)
	U.S. state			(1,600	)		—
		Total current income tax benefit (expense)		34,015			(232,622	)
Deferred:
	U.S. federal			2,208			10,325
		Total income tax benefit (expense)	$	36,223			(222,297	)

The reconciliation between tax expense computed by multiplying pretax income by the U.S. federal statutory tax rate of 34% and the reported amount of income tax expense is as follows:

		2001			2000
Computed at U.S. statutory tax rate		$	1,007,686			(2,762,052	)
Decrease (increase) in the valuation allowance			(22,241	)		520,088
Foreign exploration expenses not deducted for tax purposes			(513,953	)		—
Foreign tax credits (recaptured) utilized, net			(315,421	)		2,019,667
Adjustment of taxes provided in prior years and other, net			(119,848	)		—
	Income tax benefit (expense)	$	36,223			(222,297	)

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Greek income taxes are withheld from oil and gas revenue payments to the Company. The effective Greek income tax rate applicable to the Company’s 15% net profits interest was reduced from 50% to 40% effective January 1, 1993 with respect to the Prinos and Prinos North development areas. The 50% tax rate remains effective for areas outside the development area. Included in tax expense at December 31, 2000 was $197,007 for Canadian taxes paid on proceeds from Denison. Oceanic intends to carry back the loss generated in fiscal year 2001 for a refund of taxes paid for fiscal year 2000 and accordingly has recorded $177,193 as a receivable that is included in miscellaneous accounts receivable at December 31, 2001.

As discussed in note 2, the case against the working interest owner of the Greek properties was heard in Canadian courts. When the defendant and the Company came to an agreement in early 2000, Canadian income tax was withheld from accrued interest that was paid to the Company by the defendant. The Company is allowed to take a foreign tax credit for the amount withheld and submitted to Revenue Canada.

At December 31, 2001 and 2000, significant components of deferred tax assets and liabilities (excluding unused foreign tax credits) are as follows:

		2001			2000
Deferred tax assets:
	Oil and gas properties, principally due to differences in depreciation and depletion and impairment	$	152,511			150,404
	Goodwill amortization		32,134			13,772
	Other		23,308			21,536
			207,953			185,712
Valuation allowance			(207,953	)		(185,712	)
Deferred liabilities:
	Other		—			(2,208	)
	Net deferred tax liabilities	$	—			(2,208	)

	The deferred tax asset at December 31, 2001, for which a valuation allowance has been recorded, will be recognized when its realization is more likely than not.
(7)	Common Stock
	The Company adopted an incentive plan in June 1976, which reserved 500,000 shares of common stock for stock options and 200,000 shares for stock grants to be awarded to Company officers, directors, and employees, including certain eligible consultants. At December 31, 2001, no stock options or grants were outstanding. At that date, 223,500 shares were available for future stock option awards, and 115,626 shares were available for future stock grants.
(8)	Related Party Transactions
	The Company provides management services to Cordillera Corporation (Cordillera), the beneficial controlling shareholder of the Company, and to San Miguel Valley Corporation (SMVC), an affiliate of Cordillera, under agreements providing for payments to the Company based on costs for actual time and expenses plus an additional fee of 5% of the total amount. During the years ended December 31, 2001 and 2000, such fees amounted to approximately $448,000 and $571,000, respectively, and have been included as other revenue in the accompanying consolidated statements of operations.
	The Company contributes for all qualified employees amounts to a defined contribution pension plan and a 401(k) plan administered by Cordillera. The Company makes contributions to these plans in accordance

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with the respective plan documents. During the years ended December 31, 2001 and 2000, the Company recorded expense of $83,019 and $78,884, respectively, under these plans.

Additionally, the Company has taken over as plan sponsor for the Alliance 401(k) plan that was established July 1, 1993. According to plan documents, employer contributions are discretionary. The Company did not record any expense under this plan during the nine months ended December 31, 2000 and the year ended December 31, 2001.

During August 2000, the Company relocated its corporate offices due to condemnation proceedings at the old location to allow for highway widening and light rail construction. The new office building is owned by Sorrento West Properties, Inc., a company indirectly owned and controlled by an officer and director of the Company. Under the terms of the new office building lease, dated September 1, 2000, the Company leases 4,990 square feet of space at an annual cost of $18.00 per square foot for the first 36 months rising to an annual cost of$18.50 per square foot for the next 24 months.

The Company leases office space from an unrelated party in San Diego for the Alliance operations. Under the terms of a three year lease, beginning November 15, 2001, the Company leases 5,795 square feet of space at an annual cost of $20.40 per square foot. The lease contains a 3% escalation clause, effective on each anniversary date.

Rent expense for the years ended December 31, 2001 and 2000, were $153,057 and $102,168, respectively. Future minimum lease payments under noncancelable operating leases for office space are as follows:

Year ended December 31:
2002	$	208,481
2003		212,873
2004		202,055
2005		61,543
	$	684,952

(9)	Supplemental Financial Data — Oil and Gas Producing Activities
	The following information is presented in accordance with Statement of Financial Accounting Standards No. 69, Disclosure about Oil and Gas Producing Activities (SFAS No. 69).

(a)	Disclosures About Capitalized Costs and Costs Incurred
	Capitalized costs related to oil and gas producing activities are as follows:

	2001			2000
Unproved properties (domestic)	$	—			33,600
Proved properties (foreign)		39,000,000			39,000,000
Accumulated amortization, depletion, and impairment allowance		(39,000,000	)		(39,033,600	)
	$	—			—

Costs incurred in oil and gas producing activities for the years ended December 31, 2001 and 2000 were approximately as follows:

	2001		2000
Exploration costs (see note 4)	$	1,517,272		273,591
Impairment		—		33,600

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(b)	Oil and Gas Revenue
	Results of operations from oil and gas producing activities in Greece for the years ended December 31, 2001 and 2000 are as follows:

	2001		2000
Net profits interest proceeds, net of Greek taxes	$	—		6,739,342
	$	—		6,739,342

The Company’s gross revenues are burdened only by Greek income taxes. The Company had no production costs since its property interest was a net profit interest.

(10)	Information Concerning Business Segments
	As discussed in notes 1 and 5, the Company acquired Alliance effective March 31, 2000. Upon this acquisition, the Company began operating in two business segments, oil and gas exploration and employment operations. The Company’s oil and gas exploration activities have generally consisted of exploration of concessions through various forms of joint arrangements with unrelated companies, whereby the parties agree to share the costs of exploration, as well as the costs of, and any revenue from, a discovery. The objective of the Company’s employment operations is to provide services consisting of executive search, professional and technical placement, human resources consulting, site management and contract staffing to companies in the San Diego area.
	The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see note 1). The Company evaluates its segments based on operating income of the respective divisions.
	The table below presents certain financial information for the Company’s operating segments as of and for the years ended December 31, 2001 and 2000.

		Oil and gas
		exploration,			Employment
		including corporate			operations			Total
Year ended December 31, 2001:
	Revenue	$	709,468			2,701,447			3,410,915
	Interest income		178,731			2,337			181,068
	Loss before taxes		(2,309,351	)		(654,431	)		(2,963,782	)
	Total assets		2,818,596			920,584			3,739,180
	Capital expenditures		25,304			22,131			47,435
	Exploration expenses		1,517,272			—			1,517,272
	Staffing direct costs		—			2,283,875			2,283,875
	Amortization and depreciation		7,977			126,821			134,798
Year ended December 31, 2000:
	Revenue		9,916,185			2,721,012			12,637,197
	Interest income		2,298,101			2,180			2,300,281
	Income (loss) before taxes		8,490,809			(367,127	)		8,123,682
	Total assets		5,482,979			986,275			6,469,254
	Capital expenditures		67,811			690,708			758,519
	Exploration expenses		273,591			—			273,591
	Staffing direct costs		—			2,245,683			2,245,683
	Amortization, depreciation, and impairment		36,342			91,973			128,135

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(11)	Significant Customers
	As of December 31, 2001, the Company had accounts receivable from a significant customer totaling approximately $115,000. The same customer accounted for approximately 24% of the Company’s revenue during the year ended December 31, 2001.
(12)	Commitments and Contingencies
	Prior to 1985 the Company had subsidiaries operating in the United Kingdom. During 1985 the subsidiaries disposed of an interest in a license. The Company has been advised there may be taxable capital gains resulting from the transaction and further, there does not appear to be a statute of limitations with respect to collection of taxes. The Company has accrued the estimated capital gains tax liability and continues to accrue interest thereon.
	The Company is a party to certain legal proceedings and claims in the ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse effect on its financial condition, results of operations or liquidity.

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APPENDIX I

FORM OF SUBSCRIPTION AGREEMENT

PLEASE CAREFULLY REVIEW THE INSTRUCTIONS

OCEANIC EXPLORATION COMPANY SUBSCRIPTION AGREEMENT

     This Subscription Agreement represents a subscription to acquire the number of shares of common stock of Oceanic Exploration Company set forth below at a subscription price of $.15 per share for the total subscription price set forth below. The registered owner named below is entitled to subscribe for full shares of common stock pursuant to subscription rights granted to stockholders upon the terms and conditions set forth in the related prospectus. For each share of common stock subscribed for, the subscription price of $.15 must be forwarded to Oceanic Exploration Company.

     THE SUBSCRIPTION RIGHTS EXPIRE AT 5:00 P.M. DENVER, COLORADO TIME ON NOVEMBER       , 2002. NO SUBSCRIPTION AGREEMENTS WILL BE ACCEPTED THEREAFTER.

Stockholder Name: _______________________

Stockholder Address: _____________________

Number of Shares Owned By
Stockholder on October __, 2002: _______________

Number of Shares Subject To
Basic Subscription Rights: _________________

Section 1 — SUBSCRIPTION AND SIGNATURE

     I hereby irrevocably subscribe for the number of shares of common stock as indicated below, on the terms specified in the related Prospectus.

a.	Subscription:	__________	Shares
b.	Over-Subscription: (no more than 21,000,000 less the number subscribed for in (a))	__________	Shares
c.	Total Subscription (a + b):	__________	Shares
d.	Total Cost (c x $.15 rounded up to whole cents):	$__________

Signature of Stockholder: ___________________________________ Telephone Number: (___) _______________

Section 2 — ADDRESS FOR DELIVERY OF STOCK CERTIFICATE IF DIFFERENT FROM ABOVE

_____________________________________
_____________________________________
_____________________________________

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INSTRUCTIONS FOR USE OF SUBSCRIPTION AGREEMENT

     Each stockholder of Oceanic Exploration Company has the right to subscribe for 2.1177565 shares of common stock for each full share of common stock of Oceanic Exploration (the “Rights”) owned of record at the close of business on October      , 2002 (the “Record Date”). The number of shares of common stock you are entitled to subscribe for appears on the front of the Subscription Agreement or can be calculated by multiplying the number of shares of common stock owned of record on the Record Date by 2.1177565 and rounding up to the nearest whole number. The Subscription Price of $.15 is needed to subscribe for each share of common stock. See the prospectus for detailed information on these options. You may also subscribe for common stock pursuant to an Over-Subscription Privilege. To exercise your Rights, you must complete the appropriate sections on the Subscription Agreement. If you wish to exercise your Rights or the Over-Subscription Privilege, you must do so by no later than 5:00 p.m., Denver, Colorado time on October      , 2002. Rights may be exercised only through Oceanic Exploration. As described below, Rights are not transferable.

TO EXERCISE YOUR RIGHTS-PLEASE COMPLETE AND RETURN
THE SUBSCRIPTION AGREEMENT

1. Complete “SECTION 1-SUBSCRIPTION AND SIGNATURE.”

     a. Basic Subscription Rights. Enter the number of shares you intend to purchase under your Basic Subscription Rights. The maximum number of shares you may purchase on Basic Subscription appears on the front of the Subscription Agreement or can be calculated by multiplying the number of shares of common stock owned of record on the Record Date by 2.1177565 and rounding up to the nearest whole number.

     b. Over-Subscription. Enter the number of shares you desire to purchase under your Over-Subscription Privilege. The Over-Subscription Privilege is available only if you exercised all of your Basic Subscription Rights. The maximum number of shares that you can purchase on Over-Subscription is 21,000,000 shares less the number of shares you purchased on Basic Subscription Rights. The number of shares that will actually be purchased by you will be subject to a pro rata allocation, based on the number of shares you purchased through the Basic Subscription Privilege in proportion to the total number of shares that you and other over-subscribing stockholder purchased through the Basic Subscription Privilege, if there are not enough shares remaining after the Basic Subscription Rights to completely fill all requests for purchases on Over-Subscription. However, if your pro rata allocation exceeds the number of shares you requested in the Over-Subscription, then you will receive only the number of shares that you requested, and the remaining shares from your pro rata allocation will be divided among other stockholders exercising their Over-Subscription Privileges.

     When you send in your Subscription Agreement, you must also send the full purchase price for the number of additional shares that you have requested to purchase (in addition to the payment due for shares purchased through your Basic Subscription Privilege). Oceanic has the discretion to issue less than the total number of shares that may be available for Over-Subscription requests in order to comply with state securities laws.

     NWO Resources, Inc. and its major stockholder, Cordillera Corporation, two of Oceanic Exploration’s principal stockholders, have stated their intention to fully exercise their basic subscription rights and, if the rights offering is under subscribed, to purchase additional shares that are not subscribed

I-2

for by other stockholders in the rights offering, to the extent that shares are available. They have indicated that there is no minimum number of shares that other stockholders must subscribe for before they will consider purchasing the additional shares. NWO Resources, Inc. and Cordillera Corporation are not obligated to exercise their basic subscription privileges or purchase all unsubscribed shares and may later determine not to do so.

     c. Total Subscription. Enter the total number of shares you want to purchase in the offer. This number is the sum of the number of shares you are purchasing on Basic Subscription Rights plus the number of shares you desire to purchase on Over-Subscription.

     d. Total Cost. Enter the total cost of your subscription. Your total cost is the dollar number obtained when you multiply the number of shares shown under Total Subscription by $.15, the Subscription Price per share and rounding up to the nearest whole cent.

2. Sign the Subscription Agreement in the space provide at the bottom of Section 1. Include your daytime telephone number in the space provided.

3. Enclose the executed Subscription Agreement, together with a certified check, bank draft (cashier’s check) drawn on a U.S. bank, or money order made payable to “Oceanic Exploration Company” in the amount of the Total Cost (Item d. of Section 1) in the envelope provided. If you use your own envelope, address it to Oceanic Exploration Company, 7800 East Dorado Place, Suite 250, Englewood, Colorado 80111. You may also personally deliver your Subscription Agreement and payment to Oceanic Exploration Company, 7800 East Dorado Place, Suite 250, Englewood, Colorado 80111.

4. Mail or deliver your executed Subscription Agreement and payment for the Total Cost on a timely basis so that it is received by Oceanic Exploration by no later than 5:00 P.M. Denver, Colorado time on October      , 2002 (the “Expiration Date”). If Oceanic Exploration has not received your Subscription Agreement and payment for the Total Cost by 5:00 p.m. Denver, Colorado time on the Expiration Date, you will not be entitled to purchase shares pursuant to the Rights. Accordingly, if you are sending your executed Subscription Agreement and payment by mail, please allow sufficient time for them to be received by Oceanic Exploration prior to 5:00 p.m. on the Expiration Date.

No Minimum Any or All Offering

     The Rights Offering is being made on an any or all basis, which means that Oceanic Exploration may accept any subscription received even if all 21,000,000 shares of common stock offered are not subscribed for in the Rights Offering.

No Recommendation

     Oceanic Exploration is not making any recommendation as to whether or not you should exercise your Rights. You should make your decision based on your own assessment of your best interests.

Cancellation Right

     The Board of Directors of Oceanic Exploration may cancel the rights offering in its sole discretion at any time prior to or on the Expiration Date for any reason (including a change in the market

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price of the common stock). If Oceanic Exploration cancels the Rights offering, any funds you paid will be refunded within 15 business days, without interest.

Non-transferability of Subscription Rights

     Except in the limited circumstance described below, only you may exercise the Basic Subscription Privilege and the Over-Subscription Privilege. You may not sell, give away or otherwise transfer the Basic Subscription Privilege or the Over-Subscription Privilege.

     Notwithstanding the foregoing, your Rights may be transferred by operation of law or through involuntary transfers. For example, a transfer of rights to the estate of the recipient upon the death of the recipient would be permitted. If the Rights are transferred as permitted, evidence satisfactory to us that the transfer was proper must be received by us prior to the expiration date of the rights offering.

Shares Held for Others

     If you are a broker, a trustee or a depository for securities, or you otherwise hold shares of common stock for the account of others as a nominee holder, you should notify the beneficial owner of such shares as soon as possible to obtain instructions with respect to their subscription rights, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should complete the Subscription Agreement and submit it to us with the proper payment.

     If you are a beneficial owner of common stock held by a nominee holder, such as a broker, trustee or a depository for securities, we will ask your broker, dealer or other nominee to notify you of this rights offering. If you wish to purchase shares through this rights offering, you should contact the holder and ask him or her to effect transactions in accordance with your instructions.

Ambiguities in Exercise of Subscription Rights

     If you do not specify the number of shares of common stock being subscribed for in your Subscription Agreement, or if your payment is not sufficient to pay the total purchase price for all of the shares that you indicated you wished to purchase, you will be deemed to have subscribed for the maximum number of shares of common stock that could be subscribed for with the payment received from you. If your payment exceeds the total purchase price for all of the shares of common stock shown in your subscription agreement, your payment will be applied, until depleted, to subscribe for shares of common stock in the following order:

     (1) to subscribe for the number of shares, if any, that you indicated on the subscription certificate that you wished to purchase through your Basic Subscription Privilege;

     (2) to subscribe for shares of common stock until your Basic Subscription Privilege has been fully exercised;

     (3) to subscribe for additional shares of common stock pursuant to the Over-Subscription Privilege (subject to any applicable proration). Any excess payment remaining after the foregoing allocation will be returned to you as soon as practicable by mail, without interest or deduction.

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Regulatory Limitation

     Oceanic Exploration will not issue shares of common stock in the rights offering to California residents who do not meet the suitability requirements described in the Prospectus. State securities laws require an offering to be registered or exempt in each state where the offering is made. Oceanic Exploration believes it has complied with the registration or exemption requirements in all states where it knows stockholders reside. If you are resident in another jurisdiction, Oceanic Exploration will not be required to issue common stock to you pursuant to the rights offering if it is advised by counsel that the cost of compliance with the local securities laws will substantially exceed your subscription amount.

Oceanic Exploration’s Decision Binding

     All questions concerning the timeliness, validity, form and eligibility of any exercise of subscription will be determined by Oceanic Exploration, and its determinations will be final and binding. In its sole discretion, Oceanic Exploration may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as it may determine, or reject the purported exercise of any subscription right by reason of any defect or irregularity in such exercise. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as Oceanic Exploration determines in its sole discretion. Oceanic Exploration will not be under any duty to notify you of any defect or irregularity in connection with the submission of a subscription agreement or incur any liability for failure to give such notification.

No Revocation

     Once you have exercised your basic subscription privilege or over-subscription privilege, YOU MAY NOT REVOKE THAT EXERCISE EVEN IF THE SUBSCRIPTION PERIOD HAS NOT YET ENDED. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of common stock at the subscription price of $.15 per share.

Shares of Common Stock Outstanding after the Rights Offering

     Assuming Oceanic Exploration issues all of the shares of common stock offered in the rights offering, approximately 30,916,154 shares of common stock will be issued and outstanding. This would represent an approximate 212% increase in the number of outstanding shares of common stock. IF YOU DO NOT FULLY EXERCISE YOUR BASIC SUBSCRIPTION PRIVILEGE BUT OTHERS DO, THE PERCENTAGE OF COMMON STOCK THAT YOU HOLD WILL DECREASE.

Fees and Expenses

     You are responsible for paying commissions, fees, taxes or other expenses incurred in connection with the exercise of the subscription rights. Oceanic Exploration will not pay these expenses.

Rejection Right

     Oceanic Exploration reserves the right to reject any Subscription Agreement and payment not properly submitted. Oceanic Exploration has no duty to give notification of defects in any Subscription

I-5

Agreement or payment and will have no liability for failure to give such notification. Oceanic Exploration will return any Subscription Agreement or payment not properly submitted.

     STOCKHOLDERS SHOULD CAREFULLY REVIEW THE RELATED PROSPECTUS PRIOR TO MAKING AN INVESTMENT DECISION WITH RESPECT TO THE RIGHTS REFERRED TO IN THIS SUBSCRIPTION AGREEMENT.

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PART II — INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

     Section 145 of the General Corporation Law of the State of Delaware provides that a corporation may indemnify its officers, directors, employees and agents (or persons who have served, at the corporation’s request, as officers, directors, employees or agents of another corporation) against the expenses, including attorneys’ fees, actually and reasonably incurred by them in connection with the defense of any action by reason of being or having been directors, officers, employees or agents, if such person shall have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceedings, had no reason to believe his conduct was unlawful, except that if such action shall be in the right of the corporation, no such indemnification shall be provided as to any claim, issue or matter as to which such person shall have been adjudged to have been liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware, or any other court in which the suit was brought, shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Our Bylaws provide that we shall indemnify our officers and directors to the fullest extent permitted by the Delaware Law.

     Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 25. Other Expenses of Issuance and Distribution.

     The estimated expenses in connection with this rights offering are set forth below:

Expenses	Amount
Securities and Exchange Commission filing fee	$	290
Blue Sky fees and expenses	$	5,000
Accounting fees and expenses	$	10,000
Legal fees and expenses	$	70,000
Transfer agent and registrar fees and expenses	$	2,000
Printing and electronic transmission expenses	$	9,000
Postage	$	2,000
Miscellaneous	$	1,710
Total	$	100,000

Item 26. Recent Sales of Unregistered Securities

     We have not sold any securities within the past three years without registration under the Securities Act.

II-1

Item 27. Exhibits

     (a)  Exhibits filed herewith are listed below and if not located in another previously filed registration statement or report, are attached to this registration statement at the pages set out below. The “Exhibit Number” below refers to the Exhibit Table in Item 601 of Regulation S-B.

Exhibit Number		Name of Exhibit	Location
	2.1	Agreement of Purchase and Sale of Assets between Oceanic Exploration Company, Alliance Services Associates, Inc., Alliance Staffing Associates, Inc. and the parties executing the Agreement as shareholders of Alliance Staffing Associates, Inc. Pursuant to Item 601(b)(2) of Regulation S-X, the Exhibits referred to in the Agreement are omitted. We agree to furnish supplementally a copy of such Exhibit to the Commission upon request.	Exhibit 99.1 of Form 8-K dated March 31, 2000
	3.1	Certificate of Incorporation (including all amendments)	Exhibit 3 of the Report on Form 10-K for the year ended September 30, 1980 (SEC File No. 000-06540)
	3.2	Bylaws (including all amendments)	Exhibit 3.1 of Form 8 (Amendment No. 1 to 10-K Report) date June 1, 1982 (SEC File No. 000-06540)
	3.3	Form of Amended and Restated Certificate of Incorporation
	5.1	Opinion of Callister Nebeker & McCullough
	10.1	Memorandum of Agreement dated June 30, 1976 between Oceanic Exploration Company and Denison Mines Limited	Exhibit 9.2 of the Report on Form 10-K for the year ended September 30, 1976 (SEC File No. 000-06540)
	10.2	Letter Agreement dated July 28, 1976 amending Agreement of June 30, 1976	Exhibit 9.3 of the Report on Form 10-K for the year ended September 30, 1976 (SEC File No. 000-06540)
	10.3	Amendment dated August 27, 1976 to Agreement of June 30, 1976	Exhibit 9.4 of the Report on Form 10-K for the year ended September 30, 1976 (SEC File No. 000-06540)
	10.4	Management Agreement with Cordillera Corporation dated January 1, 2000	Exhibit 10.2 of the Report of Form 10-QSB for the quarter ended March 31, 2000
	10.5	Management Agreement with San Miguel Valley Corporation dated January 1, 2000	Exhibit 10.3 of the Report of Form 10-QSB for the quarter ended March 31, 2000

II-2

Exhibit Number		Name of Exhibit	Location
	10.6	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Alliance Services Associates, Inc.	Exhibit 99.2 of the Report of Form 8-K dated March 31, 2000
	10.7	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Alliance Staffing Associates, Inc.	Exhibit 99.3 of the Report of Form 8-K dated March 31, 2000
	10.8	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Karsten N. Blue	Exhibit 99.4 of the Report of Form 8-K dated March 31, 2000
	10.9	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Linden P. Blue	Exhibit 99.5 of the Report of Form 8-K dated March 31, 2000
	10.10	Office Building lease with Sorrento West Properties, Inc. dated September 1, 2000	Exhibit 10 the Report on Form 10-QSB for the quarter ended September 30, 2000
	10.11	Employment Agreement with Maureen Sullivan, President of Alliance Division	Exhibit 10.16 of the Report on Form 10-KSB for the year ended December 31, 2000
	10.12	Management Agreement with Points Four World Travel, Inc. dated April 1, 2001	Exhibit 10.1 of the Report on Form 10-QSB for the quarter ended June 30, 2002
	10.13	Office Building Lease with Sorrento Square, LLC dated October 18, 2001	Exhibit 10.2 of the Report on Form 10-QSB for the quarter ended June 30, 2002
	10.14	Concession Contract between the Portuguese Government (by the Minister for Overseas) and Petrotimor Companhia de Petroléos, S.A.R.L. dated December 11, 1974	*
	10.15	Demand Promissory Note (Line of Credit) dated August 15, 2002	*
	10.16	Farm-out Agreement with Enterprise Oil Exploration Limited and NMX Resources (Overseas) Limited dated September 22, 1995	Exhibit 10.4 of the Report on 10-KSB for the year ended March 31, 1989
	10.17	Letter Agreement with Enterprise Oil Exploration Limited and NMX Resources (Overseas) Limited dated September 22, 1989	Exhibit 10.5 of the Report on Form 10-KSB for the year ended March 31, 1995
	10.18	Letter of Indemnification with Enterprise Oil Exploration Limited and NMX Resources (Overseas) Limited dated September 22, 1989	Exhibit 10.6 of the Report on Form 10-KSB for the year ended March 31, 1995
	10.19	Participation Agreement among Oceanic Exploration Company and Mariah Energy, L.L.C. and Daniel R. Sommer dated September 5, 2000
	10.20	Cordillera and Affiliated Companies 401(k) Deferred Compensation Plan amended and restated as of January 1, 2001

II-3

Exhibit Number		Name of Exhibit	Location
	10.21	Cordillera and Affiliated Companies Money Purchase Pension Plan amended and restated as of January 1, 2001
	10.22	Cordillera and Affiliated Companies 401(k) Deferred Compensation Plan Restated Adoption Agreement for Oceanic Exploration Company and Oceanic International Properties Corporation effective January 1, 2001
	10.23	Cordillera and Affiliated Companies Money Purchase Pension Plan Restated Adoption Agreement for Oceanic Exploration Company and Oceanic International Properties Corporation effective January 1, 2001
	10.24	Service Agreement between Oceanic Exploration Company and Cordillera Corporation dated September 1, 2002
	21.1	Subsidiaries of Oceanic Exploration Company	*
	23.1	Consent of KPMG LLP
	23.2	Consent of Callister Nebeker & McCullough (included in Exhibit 5.1)
	24.1	Power of Attorney	*

* Previously filed on August 19, 2002.

Item 28. Undertakings

     Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

     In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

     The undersigned registrant hereby undertakes to supplement the prospectus, after the end of the subscription period, to include the results of the subscription offer and the number of shares of common stock acquired by NWO Resources, Inc. or Cordillera Corporation, if any. If NWO Resources, Inc. or Cordillera Corporation makes any subsequent public offering of the common stock registered under this registration statement, we will file a post-effective amendment to state the terms of such offering.

II-4

SIGNATURES

     In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Denver, State of Colorado, on October 2, 2002.

	OCEANIC EXPLORATION COMPANY
By:	/s/   Charles N. Haas Charles N. Haas President

     Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date stated.

Signature	Title	Date
/s/   Charles N. Haas Charles N. Haas	President and Director (Principal Executive Officer)	October 2, 2002
* Phylis J. Andersonc	Treasurer and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	October 2, 2002
* James N. Blue	Chairman of the Board of Directors and Chief Executive Officer	October 2, 2002
* John L. Redmond	Vice President - International Exploration and Director	October 2, 2002
* Sidney H. Stires	Director	October 2, 2002
* Gene E. Burke, M.D.	Director	October 2, 2002

*By: /s/   Charles N. Haas Charles N. Haas
As Attorney in Fact

II-5

EXHIBIT INDEX

Exhibit Number		Name of Exhibit	Location
	2.1	Agreement of Purchase and Sale of Assets between Oceanic Exploration Company, Alliance Services Associates, Inc., Alliance Staffing Associates, Inc. and the parties executing the Agreement as shareholders of Alliance Staffing Associates, Inc. Pursuant to Item 601(b)(2) of Regulation S-X, the Exhibits referred to in the Agreement are omitted. We agree to furnish supplementally a copy of such Exhibit to the Commission upon request.	Exhibit 99.1 of Form 8-K dated March 31, 2000
	3.1	Certificate of Incorporation (including all amendments)	Exhibit 3 of the Report on Form 10-K for the year ended September 30, 1980 (SEC File No. 000-06540)
	3.2	Bylaws (including all amendments)	Exhibit 3.1 of Form 8 (Amendment No. 1 to 10-K Report) date June 1, 1982 (SEC File No. 000-06540)
	3.3	Form of Amended and Restated Certificate of Incorporation
	5.1	Opinion of Callister Nebeker & McCullough
	10.1	Memorandum of Agreement dated June 30, 1976 between Oceanic Exploration Company and Denison Mines Limited	Exhibit 9.2 of the Report on Form 10-K for the year ended September 30, 1976 (SEC File No. 000-06540)
	10.2	Letter Agreement dated July 28, 1976 amending Agreement of June 30, 1976	Exhibit 9.3 of the Report on Form 10-K for the year ended September 30, 1976 (SEC File No. 000-06540)
	10.3	Amendment dated August 27, 1976 to Agreement of June 30, 1976	Exhibit 9.4 of the Report on Form 10-K for the year ended September 30, 1976 (SEC File No. 000-06540)
	10.4	Management Agreement with Cordillera Corporation dated January 1, 2000	Exhibit 10.2 of the Report of Form 10-QSB for the quarter ended March 31, 2000
	10.5	Management Agreement with San Miguel Valley Corporation dated January 1, 2000	Exhibit 10.3 of the Report of Form 10-QSB for the quarter ended March 31, 2000

Exhibit Number		Name of Exhibit	Location
	10.6	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Alliance Services Associates, Inc.	Exhibit 99.2 of the Report of Form 8-K dated March 31, 2000
	10.7	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Alliance Staffing Associates, Inc.	Exhibit 99.3 of the Report of Form 8-K dated March 31, 2000
	10.8	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Karsten N. Blue	Exhibit 99.4 of the Report of Form 8-K dated March 31, 2000
	10.9	Non-Compete Agreement and Continuity of Business Dealing Undertaking with Linden P. Blue	Exhibit 99.5 of the Report of Form 8-K dated March 31, 2000
	10.10	Office Building lease with Sorrento West Properties, Inc. dated September 1, 2000	Exhibit 10 the Report on Form 10-QSB for the quarter ended September 30, 2000
	10.11	Employment Agreement with Maureen Sullivan, President of Alliance Division	Exhibit 10.16 of the Report on Form 10-KSB for the year ended December 31, 2000
	10.12	Management Agreement with Points Four World Travel, Inc. dated April 1, 2001	Exhibit 10.1 of the Report on Form 10-QSB for the quarter ended June 30, 2002
	10.13	Office Building Lease with Sorrento Square, LLC dated October 18, 2001	Exhibit 10.2 of the Report on Form 10-QSB for the quarter ended June 30, 2002
	10.14	Concession Contract between the Portuguese Government (by the Minister for Overseas) and Petrotimor Companhia de Petroléos, S.A.R.L. dated December 11, 1974	*
	10.15	Demand Promissory Note (Line of Credit) dated August 15, 2002	*
	10.16	Farm-out Agreement with Enterprise Oil Exploration Limited and NMX Resources (Overseas) Limited dated September 22, 1995	Exhibit 10.4 of the Report on 10-KSB for the year ended March 31, 1989
	10.17	Letter Agreement with Enterprise Oil Exploration Limited and NMX Resources (Overseas) Limited dated September 22, 1989	Exhibit 10.5 of the Report on Form 10-KSB for the year ended March 31, 1995
	10.18	Letter of Indemnification with Enterprise Oil Exploration Limited and NMX Resources (Overseas) Limited dated September 22, 1989	Exhibit 10.6 of the Report on Form 10-KSB for the year ended March 31, 1995
	10.19	Participation Agreement among Oceanic Exploration Company and Mariah Energy, L.L.C. and Daniel R. Sommer dated September 5, 2000
	10.20	Cordillera and Affiliated Companies 401(k) Deferred Compensation Plan amended and restated as of January 1, 2001

Exhibit Number		Name of Exhibit	Location
	10.21	Cordillera and Affiliated Companies Money Purchase Pension Plan amended and restated as of January 1, 2001
	10.22	Cordillera and Affiliated Companies 401(k) Deferred Compensation Plan Restated Adoption Agreement for Oceanic Exploration Company and Oceanic International Properties Corporation effective January 1, 2001
	10.23	Cordillera and Affiliated Companies Money Purchase Pension Plan Restated Adoption Agreement for Oceanic Exploration Company and Oceanic International Properties Corporation effective January 1, 2001
	10.24	Service Agreement between Oceanic Exploration Company and Cordillera Corporation dated September 1, 2002
	21.1	Subsidiaries of Oceanic Exploration Company	*
	23.1	Consent of KPMG LLP
	23.2	Consent of Callister Nebeker & McCullough (included in Exhibit 5.1)
	24.1	Power of Attorney	*

* Previously filed on August 19, 2002.

EX-3.3

                                                                     EXHIBIT 3.3

                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                           OCEANIC EXPLORATION COMPANY

         Oceanic Exploration Company (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "DGCL"), does hereby certify:

         1. The name of the Corporation is Oceanic Exploration Company. The
original certificate of incorporation of the Corporation was filed with the
office of the Secretary of State of the State of Delaware on December 9, 1968.

         2. This Amended and Restated Certificate of Incorporation was duly
adopted by the Board of Directors of the Corporation and by the stockholders of
the Corporation in accordance with Sections 228, 242 and 245 of the DGCL.

         3. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of the
Corporation, as heretofore amended or supplemented.

         4. The text of the Certificate of Incorporation is amended and restated
in its entirety as follows:

         FIRST. The name of the Corporation is OCEANIC EXPLORATION COMPANY (the
"Corporation").

         SECOND. The address of its registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at that address is The Corporation Trust Company.

         THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").

         FOURTH. The Corporation is authorized to issue two classes of shares of
stock, to be designated, respectively, "Preferred Stock" and "Common Stock." The
total number of shares that this Corporation shall have authority to issue is
Fifty Million Six Hundred Thousand (50,600,000). The authorized number of shares
of Preferred Stock shall be Six Hundred Thousand (600,000), and the par value of
each of such shares of Preferred Stock shall be Ten Dollars ($10.00). The number
of authorized shares of Common Stock shall be Fifty Million (50,000,000), and
the par value of each of such shares of Common Stock shall be Six and
One-Quarter Cents (6 1/4 cents).

         The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby expressly authorized to fix the
designations, preferences and relative,







participating, optional or other special rights and qualifications, limitations
or restrictions on the shares of any such series of Preferred Stock, all as
provided in the DGCL, including without limitation, the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or prices, the
liquidation rights or other rights upon any distribution of the assets of the
Corporation, and the number of shares constituting any such series, or any or
all of them; and to increase or decrease (but not below the number of shares of
such series then outstanding) the number of shares of any such series subsequent
to the issuance of shares of such series. In case the number of such shares
shall be decreased, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the Board of Directors resolution
originally fixing the number of shares of such series.

         FIFTH. The Corporation is to have perpetual existence.

         SIXTH. The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal by-laws of the Corporation.

         SEVENTH. Elections of directors need not be by written ballot except
and to the extent provided in the by-laws of the Corporation.

         EIGHTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the DGCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of the DGCL order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholder or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.

         NINTH. Meetings of the stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the DGCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation.

         TENTH. The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:



                                       2




         1. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.

         2. No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) pursuant to Section 174 of the DGCL; or (iv) for any transaction from
which the director derived an improper personal benefit. If the DGCL is amended
hereafter to authorize the further elimination or limitation of the liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent authorized by the DGCL, as so
amended. Any repeal or modification of this Article TENTH by the stockholders of
the Corporation shall not adversely affect any right or protection of a director
of the Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or modification.

         3. In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them the directors are hereby empowered to exercise all
such powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the DGCL, this
Certificate of Incorporation, and any by-laws adopted by the stockholders;
provided, however, that no by-laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors that would have been valid if such
by-laws had not been adopted.

         IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be executed and attested to this ____
day of November, 2002.


                                      OCEANIC EXPLORATION COMPANY



                                      By:
                                         ---------------------------------------
                                         Charles N. Haas
                                         President
ATTEST:



- ------------------------
Secretary





                                       3

EX-5.1

                                                                     EXHIBIT 5.1

                         CALLISTER NEBEKER & MCCULLOUGH
                           A PROFESSIONAL CORPORATION
                                ATTORNEYS AT LAW
                          GATEWAY TOWER EAST SUITE 900
                              10 EAST SOUTH TEMPLE
                           SALT LAKE CITY, UTAH 84133
                             TELEPHONE 801-530-7300
                                FAX 801-364-9127


                                October 2, 2002

Board of Directors
Oceanic Exploration Company
7800 East Dorado Place, Suite 250
Englewood, Colorado  80111

      RE: OCEANIC EXPLORATION COMPANY REGISTRATION STATEMENT ON FORM SB-2

Ladies and Gentlemen:

      We have acted as special counsel to Oceanic Exploration Company, a
Delaware corporation (the "Company"), in connection with the filing of a
registration statement and an amendment no. 1 on Form SB-2 (No. 333-98347) of
the Company (collectively the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), pertaining to the 21,003,000 shares
(the "Shares") of the Company's common stock, $.0625 par value (the "Common
Stock"), being registered in connection with the Company's rights offering
described in the Registration Statement (the "Rights Offering").

      This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-B under the Securities Act

      In connection with this opinion, we have reviewed (i) the Restated
Certificate of Incorporation, as amended to date and currently in effect, (ii)
the form of the Amended and Restated Certificate of Incorporation intended to be
filed with the Secretary of State of the State of Delaware to increase the
capitalization of the Company (the "New Charter"), (iii) the Bylaws of the
Company, (iv) a specimen certificate representing the Common Stock, (v)
resolutions of the board of directors and stockholders of the Company, (vi) the
Registration Statement and (vii) such other documents as we have deemed
appropriate. As to factual matters we have relied upon a certificate supplied to
us by an officer of the Company. In rendering the opinion expressed herein, we
have assumed, without investigation, the validity of all documents and the
accuracy of all information supplied to us by the Company.

      Members of our firm are admitted to the bar in the State of Utah and we
express no opinion as to the laws of any jurisdiction other than the corporate
laws of the State of Delaware, and do not express any opinion as to the effect
of any other laws on the opinion stated herein.


      Based upon the foregoing, we are of the opinion that the Shares being
registered pursuant to the Registration Statement, when (i) the Registration
Statement becomes effective, (ii) the New Charter has been filed and accepted by
the Secretary of State of the State of Delaware and (iii) certificates
representing the Shares in the form of the specimen certificate examined by us
have been manually signed by an authorized officer of the transfer agent and
registrar for the Common Stock and registered by such transfer agent and
registrar, and have been delivered and paid for in accordance with the Rights
Offering, will have been duly authorized and the Shares will be validly issued,
fully paid and nonassessable.

      We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and the reference to this firm under
"Legal Matters" in the Prospectus contained in the Registration Statement. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission promulgated thereunder.

                                         Very truly yours,

                                         CALLISTER NEBEKER & McCULLOUGH

                                         /s/ CALLISTER NEBEKER & McCULLOUGH

EX-10.19

                                                                   EXHIBIT 10.19


                             PARTICIPATION AGREEMENT
                         Terry Field Extension Prospect


         THIS AGREEMENT, made and entered into this 5th day of September, 2000,
by and between Oceanic Exploration Company, whose address is 7800 East Dorado
Place, Suite 250, Englewood, Colorado 80111 (hereinafter referred to as
"Oceanic"), and Mariah Energy, L.L.C., whose address is 1776 Lincoln Street,
Suite 1314, Denver, Colorado 80203 (hereinafter referred to as "Mariah"), and
Daniel R. Sommer, whose address is 1776 Lincoln Street, Suite 1314, Denver, CO
80203 (hereinafter referred to as "Sommer"). Oceanic, Mariah and Sommer may
sometimes be collectively referred to as the "Parties".

         WITNESSETH:

         WHEREAS, Mariah and Sommer represent that they have entered into a
certain Farmout Contract dated March 14, 2000, as amended, with Presco Western,
L.L.C. (hereinafter referred to as "Presco") covering Presco's rights in the
following lands in Finney County, Kansas (hereinafter the "Farmout Contract"):



                  Township 23 South, Range 34 West
                  --------------------------------
                            
                  Section 3:   S/2
                  Section 4:   Lots 1, 2, 3, 4, S/2N/2, S/2 (All)
                  Section 10:  N/2


A copy of the Farmout Contract and all amendments thereto is attached hereto and
made a part hereof as Exhibit "A"; and

         WHEREAS, Oceanic desires to acquire an interest in the Farmout
Contract, and the lands covered thereby, and participate in the drilling of an
exploration test well; and Mariah desires to sell Oceanic an interest in the
Farmout Contract, and allow Oceanic to participate in the drilling of the
exploration test well, all subject to the terms of this agreement.

         NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions hereinafter set forth and other good and valuable consideration, the
Parties agree as follows:

1        Oceanic agrees to purchase a 75% interest in the Farmout Contract for a
         consideration payable to Mariah Energy, L.L.C. in the amount of $35.00
         per net acre covered by the Farmout Contract, or an amount of
         $33,600.00 (1,280.00 net acres X $35.00 per acre X 75%). The above
         consideration shall be paid to Mariah within five days after execution
         of this agreement.

2        Obligation Test Well.

         a)       As a further consideration of this Participation Agreement,
                  Oceanic hereby agrees to participate in the drilling and
                  testing of an exploration test well to be drilled at a legal
                  location in the SE/4SE/4 Section 4, Township 23 South, Range
                  34 West, Finney County, Kansas (hereinafter the "Obligation
                  Test Well") to the full extent of Oceanic's working interest
                  in the Farmout Contract. Such Obligation Test Well shall be
                  commenced on or before December 15, 2000, and thereafter
                  drilled to a depth of 4,900 feet, or to a depth sufficient to
                  adequately test (in Presco's opinion), the St. Louis
                  formation, whichever is the lesser depth (hereinafter
                  "Contract Depth"). Oceanic agrees and covenants to pay and
                  discharge 75% share of the costs incurred in the Obligation
                  Test Well. The Parties hereby agree that all operations
                  conducted in the drilling of the Obligation Test Well, will be
                  conducted pursuant to the terms of the Operating Agreement
                  attached as Exhibit "D" to the Farmout Contract, including
                  each Parties right to make a casing point election.

         b)       In the event the Operator is unable to drill the Obligation
                  Test Well to the Contract Depth, due to mechanical or other
                  difficulties beyond the reasonable control of Operator, then
                  Operator shall plug and abandon such well in accordance with
                  all applicable State regulations and shall, within fifteen
                  (15) days thereafter commence a substitute test well within
                  the same governmental quarter-quarter section or at such other
                  location mutually acceptable to all Parties (hereinafter
                  "Substitute Test Well") and thereafter drill such Substitute
                  Test Well to the Contract Depth pursuant to the Farmout
                  Contract such that the Substitute Test Well is deemed to be
                  the Obligation Test Well.

3        Optional Test Wells.

         a)       Following the drilling of the Obligation Test Well, any Party
                  hereto may propose the drilling of an additional test well or
                  wells on the lands covered by the Farmout Contract
                  (hereinafter an "Optional Test Well"). Any Party proposing to
                  drill an Optional Test Well shall (i) make such proposal
                  subject to the terms of the Farmout Contract, and (ii) shall
                  submit a written proposal to the all other Parties, specifying
                  the work to be performed, the location of the proposed well,
                  the proposed depth, objective zone, and the


                                   Page 1 of 4



                  estimated cost of the operation. A proposal to drill an
                  Optional Test Well shall be made, and elections by the Parties
                  governed, pursuant to Article VI of the applicable Operating
                  Agreement. Notwithstanding anything contained to the contrary
                  in the applicable Operating Agreement, in the event Oceanic
                  elects not to participate in any such proposal it shall be
                  deemed to have relinquished to the participating Party(ies),
                  upon commencement of the Optional Test Well:

                  (i)      in the event such Test Well is completed as a well
                           capable of producing oil and casinghead gas and has a
                           gas-oil ratio of less than 15,000 to 1, all of such
                           non-participating Party's right, title and interest
                           in and to a stand up or lay down contiguous eighty
                           (80) acre tract of land, as designated by the
                           participating Party(ies), situated in the
                           governmental section upon which the Test Well is
                           drilled under the Farmout Contract, plus one
                           additional contiguous eighty (80) acre tract of land
                           as designated by the participating Party(ies); or

                  (ii)     in the event such Test Well is completed as a well
                           capable of producing gas and associated liquid
                           hydrocarbons and has a gas-oil ratio equal to or
                           greater than 15,000 to 1, all of such
                           non-participating Party's right, title and interest
                           in and to a stand up or lay down contiguous three
                           hundred and twenty (320) acre tract of land, as
                           designated by the participating Party(ies), situated
                           in the governmental section upon which the Test Well
                           is drilled under the Farmout Contract.

                  (iii)    in the event such Test Well is plugged and abandoned
                           as a dry hole there shall be no acreage
                           relinquishment by the non participating Party.

         b)       Without the written consent of all Parties hereto, no Party
                  may propose the drilling of a Optional Test Well if another
                  proposal to drill a well has been made by a Party covering
                  lands covered by the Farmout Contract, or if another well is
                  currently drilling or completing on lands covered by the
                  Farmout Contract.

4        Operating Agreement.

         a)       The Operating Agreement attached as Exhibit "D" to the Farmout
                  Contract (hereinafter referred to as the "Presco Operating
                  Agreement") shall govern joint operations as all lands subject
                  to the Farmout Contract. Upon the Parties execution of this
                  Participation Agreement such Presco Operating Agreement shall
                  become effective as between the Parties hereto and shall apply
                  to the lands described above on a Spacing Unit, as hereinafter
                  defined, by Spacing Unit basis. A separate Operating Agreement
                  will not be executed for each individual Spacing Unit unless
                  one of the Parties hereto so requests, however, prior to
                  commencement of each well drilled hereunder the Operator will
                  provide each Party with an Exhibit "A" to the Operating
                  Agreement for the Spacing Unit on which the well is situated.
                  A Spacing Unit shall mean the area of land earned by
                  completion of a producing Test Well under the Farmout
                  Contract. Mariah, or its designee, shall be designed as
                  Operator under the Presco Operating Agreement, and in such
                  capacity shall operate the drilling of all Test Wells on lands
                  subject thereto.

         b)       In the event there is a conflict between the terms of this
                  Participation Agreement and the terms of the Operating
                  Agreement, Parties acknowledge and agree that the terms of
                  this Participation Agreement shall control and prevail.

5        An Area of Mutual Interest (hereinafter referred to as "AMI") is hereby
         established by the Parties which shall consist of the following lands:



                  Township 23 South, Range 34 West, Finney County, Kansas
                  -------------------------------------------------------
                           
                  Section  3: S/2
                  Section  4: Lots 1, 2, 3, 4, S/2N/2, S/2
                  Section 10: N/2


                  The term of this AMI shall commence as of the date first
                  written above and extend for a period ending December 31,
                  2001, unless earlier terminated in writing by the Parties
                  hereto.

                  In the event a Party to this Participation Agreement (the
                  "Acquiring Party") acquires an oil and/or gas interest within
                  this area, including, but not limited to, lease purchases,
                  royalty or mineral interests, farmouts, farmins, options to
                  farmout or farmin, acreage contributions, bottom hole purchase
                  agreements, or any other type of acreage acquisition or
                  support of any kind, the other Party(s) hereto ("Offeree")
                  shall be entitled to acquire an interest in such acquisition
                  in the same proportion as his or its ownership set forth
                  below, upon payment of its proportionate part of the actual
                  costs of acquiring same. The Acquiring Party shall notify
                  Offeree of the acquisition, and send all copies of pertinent
                  information, setting forth the bonus costs of such acquisition
                  and other significant costs and terms thereof. The Offeree
                  shall have a period of thirty (30) days after receipt of
                  notice within which to elect to participate in the
                  acquisition. If, however, a well is then being drilled on
                  lands subject to this Agreement, the Acquiring Party shall so
                  advise the Offeree and the election must be made within
                  forty-eight (48) hours of receipt of notice, inclusive of
                  Saturdays, Sundays, and holidays.


                                  Page 2 of 4



                  A Party electing to acquire its share of the acquisition shall
                  also bear the direct actual associated costs of acquiring the
                  interest in the proportion that the interest it acquires bears
                  to the whole acquisition.

                  If the Acquiring Party has not received an Offeree's election
                  within the period provided for above, said Offeree shall be
                  deemed to have elected not to participate in the acquisition.
                  Each Offeree accepting the offer shall be entitled, but not
                  obligated, to participate in a non-participating Offeree's
                  interest in the proportion that each participating Offeree's
                  interest bears to the total interest of all participating
                  Parties, including the Acquiring Party. An Offeree who elects
                  not to participate, or is deemed to have elected same, shall
                  have no further rights to such acquired interest. The acquired
                  interest shall be subject to the terms of the Participation
                  Agreement and the Operating Agreement (with appropriate
                  interest adjustments in the event less than all parties
                  elected to participate). In the event an interest acquired
                  hereunder is subject to the terms of a separate operating
                  agreement, such interest shall not be subject to the terms of
                  the Operating Agreement.

                  Notwithstanding anything to the contrary herein contained,
                  when any acreage contribution, as set forth under Article
                  VIII.C. of the Operating Agreement, is contingent upon the
                  completion of any one or more operations in which all of the
                  Parties hereto do not participate through the earning of such
                  contribution, the contribution shall belong solely to the
                  Party or Parties who participated in all steps of the
                  operation containing such condition precedent and any Party
                  not participating in all steps of such condition precedent
                  shall not receive any part of such contribution.

                  In the event there is a conflict between the ownership
                  percentages shown in the County records as to any Party's
                  interest in any leases within the AMI set forth above and the
                  interest set forth in this Participation Agreement and/or the
                  applicable Operating Agreement, then all Parties involved will
                  execute such assignments, other instruments, or further
                  assurances as are necessary to establish the ownership in the
                  leases as set forth in this Agreement. The interest of the
                  Parties to this Agreement are as follows:

                                                       
                           Mariah                           12.50%
                           Daniel R. Sommer                  6.25%
                           Oceanic                          75.00%
                           Other parties                     6.25%
                                                          -------
                                    Total                  100.00%



6        The liabilities of the Parties hereunder shall be several, not joint or
         collective. It is not the intention of the Parties to create, nor shall
         this Agreement be deemed as creating, a mining, tax or other
         partnership or association or to render the Parties liable as partners.
         Each Party shall be responsible only for its obligations hereunder and
         nothing contained in this Participation Agreement shall be deemed to
         create a partnership or agency relationship between the Parties. No
         Party hereto shall represent to third Parties or lead third parties to
         believe that such Party is the agent of any other Party hereto.

7        Gas Marketing.

         a)       In the event that pursuant to the Presco or Amoco Operating
                  Agreements any Party markets any other Party's share of
                  production from any well subject to this Agreement, the Party
                  marketing such production, and subject to the marketing
                  Party's receipt of an executed indemnifying Division Order,
                  shall (i) prior to its receipt of a Division Order Title
                  Opinion, remit the estimated net revenue share to any Parties
                  for whom it is marketing production on the basis of an
                  estimated division order deck within thirty (30) days of its
                  receipt of proceeds; and (ii) following its receipt of a
                  Division Order Title Opinion, make distribution of the working
                  interest net revenue share, and the royalty, and overriding
                  royalty interest burdening such Party within thirty (30) days
                  of the marketing Party's receipt.

         b)       In the event that pursuant to the Operating Agreement any
                  Party hereto markets any other Party's share of production
                  from any test well drilled on lands subject to this
                  Participation Agreement to its ultimate parent company
                  ("Parent") or an affiliate (An "affiliate" shall mean any
                  corporation, company or other entity in which a Party or its
                  Parent owns directly at least 50% of the issued shares
                  entitled to vote at a general meeting of shareholders), the
                  price received for such production shall not be less than the
                  prevailing price paid in the area for similar production by
                  third party purchasers, and fuel charges, compression,
                  transportation and gathering charges, if any apply, shall not
                  exceed the prevailing charges for such services in the area
                  offered by third party purchasers.

10       MISCELLANEOUS

         a)       Notices. All notices and other communications required or
                  permitted hereunder shall be deemed to have been properly
                  delivered if personally handed to an authorized representative
                  of the Party for whom intended, or sent by registered air
                  mail, or by Federal Express or DHL courier service, or by
                  facsimile to such Party at its address listed below. Notices
                  will be effective only upon receipt.


                                  Page 3 of 4



                 Mariah Energy, L.L.C.              Oceanic Exploration Company
                 1776 Lincoln Street, Suite 1314    7800 East Dorado Place
                 Denver, Colorado 80203             Denver, Colorado 80111
                 Phone: (303) 866-0722              Phone: (303) 220-8330
                 Fax:   (303) 866-0715              Fax:   (303) 779-8644

                 Daniel R. Sommer
                 1776 Lincoln Street, Suite 1314
                 Denver, Colorado 80203
                 Phone: (303) 866-0722
                 Fax:   (303) 866-0715

         b)       Oceanic represents and warrants that (i) Oceanic is an
                  experienced and knowledgeable investor in the oil and gas
                  industry, (ii) Oceanic has made such investigation of the
                  interest being offered and to be assigned and has been
                  furnished with such information in connection therewith as
                  Oceanic deems appropriate under the circumstances, and (iii)
                  the interest being offered to and to be assigned to Oceanic is
                  being acquired by Oceanic for Oceanic's own account for
                  investment purposes only and not with a view toward the
                  redistribution thereof. It is reliance upon such
                  representations and warranties that the interest is being
                  offered hereunder and that the interest purchased herein will
                  be made by Mariah to Oceanic without registration pursuant to
                  the Federal Securities Act of 1933, as amended.

         c)       Further Assurances. Following the execution of this
                  Participation Agreement the Parties agree to execute,
                  acknowledge and deliver any such further instruments, and
                  shall take such other action as may be necessary to carry out
                  the intent of the Parties under this Participation Agreement.

         c.       Amendments. The Participation Agreement may not be altered or
                  amended nor any rights hereunder be waived, except by an
                  instrument in writing, executed by the Party charged with such
                  amendment or waiver.

         d.       Binding Effect. This Participation Agreement shall be binding
                  upon and shall inure to the benefit of the Parties hereto and
                  their respective successors and assigns.

         e.       Governing Law and Jurisdiction. This Agreement shall be
                  governed by, construed and enforced in accordance with the
                  laws of the State of Colorado.


EXECUTED to be effective for all purposes as of the date first written above.

MARIAH ENERGY, L.L.C.



By: /s/ J. Andrew Dunn
    ---------------------------------
         J. Andrew Dunn, Manager


    /s/ Daniel R. Sommer
- -------------------------------------
         Daniel R. Sommer


OCEANIC EXPLORATION COMPANY



By: /s/ Charles N. Haas
    ---------------------------------




                                  Page 4 of 4

EX-10.20

                                                                   EXHIBIT 10.20


                      CORDILLERA AND AFFILIATED COMPANIES
                       401(k) DEFERRED COMPENSATION PLAN

                  (Amended and Restated as of January 1, 2001)





CONTENTS





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

                                                                                                             
          ARTICLE 1. INTRODUCTION                                                                                 1
1.1   Restatement of Plan                                                                                         1
1.2   Purpose of the Plan                                                                                         1
1.3   Applicability of the Plan                                                                                   1
1.4   Effect of Appendices                                                                                        2

          ARTICLE 2. DEFINITIONS                                                                                  3
2.1   Definitions                                                                                                 3
2.2   Gender and Number                                                                                          11
2.3   Requirement to Be in "Written Form"                                                                        11

          ARTICLE 3. PARTICIPATION AND SERVICE                                                                   12
3.1   Date of Participation                                                                                      12
3.2   Duration                                                                                                   12
3.3   Transfers                                                                                                  12
3.4   Leased Employees                                                                                           13
3.5   Special Provisions for Participants Who Enter the Armed Forces                                             13

          ARTICLE 4. PRETAX DEFERRALS                                                                            14
4.1   Amount of Contributions                                                                                    14
4.2   Excess Deferrals                                                                                           14
4.3   Elections                                                                                                  15
4.4   Compensation Reduction                                                                                     16
4.5   Transfer and Crediting of Pretax Deferrals                                                                 16
4.6   Restrictions on Pretax Deferrals                                                                           16
4.7   Refunds of Excess Pretax Deferrals                                                                         17
4.8   Rights of Returning Servicemen                                                                             19

          ARTICLE 5. MATCHING AND ROLLOVER CONTRIBUTIONS                                                         21
5.1   Matching Contributions                                                                                     21
5.2   Overall Conditions on Matching Contributions                                                               21
5.3   Transfer and Crediting of Matching Contributions                                                           21
5.4   Restrictions on Matching Contributions                                                                     21
5.5   Correction of Excess Matching Contributions                                                                23



                                       i


                                                                                                              
5.6   Rollovers                                                                                                  24
5.7   Special Participation and Contribution Provisions for 1997                                                 26

          ARTICLE 6. MAXIMUM CONTRIBUTIONS AND BENEFIT LIMITATIONS                                               27
6.1   Limitation on Annual Addition                                                                              27
6.2   "Annual Addition" Defined                                                                                  27
6.3   Excess Annual Additions                                                                                    27
6.4   Defined Benefit Plans                                                                                      28
6.5   Deductibility Limitations                                                                                  29

          ARTICLE 7. VESTING AND BENEFITS                                                                        30
7.1   Vesting                                                                                                    30
7.2   Benefit Forms, Required Consent, and Payments After Separation From Service                                30
7.3   Death Benefits                                                                                             33
7.4   Minimum Distribution Requirements                                                                          33
7.5   Hardship Withdrawals                                                                                       34
7.6   Lump Sums and Other Eligible Rollover Distributions                                                        36
7.7   Loans to Participants                                                                                      37

          ARTICLE 8. INVESTMENT ELECTIONS                                                                        41
8.1   Investment of New Contributions                                                                            41
8.2   Investment Transfers                                                                                       41
8.3   Investment Elections                                                                                       41
8.4   Transfer of Assets                                                                                         42
8.5   Participant-Directed Investments                                                                           42

          ARTICLE 9. PARTICIPANT ACCOUNTS AND RECORDS                                                            43
9.1   Accounts and Records                                                                                       43
9.2   Valuation Adjustments                                                                                      43

          ARTICLE 10. FINANCING                                                                                  44
10.1  Funding of the Plan                                                                                        44
10.2  Employer Contributions                                                                                     44
10.3  Nonreversion                                                                                               44

          ARTICLE 11. ADMINISTRATION                                                                             46
11.1  The Benefits Committee                                                                                     46
11.2  Compensation and Expenses                                                                                  46
11.3  Manner of Action                                                                                           46
11.4  Chairman, Secretary, and Employment of Specialists                                                         46
11.5  Subcommittees                                                                                              47
11.6  Other Agents                                                                                               47



                                       ii




                                                                                                              
11.7   Records                                                                                                   47
11.8   Rules                                                                                                     47
11.9   Benefits Committee's Powers and Duties                                                                    47
11.10  Investment Responsibilities                                                                               48
11.11  Benefits Committee's Decisions Conclusive                                                                 49
11.12  Indemnity                                                                                                 49
11.13  Fiduciaries                                                                                               49
11.14  Notice of Address                                                                                         50
11.15  Data                                                                                                      50
11.16  Nonalienation                                                                                             50
11.17  Incompetency                                                                                              51
11.18  Missing Persons                                                                                           52
11.19  Appeals From Denial of Claims                                                                             52

           ARTICLE 12. AMENDMENT AND TERMINATION                                                                 55
12.1   Authority to Amend or Terminate                                                                           55
12.2   Distribution on Termination                                                                               55
12.3   Corporate Reorganizations                                                                                 55
12.4   Plan Merger or Transfer                                                                                   56

           ARTICLE 13. TOP-HEAVY PROVISIONS                                                                      57
13.1   Application                                                                                               57
13.2   Key Employees                                                                                             57
13.3   Top-Heavy Group                                                                                           59
13.4   Additional Rules                                                                                          59
13.5   Combined Limit for Key Employees                                                                          60
13.6   Minimum Contribution                                                                                      60
13.7   Top-Heavy Vesting                                                                                         60

           ARTICLE 14. MISCELLANEOUS PROVISIONS                                                                  61
14.1   Employment Rights                                                                                         61
14.2   No Examination or Accounting                                                                              61
14.3   Investment Risk                                                                                           61
14.4   Severability                                                                                              61
14.5   Counterparts                                                                                              61
14.6   Service of Legal Process                                                                                  61
14.7   Headings of Articles and Sections                                                                         61
14.8   Applicable Law                                                                                            61

         APPENDIX A. SPECIAL RULES RELATED TO GUARANTEED INVESTMENT CONTRACT OF EXECUTIVE LIFE INSURANCE
         COMPANY OF CALIFORNIA                                                                                   64




                                      iii




ARTICLE 1. INTRODUCTION

1.1      RESTATEMENT OF PLAN

Cordillera Corporation (the "Company") hereby amends and restates the Cordillera
and Affiliated Companies 401(k) Deferred Compensation Plan, referred to in some
prior documents as the Cordillera Corporation and Affiliated Companies Profit
Sharing Thrift Retirement Plan (the "Plan"), effective as of January 1, 2001.

1.2      PURPOSE OF THE PLAN

This Plan is intended to encourage and assist Eligible Employees in adopting a
regular program of savings to provide security for the future. For tax purposes,
the Plan is intended to qualify as a profit sharing plan with a qualified Code
section 401(k) cash or deferred arrangement and related Employer Matching
Contributions. In accordance with Code section 401(a)(27), the determination of
the Plan as a qualified profit sharing plan shall be made without regard to
whether the Company has current or accumulated profits.

1.3      APPLICABILITY OF THE PLAN

The provisions set forth in this document apply only to Employees in the employ
of the Company, Affiliate, or Associated Company on or after January 1, 2001,
except as specifically provided in this document. If a particular provision of
this restatement has an effective date later than January 1, 2001, the relevant
provision of the prior version of the Plan shall continue to apply prior to such
effective date. If a particular provision of this restatement has an effective
date earlier than January 1, 2001, the relevant provision of this restatement
shall supersede the corresponding provision of the prior version of the Plan as
of the earlier effective date.

Notwithstanding any contrary Plan provision, if any modification of ERISA or the
Code (or regulations or rulings thereunder) requires that a conforming Plan
amendment be adopted as of a stated effective date in order for the Plan to
continue to be a qualified plan, this Plan shall be operated in accordance with
such requirements until the date when a conforming Plan amendment is adopted.

Except as otherwise required by rules of Plan qualification or by specific Plan
provisions to the contrary, any Employee who terminated employment before
January 1, 2001 shall remain subject to the terms of the Plan as in effect at
the time of such termination. However, regardless of when an Employee terminates
employment or whether he or she has ever had a termination of employment at all,
if an Employee has an Account balance attributable to an amount transferred
directly to this Plan from another qualified plan pursuant to a plan merger or
any other transaction requiring the other plan's Code section 411(d)(6)
protected benefits to be preserved hereunder, this Plan shall preserve all such
legally protected benefits with respect to such Account balance to the full
extent required by section 411(d)(6) and other applicable laws. This
preservation of section 411(d)(6) protected benefits shall apply






                                       1


notwithstanding more restrictive rules for optional benefit forms or other Plan
rights that may apply to other Account balances not subject to such protection.

1.4      EFFECT OF APPENDICES

This Plan document may be supplemented by various appendices that provide
additional information and, in some cases, override general Plan provisions. In
the event of a conflict between a Plan provision and a provision in an appendix,
the provision in the appendix shall govern with respect to the Employees or
circumstances specified in the appendix, and the Plan provision shall continue
to govern with respect to other Employees or circumstances. The appendices shall
be, by this reference, incorporated into and become a part of this Plan.




                                       2


ARTICLE 2. DEFINITIONS

2.1      DEFINITIONS

Whenever used in the Plan, the following terms shall have the respective
meanings set forth below unless otherwise required by the context in which they
are used:

(a)      "ACCOUNT" means the separate recordkeeping account maintained for each
         Participant which represents his or her total proportionate interest in
         the Trust Fund and which consists of the sum of the following
         subaccounts:

         (1)      "MATCHING ACCOUNT" means the subaccount which evidences the
                  value of Matching Contributions made on behalf of the
                  Participant pursuant to section 5.1, including related
                  investment gains and losses of the Trust Fund.

         (2)      "PRETAX DEFERRAL ACCOUNT" means the subaccount which evidences
                  the value of Pretax Deferrals made on behalf of the
                  Participant pursuant to section 4.1, including related
                  investment gains and losses of the Trust Fund.

         (3)      "ROLLOVER ACCOUNT" means the subaccount which evidences the
                  value of Rollover Contributions made by the Employee pursuant
                  to section 5.6, including related investment gains and losses
                  of the Trust Fund.

(b)      "AFFILIATE" means any business entity which is controlled by or under
         common control with the Company, within the meaning of Code sections
         414 and 1563. The determination of control shall be made without
         reference to paragraphs (a)(4) and (e)(3)(C) of Code section 1563, and
         solely for the purposes of applying the limitations of Articles 6 and
         13, the phrase "more than 50 percent" shall be substituted for the
         phrase "at least 80 percent" each place it appears in Code section
         1563(a)(1).

         In addition, to the extent required by Code section 414 and related
         regulations, Affiliate means--

         (1)      any member of an affiliated service group (within the meaning
                  of Code section 414(m)) of which the Company or any Affiliate
                  is a member; and

         (2)      any entity which, pursuant to Code section 414(o) and the
                  regulations thereunder, must be aggregated with the Company or
                  any other Affiliate for plan qualification purposes.

(c)      "ASSOCIATED COMPANY" means any entity that is not an Affiliate, but is
         under common ownership and control with the Company, to the extent of
         20 percent or more, as determined under rules applicable for purposes
         of section 414(c) of the Code.




                                       3


(d)      "BENEFICIARY" means the person or persons (who may be named
         contingently or successively) designated by a Participant to receive
         the Participant's Account in the event of the Participant's death. Each
         designation shall be in the form prescribed by the Benefits Committee,
         shall be effective only when properly filed in writing with the
         Benefits Committee, and shall revoke all prior designations by the same
         Participant. The designation by a married Participant of someone other
         than the Participant's spouse as a Beneficiary shall be invalid
         unless--

         (1)      the spouse consents to the designation of a specific nonspouse
                  Beneficiary which may not be changed without spousal consent
                  (unless the spousal consent expressly permits the Participant
                  to change Beneficiary designations without further consent by
                  the spouse), and if the Participant has chosen a life annuity
                  as a benefit form, the spouse waives the Qualified Joint and
                  Survivor Annuity in accordance with procedural requirements of
                  the Plan that comply with the rules of Code section 401(a)(11)
                  and 417;

         (2)      the spouse acknowledges the effect of the consent to such
                  Beneficiary designation and, if applicable, the waiver of the
                  Qualified Joint and Survivor Annuity; and

         (3)      the consent and waiver are in a written instrument that is
                  notarized.

         No spousal consent or waiver shall be required if it is established to
         the satisfaction of the Plan representative that it cannot be obtained
         because there is no spouse or because the spouse cannot be located. If
         no Beneficiary is properly designated at the time of the Participant's
         death, or if no person so designated shall survive the Participant, the
         Beneficiary shall be the Participant's spouse, or if the deceased
         Participant has no surviving spouse, the Participant's estate.

(e)      "BENEFITS COMMITTEE" means the Benefits Committee appointed by the
         Board of Directors to administer the Plan in accordance with the
         provisions of Article 11 of this Plan.

(f)      "BOARD OF DIRECTORS" means the Board of Directors of the Company.

(g)      "BREAK IN SERVICE" means, prior to April 1, 1997, any year used in
         measuring Years of Service in which an Employee is not credited with
         more than 500 Hours of Service. However, if an Employee is absent from
         employment due to pregnancy, birth of the Employee's child, adoption of
         a child by the Employee, or child care immediately following such birth
         or adoption, any Hour of Service for which the Employee would have
         received credit (or if not determinable, eight hours for each day of
         absence) during such absence, up to a maximum of 501 Hours of Service,
         shall be credited to the Employee solely to prevent the Employee from
         incurring a Break in Service. Any such Hours of Service shall be
         credited for the Plan Year in





                                       4


         which the absence begins if necessary to prevent a Break in Service
         during that Plan Year and, in all other cases, in the immediately
         following Plan Year.

         Effective April 1, 1997, the term "Break in Service" means a
         continuous period of time of at least 12 months during which the
         Employee is not employed by the Employer. This period of time shall
         begin on the date the Employee retires, quits, or is discharged, or if
         earlier, the 12-month anniversary of the date on which the Employee
         was otherwise first absent from service. However, if an Employee is
         absent from employment due to pregnancy, birth of the Employee's
         child, adoption of a child by the Employee, child care immediately
         following such birth or adoption, or, effective as of August 5, 1993,
         due to leave recognized under the Family and Medical Leave Act of
         1993, for purposes of determining whether an Employee has incurred a
         Break in Service, the Employee will be considered employed for the
         portion of such absence ending on the second anniversary of such
         Employee's absence from employment.

(h)      "CODE" means the Internal Revenue Code of 1986, as from time to time
         amended. Each Code reference in this Plan shall be deemed to include
         reference to any comparable or succeeding statutory provision which
         supplements or replaces such Code reference.

(i)      "COMPANY" means Cordillera Corporation or its successor in interest.

(j)      "COMPENSATION" means, with respect to an Employee for a period
         considered under the Plan, the Employee's full salary and wages from an
         the Employer for services rendered, including salary, wages,
         commissions, bonuses, and overtime, and salary reduction amounts under
         this or any other Code section 401(k) cash or deferred arrangement or
         any Code section 125 cafeteria plan maintained by the Company,
         Affiliate, or Associated Company, and, effective January 1, 2001,
         elective amounts that are not includable in gross income of the
         Employee by reason of Code section 132(f)(4), relating to qualified
         transportation fringe benefits, but excluding--

         (1)      directors' fees;

         (2)      reimbursement or other expense allowances;

         (3)      fringe benefits (cash and noncash);

         (4)      moving expenses;

         (5)      deferred compensation; and

         (6)      welfare benefits.




                                       5


         The Compensation of any Employee that is taken into account under the
         Plan for any Plan Year beginning on or after January 1, 1989, shall not
         exceed the maximum dollar amount that is permitted as of the beginning
         of the year under Code section 401(a)(17) (determined after giving
         effect to any amendments to section 401(a)(17) and any indexing or
         other adjustments made pursuant to said section that are applicable for
         the year of the determination). If an Employee is a family member of a
         5-percent owner (as defined in section 13.2) or of a Highly Compensated
         Employee among the group of ten Employees receiving the highest
         compensation for the Plan Year, then such Employee shall not be
         considered a separate Employee. Any Compensation paid to such Employee
         shall be treated as having been paid to the Highly Compensated
         Employee. For this purpose, "family member" means the Employee's spouse
         and any lineal descendants of the Employee who have not attained age 19
         before the close of the Plan Year. Notwithstanding the three preceding
         sentences, these family aggregation rules shall not apply during Plan
         Years beginning on or after January 1, 1997.

         Notwithstanding the foregoing, the term "Compensation" for purposes of
         determining an Employee's average deferral percentage under section 4.6
         or average contribution percentage under section 5.4, and for purposes
         of determining whether an Employee is a Highly Compensated Employee,
         shall mean an Employee's Section 415 Compensation plus, for Plan Years
         beginning before January 1, 1998, any salary reduction elected by the
         Employee pursuant to Code section 125 or 401(k) under any plan of the
         Employer or an Affiliate in which the Employee participates.

(k)      "ELIGIBLE EMPLOYEE" means any Employee of an Employer except--

         (1)      any Employee who is included in a unit of Employees covered by
                  a collective bargaining agreement, if there is evidence that
                  retirement benefits were the subject of good faith bargaining,
                  unless such agreement provides for participation of those
                  Employees in this Plan;

         (2)      any Employee who is a nonresident alien and who receives no
                  earned income from an Employer which constitutes income from
                  sources within the United States; and

         (3)      any Employee who is not designated as an "employee" in the
                  Company's, any Affiliate's, or Associated Company's employment
                  records during a particular period of time, including a person
                  designated as an "independent contractor," even if a
                  determination is made by the Internal Revenue Service, the
                  Department of Labor, or any other government agency, court, or
                  other tribunal, that such person is an employee for any
                  purpose.

(l)      "EMPLOYEE" means any person employed by the Company, an Affiliate, or
         Associated Company.





                                       6


(m)      "EMPLOYER" means the Company and any Affiliate or Associated Company
         which, with the approval of the Company, has adopted or adopts this
         Plan for the benefit of some or all of its Eligible Employees. As of
         January 1, 2001, and continuing through the date of adoption of this
         amendment and restatement of the Plan, the Employers include Cordillera
         Corporation; Utah Gas Service Company; Denver jetCenter, Inc.;
         jetCenters, Inc.; Salt Lake jetCenter, Inc.; Colorado jetCenter, Inc.;
         Fort Collins Loveland jetCenter, Inc.; and Wyoming Industrial Gas
         Company. In addition, Oceanic Exploration Company became an Employer as
         a result of adopting this Plan as of January 1, 1987; and Oceanic
         International Properties Corporation, a subsidiary of Oceanic
         Exploration Company, became an Employer thereafter when Employees of
         Oceanic Exploration Company transferred to it. Each of Oceanic
         International Properties Corporation and Oceanic Exploration Company
         have had Employees from time to time. Note that Utah Gas Service
         Company and Wyoming Industrial Gas Company ceased to be members of the
         group as of July 12, 2001. Also note that San Miguel Valley Corporation
         was an Employer under the terms of the Plan in effect prior to January
         1, 2001, but ceased to be an Employer as of December 31, 1999.

(n)      "ERISA" means the Employee Retirement Income Security Act of 1974, as
         from time to time amended. Each ERISA reference in this Plan shall be
         deemed to include reference to any comparable or succeeding statutory
         provision which supplements or replaces such ERISA reference.

(o)      "HIGHLY COMPENSATED EMPLOYEE" means, effective as of January 1, 1997,
         any Employee who--

         (1)      in the preceding Plan Year received compensation (as defined
                  in Code section 414(q)(4)) from the Company, an Affiliate, or
                  Associated Company, in excess of $80,000 indexed; or

         (2)      in the Plan Year or the preceding Plan Year was a "5-percent
                  owner" (as defined in section 13.2 of the Plan).

         The dollar limit described in (1) above is in effect during the 1997,
         1998, and 1999 Plan Years, and will thereafter be adjusted to reflect
         increases in the cost of living at the same time and in the same manner
         as adjustments are made to defined contribution and defined benefit
         limits under Code section 415(d).

         A former Employee shall be treated as a Highly Compensated Employee if
         the Employee was a Highly Compensated Employee either when the Employee
         incurred a Separation from Service or at any time after the Employee
         attained age 55.

(p)      "HOUR OF SERVICE" means--




                                       7


         (1)      each hour for which the Employee is paid or entitled to
                  payment for the performance of duties.

         (2)      each hour for which the Employee is paid or entitled to
                  payment on account of a period of time during which no duties
                  are performed (irrespective of whether the employment
                  relationship has terminated) due to vacation, holiday,
                  illness, incapacity (including disability), layoff, jury duty,
                  or leave of absence. No more than 501 Hours of Service shall
                  be credited to an Employee on account of any single continuous
                  period during which the Employee performs no duties.

         (3)      each hour for which back pay (irrespective of mitigation of
                  damages) is either awarded or agreed to, with no duplication
                  of credit for hours under paragraphs (1) or (2) and this
                  paragraph (3).

         (4)      each hour credited pursuant to applicable ERISA regulations
                  for unpaid periods of absence for service in the United States
                  armed forces or Public Health Service during which the
                  Employee's reemployment rights are guaranteed by law, provided
                  that the Employee is reemployed as an Employee within the time
                  limits prescribed by such law.

         If or to the extent a record of an Employee's hours of employment is
         not maintained, the Employee shall be credited with 190 Hours of
         Service for each calendar month for which the Employee would be
         required to be credited with at least one Hour of Service.

         All Hours of Service shall be determined and credited to computation
         periods in accordance with reasonable standards and policies consistent
         with Department of Labor regulations section 2530.200b-2(b) and (c).

         Notwithstanding the foregoing provisions of this section 2.1(p),
         effective April 1, 1997, the term "Hour of Service" shall mean--

         (A)      Each hour for which the Employee is paid or entitled to
                  payment for the performance of duties.

         (B)      Each hour credited pursuant to applicable ERISA regulations
                  for unpaid periods of absence for service in the United States
                  armed forces or Public Health Service during which the
                  Employee's reemployment rights are guaranteed by law, provided
                  that the Employee is reemployed as an Employee within the time
                  limits prescribed by such law.

(q)      "INVESTMENT FUND" means--

         (1)      for any Participant who is not exercising full investment
                  direction over his account pursuant to section 8.1, such
                  investment companies registered under





                                       8


                  the Investment Company Act of 1940, as amended, the shares of
                  which are designated by the Benefits Committee as an
                  investment option under the Plan; or

         (2)      for any Participant who is exercising full investment
                  direction over his account pursuant to section 8.1--

                  (A)      such securities that are publicly traded on a
                           national securities exchange, share or units issued
                           by an investment company registered under the
                           Investment Company Act of 1940, as amended, subject
                           to such restrictions imposed by the Benefits
                           Committee as to investment in certain investment
                           vehicles; and

                  (B)      any obligations issued or guaranteed by the U.S.
                           government, its agencies, and instrumentalities.

         (r)      "MATCHING CONTRIBUTIONS" means matching contributions
                  described in section 5.1 that are made by an Employer on
                  behalf of a Participant and are conditioned on Pretax
                  Deferrals made by or on behalf of the Participant.

         (s)      "NORMAL RETIREMENT AGE" means the date of the Participant's
                  attainment of age 65.

         (t)      "PARTICIPANT" means any Eligible Employee who has met the
                  requirements to become a Participant as set forth in section
                  3.1, and shall include, where appropriate to the context, any
                  former Participant described in section 3.2.

         (u)      "PLAN YEAR" means the 12-consecutive month period ending each
                  December 31.

         (v)      "PRETAX DEFERRALS" means the contributions made by the
                  Employer on behalf of a Participants pursuant to the
                  Participant's election to reduce Compensation, as described in
                  section 4.1.

         (w)      "ROLLOVER CONTRIBUTIONS" means those contributions made by an
                  Employee, as described in section 5.6.

         (x)      "SECTION 415 COMPENSATION" means an Employee's wages,
                  salaries, commissions, professional fees and other amounts
                  received for personal services rendered in the course of
                  employment with the Company, Affiliate, or Associated Company,
                  as determined for purposes of reporting (in Box 1 on the 2000
                  version of Form W-2 or in such other place as may be
                  appropriate for any other reporting year) the Employee's wages
                  that are subject to income tax withholding or are otherwise
                  reportable for income tax purposes under Code sections
                  6041(d), 6051(a)(3), and 6052, increased, for Plan Years
                  beginning on and after January 1, 1998, by salary reduction
                  amounts under any Code section 401(k) cash or deferred
                  arrangement or a cafeteria plan under Code section 125 and,
                  effective January 1, 2001, elective





                                       9


                  amounts that are not includable in gross income of the
                  Employee by reason of Code section 132(f)(4), relating to
                  qualified transportation fringe benefits.

         (y)      "SEPARATION FROM SERVICE" means any termination of the
                  employment relationship between an Employee and the Company or
                  Affiliate or Associated Company for any reason other than
                  death, including resignation, discharge, retirement or
                  disability. A Separation from Service shall not occur upon a
                  Participant's transfer to a position where the individual
                  continues to be an Employee but is no longer an Eligible
                  Employee, nor shall a Separation from Service occur as a
                  result of a leave of absence authorized by the Employer, other
                  Affiliate or Associated Company if the Employee returns to
                  employment upon expiration of such leave.

                  Except as otherwise agreed by the parties to the transaction,
                  a disposition of the stock or other ownership interest in a
                  subsidiary or a disposition of substantially all the assets
                  used in a trade or business of an Employer shall be treated as
                  a Separation from Service for the purpose of making single sum
                  distributions to the Employees who continue to work in
                  essentially the same business and employment position
                  following the disposition, provided that such disposition is
                  treated as a permissible distribution event under Code
                  sections 401(k)(2)(B)(i)(II) and 401(k)(10) and related
                  regulations.

                  The following provisions apply in the case of a sale of
                  corporate assets by the Employer to an unrelated purchaser,
                  which does not result in a Separation from Service under Code
                  section 401(k)(10)(A). On and after September 1, 2000, such a
                  sale of assets shall constitute a Separation from Service,
                  with respect to a Participant affected by such sale, provided
                  that the following conditions are satisfied:

                  (1)      the Participant does not continue employment with the
                           Company, an Affiliate, or an Associated Company; and

                  (2)      the Participant's Account is not directly transferred
                           to a tax-qualified plan maintained by the purchaser
                           of assets described above, pursuant to a
                           "trust-to-trust" transfer within a reasonable time
                           following the sale.

         (z)      "TRUST AGREEMENT" means any agreement in the nature of a trust
                  established to form a part of the Plan to receive, hold,
                  invest, and dispose of the Trust Fund.

         (aa)     "TRUSTEE" means any person, bank, or trust company selected by
                  the Company to act as Trustee under any Trust Agreement at any
                  time of reference.

         (bb)     "TRUST FUND" means the assets of every kind and description
                  held under any Trust Agreement forming a part of the Plan.

         (cc)     "VALUATION DATE" means each business day of the Plan Year
                  recognized by the New York Stock Exchange.




                                       10


         (dd)     "YEARS OF SERVICE" means, prior to April 1, 1997, periods of
                  12 consecutive months during which the Employee completes at
                  least 1,000 Hours of Service, where the first such period is
                  measured from the date on which the Employee first performs an
                  Hour of Service after being hired or after being rehired after
                  a Break in Service, and each subsequent period in the Plan
                  Year, beginning with the Plan Year that commences with or
                  within the first period.

                  Effective April 1, 1997, the term "Years of Service" means the
                  aggregate of all periods commencing with the first day the
                  Employee has an Hour of Service with the Employer and ending
                  on the date a Break in Service begins. An Employee shall also
                  receive credit for any absence from service which would
                  otherwise constitute a Break in Service except that the length
                  of absence is less than 12 consecutive months provided he
                  returns to service within such 12-month period. Fractional
                  periods of a year will be expressed in terms of days. For
                  vesting purposes, only whole Years of Service will be counted,
                  but fractional periods shall be aggregated.

                  In the case of an individual who was an Employee prior to
                  April 1, 1997 and whose service has been determined on the
                  basis of computation periods and the general method of
                  crediting service as set forth in 29 CFR section 2530.200b-2,
                  for the 1997 Plan Year, the Employee shall receive credit for
                  a period of service consisting of the greater of--

                  (1)      the period of service that would be credited to the
                           Employee under the elapsed time method for this
                           service during the entire computation period in which
                           the change to an elapsed time methodology occurs; or

                  (2)      the service taken into account under the computation
                           periods method as of the later of the effective date
                           of the amendment which incorporates the elapsed time
                           methodology or the date said amendment was adopted by
                           the Company.

2.2 GENDER AND NUMBER

Except when otherwise indicated by the context, any masculine or feminine
terminology in this document shall also include the other gender, and the
definition of any term in the singular or plural shall also include the opposite
number.

2.3 REQUIREMENT TO BE IN "WRITTEN FORM"

Various notices provided by the Company or Benefits Committee, and various
elections made by a Participant are required to be in written form. Except as
otherwise provided under IRS or DOL regulations or other guidance, these notices
and elections may be conveyed through an electronic system.




                                       11


ARTICLE 3. PARTICIPATION AND SERVICE

3.1 DATE OF PARTICIPATION

Every Employee who was an Eligible Employee and a Participant on December 31,
2000, and continues to be an Eligible Employee shall continue to be a
Participant thereafter. On and after January 1, 2001, every other Eligible
Employee shall become a Participant in the Plan on the first January 1, April 1,
July 1, or October 1 entry date that coincides with or next follows the date he
or she has attained age 21, has completed one Year of Service, and has become an
Eligible Employee.

3.2 DURATION

An Employee who becomes a Participant shall remain a Participant until the
Employee has a Separation from Service, and shall be a former Participant
thereafter for as long as the individual is entitled to receive any benefits
under this Plan.

A Participant who has a Separation from Service and is subsequently reemployed
shall again become a Participant as of the later of the Participant's
reemployment date or the date the Participant again becomes an Eligible
Employee.

3.3 TRANSFERS

An Employee, who transfers from a nonparticipating Affiliate or Associated
Company to employment status where he or she becomes an Eligible Employee, shall
receive credit for prior service with such Affiliate or Associated Company in
determining his or her Years of Service and shall become a Participant in
accordance with section 3.1 after having satisfied the eligibility conditions
specified therein.

Any Participant who transfers out of Eligible Employee status with the Employer
but who remains an Employee shall become an inactive Participant. An inactive
Participant shall not be eligible to elect Pretax Deferrals with respect to
Compensation earned after the date of the Employee's transfer.

If a Participant becomes an inactive Participant, the Participant's Account
shall continue to be held under the Plan until the Participant becomes entitled
to a distribution under the provisions of section 7.2. The inactive
Participant--

(a)      shall continue to earn Years of Service for purposes of vesting in
         Employer contributions;

(b)      shall be eligible to request and receive a hardship withdrawal in
         accordance with the provisions of section 7.5;

(c)      shall be eligible to request and receive a loan in accordance with the
         provisions of section 7.7; and




                                       12


(d)      shall be eligible to make investment elections in accordance with the
         rules for active Participants.

3.4 LEASED EMPLOYEES

Effective January 1, 1997, a person who is not an Employee of a controlled group
Employer and who performs services for the controlled group Employer pursuant to
an agreement between the controlled group Employer and a leasing organization
shall be considered a "leased employee" if he performed the services on a
substantially full-time basis for a year and the services are performed under
the primary direction or control of the service recipient. A person who is
considered a leased employee of the controlled group Employer shall not be
considered an Eligible Employee for purposes of the Plan. However, if a leased
employee participates in the Plan as a result of subsequent employment with the
Company, Affiliate, or Associated Company, he shall receive Service for such
employment as a leased employee. Notwithstanding the preceding provisions of
this section, a leased employee will be included as an Employee for purposes of
applying the requirements described in section 414(n)(3) of the Code. For
purposes of this section, the term "Employer" includes an Employer participating
in the Plan and only those affiliates of such entity that must be aggregated and
treated as a single employer for purposes of Code section 414 and related
Treasury regulations.

3.5 SPECIAL PROVISIONS FOR PARTICIPANTS WHO ENTER THE ARMED FORCES

If a Participant is absent from employment for voluntary or involuntary military
service with the armed forces of the United States and returns to employment
within the period required under the law pertaining to veterans' reemployment
rights, he shall receive Service for the period of his absence from employment.
Notwithstanding any provisions of this Plan to the contrary, effective as of
December 12, 1994, contributions, benefits, and service credit with respect to
qualified military service will be provided in accordance with Code section
414(u).




                                       13


ARTICLE 4. PRETAX DEFERRALS

4.1 AMOUNT OF CONTRIBUTIONS

Each Participant may elect to have the Employer contribute on the Participant's
behalf as Pretax Deferrals an amount equal to any whole percentage from 1
percent to 10 percent of the Participant's Compensation from such Employer
during the period for which the election is in effect. No benefits other than
Matching Contributions shall be conditioned on a Participant's election to make
Pretax Deferrals under this Plan. The Participant's election shall be made in
accordance with the rules set forth in this Article 4 and such other
administrative rules as the Benefits Committee may prescribe.

4.2 EXCESS DEFERRALS

(a)      In accordance with Code section 401(a)(30), this Plan and all other
         plans of the Company, Affiliate, or Associated Company shall not permit
         elective deferrals (including Pretax Deferrals under this Plan) to
         exceed $10,500 (or such other amount as may at the time be prescribed
         under Code section 402(g)) for the Participant's taxable year. The
         Benefits Committee shall prescribe procedures designed to prevent this
         limit from being exceeded and to cause Pretax Deferrals (and the
         corresponding salary reductions) that have been elected by the
         Participant to be stopped at any time during the Participant's taxable
         year when this limit has been reached.

(b)      In addition, the Benefits Committee shall adopt reasonable procedures
         to assist a Participant in fulfilling the Participant's responsibility
         of ensuring that Pretax Deferrals made on behalf of the Participant
         under this Plan for the Participant's taxable year do not exceed
         $10,500 (or such other amount as may at the time be prescribed under
         Code section 402(g)) less any other elective deferrals made on behalf
         of the Participant by someone other than the Company, Affiliate, or
         Associated Company. If the Participant notifies the Benefits Committee
         in writing no later than March 1 following the Participant's taxable
         year of the amount of any excess Pretax Deferrals under this subsection
         for such taxable year, the Plan may, but need not, distribute such
         excess (and any income or investment gains or losses allocable to such
         excess) to the Participant no later than April 15 following such
         taxable year.

(c)      The Participant will be treated as having a calendar taxable year,
         unless the Participant notifies the Benefits Committee differently, in
         writing, before the beginning of the Participant's taxable year or, if
         later, by the date that the Employee first becomes a Participant.

(d)      For purposes of this section, "elective deferrals" includes--




                                       14


         (1)      Employer contributions to a qualified cash or deferred
                  arrangement to the extent excluded from the Participant's
                  gross income for the taxable year pursuant to Code section
                  402(a)(8);

         (2)      Employer contributions to a simplified employee pension to the
                  extent excluded from the Participant's gross income for the
                  taxable year under Code section 402(h)(1)(b); and

         (3)      Employer contributions to purchase an annuity contract under
                  Code section 403(b) under a salary reduction agreement.

(e)      Excess Pretax Deferrals which are distributed from the Plan under this
         section shall not be included as an Annual Addition. The Participant's
         income for the taxable year of the excess Pretax Deferral (or, the year
         of distribution or other year or years that may be specified pursuant
         to Treasury rules or regulations) shall be increased by the amount
         distributed under this section, including both the excess Pretax
         Deferral and allocable income or investment gains or losses. Allocable
         income and investment gains or losses shall be determined in the manner
         described in section 4.7. The distribution described in this section
         may be made notwithstanding any other Plan provision.

(f)      The Benefits Committee shall adopt reasonable procedures for
         coordinating distributions of excess Pretax Deferrals and allocable
         income under this section and section 4.7, in accordance with any
         applicable Treasury regulations. Specifically, the amount of any excess
         deferrals for a Plan Year that may be distributed under this section
         shall be reduced by the amount of excess contributions previously
         distributed to the Participant under section 4.7.

4.3 ELECTIONS

Each Participant (or Employee expected to become a Participant by the time that
the election will take effect) shall make the election described in section 4.1
by completing the election form made available by the Benefits Committee.
Elections shall remain in effect until a new election to begin, stop, increase,
or decrease the Participant's Pretax Deferrals is received by the Benefits
Committee. If a Participant has elected to begin, stop, increase or decrease
Pretax Deferrals, the Participant may not file any new election to change Pretax
Deferrals until the first day of the next calendar month.

Regardless of the type of election being made, if the election form is received
by the Benefits Committee on or before the fifteenth day of the calendar month,
then the election shall take effect for the pay period that ends first in the
month following the Benefits Committee's receipt of the election form. If the
election form is received after the fifteenth day of the calendar month, it
shall take effect for the pay period that ends first in the second month
following the Benefits Committee's receipt of the election form. Except as
otherwise





                                       15


provided in this Plan, all elections shall be irrevocable for each pay period
beginning on or after the effective date of the election.

4.4 COMPENSATION REDUCTION

Each Participant, who makes an election to have the Employer contribute a
percentage of the Participant's Compensation as Pretax Deferrals, shall by the
act of making such election, agree to have such Compensation reduced by an
equivalent amount for so long as the election remains in effect. The
Participant's Compensation shall not be reduced to the extent that the Employer
does not contribute the Pretax Deferrals to the Plan on behalf of the
Participant.

4.5 TRANSFER AND CREDITING OF PRETAX DEFERRALS

Pretax Deferrals shall be transferred to the Trust Fund as soon as practicable
after each payroll payment date. Pretax Deferrals shall be allocated to the
Participant's Pretax Deferral Account as of the payroll date on which the
corresponding amount would have been paid in the absence of the election under
section 4.1, provided that, for purposes of accounting for the investment return
on Pretax Deferrals during the valuation period in which they are transferred to
the Trust Fund, the Benefits Committee may provide that all new Pretax Deferrals
will be considered to have been received in the middle of such valuation period
or may prescribe the uniform use of any other acceptable convention of trust
accounting.

4.6 RESTRICTIONS ON PRETAX DEFERRALS

For Plan Years beginning after 1996, as of the last day of each Plan Year and at
such other times throughout the Plan Year as the Benefits Committee may
determine, the Benefits Committee shall require testing of Pretax Deferrals (and
any other Employer contributions that the Company elects to include in this
testing in accordance with applicable conditions specified under Code section
401(k) and related regulations) to assure that the average deferral percentage
for the Plan Year of Participants who are Highly Compensated Employees shall not
exceed the greater of--

(a)      1.25 times the average deferral percentage for the prior Plan Year of
         all other Participants; or

(b)      the lesser of--

         (1)      two percentage points more than; or

         (2)      two times the average deferral percentage for the prior Plan
                  Year of all other Participants.

The rules of this Plan section 4.6 shall be applied separately to each
controlled group Employer, as determined after any aggregation required pursuant
to Code section 414(b), (c), (m), (n), and (o).




                                       16


By an amendment to the Plan, the Benefits Committee may elect to apply
subsections (a) and (b) by using the current Plan Year rather than the preceding
Plan Year except that such election may not be changed unless permitted by the
Internal Revenue Service.

The term "average deferral percentage" for each group of Participants for any
period shall be the average of the percentages, calculated separately for each
Participant in such group, of Pretax Deferrals (and any other Employer
contributions that the Company elects to include in this testing in accordance
with applicable conditions specified under Code section 401(k) and related
regulations) made on behalf of the Participant for the applicable Plan Year to
that Participant's Compensation earned while a Participant for that Plan Year.
To the extent required by Treasury regulations, excess Pretax Deferrals under
section 4.2 shall be treated as a Pretax Deferral amount elected under section
4.1 and contributed to the Plan, whether or not such excess Pretax Deferral is
distributed under section 4.2.

Advanced testing done under this section shall be based on a Participant's
annual rate of Compensation while a Participant in effect at the time of the
test, and corrections made to reduce the amount in excess of the maximum
permissible deferral percentage shall be made from Compensation to be earned for
the remainder of the Plan Year. Final Plan Year compliance with the restrictions
of this section shall be based on the Participant's actual Compensation while a
Participant and Pretax Deferrals for the Plan Year.

If this Plan is aggregated with one or more other plans, which include qualified
cash or deferred arrangements, for purposes of Code section 401(a)(4) or 410(b),
then the cash or deferred arrangements of this Plan and such other plans shall
be treated as one arrangement for purposes of this section. If any Highly
Compensated Employee is a participant under two or more qualified cash or
deferred arrangements of the Company or Affiliate, all such cash or deferred
arrangements shall be treated as one such arrangement for purposes of
determining the average deferral percentage of the Highly Compensated Employee.

4.7 REFUNDS OF EXCESS PRETAX DEFERRALS

For a Plan Year that begins after 1996, if the Benefits Committee determines
after the end of the Plan Year that the limitation of section 4.6 has not been
satisfied, the Plan shall first determine, in the manner described in subsection
(a), the aggregate excess Pretax Deferrals that must be eliminated to satisfy
the limitation of section 4.6, then shall allocate and distribute the aggregate
excess amount and allocable earnings in the manner described in subsections (b)
and (c), and forfeit related Matching Contributions.

(a)      For the sole purpose of determining the amount of the aggregate excess
         Pretax Deferrals to be distributed under subsection (b) (and not the
         amount to be distributed to a specific Highly Compensated Employee),
         the aggregate amount of excess Pretax Deferrals is determined by--

         (1)      computing a reduction in the amount of the Pretax Deferrals of
                  the Highly Compensated Employee with the highest average
                  deferral percentage so that





                                       17


                  such percentage does not exceed the average deferral
                  percentage of the Highly Compensated Employee with the next
                  highest average deferral percentage, or if less, the amount
                  necessary so that the limitation of section 4.6 is satisfied;
                  and

         (2)      if the amount of the reduction pursuant to paragraph (1) is
                  insufficient to reduce the average deferral percentage for the
                  Highly Compensated Employees so that it does not exceed the
                  limitation of section 4.6, then repeating the process
                  described in paragraph (1) in descending order of the average
                  deferral percentages of the Highly Compensated Employees until
                  the average deferral percentage for the group of Highly
                  Compensated Employees satisfies the limitation of section 4.6.

(b)      The aggregate excess Pretax Deferrals determined under subsection (a)
         shall be eliminated by--

         (1)      distributing Pretax Deferrals to the Highly Compensated
                  Employee with the highest dollar amount of Pretax Deferrals
                  until it equals the dollar amount of the Pretax Deferrals of
                  the Highly Compensated Employee with the next highest dollar
                  amount of Pretax Deferrals, or if less, the aggregate amount
                  of the excess amount determined under subsection (a); and

         (2)      if the distribution described in paragraph (1) does not
                  eliminate the excess amount determined under subsection (a),
                  repeating the foregoing process in descending order of the
                  dollar amounts of the Pretax Deferrals until the aggregate
                  excess amount under subsection (a) has been distributed.

         The distributions described in this section may be made notwithstanding
         any other Plan provision. The Benefits Committee shall adopt reasonable
         procedures for coordinating distributions of excess Pretax Deferrals
         under this section and section 4.2.

         If the distributions required by this subsection (b) are made, the
         limitation of section 4.6 is satisfied notwithstanding that the average
         deferral percentage of the Highly Compensated Employees recomputed
         after the distributions may still exceed the limitation of section 4.6.

(c)      The Plan shall distribute the amounts determined under subsection (b)
         to the Participants no later than the last day of the Plan Year
         following the Plan Year in which the limitation of section 4.6 is
         exceeded, or the Plan may distribute the amounts within 2 1/2 months
         after such Plan Year if the Benefits Committee deems it desirable for
         tax purposes. All distributions shall be adjusted in accordance with
         subsection (d) to reflect investment gains and losses.

(d)      The income and investment gains and losses attributable to distributed
         excess Pretax Deferrals shall take into consideration income and
         investment gains and losses on the





                                       18


         Participant's Account for the Plan Year. Unless a different method is
         selected by the Benefits Committee, the income and investment gains and
         losses allocable to distributed excess Pretax Deferrals for the Plan
         Year shall be that portion of income and investment gains and losses on
         the Participant's Account for the Plan Year that bears the same ratio
         to total income and investment gains and losses for the Plan Year as
         the distributed excess Pretax Deferrals bears to the total Account
         balance determined as of the end of the Plan Year, before income and
         investment gains and losses for the Plan Year are added to the Account.

(e)      Notwithstanding any other provision of this Plan to the contrary, the
         Benefits Committee shall take steps to ensure that this section is
         interpreted and administered so as to comply with applicable legal
         requirements for the determination of what amounts constitute excess
         Code section 401(k) elective deferrals and for the return of such
         excess amounts and any income and investment gain or loss attributable
         thereto. All determinations under this section shall comply with Code
         section 401(k) and the regulations thereunder. The Benefits Committee
         shall keep adequate records to show compliance with these requirements.
         In the event of any conflict, the rules of the Code and regulations
         shall control.

4.8 RIGHTS OF RETURNING SERVICEMEN

A person who leaves employment with an Employer for military service, and who
returns to employment with an Employer on or after December 12, 1994, and within
the time prescribed by law for reinstatement of his employment rights, and who
thereby initially becomes a Participant or who resumes participation in the
Plan, shall have the right to make up Pretax Deferrals in accordance with this
section.

(a)      PERIOD FOR MAKE-UP PRETAX DEFERRALS. Such Participant's make-up period,
         which shall begin on the date of his reemployment, shall be equal to
         three times the period of his military service, up to a maximum of five
         years.

(b)      AMOUNT OF MAKE-UP PRETAX DEFERRALS. For all or part of his period of
         military service, such Participant may make Pretax Deferrals at any of
         the rates permitted under section 4.1 that were in effect during his
         period of military service. Such contributions shall be made by payroll
         reduction over the interval specified by him that is consistent with
         (a) above. The basis for making such contributions shall be such
         Participant's average Compensation during the 12-month period
         immediately prior to entry into military service. Such contributions
         shall be in addition to any Pretax Deferrals the Participant is making
         under section 4.1 for his current period of employment.

(c)      ADJUSTMENT, SUSPENSION, OR RESUMPTION. Such make-up contributions may
         be adjusted, suspended, or resumed by such Participant as provided in
         section 4.3 during the make-up period specified in (a) above, but there
         shall be no penalty for any discontinuance of such contributions.




                                       19


(d)      MATCHING CONTRIBUTIONS. The Participant shall be entitled to Matching
         Contributions in accordance with section 5.1 that match such make-up
         Pretax Deferrals.

(e)      LIMITATIONS NOT APPLICABLE. The limitations and restrictions of
         sections 4.2, 4.6, 5.4, and 6.1 of the Plan and section 404(a) of the
         Code shall not be applicable to any Participant make-up Pretax
         Deferrals and Matching Contributions with respect to the year in which
         such contributions are made, and such limitations shall apply for the
         year for which the contributions are made only to the extent provided
         by rules prescribed by the Secretary of the Treasury.

(f)      EARNINGS, GAINS, OR LOSSES. Such make-up Pretax Deferrals and related
         Matching Contributions shall not be credited with any earnings, gains,
         or losses on such contributions, nor shall any forfeiture be credited
         to the Participant's Account, with respect to the period during which
         the Participant was in military service.




                                       20


ARTICLE 5. MATCHING AND ROLLOVER CONTRIBUTIONS

5.1 MATCHING CONTRIBUTIONS

Each Participant for whom Pretax Deferrals were credited to the Participant's
Account during a payroll period shall be entitled to a Matching Contribution
equal to 100 percent of the first 6 percent of Compensation deferred as Pretax
Deferrals on behalf of the Participant for that payroll period.

Notwithstanding the preceding paragraph, with respect to the Plan Year ending
December 31, 1998, Participants who are employed by San Miguel Valley
Corporation shall be eligible to receive a maximum rate of Matching Contribution
under this Plan which is not greater than the highest maximum rate of Matching
Contribution provided under any other qualified retirement plan maintained by a
member of the controlled group of corporations (as defined in Code sections 414
and 1563), of which San Miguel Valley Corporation is a part.

5.2 OVERALL CONDITIONS ON MATCHING CONTRIBUTIONS

Notwithstanding any Plan provision to the contrary, any Matching Contribution
(including any investment gain attributable thereto), which relates to an excess
Pretax Deferral under section 4.2 or section 4.6, shall be forfeited and shall
not be treated as a Matching Contribution with respect to the Participant for
the Plan Year.

5.3 TRANSFER AND CREDITING OF MATCHING CONTRIBUTIONS

Matching Contributions shall be transferred to the Trust Fund as soon as
practicable. Matching Contributions shall be allocated to the Participant's
Matching Account as of the date for which the Pretax Deferrals to which the
relate are allocated.

5.4 RESTRICTIONS ON MATCHING CONTRIBUTIONS

For Plan Years beginning after 1996, as of the last day of each Plan Year and at
such times throughout each Plan Year as the Benefits Committee may determine,
the Benefits Committee shall require testing of Matching Contributions to assure
that the contribution percentage for the Plan Year of Participants who are
Highly Compensated Employees shall not exceed the greater of--

(a)      1.25 times the contribution percentage for the prior Plan Year of all
         other Participants; or

(b)      The lesser of--

         (1)      two percentage points more than; or

         (2)      two times the average deferral percentage for the prior Plan
                  Year of all other Participants.




                                       21


The rules of this Plan section 5.4 shall be applied separately to each
controlled group Employer, as determined after any aggregation required pursuant
to Code section 414(b), (c), (m), (n), and (o).

By an amendment to the Plan, the Benefits Committee may elect to apply
subsections (a) and (b) by using the current Plan Year rather than the preceding
Plan Year except that such election may not be changed unless permitted by the
Internal Revenue Service.

The term "contribution percentage" for each group of Participants shall be the
average of the ratios, calculated separately for each Participant in such group,
of the sum of all Matching Contributions made by or on behalf of the Participant
for the applicable Plan Year to that Participant's Compensation earned while a
Participant during that Plan Year.

To the extent permitted by Code section 401(m) and related regulations, the
Company may elect, in computing contribution percentages, to treat Pretax
Deferrals for the applicable Plan Year as Matching Contributions, to the extent
such Pretax Deferrals exceed the amount of Pretax Deferrals needed to comply
with the average deferral percentage test of section 4.6.

Advanced testing done under this section shall be based on a Participant's
Matching Contributions and annual rate of Compensation while a Participant in
effect at the time of the test, and corrections made to reduce the amount in
excess of the maximum permissible contribution percentage shall be from Matching
Contributions to be made for the remainder of the Plan Year. Final Plan Year
compliance with the restrictions of this section shall be based on the
Participant's actual Compensation while a Participant and Matching Contributions
for the Plan Year.

If this Plan is aggregated with one or more other plans, which include employer
matching or employee after-tax contributions subject to contribution testing
under Code section 401(m), for purposes of Code section 401(a)(4) or 410(b),
then this Plan and such other plans shall be treated as one arrangement for
purposes of this section, and the after-tax contributions and matching
contributions in the aggregated plans shall be treated like Matching
Contributions hereunder in conducting the test. If a Highly Compensated Employee
participates in this Plan and one or more other plans of the Company or an
Affiliate to which contributions required to be tested under Code section 401(m)
are made, all such contributions shall be aggregated for purposes of determining
the Highly Compensated Employee's contribution percentage.

In addition to the limitation on Pretax Deferrals specified in section 4.6 and
the limitation on Matching Contributions specified in this section, Pretax
Deferrals and Matching Contributions with respect to Highly Compensated
Employees shall be subject to compliance with applicable Treasury regulations
that prevent the multiple use of the alternative percentage limitations in Code
sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii). If multiple use of the
alternative percentage limitation occurs, such multiple use shall be corrected,
in accordance with Treasury regulation section 1.401(m)-2(c), by reducing the
average deferral percentages of Highly Compensated Employees.




                                       22


5.5 CORRECTION OF EXCESS MATCHING CONTRIBUTIONS

For a Plan Year that begins after 1996, if the Benefits Committee determines
after the end of the Plan Year that the limitation of section 5.4 has not been
satisfied, the Plan shall first determine, in the manner described in subsection
(a), the aggregate Matching Contributions that must be eliminated to satisfy the
limitation of section 5.4, then shall allocate and distribute the aggregate
excess amount and allocable earnings in the manner described in subsections (b)
and (c).

(a)      For the sole purpose of determining the amount of the aggregate excess
         Matching Contributions to be distributed under subsection (b) (and not
         the amount to be distributed to a specific Highly Compensated
         Employee), the aggregate amount of excess Matching Contributions is
         determined by--

         (1)      computing a reduction in the amount of Matching Contributions
                  of the Highly Compensated Employee with the highest
                  contribution percentage so that such percentage does not
                  exceed the contribution percentage of the Highly Compensated
                  Employee with the next highest contribution percentage, or if
                  less, the amount necessary so that the limitation of section
                  5.4 is satisfied; and

         (2)      if the amount of the reduction pursuant to paragraph (1) is
                  insufficient to reduce the contribution percentage for the
                  Highly Compensated Employees so that it does not exceed the
                  limitation of section 5.4, then repeating the process
                  described in paragraph (1) in descending order of the
                  contribution percentages of the Highly Compensated Employees
                  until the contribution percentage for the group of Highly
                  Compensated Employees satisfies the limitation of section 5.4.

(b)      The limitation of section 5.4 is deemed to be satisfied if the
         aggregate excess Matching Contributions determined under subsection (a)
         is eliminated by--

         (1)      distributing Matching Contributions to the Highly Compensated
                  Employee with the highest dollar amount of such contributions
                  until it equals the dollar amount of such contributions of the
                  Highly Compensated Employee with the next highest dollar
                  amount of such contributions, or if less, the aggregate amount
                  of the excess amount determined under subsection (a); and

         (2)      if the distribution described in paragraph (1) does not
                  eliminate the excess amount determined under subsection (a),
                  repeating the foregoing process in descending order of the
                  dollar amounts of the Matching Contributions until the
                  aggregate excess amount under subsection (a) has been
                  distributed.

         If the distributions required by this subsection are made, the
         limitation of section 5.4 is satisfied notwithstanding that the
         contribution percentage of the Highly Compensated Employees recomputed
         after the distributions may still exceed the limitation of section 5.4.




                                       23


(c)      The Plan shall distribute the amounts determined under subsection (b)
         to the Participants no later than the last day of the Plan Year
         following the Plan Year in which the limitation of section 5.4 is
         exceeded, or the Plan may distribute the amounts within 2 1/2 months
         after such Plan Year if the Benefits Committee deems it desirable for
         tax purposes. All distributions shall be adjusted in accordance with
         subsection (d) to reflect investment gains and losses.

(d)      The income and investment gains and losses attributable to excess
         Matching Contributions for the Plan Year shall be determined by the
         same procedure as set forth in section 4.7 for determining income
         attributable to excess Pretax Deferrals.

(e)      Notwithstanding any other provision of this Plan to the contrary, the
         Benefits Committee shall take steps to ensure that this section is
         interpreted and administered so as to comply with applicable legal
         requirements for the determination of what amounts constitute excess
         contribution amounts under Code section 401(m) and for the return of
         such excess amounts and any income and investment gain or loss
         attributable thereto. All determinations under this section shall
         comply with Code section 401(m) and the regulations thereunder. The
         Benefits Committee shall keep adequate records to show compliance with
         these requirements. In the event of any conflict, the rules of the Code
         and regulations shall control.

5.6 ROLLOVERS

Amounts which an Eligible Employee has received from any other qualified
employee benefit plan may, subject to the Benefits Committee's approval and in
accordance with uniform, nondiscriminatory procedures designed to protect the
qualification and the integrity of the Plan, be transferred by the Eligible
Employee to this Plan in cash provided the following conditions are satisfied:

(a)      The amounts distributed to or on behalf of the Eligible Employee from
         another qualified plan and rolled over to this Plan shall not be
         subject to the distribution rules of the plan from which they came
         after being transferred to this Plan. Upon receipt by this Plan, such
         amounts shall be fully vested and shall be credited to the Eligible
         Employee's Rollover Account.

(b)      In case of a rollover of a distribution made from a qualified plan
         before January 1, 1993, the amount to be rolled over to this Plan must
         be solely attributable to a Code section 402(a)(5) qualified total
         distribution, and must be transferred to this Plan in a timely manner
         following a distribution from--

         (1)      a plan qualified under Code section 401(a); or

         (2)      a rollover or conduit individual retirement account or annuity
                  which has received only rollover contributions described in
                  Code section 408(d)(3) (determined without regard to
                  subparagraphs (A)(iii) and (D) thereof).




                                       24


(c)      In case of a rollover of a distribution made from a qualified plan on
         or after January 1, 1993, the amount to be rolled over to this Plan
         must be solely attributable to a Code section 402(c)(4) eligible
         rollover distribution, and must be transferred in a timely manner to
         this Plan following a distribution from--

         (1)      a plan qualified under Code section 401(a); or

         (2)      a rollover or conduit individual retirement account or annuity
                  which has received a rollover contribution described in Code
                  section 408(d)(3) (determined without regard to subparagraphs
                  (A)(iii) and (D) thereof) and to which no other contributions
                  have been made.

(d)      The amounts tendered must not include nondeductible employee
         contributions to a qualified plan by an Eligible Employee or amounts
         attributable to--

         (1)      contributions to an individual retirement account or annuity
                  that are deductible under Code section 219;

         (2)      accumulated deductible employee contributions described in
                  Code section 72(o)(5)(B);

         (3)      contributions or deferrals to an annuity described in Code
                  section 403(b); or

         (4)      in the case of a distribution that occurred before January 1,
                  1993, a partial distribution described in Code section
                  402(a)(5)(D).

(e)      The transfer to this Plan of amounts described in paragraph (b) shall
         only be accepted if the Eligible Employee presents to the Benefits
         Committee the IRS Form 1099 or equivalent, the original distribution
         check or a copy thereof, or such other evidence as the Benefits
         Committee may require to verify the nature of the amount and ensure
         that its receipt will not adversely affect the qualified status of this
         Plan.

(f)      Amounts must be received by this Plan not later than 60 days after a
         distribution was received by the Eligible Employee.

(g)      The Benefits Committee may establish additional procedures, consistent
         with the rules of the Code, related regulatory guidance and this
         section, concerning the acceptance of rollovers, including sixty-day
         rollovers and direct rollovers of eligible rollover distributions,
         under this Plan.

(h)      Upon approval by the Benefits Committee, rollover amounts shall be
         transmitted to the Trustee, to be invested in such Investment Funds as
         the Eligible Employee may select in accordance with such rules and
         procedures as the Benefits Committee may establish for this purpose.




                                       25

5.7 SPECIAL PARTICIPATION AND CONTRIBUTION PROVISIONS FOR 1997

For the Plan Year ending December 31, 1997 (and thereafter if required), the
term "Participant" shall be expanded to include such number of nonhighly
compensated employees as are required to meet minimum coverage testing
requirements of Code section 410(b) and the regulations thereunder. For this
purpose, a "nonhighly compensated employee" is any Employee who is not a Highly
Compensated Employee, as defined in section 2.1(o).

Such Specially Included Participant(s) (SIPS)) shall be those participant(s)
with the lowest compensation included in a qualified retirement plan maintained
by another member of the controlled group of corporations (as defined in Code
sections 414 and 1563) of which San Miguel Valley Corporation is a part, who
would otherwise be Eligible Employees as defined in section 2.1(k), and who
would not be Highly Compensated Employees, if actually employed by San Miguel
Valley Corporation.

If necessary to comply with Code section 410(b) and the regulations thereunder,
each SIP shall receive a Qualified Nonelective Contribution allocated to the
SIP's Pretax Deferral Account for the 1997 Plan Year (and thereafter, if
necessary) equal to the product of his Compensation for the Plan Year and the
average deferral percentage of the Plan Year for all other Participants employed
by San Miguel Valley Corporation who are not Highly Compensated Employees.
Further, each SIP shall also receive an additional Qualified Nonelective
Contribution allocated to the SIP's Matching Account for the Plan year equal to
the product of his Compensation for the Plan Year and contribution percentage
for the Plan Year for all other Participants employed by San Miguel Valley
Corporation who are not Highly Compensated Employees. For purposes of this
Section 5.7, the term "Qualified Nonelective Contribution" shall mean a
contribution (which may be zero in amount) made by San Miguel Valley
Corporation, other than Pretax Deferrals and Matching Contributions, that are
nonforfeitable once they are made and subject to the restrictions on
distributions described in Article 7.






                                       26


ARTICLE 6. MAXIMUM CONTRIBUTIONS AND BENEFIT LIMITATIONS

6.1 LIMITATION ON ANNUAL ADDITION

Notwithstanding anything to the contrary contained in this Plan, the total
Annual Additions of a Participant for any Plan Year, which shall be the
limitation year for purposes of Code section 415, shall not exceed the lesser
of--

(a)      $35,000 or such larger amount as may be prescribed under Code section
         415(d), or

(b)      25 percent of the Participant's Section 415 Compensation for the
         limitation year.

6.2 "ANNUAL ADDITION" DEFINED

The term "Annual Addition" means, with respect to each Participant for the Plan
Year, the aggregate of:

(a)      the amount of Company, Affiliate, or Associated Company contributions
         (including Pretax Deferrals) and forfeitures allocated to the
         Participant's Account under this Plan and any other defined
         contribution plan, as defined in Code section 414(i), maintained by the
         Employer for the Plan Year;

(b)      the amount of a Participant's after-tax contributions for such Plan
         Year under this Plan and any other defined contribution plan, as
         defined in Code section 414(i), maintained by the Employer for the Plan
         Year;

(c)      for purposes of section 6.1(a), the amount of contributions allocated
         to an individual medical account, as defined in Code section 415(l)(2),
         which is part of a pension or annuity plan; and

(d)      for purposes of section 6.1(a), the amount of contributions
         attributable to post-retirement medical benefits, which are allocated
         to the separate account of a key employee, as defined in Code section
         419A(d)(3), under a welfare benefit fund, as defined in Code section
         419(e).

6.3 EXCESS ANNUAL ADDITIONS

If, as a result of the allocation of forfeitures or a reasonable error in
estimating a Participant's Section 415 Compensation for the Plan Year (or any
other circumstance permitted under Code section 415 and applicable Treasury
regulations), the Annual Additions for a Participant is exceeded, such excess
amount shall be reduced in accordance with the provisions of this section. The
Participant's excess Annual Additions shall first be reduced under this Plan
before reductions are made under any other qualified defined contribution plan
maintained by the Company, Affiliate, or Associated Company.




                                       27



The Participant's excess Annual Additions shall be reduced under this Plan as
follows:

(a)      Pretax Deferrals made on behalf of the Participant for the Plan Year
         (as well as income and investment gains and losses attributable
         thereto) shall be refunded to the Participant to the extent necessary
         to eliminate the excess Annual Additions. If further reductions are
         required, Matching Contributions (as well as income and investment
         gains and losses attributable thereto) for the Plan Year shall be
         reduced and held in a suspense account to the extent necessary to
         eliminate the excess Annual Additions.

(b)      If even further reductions are required, excess Annual Additions shall
         be reduced under other defined contribution plans maintained by the
         Company or an Affiliate, in accordance with the terms of such other
         plans.

(c)      The refund of Pretax Deferrals under subsection (a) and any reduction
         of Matching Contributions under subsection (b) are disregarded for
         purposes of the actual deferral percentage test under Plan section 4.6
         and the average contribution percentage test under Plan section 5.4.

(d)      Excess amounts held in the suspense account shall be used to reduce
         Employer contributions (including, for this purpose, Pretax Deferrals
         and Matching Contributions) for that Participant for the next Plan Year
         (and succeeding Plan Years, if necessary), provided that the
         Participant is covered by the Plan during the Plan Year. If the
         Participant is not covered by the Plan as of the end of the Plan Year
         in which the excess Annual Additions were made, the excess amounts
         shall be allocated and, if necessary, reallocated in the next Plan Year
         to all remaining Participants before any Employer contributions (again
         including, for this purpose, Pretax Deferrals and Matching
         Contributions) for all remaining Participants can be made to the Plan
         for that Plan Year.

6.4 DEFINED BENEFIT PLANS

If a Participant in this Plan is or was also a participant in a qualified
defined benefit plan, as defined in Code section 414(j), maintained or
previously maintained by the Company, Affiliate, or Associated Company, and the
sum of the Participant's defined contribution plan fraction and defined benefit
plan fraction (as these terms are defined in Code section 415(e)) exceeds 1.0
for the Plan Year, then in addition to the limitations contained in section 6.1,
the Annual Additions of the Participant shall be limited first under any other
qualified defined contribution plans of the Company, Affiliate, or Associated
Company and then under this Plan to the extent necessary to comply with the
limitations set forth in Code section 415(e). Notwithstanding the foregoing, the
limitations described in this section shall not apply to Plan Years beginning on
or after January 1, 2000.




                                       28


6.5 DEDUCTIBILITY LIMITATIONS

The aggregate dollar amount of Pretax Deferrals and Matching Contributions for
any Plan Year shall be limited to the amount deductible by the Employer under
section 404 of the Code for the taxable year.






                                       29


ARTICLE 7. VESTING AND BENEFITS

7.1 VESTING

Each Participant's interest in his or her Pretax Deferral Account, Rollover
Account, and Matching Account shall be fully vested at all times, including the
time at which the Participant attains Normal Retirement Age.

7.2 BENEFIT FORMS, REQUIRED CONSENT, AND PAYMENTS AFTER SEPARATION FROM SERVICE

Every Participant who incurs a Separation from Service shall receive a
distribution of the value of his or her vested Account in a permissible form
that, as determined below, is either paid automatically or elected by the
Participant.

(a)      If the vested Account balance of a Participant who is entitled to a
         distribution under this section has not ever exceeded $3,500 ($5,000
         effective January 1, 1998) at a time when the Participant was entitled
         to a distribution, such balance shall automatically be distributed to
         the Participant as an immediate lump sum, determined as of the
         Valuation Date on which the distribution is made.

(b)      Except as provided in section 7.2(a) above, the Plan shall not make a
         distribution to any Participant, whether before or after Separation
         from Service, if the distribution would occur prior to the
         Participant's attainment of Normal Retirement Age and does not have the
         Participant's written consent. After a Participant's attainment of
         Normal Retirement Age, the Participant's written consent to an
         immediate distribution is not required, and, subject to sections 7.3
         and 7.4, the Plan shall make or commence distribution of the
         Participant's vested Account balance as soon as is practicable after
         the later of the Participant's Separation from Service or attainment of
         Normal Retirement Age.

(c)      If a Participant has had a Separation from Service, is not subject to
         section 7.2(a), and has not elected a life annuity form of payment, the
         Participant's normal form of distribution is an immediate lump sum,
         payable as soon as practicable on or after all events requiring the
         distribution have occurred, including the Participant's Separation from
         Service and either the Participant's written consent to the
         distribution or the Participant's attainment of Normal Retirement Age.
         The normal form for required minimum distributions under section 7.4 to
         a Participant who has not had a Separation from Service and has not
         elected a life annuity form of payment is a payment over the life
         expectancy of the Participant that satisfies the minimum distribution
         requirements of Code section 401(a)(9) and related regulations. The
         normal form of distribution for a Participant who elects a life annuity
         form of payment is, if the Participant is not married, an annuity for
         the life of the Participant, and is, if the Participant is married, a
         Qualified Joint and Survivor Annuity described in section 7.2(h).




                                       30


(d)      In lieu of the normal form, a Participant who has had a Separation from
         Service or who has not had a Separation of Service but is required to
         commence benefits under section 7.4, and who is not subject to section
         7.2(a), may elect an optional form of distribution. Optional forms
         include--

         (1)      substantially equal installments payable no less frequently
                  than annually over a period not extending beyond the
                  Participant's life expectancy;

         (2)      a combination of a lump sum and such installments;

         (3)      an annuity for the life of the Participant; and

         (4)      a joint and 50 percent survivor annuity.

(e)      On and after January 1, 1993, as elected by the Participant in
         accordance with Code sections 401(a)(31) and 402(c) and section 7.6 of
         this Plan with respect to an optional form that constitutes an eligible
         rollover distribution, the Plan shall arrange for a direct transfer of
         a Participant's distribution amount to an eligible retirement plan
         instead of distributing such amount to the Participant. The Plan shall
         also provide for the required notice to the Participant and tax
         withholding concerning any eligible rollover distribution.

(f)      If the Participant's consent to a distribution is required under this
         section, the Participant must give the consent in writing by filing a
         completed election form in the manner prescribed by the Benefits
         Committee. The Participant's Account balance shall be the amount
         determined on the Valuation Date on which the distribution is made.

(g)      Except as otherwise required for required minimum distributions under
         section 7.4 due to "look-back" rules of Code section 401(a)(9) and
         related regulations that focus on an earlier Valuation Date, the amount
         of any payment that is due shall be determined based on the
         Participant's vested Account balance as of the Valuation Date which is
         the date of payment.

(h)      If a Participant elects a life annuity form of benefit under section
         7.2(d)(3) or (4) and is married on the annuity starting date for paying
         such benefits, such Participant shall be deemed to have automatically
         elected a Qualified Joint and Survivor Annuity unless such form is
         waived as follows. For this purpose, a "Qualified Joint and Survivor
         Annuity" means an annuity described in Code section 417(b) that can be
         purchased from an insurance company with the Participant's vested
         Account balance and provides payments for the Participant's life with a
         survivor annuity to the spouse to whom the Participant was married on
         the annuity starting date in an amount equal to 50 percent of the
         annuity payable during the Participant's lifetime. To receive an
         annuity other than a Qualified Joint and Survivor Annuity, the
         Participant must make an election to which the Participant's spouse
         consents in a writing that is notarized





                                       31


         and acknowledges the effect of the spouse's consent and recognizes and
         accepts the specific nonspouse Beneficiary, if any, who may receive
         benefits in the event of the Participant's death. Spousal consent to
         the Participant's waiver of a Qualified Joint and Survivor Annuity
         shall be effective only with respect to the spouse signing the consent.
         Such consent shall not be required if the Participant establishes to
         the satisfaction of the Benefits Committee that the consent cannot be
         obtained for valid reasons described in the Code or regulations
         thereunder.

(i)      To satisfy the notice requirements of the Code, a Participant who
         elects a life annuity as an optional benefit form under section
         7.2(d)(3) or (4) shall receive (by mail or personal delivery), no less
         than 30 days nor more than 90 days before the annuity starting date, a
         written explanation of--

         (1)      the terms and conditions of the automatic election of a
                  Qualified Joint and Survivor Annuity in the previous
                  paragraph;

         (2)      the Participant's right to make (and the effect of) an
                  election to waive such benefit;

         (3)      the right of the Participant's spouse to consent in writing to
                  such waiver;

         (4)      the fact that the waiver and consent are irrevocable or, if
                  applicable, the right to make (and the effect of) a revocation
                  of such waiver during the 90-day election period that precedes
                  the annuity starting date; and

         (5)      the eligibility conditions and other material features and
                  relative values of optional forms of benefits.

(j)      Notwithstanding the preceding subsection, effective as of September 22,
         1995, the Participant's annuity starting date may occur as soon as
         eight days subsequent to the delivery of notice to the Participant (or
         any earlier date permitted under IRS regulations), provided that the
         Participant is afforded the opportunity to consider whether to take an
         election for at least 30 days, but affirmatively elects (subject to
         spousal consent, if applicable) to have his retirement benefit commence
         prior to the expiration of the 30-day period. Any such election shall
         be revocable by the Participant until the later of--

         (1)      the expiration of the seven-day period following the delivery
                  of notice; or

         (2)      the Participant's annuity starting date (which may precede the
                  date of the Participant's election).

         Although the procedures described in the preceding two paragraphs shall
         normally apply, it shall be permissible for the Benefits Committee to
         provide the written explanation described above after the Participant's
         annuity starting date, so as to





                                       32


         permit retroactive payment of benefits. Under these circumstances, the
         30-day and eight-day timing requirements described above shall continue
         to apply.

7.3 DEATH BENEFITS

Upon the death of a Participant who has elected a life annuity form of benefit,
the death benefits, if any, shall be determined under the elected form,
provided, however, that if the Participant dies before the annuity starting date
and leaves a surviving spouse, the death benefit shall be paid as a Qualified
Preretirement Survivor Annuity, subject to the following. For this purpose, a
"Qualified Preretirement Survivor Annuity" means an annuity described in Code
section 417(c) that can be purchased with the Participant's vested Account
balance and provides payments for the spouse's life in the amount which can be
purchased from an insurance company with such balance. Notwithstanding the
foregoing, the surviving spouse may elect an immediate lump sum distribution of
the Participant's vested Account balance in lieu of the Qualified Preretirement
Survivor Annuity.

Upon the death of a Participant who has not elected an annuity form of benefit
and has not received a complete distribution of his or her vested Account, the
Plan shall pay the Participant's entire Account balance to the Beneficiary in a
single sum payment. The Account balance shall be the amount determined as of the
Valuation Date on which the payment is made to the Beneficiary. The payment to
the Beneficiary shall be made as soon as practicable; provided, however, that if
the Beneficiary is the Participant's spouse and the vested Account balance,
prior to any distributions, exceeds $3,500 ($5,000 effective January 1, 1998),
then payment shall not be made without the spouse's written consent prior to the
date that the Participant would have attained Normal Retirement Age. If the
spouse defers receipt of the death benefit described in this section, the
Account balance to be distributed shall be determined under the procedures in
section 7.2 for distributions requiring the Participant's consent, except that
the spouse's consent shall be substituted for the Participant's consent.

The Benefits Committee may require such proper proof of death and such evidence
of the right of any person to receive payment of the value of the Participant's
vested Account as the Benefits Committee may deem desirable. The Benefits
Committee's determination of death and of the right of any person to receive
payment shall be conclusive.

7.4 MINIMUM DISTRIBUTION REQUIREMENTS

This section provides for the latest time that the Participant's vested Account
may be distributed; it takes precedence over any inconsistent Plan provision.
All distributions required under this section shall be determined and made in
accordance with Code sections 401(a)(9) and 401(a)(14) as well as regulations
thereunder, including the minimum distribution incidental benefit requirements,
which are incorporated herein by this reference.

Payment of benefits to a Participant shall be made or commence not later than
the sixtieth day after the close of the Plan Year in which occurs the later of
the Participant's Separation





                                       33


from Service or the Participant's attainment of Normal Retirement Age. If for
any reason the amount which is required to be paid cannot be ascertained on the
date payment would be due hereunder, payment shall be made not later than 90
days after the earliest date on which the amount of such payment can be
ascertained.

Moreover, distribution of the Participant's vested Account must begin not later
than the April 1 following the calendar year in which the Participant attains
age 70 1/2 even if the Participant has not incurred a Separation from Service by
such date.

If distribution of the Participant's benefit has commenced before the
Participant dies, the remaining benefit, if any, shall be distributed at least
as rapidly as the method in effect at the Participant's death. If distribution
of the Participant's benefit has not commenced before the Participant dies, then
any death benefit payable to a nonspouse Beneficiary under the terms of the Plan
shall be paid within one year of the Participant's death. If the distribution
has not commenced when the Participant dies and the death benefit is to be paid
to the Participant's surviving spouse, the payment of such death benefit must
commence no later than the end of the Plan Year following the calendar year in
which the Participant would have attained age 70 1/2.

7.5 HARDSHIP WITHDRAWALS

(a)      On or after January 1, 1994, upon application and demonstration to the
         satisfaction of the Benefits Committee that the Participant is
         confronted with a financial hardship, a Participant shall be permitted
         to make a cash withdrawal of up to the amount which is the sum of
         following, determined as of the Valuation Date immediately preceding
         the Benefits Committee's receipt of the application for a hardship
         withdrawal:

         (1)      the Participant's Rollover Account balance (if any);

         (2)      the Participant's Pretax Deferral Account balance exclusive of
                  post-1988 earnings on Pretax Deferrals; and

         (3)      the vested portion of the Participant's Matching Account
                  balances exclusive of post-1988 earnings on Matching
                  Contributions.

(b)      In compliance with applicable regulations under Code section 401(k),
         the Benefits Committee may establish a hierarchy among the Accounts to
         determine the amount available for a hardship withdrawal under
         subsection (a) and use it to determine the order in which funds are
         considered withdrawn from Investment Funds when a less than total
         withdrawal occurs. Amounts may not be withdrawn from the Participant's
         Pretax Deferral Account until all other amounts available for
         withdrawal have been withdrawn.




                                       34


(c)      Application for withdrawals shall be made on such forms as the Benefits
         Committee prescribes and may be made at any time effective following
         satisfaction of the requirements in this section. Distribution of
         withdrawals shall be made in a single sum in cash as soon as is
         administratively possible following such date.

(d)      For purposes of this section, a distribution is on account of
         "financial hardship" only if the Benefits Committee determines that the
         distribution is both on account of an immediate and heavy financial
         need of a Participant and necessary to satisfy such a need.

         (1)      The determination that the distribution is on account of an
                  immediate and heavy financial need of a Participant shall be
                  made in accordance with uniform principles consistently
                  applied and with pertinent Code sections and corresponding
                  regulations, provided that distributions for the following
                  reasons shall be deemed to be made on account of immediate and
                  heavy financial need:

                  (A)      medical expenses incurred by the Participant, his
                           spouse, any of his dependents;

                  (B)      the purchase (excluding mortgage payments) of the
                           Participant's primary residence;

                  (C)      tuition and related educational fees for the next 12
                           months of college or other post-secondary education
                           of the Participant or the Participant's spouse,
                           children, or other dependents;

                  (D)      the need to prevent the Participant's eviction from
                           his principal residence or foreclosure on the
                           mortgage of his principal residence; or

                  (E)      another need not mentioned above that has been
                           recognized by the Commissioner of Internal Revenue
                           pursuant to regulations as constituting a deemed
                           immediate and heavy financial need.

         (2)      The amount of any distribution under this section shall be
                  limited to the amount which is necessary to satisfy the
                  hardship expense and which is not available from other
                  reasonably liquid assets from other sources outside or within
                  the Plan.

                  For this purpose and effective April 1, 1989, a distribution
                  shall be considered necessary to satisfy an immediate and
                  heavy financial need of a Participant if all of the following
                  requirements are satisfied:

                  (A)      the distribution is not in excess of the amount of
                           the immediate and heavy financial need of the
                           Participant;





                                       35


                  (B)      the Participant has obtained all distributions, other
                           than hardship distributions, and all nontaxable loans
                           currently available under all plans maintained by the
                           Company and Affiliates;

                  (C)      the Participant's Pretax Deferrals, and similar
                           contributions and after-tax contributions elected by
                           the Participant under all other qualified plans
                           maintained by the Company or an Affiliate, shall be
                           suspended for at least twelve months after receipt of
                           the hardship distribution; and

                  (D)      the Participant's Pretax Deferrals for the calendar
                           year immediately following the year of the hardship
                           withdrawal shall not exceed $7,000 (or such other
                           amount as may be prescribed under Code section
                           402(g)(5) for Plan Years beginning after 1989) less
                           the amount of the Participant's Pretax Deferrals for
                           the year of the hardship withdrawal.

         The Benefits Committee may, without further investigation, accept the
         written statement of the Participant as to the amount necessary to meet
         the immediate and heavy financial need of the Participant and as to the
         lack of other funds available to meet this need unless it has reason to
         believe that the statement is in error.

(e)      Amounts that are withdrawn pursuant to this section may not be
         subsequently repaid to the Plan.

7.6 LUMP SUMS AND OTHER ELIGIBLE ROLLOVER DISTRIBUTIONS

Lump sums and other eligible rollover distributions under the Plan shall comply
with the requirements of Code section 401(a)(31) as follows. This section
applies to distributions made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a distributee's
election under this section, a distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover. For purposes of this section, the following
definitions shall apply.

An "eligible rollover distribution" is any distribution of all or any portion of
the balance to the credit of the distributee, except that an "eligible rollover
distribution" does not include: any distribution that is one of a series of
substantially equal period payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section 401(a)(9)
of the Code; any hardship distribution made from a 401(k) or 403(b) plan after
1998; and the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation with
respect to employer securities); and provided further that the determination of
what constitutes an "eligible rollover distribution" shall at all times be made
in accordance with the current rules of Code section 402(c), which shall be
controlling for this purpose.




                                       36


An "eligible retirement plan" is an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in section 403(a) of the
Code, or a qualified trust described in section 401(a) of the Code that accepts
the distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an "eligible retirement
plan" is an individual retirement account or individual retirement annuity.

A "distributee" includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former spouse.

A "direct rollover" is a payment by the Plan to the eligible retirement Plan
specified by the distributee.

In prescribing the manner of making elections with respect to eligible rollover
distributions, as described above, the Committee may provide for the uniform,
nondiscriminatory application of any restrictions permitted under applicable
sections of the Code and related rules and regulations, including a requirement
that a distributee may not elect a partial direct rollover in an amount less
than $500 and a requirement that a distributee may not elect to make a direct
rollover from a single eligible rollover distribution to more than one eligible
retirement plan. Moreover, if a distribution is one to which sections 401(a)(11)
and 417 of the Code do not apply, such distribution may commence less than 30
days after the notice required under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that--

(1)      the Plan administrator clearly informs the Participant that the
         Participant has a right to a period of at least 30 days after receiving
         the notice to consider the decision of whether or not to elect a
         distribution (and, if applicable, a particular distribution option);
         and

(2)      the Participant, after receiving the notice, affirmatively elects a
         distribution.

7.7 LOANS TO PARTICIPANTS

The Benefits Committee, upon application by an eligible Participant, shall
permit the Plan to make a loan to such Participant, provided that all loans
shall comply with such rules and regulations as the Benefits Committee may
establish for making Plan loans consistent with the following terms and
conditions:

(a)      Loans shall be made available to all Participants, subject to the
         following conditions, provided that loans granted on or after July 1,
         1994, shall be available only to Participants who are "parties in
         interest" for purposes of section 3(14) of ERISA. These loans shall at
         all times be available on a nondiscriminatory and reasonably





                                       37

         equivalent basis under uniform rules prescribed by the Benefits
         Committee in accordance with the requirements of the Code and ERISA and
         this section 7.7. A Participant who is also requesting a hardship
         withdrawal under section 7.5 must first take a loan in the maximum
         amount available under this section 7.7 before he can then take a
         hardship withdrawal under section 7.5 to the extent he is still
         eligible for such a withdrawal.

(b)      Loans may be processed as of any Valuation Date following such
         reasonable notice as the Benefits Committee may require. To receive a
         loan from the Plan, a Participant and his or her spouse, if any, must
         execute a promissory note and have their signatures witnessed by a
         notary public on a form prescribed by the Benefits Committee that shows
         loan amount and authorize payroll deductions for payment of interest
         and principal in accordance with procedures adopted by the Benefits
         Committee. To secure repayment of the loan, the Participant (and the
         Participant's spouse, if any) shall, within the 90 day period before
         the loan is made, consent to any distribution resulting from a setoff
         of the loan against the Participant's Account under subsection (h). Any
         consent by a Participant's spouse must comply with the Plan's
         requirements for waiving a Qualified Joint and Survivor Annuity or a
         Qualified Preretirement Survivor Annuity. Therefore, the consent must
         be in writing, must acknowledge the effect of the loan, and must be
         witnessed by a notary public.

(c)      The amount of the loan shall not be less than $1,000 nor more than 50
         percent of the first $100,000 of the vested balance in the
         Participant's Account. The 50 percent limitation shall be reduced by
         the highest outstanding balance of loans to the Participant from the
         Plan during the 1-year period ending on the day before the date on
         which the loan is made. If such Participant is also covered under
         another qualified plan maintained by the Company, Affiliate, or
         Associated Company, the above limitations shall be applied as though
         all such qualified plans are one plan. In no event may a Participant
         have more than one outstanding loan from this Plan at any time.

(d)      The loan repayment period shall not exceed 60 months. However, loans
         which are used to acquire the Participant's principal residence may be
         repaid over a reasonable period not exceeding 180 months. Moreover, in
         no event shall the loan repayment period for a loan granted on or after
         July 1, 1994 end later than the end of the second month following the
         month in which the Participant ceases to be a party in interest for
         purposes of section 3(14) of ERISA.

(e)      The Benefits Committee shall determine the interest rate for Plan loans
         or the method for determining such rate and communicate it to
         Participants in advance. For this purpose, the following rules shall
         apply. Each loan shall bear an interest rate equal to the prime rate of
         a bank selected by the Benefits Committee or equal to the prime rate as
         reported in the WALL STREET JOURNAL or other Benefits Committee-





                                       38


         selected publication of general circulation. The interest rate so
         determined shall be the one in effect at the time the loan is granted
         and shall remain fixed for the term of the loan. Notwithstanding the
         foregoing, the Benefits Committee may select and publish another method
         for determining the interest rate that complies with applicable law if
         it determines that the use of a method like the foregoing is not
         permitted under ERISA or other applicable law.

(f)      The Benefits Committee shall establish a Loan Fund representing the
         Participant's individual investment in the loan of amounts that were
         withdrawn from various Investment Funds in which the Participant's
         Account was invested and prior to being lent to the Participant. Unpaid
         loan amounts shall remain in the Loan Fund under the Participant's
         Account, which shall serve as security for the loan to the extent so
         invested. The Accounts and Investment Funds of the Participant that are
         used to provide the amount lent to the Participant shall be determined
         under uniform procedures established by the Benefits Committee after
         consulting with the Trustee and recordkeeper as appropriate to ensure
         their feasibility. Each repayment of principal on the loan received by
         the Trustee from the Participant shall reduce the Participant's
         investment in his Loan Fund and such repayment of principal together
         with each payment of loan interest shall increase pro rata the amount
         invested in each other Investment Fund in accordance with the
         Participant's investment elections at the time of such repayment,
         subject to any Investment Fund restrictions.

(g)      Except as otherwise provided below, repayment in equal installments of
         interest and principal shall be accomplished through regular payroll
         deductions. The obligation to make repayments of principal and interest
         shall be suspended during the period not to exceed one year that the
         Participant is on an authorized leave of absence without pay. If the
         unpaid leave continues thereafter, the Participant shall be required to
         recommence repayments, on a monthly basis by check, until he returns to
         pay status and resumes regular repayments by means of payroll
         deductions. To satisfy legal requirements, the Benefits Committee may
         specify rules for redetermining the amount, timing, or manner of
         repayments following a period of suspension due to unpaid leave; but
         such redetermination shall not be made for other reasons. The
         obligation to make repayments shall continue during a paid leave of
         absence or a transfer to a paid status as an Employee who is no longer
         an Eligible Employee. Where it is not feasible in such a case to
         continue processing the loan repayments as payroll deductions under a
         payroll system that currently covers the Participant, the repayments
         shall be made by the Participant by check on a monthly basis. A
         Participant shall be entitled at any time to prepay, without penalty,
         any or all of the accrued interest and outstanding principal amount of
         the loan by direct payment. Notwithstanding the foregoing, loan
         repayments will be suspended under this Plan as permitted under section
         414(u)(4) of the Code.




                                       39


(h)      If a Participant incurs a Separation from Service and either receives
         an immediate distribution of his remaining interest in the Plan or does
         not pay the total accrued interest and outstanding principal amount of
         the loan within 60 days, the Participant's note shall be canceled and
         the principal deemed distributed by the Trust Fund to him or, if
         applicable, his Beneficiary. This paragraph shall not apply, however,
         to any loan granted before July 1, 1994, nor shall it apply to any loan
         granted after such date in the case of a Participant who,
         notwithstanding his Separation from Service, continues to be a party in
         interest under section 3(14) of ERISA, who, while not in default on his
         regular loan repayments, is legally entitled to continue his loan. Any
         Participant whose loan continues following Separation from Service
         pursuant to this paragraph shall be allowed to make required loan
         repayments by monthly checks or other appropriate means approved by the
         Benefits Committee once he or she ceases to be covered by a payroll of
         the Company, Affiliate, or Associated Company.

(i)      The Company and the Trustee may make suitable arrangements, consistent
         with the requirements of the Code and ERISA, for holding the
         Participant's note under an agency, subtrust or other vehicle that
         provides adequate safeguards while simplifying the handling of the loan
         and eliminating the need to transfer the note to the Trustee.

(j)      The foregoing provisions of this section notwithstanding, the Benefits
         Committee reserves the right to stop granting loans to Participants at
         any time.




                                       40


ARTICLE 8. INVESTMENT ELECTIONS

8.1 INVESTMENT OF NEW CONTRIBUTIONS

All contributions made by and on behalf of a Participant each Plan Year shall be
invested as the Participant shall designate in the Investment Funds then
available in increments of 1 percent of the aggregate amount of such
contributions. If the Participant fails to make a valid election, contributions
made by and on behalf of the Participant shall be invested in the Schwab money
market fund.

Notwithstanding the preceding paragraph, the Benefits Committee, in its sole
discretion, may permit Participants to exercise full investment discretion over
their Accounts by instructing the Broker as to the investment of the assets held
by the Trustee in the Participant's Account in the available Investment Funds as
described in section 2.1(q)(2) in increments of 1 percent. The Benefits
Committee reserves the authority to restrict a Participant's investment in
certain of the investment vehicles which constitute Investment Funds. A separate
account at the Broker shall be established for each Participant who exercises
full investment discretion over his Account. For purposes of this paragraph, the
term "Broker" means Charles Schwab & Co., Inc. of its successor or assign
serving from time to time, which shall be a broker-dealer registered under the
Securities Exchange Act of 1934, as amended.

8.2 INVESTMENT TRANSFERS

Subject to any investment instructions and procedures that may apply from time
to time, each Participant, including inactive and former Participants, may elect
to transfer any amounts invested in an Investment Fund to one or more other
Investment Funds as any time. Each Participant, including inactive and former
Participants, who is instructing the Broker as to the investment of the assets
in his Account may direct the Broker to reinvest such assets at any time and
from time to time, subject to the internal rules and policies of the Broker.
Further, each Participant, including inactive and former Participants, may elect
to transfer all amounts invested in Investment Funds to a separate account with
the Broker for the purpose of exercising full investment discretion over his
Account. Alternatively, each Participant including inactive and former
Participants, may elect to transfer all amounts which are held in an account
with the Broker to one or more of the Investment Funds. Any investment transfer
shall become effective as soon as administratively possible, according to the
rules and procedures established by the Benefits Committee, recordkeeper,
Trustee and/or Broker, as applicable.

8.3 INVESTMENT ELECTIONS

Each Participant may make the election described in section 8.1 by filing an
election form with the Benefits Committee upon becoming a Participant. The
elections described in sections 8.1 and 8.2 may be changed together or
separately by making an election in the manner acceptable to the Benefits
Committee.




                                       41


Subject to such rules as the Benefits Committee may prescribe, Beneficiaries and
alternate payees shall have the same investment election rights as Participants
under this Plan.

8.4 TRANSFER OF ASSETS

The Benefits Committee shall establish procedures to transmit investment
directions of the Participants to the recordkeeper. The recordkeeper shall
instruct the Trustee to invest and reinvest assets held in the Participants'
Accounts based on such directions.

8.5 PARTICIPANT-DIRECTED INVESTMENTS

(a)      INTENT TO MEET ERISA SECTION 404(c). The Plan provisions pertaining to
         Participant-directed investments are intended to permit the Plan and
         Participant-directed transactions under it to comply with requirements
         in ERISA section 404(c) and related regulations so that a Participant
         will not be deemed to be a fiduciary by reason of exercising control
         over assets in his or her Account, and no person who is otherwise a
         fiduciary shall be liable, either for any loss or by reason of any
         breach, which results from the exercise of such control. For purposes
         of carrying out this intent, any Plan reference to a Participant who
         exercises control over Account assets shall be deemed to include a
         Beneficiary or an alternate payee who exercises such control, and any
         reference to a specific Department of Labor regulation shall be deemed
         to include a reference to any other currently applicable rule or
         regulation pertaining to the same subject.

(b)      FIDUCIARY FOR DISCLOSURES AND INSTRUCTIONS. To comply with ERISA
         section 404(c) and Department of Labor regulation 2550.404(c)-1
         thereunder, the Benefits Committee is designated as the Plan fiduciary
         responsible for giving Participants, Beneficiaries and alternate payees
         (together referred to as "eligible investors") all required
         information, receiving and carrying out investment directions from
         eligible investors and giving eligible investors written confirmation
         of instructions received from them. Accordingly, the Benefits Committee
         (or a person or persons designated by the Benefits Committee to act on
         its behalf) shall provide information to eligible investors in
         accordance with section 1((b)(2)(B) of the above Department of Labor
         regulation, shall receive investment instructions provided by such
         eligible investors in accordance with this article of the Plan, and
         shall provide eligible investors with written confirmation of such
         instructions. The Benefits Committee and any person or persons it has
         designated to act on its behalf shall comply with all such investment
         instructions from eligible investors except in cases where the Benefit
         Committee declines to implement such instructions in accordance with
         sections 1(b)(2)(ii)(B) and 1(d)(2)(ii) of the above Department of
         Labor regulation.




                                       42


ARTICLE 9. PARTICIPANT ACCOUNTS AND RECORDS

9.1 ACCOUNTS AND RECORDS

The accounts and records of the Plan shall be maintained at the direction of the
Benefits Committee and shall accurately disclose the value of the Account of
each Participant or Beneficiary in the Plan. Such accounts and records may be
kept in dollars or in units or both, as determined in accordance with generally
accepted principles of trust accounting approved by the Benefits Committee.

Each subaccount of a Participant's Account shall be assigned a share of each
Investment Fund in which the Participant's Account is invested in the proportion
which the balance of such subaccount bears to the total Participant's Account.
The Benefits Committee shall cause records to be maintained relative to a
Participant's Account so that there may be determined as of any Valuation Date
the current value of the Participant's Account in the Trust Fund and the
adjustments from the previous Valuation Date that have produced such current
value. If the Participant is exercising full investment discretion over his
Account, such Participant's Account shall be credited with the earnings, gains,
and losses attributable to the assets in the Participant's Account.

9.2 VALUATION ADJUSTMENTS

As of each Valuation Date, the Recordkeeper shall credit the Accounts of
Participants and Beneficiaries with contributions made during the day and debit
such Accounts with withdrawals and distributions during such day. The net worth
of an Investment Fund shall be determined by the trustee in accordance with
generally accepted principles of trust accounting and shall be conclusive and
binding upon all persons having an interest under the Plan.




                                       43


ARTICLE 10. FINANCING

10.1 FUNDING OF THE PLAN

The Company shall maintain a Trust Fund to finance the benefits under the Plan,
by entering into one or more Trust Agreements or insurance and bank investment
contracts approved by the Company, or by causing insurance and bank investment
contracts to be held under a Trust Agreement. Any Trust Agreement is designated
as and shall constitute a part of this Plan. All rights which may accrue to any
person under this Plan shall be subject to all the terms and provisions of such
Trust Agreement. A Trustee shall be appointed by the Company and shall have such
powers as provided in the Trust Agreement. The Company may modify any Trust
Agreement or insurance and bank investment contract from time to time to
accomplish the purpose of the Plan and may replace any insurance company or bank
or appoint a successor Trustee or Trustees. By entering into such Trust
Agreements or insurance or bank investment contracts, the Company shall vest in
the Trustee, or in one or more investment managers appointed under the terms of
the Trust Agreement from time to time by action of the Benefits Committee,
responsibility for the management and control of the Trust Fund. In the event
the Benefits Committee appoints any such investment manager, the Trustee shall
not be liable for the acts or omissions of the investment manager or have any
responsibility to invest or otherwise manage any portion of the Trust Fund
subject to the management and control of the investment manager. The Company
from time to time shall establish a funding policy which is consistent with the
objectives of the Plan and shall communicate it to the Trustee and each
investment manager so that they may coordinate investment policies with such
funding policy. Nothing in this section shall eliminate the responsibility of
Participants for the results of investment elections that are within their
control, as provided in Article 8.

10.2 EMPLOYER CONTRIBUTIONS

Each Employer shall make the contributions to the Trust Fund that are required
of it under the terms of this Plan, subject to the right of the Company to
discontinue the Plan.

10.3 NONREVERSION

Anything in this Plan to the contrary notwithstanding, it shall be impossible at
any time for the contributions of the Company (or any Employer) or any part of
the Trust Fund to revert to the Company, Affiliate, or Associated Company or to
be used for or diverted to any purpose other than the exclusive benefit of
Participants or their Beneficiaries, except that--

(a)      if all or a portion of any contribution is made by an Employer by a
         mistake of fact, upon written request to the Trustee, such contribution
         or such portion (less any investment losses attributable thereto) and
         any increment thereon shall be returned to the Employer within one year
         after the date of payment; and

(b)      in the event that a deduction for any contributions made by the
         Employer is disallowed by the Internal Revenue Service in any Plan
         Year, then that portion of the





                                       44


         Employer contribution (less any investment losses attributable thereto)
         that is not deductible shall be returned to the Employer within one
         year from the date of receipt of notice by the Internal Revenue Service
         of the disallowance of the deduction.





                                       45


ARTICLE 11. ADMINISTRATION

11.1 THE BENEFITS COMMITTEE

The Plan shall be administered by a Benefits Committee appointed by the Board of
Directors. The Benefits Committee shall be composed of as many members as the
Board may appoint from time to time, but not fewer than three members, and shall
hold office at the pleasure of the Board. Such members may, but need not, be
Employees of the Company.

Any member of the Benefits Committee may resign by delivering a written
resignation to the Board and to the Benefits Committee Secretary with 30 days'
advance notice. Such resignation shall be effective no earlier than the date of
the written notice.

Vacancies in the Benefits Committee arising by resignation, death, removal or
otherwise, shall be filled by the Board.

11.2 COMPENSATION AND EXPENSES

The members of the Benefits Committee shall serve without compensation for
services as a member of the Benefits Committee. Any member of the Benefits
Committee may receive reimbursement by the Company of expenses properly and
actually incurred in the performance of duties as a Benefits Committee member.

All administrative expenses of the Plan shall be paid out of Plan assets if not
paid directly by the Company. Such expenses shall include any expenses incident
to the functioning of the Benefits Committee and the Trustee, including, but not
limited to, fees of the Plan's accountants, outside counsel and other
specialists, Trustee's fees, asset management fees, and other costs of
administering the Plan.

11.3 MANNER OF ACTION

A majority of the members of the Benefits Committee at the time in office shall
constitute a quorum for the transaction of business. All resolutions adopted,
and other actions taken by the Benefits Committee at any meeting shall be by the
vote of a majority of those present at any such meeting. Upon the unanimous
written consent of the members at the time in office, action of the Benefits
Committee may be taken otherwise than at a meeting.

11.4 CHAIRMAN, SECRETARY, AND EMPLOYMENT OF SPECIALISTS

The members of the Benefits Committee shall elect one of their number as
Chairman and shall elect a Secretary who may, but need not, be a member of the
Benefits Committee. They may authorize one or more of their number or any agent
to execute or deliver any instrument or instruments on their behalf, and may
employ such counsel, auditors, and other specialists and such clerical,
actuarial and other services as they may require in carrying out the provisions
of the Plan.




                                       46


11.5 SUBCOMMITTEES

The Benefits Committee may appoint one or more subcommittees and delegate such
of its power and duties as it deems desirable to any such subcommittee, in which
case every reference herein made to the Benefits Committee shall be deemed to
mean or include the subcommittees as to matters within their jurisdiction. The
members of any such subcommittee shall consist of such officers or other
Employees of the Company and such other persons as the Benefits Committee may
appoint.

11.6 OTHER AGENTS

The Benefits Committee may also appoint one or more persons or agents to aid it
in carrying out its duties as Plan administrator. The Benefits Committee may
delegate such of its powers and duties as it deems desirable to such persons or
agents.

11.7 RECORDS

All resolutions, proceedings, acts and determinations of the Benefits Committee
shall be recorded under the Secretary's supervision. All such records, together
with such documents and instruments as may be necessary for the administration
of the Plan, shall be preserved in the custody of the Secretary.

11.8 RULES

Subject to the limitations contained in the Plan, the Benefits Committee shall
be empowered from time to time in its discretion to adopt by-laws and establish
rules for the conduct of its affairs and the exercise of the duties imposed upon
it under the Plan.

11.9 BENEFITS COMMITTEE'S POWERS AND DUTIES

The Benefits Committee shall have responsibility for the general administration
of the Plan and for carrying out its provisions. The Benefits Committee shall
have such powers and duties as may be necessary to discharge its functions
including, but not limited to, the following:

(a)      to construe and interpret the Plan, to decide all questions of
         eligibility and determine the amount, manner and time of payment of any
         benefits hereunder;

(b)      to make a determination as to the right of any person to an allocation,
         and the amount thereof;

(c)      to obtain from the Employees and Employers such information as shall be
         necessary for the proper administration of the Plan and, when
         appropriate, to furnish such information promptly to the Trustees or
         other persons entitled thereto;

(d)      to prepare and distribute, in such manner as the Company determines to
         be appropriate, information explaining the Plan;




                                       47


(e)      to establish and maintain such accounts in the name of each Participant
         as are necessary;

(f)      to instruct the Trustee with respect to the payment of benefits
         hereunder;

(g)      to provide for any required bonding of fiduciaries and other persons
         who may from time to time handle Plan assets;

(h)      to prepare and file any reports required by ERISA;

(i)      to engage an independent public accountant to conduct such examinations
         and to render such opinions as may be required by ERISA;

(j)      to allocate contributions and Trust Fund gains or losses to the
         Accounts of Participants; and

(k)      to correct any mistakes and cure any defects in the administration of
         the Plan.

11.10 INVESTMENT RESPONSIBILITIES

The Benefits Committee shall have the authority and responsibility to direct the
Trustee with respect to the investment and management of the Trust Fund. Except
as otherwise provided in ERISA, the Benefits Committee may delegate such
authority and responsibility to direct the Trustee to any person who
acknowledges in writing that it is a fiduciary with respect to the Plan and who
provides the Benefits Committee with a written affirmation that it is qualified
to act as an investment manager within the meaning of ERISA. If the Benefits
Committee delegates to an investment manager the authority and responsibility to
so direct the Trustee, such investment manager, and not the Benefits Committee
or the Trustee, shall have sole responsibility for the investment and management
of so much of the Trust Fund as has been entrusted to his or her management and
control, and, except to the extent otherwise required by ERISA, such delegation
shall relieve the Benefits Committee and the members thereof of all duties and
responsibilities with respect to the authority and responsibility so delegated.

The Benefits Committee may relinquish to the Trustee the Benefits Committee's
power to direct the Trustee with respect to the investment and management of the
Trust Fund. In the event the Benefits Committee so relinquishes said power to
the Trustee and the Trustee accepts such responsibility in writing, the Trustee
shall have sole and exclusive power and responsibility with respect to the
investment and management of the Trust Fund. The Benefits Committee may regain
the power so relinquished by appropriate Benefits Committee action and notice to
the Trustee.

Nothing in this section shall eliminate the responsibility of Participants for
the results of investment elections that are within their control, as provided
in Article 8.





                                       48


11.11 BENEFITS COMMITTEE'S DECISIONS CONCLUSIVE

Benefits under this Plan shall be paid only if the Benefits Committee decides in
its discretion that the applicant is entitled to them. The Benefits Committee
shall have the exclusive right and discretionary authority to interpret the
terms and provisions of the Plan and to resolve all questions arising
thereunder, including, without limitation, the right to resolve and remedy
ambiguities, inconsistencies, or omissions in the Plan; provided, however, that
the construction necessary for the Plan to conform to the Code shall in all
cases control. The Benefits Committee shall endeavor to act in such a way as not
to discriminate in favor of any class of Employees, Participants, or other
persons. Any and all disputes with respect to the Plan that may arise involving
Participants, Beneficiaries, or alternate payees shall be referred to the
Benefits Committee, and its decisions shall be final, conclusive, and binding.
All findings of fact, interpretations, determinations, and decisions of the
Benefits Committee in respect of any matter or question arising under the Plan
shall be final, conclusive, and binding upon all persons, including, without
limitation, Employees, Participants, Beneficiaries, alternate payees, and any
and all other persons having, or claiming to have, any interest in or under the
Plan and shall be given the maximum possible deference allowed by law.

11.12 INDEMNITY

The Company shall indemnify each member of the Benefits Committee (which, for
purposes of this section, includes any Employee to whom the Benefits Committee
has delegated fiduciary or other duties) against any and all claims, losses,
damages, expenses, including counsel fees, incurred by the member and any
liability, including any amounts paid in settlement with the Company's approval,
arising from the member's or the Company's action or failure to act, except when
the same is judicially determined to be attributable to the gross negligence or
willful misconduct of such member. The right of indemnity described in the
preceding sentence shall be conditioned upon--

(a)      the timely receipt of notice by the Company of any claim asserted
         against the member, which notice, in the event of a lawsuit shall be
         given within 90 days after receipt by the member of the complaint; and

(b)      the receipt by the Company of an offer from the member of an
         opportunity to participate in the settlement or defense of such claim.

11.13 FIDUCIARIES

The fiduciaries named in this Article shall have only those specific powers,
duties, responsibilities and obligations as are specifically given them under
this Plan or the Trust Agreement. The Employers shall have the sole
responsibility for making the contributions under the Plan. Except as provided
in section 12.1, the Company shall have the sole authority to amend or
terminate, in whole or in part, this Plan or the Trust Agreement and to appoint
or remove the Trustee. The Benefits Committee shall be the Named Fiduciary under
the Plan and shall have the sole responsibility for the administration of this
Plan. The officers and





                                       49


Employees of the Company shall have the responsibility of implementing the Plan
and carrying out its provisions as the Benefits Committee shall direct. Except
as provided under ERISA with respect to investment and elections of Participants
allowed under Article 8, the Benefits Committee, the Trustee, and any investment
manager shall have the sole responsibility for the administration of the Trust
Fund and the management of the assets held under the Trust Agreement. A
fiduciary may rely upon any direction, information or action of another
fiduciary as being proper under this Plan or the Trust Agreement, and is not
required under this Plan or the Trust Agreement to inquire into the propriety of
any such direction, information or action. It is intended under this Plan and
the Trust Agreement that each fiduciary shall be responsible for the proper
exercise of that fiduciary's own powers, duties, responsibilities and
obligations under this Plan and the Trust Agreement and shall not be responsible
for any act or failure to act of another fiduciary. No fiduciary guarantees the
Trust Fund in any manner against investment loss or depreciation in asset value.
Any party may serve in more than one fiduciary capacity with respect to the Plan
or the Trust Agreement.

11.14 NOTICE OF ADDRESS

For purposes of distributing benefits, the Benefits Committee may rely upon the
address of record of the Participant, Beneficiary or other payee on file with
the Benefits Committee. Each person entitled to benefits from the Plan must file
with the Benefits Committee, in writing, each change of post office address. Any
communication, statement or notice addressed to such a person at his or her
latest reported post office address shall be binding upon that person for all
purposes of the Plan, and neither the Benefits Committee nor the Company or any
Trustee shall be obliged to search for or ascertain the person's whereabouts.

11.15 DATA

All persons entitled to benefits from the Plan must furnish to the Benefits
Committee such documents, evidence, or information, including information
concerning marital status, as the Benefits Committee considers necessary or
desirable for the purpose of administering the Plan. It is an express condition
of this Plan that each such person must furnish such information and sign such
documents as the Benefits Committee may require before any benefits become
payable from the Plan. The Benefits Committee shall be entitled to distribute
benefits to a nonspouse Beneficiary in reliance upon the signed statement of the
Participant that the Participant is unmarried without any further liability to a
spouse if such statement is false.

11.16 NONALIENATION

(a)      Plan benefits may not be assigned unless the Plan authorizes a specific
         exception to this general rule. Accordingly, except as permitted by the
         Plan in accordance with Code section 401(a)(13) and ERISA section
         206(d) with respect to assignments to alternate payees under qualified
         domestic relations orders, no benefit payable at any time under the
         Plan shall be subject to the debts or liabilities of a Participant or
         his or her Beneficiary, and any attempt to alienate, sell, transfer,
         assign, pledge, or





                                       50


         otherwise encumber any such benefit, whether presently or thereafter
         payable, shall be void. Effective as of August 5, 1997, the Plan may
         offset payments described in a judgment, order, decree, or settlement
         agreement relating to a breach of fiduciary duty or criminal act
         against the Plan, as further described in Code section 401(a)(13).
         Subject to the foregoing exceptions, no benefit under the Plan shall be
         subject in any manner to attachment, garnishment, or encumbrance of any
         kind.

(b)      Assignments of Plan benefits may be made in accordance with the
         following specific exception for qualified domestic relations orders.
         Pursuant to procedures established by the Benefits Committee that are
         consistent with Code section 414(p) (including procedures requiring
         prompt notification of the affected Participant and each alternate
         payee of the Plan's receipt of a domestic relations order and its
         procedures for determining the qualified status of such order),
         judicial orders for purposes of enforcing family support obligations or
         pertaining to domestic relations (which orders do not alter the amount,
         timing or form of benefit other than to have it commence at the
         earliest permissible date) shall be honored by the Plan if the Benefits
         Committee determines that they constitute qualified domestic relations
         orders.

         (1)      Except as may otherwise be required by Department of Labor
                  regulations, a qualified domestic relations order may not
                  require a retroactive transfer of all or part of a
                  Participant's Account to or from the benefit of an alternate
                  payee without permitting an appropriate adjustment for
                  earnings and investment gains or losses that have occurred in
                  the interim, nor shall such orders require the Plan to provide
                  loans, self-directed investment elections, or other rights to
                  alternate payees that are not available to Beneficiaries
                  generally.

         (2)      To the full extent permitted by Code section 414(p)(10) and by
                  the terms of a qualified domestic relations order, amounts
                  assigned to an alternate payee may be paid as soon as possible
                  in a lump sum, notwithstanding the age, financial hardship,
                  employment status, or other factors affecting the ability of
                  the Participant to make a withdrawal or otherwise receive a
                  distribution of balances to the Participant's credit under the
                  Plan. In cases where such full and prompt payment of amounts
                  assigned to an alternate payee will not be made, the assigned
                  amounts shall be transferred within a reasonable time to the
                  Investment Funds selected by the alternate payee or to the
                  Schwab money market fund if the alternate payee does not make
                  a valid election within a reasonable time, as determined by
                  the Benefits Committee.

11.17 INCOMPETENCY

Every person receiving or claiming benefits under the Plan shall be conclusively
presumed to be mentally competent and of age until the date on which the
Benefits Committee receives a written notice, in a form and manner acceptable to
the Benefits Committee, that such person






                                       51


is incompetent or a minor, for whom a guardian or other person legally vested
with the care of the person or estate has been appointed; provided, however,
that if the Benefits Committee shall find that any person to whom a benefit is
payable under the Plan is unable to care for his or her affairs because of
incompetency, or is a minor, any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal representative) may be paid to
the spouse, a child, a parent or a brother or sister, or to any person or
institution deemed by the Benefits Committee to have incurred expense for such
person otherwise entitled to payment. To the extent permitted by law, any such
payment so made shall be a complete discharge of liability therefor under the
Plan.

In the event a guardian of the estate of any person receiving or claiming
benefits under the Plan shall be appointed by a court of competent jurisdiction,
benefit payments may be made to such guardian, provided that proper proof of
appointment and continuing qualification is furnished in a form and manner
acceptable to the Benefits Committee. To the extent permitted by law, any such
payment so made shall be a complete discharge of any liability therefor under
the Plan.

11.18 MISSING PERSONS

If the Benefits Committee is unable, within two years after the Participant's
distribution becomes due, to make payment because the identity or whereabouts of
the Participant or Beneficiary cannot be ascertained, the Benefits Committee may
mail a notice by registered mail to the last known address of such person
stating that unless such person makes written reply to the Benefits Committee
within 60 days from the mailing of such notice, the Benefits Committee shall
direct that the Participant's Account shall be forfeited and all further
benefits with respect to such person shall be discontinued and all liability for
the payment thereof shall terminate. In the event of the subsequent reappearance
of the Participant or Beneficiary prior to termination of the Plan, the benefits
which were due and payable and which such person failed to receive shall be paid
in a single sum, and any future benefits due such person shall be reinstated in
full. The amount payable to such person shall be equal to the benefit forfeited,
without interest on such amount for the period commencing on the date such
benefit was forfeited and ending on the date of the claim. If the Participant's
Account is reinstated under this section and available forfeitures are
insufficient to cover the reinstatement, then the Company shall contribute to
the Trust an amount which shall equal the reinstatement described above, without
interest or earnings for the period between such reallocation and the
reappearance.

11.19 APPEALS FROM DENIAL OF CLAIMS

(a)      If a Participant, Beneficiary or alternate payees (each of which may be
         "Claimant") believes he or she is entitled to a benefit, or a benefit
         different from the one received, then the Claimant may file a claim for
         the benefit by writing a letter to the Benefits Committee or its
         authorized delegate. If any claim for benefits under the Plan is wholly
         or partially denied, the Claimant shall be given notice in writing of
         such denial within 90 days after receipt of the claim or within an
         additional 90 days if





                                       52


         special circumstances require an extension of time, and written notice
         of the extension shall be furnished to the Claimant. If special
         circumstances justify extending the claim period up to an additional 90
         days, the Claimant shall be given written notice of this extension
         within the original 90-day period, and such notice shall set forth the
         special circumstances and the date a decision is expected.

(b)      A notice of the denial, written in a manner calculated to be understood
         by the Claimant, shall set forth the following information:

         (1)      the specific reason or reasons for the denial;

         (2)      specific reference to pertinent Plan provisions on which
                  denial is based;

         (3)      a description of any additional material or information
                  necessary for the claimant to perfect the claim and an
                  explanation of why such material or information is necessary;

         (4)      an explanation that a full and fair review by the Benefits
                  Committee of the decision denying the claim may be requested
                  by the claimant or the claimant's authorized representative by
                  filing with the Benefits Committee, within 60 days after such
                  notice has been received, a written request for such review;
                  and

(c)      If such request is so filed, the claimant or the claimant's authorized
         representative may review pertinent documents and submit issues and
         comments in writing within the same 60-day period.

(d)      The decision of the Benefits Committee upon review shall be made
         promptly, and not later than 60 days after the Benefits Committee's
         receipt of the request for review, unless special circumstances require
         an extension of time for processing, in which case the claimant shall
         be so notified and a decision shall be rendered as soon as possible,
         but not later than 120 days after receipt of the request for review. If
         the claim is denied, wholly or in part, the claimant shall be given a
         copy of the decision promptly. The decision shall be in writing and
         shall include specific reasons for the denial, specific references to
         the pertinent Plan provisions on which the denial is based and shall be
         written in a manner calculated to be understood by the claimant.

(e)      All decisions made under the procedure set out in this section shall be
         final, and there shall be no further right of appeal. No person may
         initiate a lawsuit before fully pursuing the procedures set out in this
         section, including appeal. In addition, no legal action with respect to
         a claim for benefits may be initiated after the later of--

         (1)      365 days after receiving the written response of the Benefits
                  Committee to the Claimant's request for review pursuant to
                  subsection (d); or




                                       53


         (2)      two years after the Claimant's original claim for benefits
                  pursuant to subsection (a).





                                       54


ARTICLE 12. AMENDMENT AND TERMINATION

12.1 AUTHORITY TO AMEND OR TERMINATE

The Company expects the Plan to be permanent and continue indefinitely, but
since future conditions affecting the Company cannot be anticipated or foreseen,
the Company must necessarily and does hereby reserve the right to amend, modify
or terminate the Plan at any time by action of its Board of Directors. The
Benefits Committee may make any modifications or amendments to the Plan that are
necessary or appropriate to meet the requirements of ERISA, the Code or any
other law. The Benefits Committee may also make any technical or clerical
amendments which do not significantly increase or decrease benefit levels or
costs. No amendment of the Plan shall cause any part of the Trust Fund to be
used for, or diverted to, purposes other than for the exclusive benefit of the
Participants or their Beneficiaries covered by the Plan. Plan amendments may not
decrease the Account balance of any Participant. In addition, neither the
Company nor the Benefits Committee may, through the exercise of discretion or by
Plan amendment, deny a Participant a benefit or right protected under Code
section 411(d)(6) and the related regulations to which the Participant is
otherwise entitled.

Notwithstanding the preceding paragraph of this section 12.1, Oceanic
Exploration Company is hereby authorized to amend or modify the Plan solely with
respect to the employees of Oceanic Exploration Company and its Affiliates and
their participation under the Plan, at any time by action of the Board of
Directors of Oceanic Exploration Company.

12.2 DISTRIBUTION ON TERMINATION

Upon termination of the Plan, in whole or in part, or upon complete
discontinuance of contributions to the Plan by the Company, the value of the
proportionate interest in the Trust Fund of each Participant affected by such
termination having an interest in the Trust Fund shall be determined by the
Benefits Committee as of the date of such termination or discontinuance. The
Accounts of such Participants shall be fully vested and nonforfeitable.
Thereafter, distribution shall be made to such Participants as directed by the
Benefits Committee.

Upon the partial termination of the Plan, the Benefits Committee shall determine
the timing of a distribution of the balance of the affected Participants'
Accounts.

12.3 CORPORATE REORGANIZATIONS

In the event the Company is dissolved or liquidated or shall by appropriate
legal proceedings be adjudged a bankrupt, or in the event judicial proceedings
of any kind result in the involuntary dissolution of the Company, the Plan shall
be terminated. The merger, consolidation or reorganization of the Company, or
the sale of the Company or of all or substantially all of its assets or stock,
shall not terminate the Plan if there is delivery to the Company, by its
successor or by the purchaser of all or substantially all of its stock or
assets, a written instrument requesting that it be substituted for the Company
and agreeing to





                                       55


perform all the provisions hereof which the Company is required to perform
hereunder. Upon the receipt of said instrument, with the approval of the
Company, the successor or the purchaser shall be substituted for the Company
herein, and the Company shall be relieved and released from all obligations of
any kind, character or description herein or in any trust agreement.

12.4 PLAN MERGER OR TRANSFER

This Plan shall not merge or consolidate with, or transfer assets and
liabilities to, or accept a transfer from, any other employee benefit plan
unless each Participant in this Plan will (if the Plan had then terminated)
receive a benefit immediately after the merger, consolidation or transfer which
is not less than the benefit the Participant would have been entitled to receive
immediately before the merger, consolidation or transfer of assets (if this Plan
had then terminated).





                                       56


ARTICLE 13. TOP-HEAVY PROVISIONS

13.1 APPLICATION

The provisions of this Article shall be interpreted and administered in
accordance with the requirements of Code section 416 and related Treasury
regulations. Because the Plan is a multiple employer plan, as described in Code
section 413(c), the top-heavy requirements of Code section 416 and related
Treasury regulations apply to each controlled group Employer separately to the
extent that benefits under the Plan are provided to Employees with respect to
service for that controlled group Employer. For purposes of this Article, the
term "Employer" includes an Employer under the Plan and only those Affiliates of
such entity that must be aggregated and treated as a single employer for
purposes of Code section 414 and related Treasury regulations.

If, as of the Determination Date in any Plan Year, the sum of the Accounts of
Employees who are Key Employees of a controlled group Employer for such Plan
Year exceeds 60 percent of the sum of the Accounts of all Employees of the
controlled group Employer and their Beneficiaries or the Plan is part of a
Top-Heavy Group, then the following provisions under this Article shall apply
for such Plan Year. The foregoing notwithstanding, the provisions of this
Article shall not apply to the Plan in any Plan Year during which it is part of
an Aggregation Group (as defined in Plan section 13.3(a)) with respect to a
controlled group Employer, whether or not it is top-heavy as a single plan,
unless the Aggregation Group of which it is a part is top-heavy with respect to
the controlled group Employer in such Plan Year.

The "Determination Date," which is the date for determining the applicability of
this Article, is--

(a)      for the first Plan Year beginning after 1983, the last day of the Plan
         Year; and

(b)      for any other Plan Year, the last day of the preceding Plan Year.

13.2 KEY EMPLOYEES

(a)      For purposes of this Article, the term "Key Employee" means any
         Employee or former Employee (and the Beneficiary of such an Employee)
         who at any time during the Plan Year in which a determination of
         top-heaviness is made or any of the four preceding Plan Years is--

         (1)      an officer of the controlled group Employer whose Section 415
                  Compensation during the relevant Plan Year exceeded 50 percent
                  of the dollar limitation in effect under Code section
                  415(b)(1)(A); provided, however, that no more than the lesser
                  of--




                                       57


                  (A)      50 Employees; or

                  (B)      the greater of three Employee or ten percent of all
                           Employees

                  shall be treated as officers;

         (2)      one of the ten Employees having Section 415 Compensation for
                  the relevant Plan Year in excess of the dollar limitation in
                  effect under Code section 415(c)(1)(A) and owning (or
                  considered as owning within the meaning of Code section 318,
                  as modified by Code section 416(i)(1)(B)) the largest
                  interests in the controlled group Employer; provided, however,
                  that if two Employees have the same interest in the controlled
                  group Employer, then the Employee with the greater Section 415
                  Compensation shall be treated as having the larger interest;

         (3)      a 5-percent owner of the controlled group Employer; or

         (4)      a 1-percent owner of the controlled group Employer having
                  annual Section 415 Compensation of more than $150,000.

(b)      A 5-percent owner is any Employee who owns (or is considered as owning
         within the meaning of Code section 318, as modified by Code section
         416(i)(1)(B)) more than five percent of the value of the outstanding
         stock of the of the Employer or stock possessing more than five percent
         of the total combined voting power of all stock of the Employer.
         Similarly, a 1-percent owner is any Employee who owns (or is considered
         as owning within the meaning of Code section 318, as modified by Code
         section 416(i)(1)(B)) more than one percent of the value of the
         outstanding stock of the of the Employer or stock possessing more than
         one percent of the total combined voting power of all stock of the
         Employer. For purposes of determining five-percent and 1-percent
         owners, the aggregation and other rules of subsections (b), (c) and (m)
         of Code section 414 do not apply.

(c)      If an Employee who has not terminated employment ceases to be a Key
         Employee, such Employee's Account balance or accrued benefit shall be
         disregarded under the top-heavy plan computation for any Plan Year
         following the last Plan Year for which the individual was treated as a
         Key Employee. The Account balance or accrued benefit of any Employee or
         former Employee, who has not performed any services for the controlled
         group Employer at any time during the five-year period ending on the
         Determination Date, shall not be taken into account to determine
         whether the Plan or Aggregation Group is top-heavy.

A "non-Key Employee" means any Participant who is not a Key Employee, but who is
an Employee on the last day of the Plan Year.




                                       58


13.3 TOP-HEAVY GROUP

For purposes of determining whether the Plan is a part of a Top-Heavy Group, the
following rules shall apply:

(a)      AGGREGATION GROUP. The Aggregation Group shall include any plan
         maintained by the controlled group Employer which covers a Key Employee
         and any other plan which enables a plan covering a Key Employee to meet
         the requirements of Code section 401(a)(4) or 410.

(b)      TOP-HEAVY GROUP. An Aggregation Group is a Top-Heavy Group if the sum
         of the account balances of Key Employees under all defined contribution
         plans included in the group and the present value of the accumulated
         accrued benefits for Key Employees under all defined benefit plans in
         the group exceeds 60 percent of a similar sum determined for all
         Employees and their Beneficiaries under all such plans in the group.
         The present value of accrued benefits under defined benefit plans and
         the account balances under defined contribution plans shall be
         determined separately as of each plan's determination date. For
         purposes of determining whether an Aggregation Group is a Top-Heavy
         Group, the present value of accrued benefits under all defined benefit
         plans in the Aggregation Group shall be determined using a single set
         of actuarial assumptions, as defined in such defined benefit plans. The
         determination of whether the Aggregation Group is a Top-Heavy Group
         shall be made using each plan's results as of that plan's determination
         date which falls within the calendar year. In any Plan Year, in testing
         for top-heaviness under this Article, the controlled group Employer
         may, in its discretion, take into account accumulated accrued benefits
         and account balances in any other plan maintained by it, so long as
         such expanded Aggregation Group continues to meet the requirements of
         Code sections 401(a)(4) and 410.

13.4 ADDITIONAL RULES

In determining the present value of the accrued benefits under a defined benefit
plan and the sum of the account balances under a defined contribution plan,
Employer contributions and voluntary Employee contributions shall be taken into
account and any rollover contribution or similar transaction initiated by the
Employee, which results in a transfer to this Plan, shall not be taken into
account. The present value of the accrued benefits in a defined benefit plan and
the account balance in a defined contribution plan shall include any amount
distributed to an Employee or Beneficiary within the five-year period ending on
that plan's determination date.

The present value of any Employee's accrued benefit under any defined benefit
plan as of any determination date shall be calculated:

(a)      as of the most recent Actuarial Valuation Date which is within a
         12-month period ending on the Determination Date;




                                       59


(b)      as if employment terminated as of such valuation date; and

(c)      without regard to the automatic preretirement survivor annuity benefit
         or any other nonproportional subsidy.

The term "Actuarial Valuation Date" shall mean the valuation date used for
computing plan costs for minimum funding.

13.5 COMBINED LIMIT FOR KEY EMPLOYEES

If the Plan is determined to be top-heavy in any Plan Year, then the combined
limits of Code section 415(e) and section 6.4 of the Plan shall be applied in
accordance with Code section 416(h)(1) by substituting "1.0" for "1.25" in
computing the defined benefit fraction and the defined contribution fraction
under paragraphs (2)(B) and (3)(B) of Code section 415(e). Notwithstanding the
foregoing, the limitations described in this section shall not apply to Plan
Years beginning on or after January 1, 2000.

13.6 MINIMUM CONTRIBUTION

If this Plan is determined to be top-heavy in any Plan Year, then the aggregate
contributions to be made by the Employer on behalf of each non-Key Employee for
the Plan Year (excluding Pretax Deferrals or other Employer contributions
attributable to a salary reduction arrangement) shall not be less than three
percent of the Participant's Section 415 Compensation for such year (or such
lesser percentage as represents the maximum percentage of Section 415
Compensation contributed on behalf of a Key Employee for the Plan Year), as
determined under Code section 416(c).

13.7 TOP-HEAVY VESTING

If this Plan is determined to be top-heavy in any Plan Year, the vesting
schedule specified in section 7.1 shall continue to apply.





                                       60


ARTICLE 14. MISCELLANEOUS PROVISIONS

14.1 EMPLOYMENT RIGHTS

Nothing contained in this Plan or any modification of the Plan or act done in
pursuance hereof shall be construed as giving any person any legal or equitable
right against the Company, Affiliate, or Associated Company, the Trustee or the
Trust Fund, unless specifically provided herein, or as giving any person a right
to be retained in the employ of the Company, Affiliate, or Associated Company.
All Participants shall remain subject to assignment, reassignment, promotion,
transfer, layoff, reduction, suspension and discharge to the same extent as if
this Plan had never been established.

14.2 NO EXAMINATION OR ACCOUNTING

Neither this Plan nor any action taken thereunder shall be construed as giving
any person the right to an accounting or to examine the books or affairs of the
Company, Affiliate, or Associated Company.

14.3 INVESTMENT RISK

The Participants and their Beneficiaries shall assume all risks in connection
with any decrease in the value of any assets or funds which may be invested or
reinvested in the Trust Fund which supports this Plan.

14.4 SEVERABILITY

In the event any provision of this Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of
this Plan, and it shall be construed and enforced as if such illegal or invalid
provision had never been inserted herein.

14.5 COUNTERPARTS

This Plan may be executed in any number of counterparts, each of which shall be
deemed to be an original. All the counterparts shall constitute but one and the
same instrument and may be sufficiently evidenced by any one counterpart.

14.6 SERVICE OF LEGAL PROCESS

The Secretary of the Company is hereby designated agent of the Plan for the
purpose of receiving service of summons, subpoena or other legal process.

14.7 HEADINGS OF ARTICLES AND SECTIONS

The headings of sections and subsections are included solely for convenience of
reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.

14.8 APPLICABLE LAW

Except to the extent superseded or preempted by ERISA, the Plan and all rights
hereunder shall be governed, construed and administered in accordance with the
laws of the State of Colorado with the exception that any Trust Agreement which
may constitute a part of the





                                       61


Plan may provide that it will be construed and enforced in all respects under
and by the laws of the state in which the Trustee thereunder is located.

                               * * * * * * * * * *




                                       62

IN WITNESS WHEREOF, Cordillera Corporation has caused this restated Plan to be
executed this 7th day of December, 2001, to be effective as indicated in section
1.3.



                                           CORDILLERA CORPORATION


ATTEST:
                                           By   /s/ John E. Jones
                                               --------------------------------
                                               John E. Jones
                                               Its:  Executive Vice President
By  /s/ Lettie S. Flower
    --------------------------------
    Lettie S. Flower
    Its:  Assistant Secretary                              (Corporate Seal)




                                       63



APPENDIX A. SPECIAL RULES RELATED TO GUARANTEED INVESTMENT CONTRACT OF EXECUTIVE
LIFE INSURANCE COMPANY OF CALIFORNIA

(1)      APPLICABILITY. This appendix supplements the Cordillera and Affiliated
         Companies 401(k) Deferred Compensation Plan (the "Plan") and provides
         the special rules applicable to amounts held in the Trust Fund and
         previously invested through Fund A (as defined by the Plan as in effect
         prior to January 1, 2001) in the guaranteed investment contract issued
         by Executive Life Insurance Company of California (the "Executive Life
         GIC"). As explained herein, this appendix is generally effective April
         1, 1991.

(2)      BACKGROUND. In April, 1991, the California State Insurance Commission
         took court-supervised conservatorship of Executive Life Insurance
         Company. The Benefits Committee, in response to this extraordinary
         event and in the exercise of its duties and responsibilities under the
         Plan, took prompt action to protect the interests of Participants and
         Beneficiaries. By way of documentation and not limitation, these
         actions are reflected in this appendix. Nothing in this appendix shall
         be construed or interpreted to limit or restrict the authority of the
         Benefits Committee to take any further action concerning the Executive
         Life GIC that it deems appropriate in the interest of Participants and
         Beneficiaries.

(3)      Action Steps. In response to the court appointment of the California
         Insurance Commission as conservator of Executive Life Insurance Company
         and to protect the interests of Participants and Beneficiaries, the
         following steps were implemented:

         (a)      All Plan transactions, including valuation of Accounts,
                  through and as of the March 31, 1991 Valuation Date were
                  completed under the terms of the Plan, without regard to
                  events subsequent to that Valuation Date.

         (b)      As of April 1, 1991, the Executive Life GIC is segregated from
                  the other assets of Fund A. No new contributions or investment
                  transfers are allocated to the segregated Executive Life GIC.

         (c)      A proportionate allocation of the Executive Life GIC
                  investment is identified for each Account invested in Fund A
                  as of April 1, 1991.

         (d)      A temporary hold is placed on each such proportionate
                  allocation in the Executive Life GIC. Until the status of the
                  Executive Life GIC under the court-supervised conservatorship
                  is resolved, the proportionate allocation shall not be:

                  (1)      transferable to other Investment Funds pursuant to
                           Article 8;

                  (2)      available for hardship withdrawals pursuant to Plan
                           section 7.5;




                                       64


                  (3)      available for distribution under the Plan, including
                           distributions specified under Plan section 7.2 on
                           account of Separation from Service, Plan section 7.3
                           on account of the Participant's death or under Plan
                           section 7.4 relating to the minimum distribution
                           rules.

         (e)      As of April 1, 1991, the investment return for the
                  nonsegregated assets in Fund A does not include investment
                  results related to the Executive Life GIC.

         (f)      The Plan was amended, effective as of April 1, 1991, to
                  provide that distributions on account of Separation from
                  Service or death are valued as of the Valuation Date following
                  the Separation from Service or death or, if the distribution
                  is deferred, as of a later Valuation Date as further described
                  in Plan sections 7.2 and 7.3.

         (g)      The temporary hold described above in section 3(d) of this
                  appendix shall be lifted as follows. As Executive Life GIC
                  settlement proceeds become available to the plan in liquid
                  form following the reorganization of Executive Life pursuant
                  to its court-supervised conservatorship, the Benefits
                  Committee shall:

                  (1)      cause each affected Participant's proportionate share
                           in such proceeds to be determined based on the value
                           of the Participant's interest relative to the value
                           of the interest of all Participants in the Executive
                           Life GIC as of April 1, 1991; and

                  (2)      provide each affected Participant:

                           (A)      with an election to transfer his or her
                                    share of the available settlement proceeds
                                    to other Investment Funds in the time and
                                    manner prescribed by the Benefits Committee,
                                    and

                           (B)      if eligible, the ability to receive such
                                    settlement proceeds in the form of a
                                    hardship withdrawal, a loan, or a
                                    distribution from the Plan in accordance
                                    with applicable Plan provisions.

         The above process shall be repeated as soon as practicable after each
         occasion on which Executive Life GIC settlement proceeds become
         available to the Plan so that no liquid settlement proceeds will remain
         in the segregated Executive Life GIC that continues to be subject to
         the temporary hold described in section 3(d) of Appendix A. If a
         Participant fails to make a valid election pursuant to paragraph (2)(A)
         above, the Participant's share of available settlement proceeds shall
         be transferred to the Cash Reserves Fund (or, effective April 1, 1997,
         the Schwab money market fund). When the last payment of Executive Life
         GIC settlement proceeds has been received and processed as described
         above, Appendix A shall cease to apply.






                                       65

EX-10.21

                                                                   EXHIBIT 10.21

                      CORDILLERA AND AFFILIATED COMPANIES
                          MONEY PURCHASE PENSION PLAN

                  (Amended and Restated as of January 1, 2001)





CONTENTS

================================================================================

                                                                                                        
      ARTICLE 1. INTRODUCTION                                                                                1
1.1   Restatement of Plan                                                                                    1
1.2   Purpose of the Plan                                                                                    1
1.3   Applicability of the Plan                                                                              1
1.4   Effect of Appendices                                                                                   2

      ARTICLE 2. DEFINITIONS                                                                                 3
2.1   Definitions                                                                                            3
2.2   Gender and Number                                                                                     11
2.3   Requirement to Be in "Written Form"                                                                   11

      ARTICLE 3. PARTICIPATION AND SERVICE                                                                  12
3.1   Date of Participation                                                                                 12
3.2   Duration                                                                                              12
3.3   Transfers                                                                                             12
3.4   Leased Employees                                                                                      12
3.5   Special Provisions for Participants Who Enter the Armed Forces                                        13

      ARTICLE 4. EMPLOYEE CONTRIBUTIONS                                                                     14
4.1   Nature and Amount                                                                                     14

      ARTICLE 5. EMPLOYER AND ROLLOVER CONTRIBUTIONS                                                        15
5.1   Employer Contributions                                                                                15
5.2   Transfer and Crediting of Employer Contributions                                                      15
5.3   Rollovers                                                                                             15

      ARTICLE 6. MAXIMUM CONTRIBUTIONS AND BENEFIT LIMITATIONS                                              18
6.1   Limitation on Annual Addition                                                                         18
6.2   "Annual Addition" Defined                                                                             18
6.3   Excess Annual Additions                                                                               18
6.4   Defined Benefit Plans                                                                                 19
6.5   Deductibility Limitations                                                                             19



                                       i




                                                                                                      
       ARTICLE 7. VESTING AND BENEFITS                                                                    20
7.1    Vesting                                                                                            20
7.2    Forfeiture and Reinstatement of Contingent Interests                                               21
7.3    Benefits Forms, Required Consent, and Payments After Separation From Service                       22
7.4    Death Benefits                                                                                     25
7.5    Minimum Distribution Requirements                                                                  25
7.6    Lump Sums and Other Eligible Rollover Distributions                                                26
7.7    Loans to Participants                                                                              27

       ARTICLE 8. INVESTMENT ELECTIONS                                                                    31
8.1    Investment of New Contributions                                                                    31
8.2    Investment Transfers                                                                               31
8.3    Investment Elections                                                                               31
8.4    Transfer of Assets                                                                                 32
8.5    Participant-Directed Investments                                                                   32

       ARTICLE 9. PARTICIPANT ACCOUNTS AND RECORDS                                                        33
9.1    Accounts and Records                                                                               33
9.2    Valuation Adjustments                                                                              33

       ARTICLE 10. FINANCING                                                                              34
10.1   Funding of the Plan                                                                                34
10.2   Employer Contributions                                                                             34
10.3   Nonreversion                                                                                       34

       ARTICLE 11. ADMINISTRATION                                                                         35
11.1   The Benefits Committee                                                                             35
11.2   Compensation and Expenses                                                                          35
11.3   Manner of Action                                                                                   35
11.4   Chairman, Secretary, and Employment of Specialists                                                 35
11.5   Subcommittees                                                                                      36
11.6   Other Agents                                                                                       36
11.7   Records                                                                                            36
11.8   Rules                                                                                              36
11.9   Benefits Committee's Powers and Duties                                                             36
11.10  Investment Responsibilities                                                                        37
11.11  Benefits Committee's Decisions Conclusive                                                          38
11.12  Indemnity                                                                                          38
11.13  Fiduciaries                                                                                        38
11.14  Notice of Address                                                                                  39
11.15  Data                                                                                               39
11.16  Nonalienation                                                                                      39
11.17  Incompetency                                                                                       40



                                       ii



                                                                                                      
11.18  Missing Persons                                                                                    41
11.19  Appeals From Denial of Claims                                                                      41

       ARTICLE 12. AMENDMENT AND TERMINATION                                                              43
12.1   Authority to Amend or Terminate                                                                    43
12.2   Distribution on Termination                                                                        43
12.3   Corporate Reorganizations                                                                          43
12.4   Plan Merger or Transfer                                                                            44

       ARTICLE 13. TOP-HEAVY PROVISIONS                                                                   45
13.1   Application                                                                                        45
13.2   Key Employees                                                                                      45
13.3   Top-Heavy Group                                                                                    46
13.4   Additional Rules                                                                                   47
13.5   Combined Limit for Key Employees                                                                   48
13.6   Minimum Contribution                                                                               48
13.7   Top-Heavy Vesting                                                                                  48

       ARTICLE 14. MISCELLANEOUS PROVISIONS                                                               49
14.1   Employment Rights                                                                                  49
14.2   No Examination or Accounting                                                                       49
14.3   Investment Risk                                                                                    49
14.4   Severability                                                                                       49
14.5   Counterparts                                                                                       49
14.6   Service of Legal Process                                                                           49
14.7   Headings of Articles and Sections                                                                  49
14.8   Applicable Law                                                                                     49

      APPENDIX A. SPECIAL RULES RELATED TO GUARANTEED INVESTMENT
      CONTRACT OF EXECUTIVE LIFE INSURANCE COMPANY OF CALIFORNIA                                          51




                                       iii



ARTICLE 1. INTRODUCTION

1.1 RESTATEMENT OF PLAN

Cordillera Corporation (the "Company") hereby amends and restates the Cordillera
and Affiliated Companies Money Purchase Pension Plan (the "Plan"), effective as
of January 1, 2001.

1.2 PURPOSE OF THE PLAN

This Plan is intended to provide retirement income to Eligible Employees through
regular contributions of the Company. For tax purposes, the Plan is intended to
qualify, and the Trust established pursuant to the related Trust Agreement, is
intended to be exempt from federal income tax, under the pertinent provisions of
the Internal Revenue Code, as amended and in effect from time to time.

1.3 APPLICABILITY OF THE PLAN

The provisions set forth in this document apply only to Employees in the employ
of the Company, Affiliate, or Associated Company on or after January 1, 2001,
except as specifically provided in this document. If a particular provision of
this restatement has an effective date later than January 1, 2001, the relevant
provision of the prior version of the Plan shall continue to apply prior to such
effective date. If a particular provision of this restatement has an effective
date earlier than January 1, 2001, the relevant provision of this restatement
shall supersede the corresponding provision of the prior version of the Plan as
of the earlier effective date.

Notwithstanding any contrary Plan provision, if any modification of ERISA or the
Code (or regulations or rulings thereunder) requires that a conforming Plan
amendment be adopted as of a stated effective date in order for the Plan to
continue to be a qualified plan, this Plan shall be operated in accordance with
such requirements until the date when a conforming Plan amendment is adopted.

Except as otherwise required by rules of Plan qualification or by specific Plan
provisions to the contrary, any Employee who terminated employment before
January 1, 2001 shall remain subject to the terms of the Plan as in effect at
the time of such termination. However, regardless of when an Employee terminates
employment or whether he or she has ever had a termination of employment at all,
if an Employee has an Account balance attributable to an amount transferred
directly to this Plan from another qualified plan pursuant to a plan merger or
any other transaction requiring the other plan's Code section 411(d)(6)
protected benefits to be preserved hereunder, this Plan shall preserve all such
legally protected benefits with respect to such Account balance to the full
extent required by section 411(d)(6) and other applicable laws. This
preservation of section 411(d)(6) protected benefits shall apply notwithstanding
more restrictive rules for optional benefit forms or other Plan rights that may
apply to other Account balances not subject to such protection.


                                       1



1.4 EFFECT OF APPENDICES

This Plan document may be supplemented by various appendices that provide
additional information and, in some cases, override general Plan provisions. In
the event of a conflict between a Plan provision and a provision in an appendix,
the provision in the appendix shall govern with respect to the Employees or
circumstances specified in the appendix, and the Plan provision shall continue
to govern with respect to other Employees or circumstances. The appendices shall
be, by this reference, incorporated into and become a part of this Plan.


                                       2



ARTICLE 2. DEFINITIONS

2.1 DEFINITIONS

Whenever used in the Plan, the following terms shall have the respective
meanings set forth below unless otherwise required by the context in which they
are used:

(a)      "ACCOUNT" means the separate recordkeeping account maintained for each
         Participant which represents his or her total proportionate interest in
         the Trust Fund and which consists of the sum of the following
         subaccounts:

         (1)      "DEDUCTIBLE EMPLOYEE CONTRIBUTIONS ACCOUNT" means the
                  subaccount which evidences the value of Deductible Employee
                  Contributions made by the Participant prior to January 1,
                  1987, as described in section 4.1, including related
                  investment gains and losses of the Trust Fund.

         (2)      "REGULAR ACCOUNT" means the subaccount which evidences the
                  value of Employer Contributions made on behalf of the
                  Participant pursuant to section 5.1, including related
                  investment gains and losses of the Trust Fund.

         (3)      "ROLLOVER ACCOUNT" means the subaccount which evidences the
                  value of Rollover Contributions made by the Employee pursuant
                  to section 5.3, including related investment gains and losses
                  of the Trust Fund.

(b)      "AFFILIATE" means any business entity which is controlled by or under
         common control with the Company, within the meaning of Code sections
         414 and 1563. The determination of control shall be made without
         reference to paragraphs (a)(4) and (e)(3)(C) of Code section 1563, and
         solely for the purposes of applying the limitations of Articles 6 and
         13, the phrase "more than 50 percent" shall be substituted for the
         phrase "at least 80 percent" each place it appears in Code section
         1563(a)(1).

         In addition, to the extent required by Code section 414 and related
         regulations, Affiliate means--

         (1)      any member of an affiliated service group (within the meaning
                  of Code section 414(m)) of which the Company or any Affiliate
                  is a member; and

         (2)      any entity which, pursuant to Code section 414(o) and the
                  regulations thereunder, must be aggregated with the Company or
                  any other Affiliate for plan qualification purposes.

(c)      "ASSOCIATED COMPANY" means any entity that is not an Affiliate, but is
         under common ownership and control with the Company, to the extent of
         20 percent or



                                       3


         more, as determined under rules applicable for purposes of section
         414(c) of the Code.

(d)      "BENEFICIARY" means the person or persons (who may be named
         contingently or successively) designated by a Participant to receive
         the Participant's Account in the event of the Participant's death. Each
         designation shall be in the form prescribed by the Benefits Committee,
         shall be effective only when properly filed in writing with the
         Benefits Committee, and shall revoke all prior designations by the same
         Participant. The designation by a married Participant of someone other
         than the Participant's spouse as a Beneficiary shall be invalid
         unless--

         (1)      the spouse consents to the designation of a specific nonspouse
                  Beneficiary which may not be changed without spousal consent
                  (unless the spousal consent expressly permits the Participant
                  to change Beneficiary designations without further consent by
                  the spouse), and the spouse waives the Qualified Joint and
                  Survivor Annuity in accordance with procedural requirements of
                  the Plan that comply with the rules of Code section 401(a)(11)
                  and 417;

         (2)      the spouse acknowledges the effect of the consent to such
                  Beneficiary designation and, if applicable, the waiver of the
                  Qualified Joint and Survivor Annuity; and

         (3)      the consent and waiver are in a written instrument that is
                  notarized.

         No spousal consent or waiver shall be required if it is established to
         the satisfaction of the Plan representative that it cannot be obtained
         because there is no spouse or because the spouse cannot be located. If
         no Beneficiary is properly designated at the time of the Participant's
         death, or if no person so designated shall survive the Participant, the
         Beneficiary shall be the Participant's spouse, or if the deceased
         Participant has no surviving spouse, the Participant's estate.

(e)      "BENEFITS COMMITTEE" means the Benefits Committee appointed by the
         Board of Directors to administer the Plan in accordance with the
         provisions of Article 11 of this Plan.

(f)      "BOARD OF DIRECTORS" means the Board of Directors of the Company.

(g)      "BREAK IN SERVICE" means, prior to April 1, 1997, any year used in
         measuring Years of Service in which an Employee is not credited with
         more than 500 Hours of Service. However, if an Employee is absent from
         employment due to pregnancy, birth of the Employee's child, adoption of
         a child by the Employee, or child care immediately following such birth
         or adoption, any Hour of Service for which the Employee would have
         received credit (or if not determinable, eight hours for each day of
         absence) during such absence, up to a maximum of 501 Hours of Service,
         shall be credited to the Employee solely to prevent the Employee from
         incurring a


                                       4



         Break in Service. Any such Hours of Service shall be credited for the
         Plan Year in which the absence begins if necessary to prevent a Break
         in Service during that Plan Year and, in all other cases, in the
         immediately following Plan Year.

         Effective April 1, 1997, the term "Break in Service" means a continuous
         period of time of at least 12 months during which the Employee is not
         employed by the Employer. This period of time shall begin on the date
         the Employee retires, quits, or is discharged, or if earlier, the
         12-month anniversary of the date on which the Employee was otherwise
         first absent from service. However, if an Employee is absent from
         employment due to pregnancy, birth of the Employee's child, adoption of
         a child by the Employee, child care immediately following such birth or
         adoption, or, effective as of August 5, 1993, due to leave recognized
         under the Family and Medical Leave Act of 1993, for purposes of
         determining whether an Employee has incurred a Break in Service, the
         Employee will be considered employed for the portion of such absence
         ending on the second anniversary of such Employee's absence from
         employment.

(h)      "CODE" means the Internal Revenue Code of 1986, as from time to time
         amended. Each Code reference in this Plan shall be deemed to include
         reference to any comparable or succeeding statutory provision which
         supplements or replaces such Code reference.

(i)      "COMPANY" means Cordillera Corporation or its successor in interest.

(j)      "COMPENSATION" means, with respect to an Employee for a period
         considered under the Plan, the Employee's full salary and wages from an
         Employer for services rendered, including salary, wages, commissions,
         bonuses, and overtime, and salary reduction amounts under any Code
         section 401(k) cash or deferred arrangement or any cafeteria plan
         maintained by the Company, Affiliate, or Associated Company, and,
         effective January 1, 2001, elective amounts that are not includable in
         gross income of the Employee by reason of Code section 132(f)(4),
         relating to qualified transportation fringe benefits, but excluding--

         (1)      directors' fees;

         (2)      reimbursement or other expense allowances;

         (3)      fringe benefits (cash and noncash);

         (4)      moving expenses;

         (5)      deferred compensation; and

         (6)      welfare benefits.


                                       5



         The Compensation of any Employee that is taken into account under the
         Plan for any Plan Year beginning on or after January 1, 1989, shall not
         exceed the maximum dollar amount that is permitted as of the beginning
         of the year under Code section 401(a)(17) (determined after giving
         effect to any amendments to section 401(a)(17) and any indexing or
         other adjustments made pursuant to said section that are applicable for
         the year of the determination). If an Employee is a family member of a
         5-percent owner (as defined in section 13.2) or of a Highly Compensated
         Employee among the group of ten Employees receiving the highest
         compensation for the Plan Year, then such Employee shall not be
         considered a separate Employee. Any Compensation paid to such Employee
         shall be treated as having been paid to the Highly Compensated
         Employee. For this purpose, "family member" means the Employee's spouse
         and any lineal descendants of the Employee who have not attained age 19
         before the close of the Plan Year. Notwithstanding the three preceding
         sentences, these family aggregation rules shall not apply during Plan
         Years beginning on or after January 1, 1997.

         Notwithstanding the foregoing, the term "Compensation" for purposes of
         determining whether an Employee is a Highly Compensated Employee, shall
         mean an Employee's Section 415 Compensation plus, for Plan Years
         beginning before January 1, 1998, any salary reduction elected by the
         Employee pursuant to Code section 125 or 401(k) under any plan of the
         Employer or an Affiliate in which the Employee participates.

(k)      "DEDUCTIBLE EMPLOYEE CONTRIBUTIONS" means the deductible contributions
         of up to $2,000 per year made by a Participant prior to January 1,
         1987, as described in section 4.1.

(l)      "DISABILITY" means a physical or mental condition which renders the
         Employee eligible for disability payments under the Social Security
         Act.

(m)      "ELIGIBLE EMPLOYEE" means any Employee of an Employer except--

         (1)      any Employee who is included in a unit of Employees covered by
                  a collective bargaining agreement, if there is evidence that
                  retirement benefits were the subject of good faith bargaining,
                  unless such agreement provides for participation of those
                  Employees in this Plan;

         (2)      any Employee who is a nonresident alien and who receives no
                  earned income from an Employer which constitutes income from
                  sources within the United States; and

         (3)      any Employee who is not designated as an "employee" in the
                  Company's, any Affiliate's, or Associate Company's employment
                  records during a particular period of time, including a person
                  designated as an "independent contractor,"


                                       6



                  even if a determination is made by the Internal Revenue
                  Service, the Department of Labor, or any other government
                  agency, court, or other tribunal, that such person is an
                  employee for any purpose.

(n)      "EMPLOYEE" means any person employed by the Company, an Affiliate, or
         Associated Company.

(o)      "EMPLOYER" means the Company and any Affiliate or Associated Company
         which, with the approval of the Company, has adopted or adopts this
         Plan for the benefit of some or all of its Eligible Employees. As of
         January 1, 2001, and continuing through the date of adoption of this
         amendment and restatement of the Plan, the Employers include Cordillera
         Corporation; Utah Gas Service Company; Denver jetCenter, Inc.;
         jetCenters, Inc.; Salt Lake jetCenter, Inc.; Colorado jetCenter, Inc.;
         Fort Collins Loveland jetCenter, Inc.; and Wyoming Industrial Gas
         Company. In addition, Oceanic Exploration Company became an Employer as
         a result of adopting this Plan as of January 1, 1987; and Oceanic
         International Properties Corporation, a subsidiary of Oceanic
         Exploration Company, became an Employer thereafter when Employees of
         Oceanic Exploration Company transferred to it. Each of Oceanic
         International Properties Corporation and Oceanic Exploration Company
         have had Employees from time to time. Note that Utah Gas Service
         Company and Wyoming Industrial Gas Company ceased to be members of the
         group as of July 12, 2001. Also note that San Miguel Valley Corporation
         and Ohio Gas Company were Employers under the terms of the Plan in
         effect prior to January 1, 2001, but ceased to be Employers as of
         December 31, 1999.

(p)      "EMPLOYER CONTRIBUTIONS" means the contributions described in section
         5.1 that are made by an Employer on behalf of a Participant.

(q)      "ERISA" means the Employee Retirement Income Security Act of 1974, as
         from time to time amended. Each ERISA reference in this Plan shall be
         deemed to include reference to any comparable or succeeding statutory
         provision which supplements or replaces such ERISA reference.

(r)      "HIGHLY COMPENSATED EMPLOYEE" means, effective as of January 1, 1997,
         any Employee who--

         (1)      in the preceding Plan Year received compensation (as defined
                  in Code section 414(q)(4)) from the Company, an Affiliate, or
                  Associated Company, in excess of $80,000 indexed; or

         (2)      in the Plan Year or the preceding Plan Year was a "5-percent
                  owner" (as defined in section 13.2 of the Plan).

         The dollar limit described in (1) above is in effect during the 1997,
         1998, and 1999 Plan Years, and will thereafter be adjusted to reflect
         increases in the cost of living at


                                       7



         the same time and in the same manner as adjustments are made to defined
         contribution and defined benefit limits under Code section 415(d).

         A former Employee shall be treated as a Highly Compensated Employee if
         the Employee was a Highly Compensated Employee either when the Employee
         incurred a Separation from Service or at any time after the Employee
         attained age 55.

(s)      "HOUR OF SERVICE" means--

         (1)      each hour for which the Employee is paid or entitled to
                  payment for the performance of duties.

         (2)      each hour for which the Employee is paid or entitled to
                  payment on account of a period of time during which no duties
                  are performed (irrespective of whether the employment
                  relationship has terminated) due to vacation, holiday,
                  illness, incapacity (including disability), layoff, jury duty,
                  or leave of absence. No more than 501 Hours of Service shall
                  be credited to an Employee on account of any single continuous
                  period during which the Employee performs no duties.

         (3)      each hour for which back pay (irrespective of mitigation of
                  damages) is either awarded or agreed to, with no duplication
                  of credit for hours under paragraphs (1) or (2) and this
                  paragraph (3).

         (4)      each hour credited pursuant to applicable ERISA regulations
                  for unpaid periods of absence for service in the United States
                  armed forces or Public Health Service during which the
                  Employee's reemployment rights are guaranteed by law, provided
                  that the Employee is reemployed as an Employee within the time
                  limits prescribed by such law.

         If or to the extent a record of an Employee's hours of employment is
         not maintained, the Employee shall be credited with 190 Hours of
         Service for each calendar month for which the Employee would be
         required to be credited with at least one Hour of Service.

         All Hours of Service shall be determined and credited to computation
         periods in accordance with reasonable standards and policies consistent
         with Department of Labor regulations section 2530.200b-2(b) and (c).

         Notwithstanding the foregoing provisions of this section 2.1(s),
         effective April 1, 1997, the term "Hour of Service" shall mean--

         (A)      Each hour for which the Employee is paid or entitled to
                  payment for the performance of duties.


                                       8



         (B)      Each hour credited pursuant to applicable ERISA regulations
                  for unpaid periods of absence for service in the United States
                  armed forces or Public Health Service during which the
                  Employee's reemployment rights are guaranteed by law, provided
                  that the Employee is reemployed as an Employee within the time
                  limits prescribed by such law.

(t)      "INVESTMENT FUND" means--

         (1)      for any Participant who is not exercising full investment
                  direction over his account pursuant to section 8.1, such
                  investment companies registered under the Investment Company
                  Act of 1940, as amended, the shares of which are designated by
                  the Benefits Committee as an investment option under the Plan;
                  or

         (2)      for any Participant who is exercising full investment
                  direction over his account pursuant to section 8.1--

                  (A)      such securities that are publicly traded on a
                           national securities exchange, shares, or units issued
                           by an investment company registered under the
                           Investment Company Act of 1940, as amended, subject
                           to such restrictions imposed by the Benefits
                           Committee as to investing in certain investment
                           vehicles; and

                  (B)      any obligations issued or guaranteed by the U.S.
                           government, its agencies, and instrumentalities.

(u)      "NORMAL RETIREMENT AGE" means the date of the Participant's attainment
         of age 65.

(v)      "PARTICIPANT" means any Eligible Employee who has met the requirements
         to become a Participant as set forth in section 3.1, and shall include,
         where appropriate to the context, any former Participant described in
         section 3.2.

(w)      "PLAN YEAR" means the 12-consecutive month period ending each December
         31.

(x)      "ROLLOVER CONTRIBUTIONS" means those contributions made by an Employee,
         as described in section 5.3.

(y)      "SECTION 415 COMPENSATION" means an Employee's wages, salaries,
         commissions, professional fees and other amounts received for personal
         services rendered in the course of employment with the Company,
         Affiliate, or Associated Company, as determined for purposes of
         reporting (in Box 1 on the 2000 version of Form W-2 or in such other
         place as may be appropriate for any other reporting year) the
         Employee's wages that are subject to income tax withholding or are
         otherwise reportable for income tax purposes under Code sections
         6041(d), 6051(a)(3), and 6052, increased, for Plan Years beginning on
         and after January 1, 1998, by salary


                                       9



         reduction amounts under any Code section 401(k) cash or deferred
         arrangement or a cafeteria plan under Code section 125 and, effective
         January 1, 2001, elective amounts that are not includable in gross
         income of the Employee by reason of Code section 132(f)(4), relating to
         qualified transportation fringe benefits.

(z)      "SEPARATION FROM SERVICE" means any termination of the employment
         relationship between an Employee and the Company or Affiliate or
         Associated Company for any reason other than death, including
         resignation, discharge, retirement or disability. A Separation from
         Service shall not occur upon a Participant's transfer to a position
         where the individual continues to be an Employee but is no longer an
         Eligible Employee, nor shall a Separation from Service occur as a
         result of a leave of absence authorized by the Employer, other
         Affiliate or Associated Company if the Employee returns to employment
         upon expiration of such leave.

(aa)     "TRUST AGREEMENT" means any agreement in the nature of a trust
         established to form a part of the Plan to receive, hold, invest, and
         dispose of the Trust Fund.

(bb)     "TRUST FUND" means the assets of every kind and description held under
         any Trust Agreement forming a part of the Plan.

(cc)     "TRUSTEE" means any person, bank, or trust company selected by the
         Company to act as Trustee under any Trust Agreement at any time of
         reference.

(dd)     "VALUATION DATE" means each business day of the Plan Year recognized by
         the New York Stock Exchange.

(ee)     "YEARS OF SERVICE" means, prior to April 1, 1997, periods of 12
         consecutive months during which the Employee completes at least 1,000
         Hours of Service, where the first such period is measured from the date
         on which the Employee first performs an Hour of Service after being
         hired or after being rehired after a Break in Service, and each
         subsequent period is the Plan Year, beginning with the Plan Year that
         commences with or within the first period.

         Effective April 1, 1997, the term "Years of Service" means the
         aggregate of all periods commencing with the first day the Employee has
         an Hour of Service with the Employer and ending on the date a Break in
         Service begins. An Employee shall also receive credit for any absence
         from service which would otherwise constitute a Break in Service except
         that the length of absence is less than 12 consecutive months provided
         he returns to service within such 12-month period. Fractional periods
         of a year will be expressed in terms of days. For vesting purposes,
         only whole Years of Service will be counted, but fractional periods
         shall be aggregated.

         In the case of an individual who was an Employee prior to April 1, 1997
         and whose service has been determined on the basis of computation
         periods and the general method of crediting service as set forth in 29
         CFR section 2530.200b-2, for the 1997


                                       10



         Plan Year, the Employee shall receive credit for a period of service
         consisting of the greater of--

         (1)      the period of service that would be credited to the Employee
                  under the elapsed time method for his service during the
                  entire computation period in which the change to an elapsed
                  time methodology occurs; or

         (2)      the service taken into account under the computation periods
                  method as of the later of the effective date of the amendment
                  which incorporates the elapsed time methodology or the date
                  said amendment was adopted by the Company.

2.2 GENDER AND NUMBER

Except when otherwise indicated by the context, any masculine or feminine
terminology in this document shall also include the other gender, and the
definition of any term in the singular or plural shall also include the opposite
number.

2.3 REQUIREMENT TO BE IN "WRITTEN FORM"

Various notices provided by the Company or Benefits Committee, and various
elections made by a Participant are required to be in written form. Except as
otherwise provided under IRS or DOL regulations or other guidance, these notices
and elections may be conveyed through an electronic system.


                                       11



ARTICLE 3. PARTICIPATION AND SERVICE

3.1 DATE OF PARTICIPATION

Every Employee who was an Eligible Employee and a Participant on December 31,
2000, and continues to be an Eligible Employee shall continue to be a
Participant thereafter. On and after January 1, 2001, every other Eligible
Employee shall become a Participant in the Plan on the first January 1, April 1,
July 1, or October 1 entry date that coincides with or next follows the date he
or she has attained age 21, has completed one Year of Service, and has become an
Eligible Employee.

3.2 DURATION

An Employee who becomes a Participant shall remain a Participant until the
Employee has a Separation from Service, and shall be a former Participant
thereafter for as long as the individual is entitled to receive any benefits
under this Plan.

A Participant who has a Separation from Service and is subsequently reemployed
shall again become a Participant as of the later of the Participant's
reemployment date or the date the Participant again becomes an Eligible
Employee.

3.3 TRANSFERS

An Employee, who transfers from a nonparticipating Affiliate or Associated
Company to employment status where he or she becomes an Eligible Employee, shall
receive credit for prior service with such Affiliate or Associated Company in
determining his or her Years of Service and shall become a Participant in
accordance with section 3.1 after having satisfied the eligibility conditions
specified therein.

Any Participant who transfers out of Eligible Employee status with the Employer
but who remains an Employee shall become an inactive Participant. An inactive
Participant's Account shall continue to be held under the Plan until the
Participant becomes entitled to a distribution under the provisions of section
7.3. The inactive Participant--

(a)      shall continue to earn Years of Service for purposes of vesting in
         Employer Contributions;

(b)      shall be eligible to request and receive a loan in accordance with the
         provisions of section 7.7, and

(c)      shall be eligible to make investment elections in accordance with the
         rules for active Participants.

3.4 LEASED EMPLOYEES

Effective January 1, 1997, a person who is not an Employee of a controlled group
Employer and who performs services for the controlled group Employer pursuant to
an agreement between the controlled group Employer and a leasing organization
shall be considered a


                                       12



"leased employee" if he performed the services on a substantially full-time
basis for a year and the services are performed under the primary direction or
control of the service recipient. A person who is considered a leased employee
of the controlled group Employer shall not be considered an Eligible Employee
for purposes of the Plan. However, if a leased employee participates in the Plan
as a result of subsequent employment with the Company, Affiliate, or Associated
Company, he shall receive Service for such employment as a leased employee.
Notwithstanding the preceding provisions of this section, a leased employee will
be included as an Employee for purposes of applying the requirements described
in section 414(n)(3) of the Code. For purposes of this section, the term
"Employer" includes an Employer participating in the Plan and only those
affiliates of such entity that must be aggregated and treated as a single
employer for purposes of Code section 414 and related Treasury regulations.

3.5 SPECIAL PROVISIONS FOR PARTICIPANTS WHO ENTER THE ARMED FORCES

If a Participant is absent from employment for voluntary or involuntary military
service with the armed forces of the United States and returns to employment
within the period required under the law pertaining to veterans' reemployment
rights, he shall receive Service for the period of his absence from employment.
Notwithstanding any provisions of this Plan to the contrary, effective as of
December 12, 1994, contributions, benefits, and service credit with respect to
qualified military service will be provided in accordance with Code section
414(u).


                                       13



ARTICLE 4. EMPLOYEE CONTRIBUTIONS

4.1 NATURE AND AMOUNT

After-tax contributions by Participants are not permitted under this Plan. Prior
to January 1, 1987, Participants were also allowed to make Deductible Employee
Contributions of up to $2,000 per year pursuant to section 72(o) of the Code.
Such contributions are no longer permitted, but amounts attributable to them may
be retained in a Participant's Deductible Employee Contributions Account until
such amounts are distributed in accordance with the terms of the Plan.


                                       14



ARTICLE 5. EMPLOYER AND ROLLOVER CONTRIBUTIONS

5.1 EMPLOYER CONTRIBUTIONS

For each Plan Year the Employer shall make a contribution on behalf of each
eligible Participant in its employ as follows. The amount of the contribution
shall be 6 percent of that portion of the eligible Participant's Compensation
for the Plan Year that does not exceed the integration level, plus 5.7 percent
of that portion, if any, of the eligible Participant's Compensation for the Plan
Year that exceeds the integration level, where the integration level is social
security taxable wage base in effect at the beginning of the Plan Year, as
determined in compliance with section 1.401(l)-2(d)(2) of the Income Tax
Regulations.

A Participant shall be eligible for an Employer Contribution for a Plan Year if
the Participant satisfies one of the following conditions:

(a)      the Participant is an Employee on the last day of the Plan Year;

(b)      the Participant retired during the Plan Year after attaining his or her
         Normal Retirement Age;

(c)      the Participant died while still an Employee during the Plan Year; or

(d)      the Participant incurred a Disability while still an Employee during
         the Plan Year.

If a Participant does not satisfy any of the foregoing conditions while still an
Employee, the Participant shall not be an eligible Participant and shall not
receive an Employer Contribution for the Plan Year.

5.2 TRANSFER AND CREDITING OF EMPLOYER CONTRIBUTIONS

Employer Contributions required under section 5.1 shall be transferred to the
Trust Fund on or before the due date (including extensions) for filing the
Employer's tax return for the year ending with or within the Plan Year for which
the contributions are made. Such Employer Contributions shall be allocated to
the Regular Account of each eligible Participant in the amount determined with
respect to such Participant in accordance with section 5.1, with the allocation
being made as of the last day of the Plan Year to which it relates.

5.3 ROLLOVERS

Amounts which an Eligible Employee has received from any other qualified
employee benefit plan may, subject to the Benefits Committee's approval and in
accordance with uniform, nondiscriminatory procedures designed to protect the
qualification and the integrity of the Plan, be transferred by the Eligible
Employee to this Plan in cash provided the following conditions are satisfied:

(a)      The amounts distributed to or on behalf of the Eligible Employee from
         another qualified plan and rolled over to this Plan shall not be
         subject to the distribution rules


                                       15



         of the plan from which they came after being transferred to this Plan.
         Upon receipt by this Plan, such amounts shall be fully vested and shall
         be credited to the Eligible Employee's Rollover Account.

(b)      In case of a rollover of a distribution made from a qualified plan
         before January 1, 1993, the amount to be rolled over to this Plan must
         be solely attributable to a Code section 402(a)(5) qualified total
         distribution, and must be transferred to this Plan in a timely manner
         following a distribution from:

         (1)      a plan qualified under Code section 401(a); or

         (2)      a rollover or conduit individual retirement account or annuity
                  which has received only rollover contributions described in
                  Code section 408(d)(3) (determined without regard to
                  subparagraphs (A)(iii) and (D) thereof).

(c)      In case of a rollover of a distribution made from a qualified plan on
         or after January 1, 1993, the amount to be rolled over to this Plan
         must be solely attributable to a Code section 402(c)(4) eligible
         rollover distribution, and must be transferred in a timely manner to
         this Plan following a distribution from:

         (1)      a plan qualified under Code section 401(a); or

         (2)      a rollover or conduit individual retirement account or annuity
                  which has received a rollover contribution described in Code
                  section 408(d)(3) (determined without regard to subparagraphs
                  (A)(iii) and (D) thereof) and to which no other contributions
                  have been made.

(d)      The amounts tendered must not include nondeductible employee
         contributions to a qualified plan by an Eligible Employee or amounts
         attributable to--

         (1)      contributions to an individual retirement account or annuity
                  that are deductible under Code section 219;

         (2)      accumulated deductible employee contributions described in
                  Code section 72(o)(5)(B);

         (3)      contributions or deferrals to an annuity described in Code
                  section 403(b); or

         (4)      in the case of a distribution that occurred before January 1,
                  1993, a partial distribution described in Code section
                  402(a)(5)(D).

(e)      The transfer to this Plan of amounts described in paragraph (b) shall
         only be accepted if the Eligible Employee presents to the Benefits
         Committee the IRS Form 1099 or equivalent, the original distribution
         check or a copy thereof, or such other evidence as the Benefits
         Committee may require to verify the nature of the amount and ensure
         that its receipt will not adversely affect the qualified status of this
         Plan.


                                       16



(f)      Amounts must be received by this Plan not later than 60 days after a
         distribution was received by the Eligible Employee.

(g)      The Benefits Committee may establish additional procedures, consistent
         with the rules of the Code, related regulatory guidance and this
         section, concerning the acceptance of rollovers, including sixty-day
         rollovers and direct rollovers of eligible rollover distributions,
         under this Plan.

(h)      Upon approval by the Benefits Committee, rollover amounts shall be
         transmitted to the Trustee, to be invested in such Investment Funds as
         the Eligible Employee may select in accordance with such rules and
         procedures as the Benefits Committee may establish for this purpose.


                                       17



ARTICLE 6. MAXIMUM CONTRIBUTIONS AND BENEFIT LIMITATIONS

6.1 LIMITATION ON ANNUAL ADDITION

Notwithstanding anything to the contrary contained in this Plan, the total
Annual Additions of a Participant for any Plan Year, which shall be the
limitation year for purposes of Code section 415, shall not exceed the lesser
of--

(a)      $35,000 or such larger amount as may be prescribed under Code section
         415(d), or

(b)      25 percent of the Participant's Section 415 Compensation for the
         limitation year.

6.2 "ANNUAL ADDITION" DEFINED

The term "Annual Addition" means, with respect to each Participant for the Plan
Year, the aggregate of--

(a)      the amount of Company, Affiliate, or Associated Company contributions
         and forfeitures allocated to the Participant's Account under this Plan
         and any other defined contribution plan, as defined in Code section
         414(i), maintained by the Employer for the Plan Year;

(b)      the amount of a Participant's after-tax contributions for such Plan
         Year under this Plan and any other defined contribution plan, as
         defined in Code section 414(i), maintained by the Employer for the Plan
         Year;

(c)      for purposes of section 6.1(a), the amount of contributions allocated
         to an individual medical account, as defined in Code section 415(l)(2),
         which is part of a pension or annuity plan; and

(d)      for purposes of section 6.1(a), the amount of contributions
         attributable to post-retirement medical benefits, which are allocated
         to the separate account of a key employee, as defined in Code section
         419A(d)(3), under a welfare benefit fund, as defined in Code section
         419(e).

6.3 EXCESS ANNUAL ADDITION

If, as a result of the allocation of forfeitures or a reasonable error in
estimating a Participant's Section 415 Compensation for the Plan Year (or any
other circumstance permitted under applicable regulations under Code section
415), the Annual Additions for a Participant is exceeded, such excess amount
shall be reduced in accordance with the provisions of this section. The
Participant's excess Annual Additions shall first be reduced under any other
qualified defined contribution plan maintained by the Company, Affiliate, or
Associated Company, in accordance with the terms of such plan. If, after
reductions have been made under such other plans, additional reductions are
required from this Plan, Employer Contributions for the Plan Year shall be
reduced to the extent necessary to eliminate the excess Annual Additions. The
excess amounts shall be used to reduce Employer


                                       18



Contributions for that Participant for the next Plan Year (and succeeding Plan
Years, if necessary), provided that the Participant is still covered by the Plan
as of the end of that subsequent Plan Year. If, at that time, the Participant is
not covered by the Plan, the excess amount shall be treated as a forfeiture.

6.4 DEFINED BENEFIT PLANS

If a Participant in this Plan is or was also a participant in a qualified
defined benefit plan, as defined in Code section 414(j), maintained or
previously maintained by the Company, Affiliate, or Associated Company, and the
sum of the Participant's defined contribution plan fraction and defined benefit
plan fraction (as these terms are defined in Code section 415(e)) exceeds 1.0
for the Plan Year, then in addition to the limitations contained in section 6.1,
the Annual Additions of the Participant shall be limited first under any other
qualified defined contribution plans of the Company, Affiliate, or Associated
Company and then under this Plan to the extent necessary to comply with the
limitations set forth in Code section 415(e). Notwithstanding the foregoing, the
limitations described in this section shall not apply to Plan Years beginning on
or after January 1, 2000.

6.5 DEDUCTIBILITY LIMITATIONS

The aggregate dollar amount of Employer Contributions for any Plan Year shall be
limited to the amount deductible by the Employer under section 404 of the Code
for the taxable year.


                                       19



ARTICLE 7.  VESTING AND BENEFITS

7.1 VESTING

Each Participant's interest in his or her Deductible Employee Contributions
Account and Rollover Account shall be fully vested at all times, including the
time at which the Participant attains Normal Retirement Age. Each Participant's
interest in his or her Regular Account shall be contingent, except as such
interest becomes vested under the following provisions of this section:

(a)      The Participant's interest in his or her Regular Account shall be fully
         vested upon the happening of any of the following events while the
         Participant is employed as an Employee:

         (1)  the Participant's attainment of Normal Retirement Age;

         (2)  the Participant's death;

         (3)  the Participant's Disability; and

         (4)  a termination or partial termination of the Plan that affects the
              Participant.

(b)      The Participant's interest in his or her Regular Account shall fully
         vest if this Plan is terminated or if any other event occurs which
         constitutes a partial termination of the Plan with respect to the
         Participant within the meaning of Code section 411 and related
         regulations.

         A Participant who ceases to continue to be an Eligible Employee because
         of the transactions described in the Agreement and Plan of Merger among
         Gas Corp., Cordillera Corporation, Questar Gas Corp., Questar Regulated
         Services, and Questar Corp. (the "Agreement"), either because such
         Participant incurs a Separation from Service in connection with such
         transactions or because the Participant continues in employment with
         the Surviving Corporation, as defined in the Agreement, shall be fully
         vested in his or her Regular Account on the Closing Date, as defined in
         the Agreement.

(c)      Subject to the provisions of paragraphs (a) and (b), each Participant
         shall vest in his or her Regular Account based on the Participant's
         Years of Service pursuant to the following table:


                                       20





          YEARS OF SERVICE       PERCENTAGE VESTED
          ----------------       -----------------
                              
          Less than 2            0%
          2                      20%
          3                      40%
          4                      60%
          5                      80%
          6 or more              100%
          


(d)      Notwithstanding the foregoing, effective January 1, 1997, each
         Participant's interest in contributions made by the Employer pursuant
         to section 1.401(a)(4)-11(g) of the Income Tax Regulations shall be
         fully vested at all times.

7.2 FORFEITURE AND REINSTATEMENT OF CONTINGENT INTERESTS

Any portion of a Participant's Regular Account that is not vested upon a
distribution of the Participant's vested Account balance following Separation
from Service shall be forfeited on such date. If the Participant's vested
Account is not distributed, the nonvested portion of the Account shall be
forfeited when the Participant completes five consecutive Breaks in Service. Any
such forfeiture shall be used as soon as possible to reduce Employer
Contributions.

If a Participant is rehired after incurring five consecutive Breaks in Service,
previously forfeited amounts shall not be restored to the Participant's Account.
If a Participant is rehired before incurring five consecutive Breaks in Service,
then any amount previously forfeited shall be restored to the Participant's
Account by means of a special contribution by the Employer, but only if the
Participant repays, without interest, to the Plan the full amount of the
distribution received on account of the prior Separation from Service. The
repayment must be made within five years after the date the Participant is
rehired and will be credited to the Participant's Rollover Account and treated
as a fully vested after-tax payment for purposes of any subsequent distribution.

If a Participant returns to employment and receives a reinstatement of a
previously forfeited balance, as provided above, the Participant's vested amount
in his or her Regular Account prior to the Participant's full vesting therein
shall be equal to:

                                  P(AB + D)-D,

where P is the vested percentage and AB is the Regular Account balance at the
time the vesting is determined, and D is the amount of the prior distribution.


                                       21



7.3 BENEFITS FORMS, REQUIRED CONSENT, AND PAYMENTS AFTER SEPARATION FROM SERVICE

Every Participant who incurs a Separation from Service shall receive a
distribution of the value of his or her vested Account in a permissible form
that, as determined below, is either paid automatically or elected by the
Participant.

(a)      If the vested Account balance of a Participant who is entitled to a
         distribution under this section has not ever exceeded $3,500 ($5,000
         effective January 1, 1998) at a time when the Participant was entitled
         to a distribution, such balance shall automatically be distributed to
         the Participant as an immediate lump sum, determined as of the
         Valuation Date on which the distribution is made.

(b)      Except as provided in section 7.3(a) above, the Plan shall not make a
         distribution to any Participant, whether before or after Separation
         from Service, if the distribution would occur prior to the
         Participant's attainment of Normal Retirement Age and does not have the
         Participant's written consent. After a Participant's attainment of
         Normal Retirement Age, the Participant's written consent to an
         immediate distribution is not required, and, subject to sections 7.4
         and 7.5, the Plan shall make or commence distribution of the
         Participant's vested Account balance as soon as is practicable after
         the later of the Participant's Separation from Service or attainment of
         Normal Retirement Age.

(c)      The normal form of distribution for other Participants who have had a
         Separation from Service and do not automatically receive an immediate
         lump sum payment pursuant to section 7.3(a) is--

         (1)  a Qualified Joint and Survivor Annuity if the Participant is
              married on the annuity starting date; or

         (2)  an annuity for the life of the Participant if the Participant is
              not married on the annuity starting date.

         For this purpose, a "Qualified Joint and Survivor Annuity" means an
         annuity described in Code section 417(b) that can be purchased from an
         insurance company with the Participant's vested Account balance and
         provides payments for the Participant's life with a survivor annuity to
         the spouse to whom the Participant was married on the annuity starting
         date in an amount equal to 50 percent of the annuity payable during the
         Participant's lifetime.

(d)      In lieu of the normal form, a Participant who has had a Separation from
         Service or who has not had a Separation from Service but is required to
         commence benefits under section 7.5, and who is not subject to section
         7.3(a), may elect an optional form of distribution. Optional forms
         include--


                                       22



         (1)  an immediate lump sum payment;

         (2)  substantially equal installments payable no less frequently than
              annually over a period not extending beyond the Participant's life
              expectancy;

         (3)  a combination of a lump sum and such installments; and

         (4)  a joint and 50 percent survivor annuity with a Beneficiary other
              than the Participant's spouse.

(e)      On and after January 1, 1993, as elected by the Participant in
         accordance with Code sections 401(a)(31) and 402(c) and section 7.6 of
         this Plan with respect to an optional form that constitutes an eligible
         rollover distribution, the Plan shall arrange for a direct transfer of
         a Participant's distribution amount to an eligible retirement plan
         instead of distributing such amount to the Participant. The Plan shall
         also provide for the required notice to the Participant and tax
         withholding concerning any eligible rollover distribution.

(f)      If the Participant's consent to a distribution is required under this
         section, the Participant must give the consent in writing by filing a
         completed election form in the manner prescribed by the Benefits
         Committee. The Participant's Account balance shall be the amount
         determined on the Valuation Date on which the distribution is made.

(g)      Except as otherwise required for required minimum distributions under
         section 7.5 due to "look-back" rules of Code section 401(a)(9) and
         related regulations that focus on an earlier Valuation Date, the amount
         of any payment that is due shall be determined based on the
         Participant's Account balance as of the Valuation Date which is the
         date of payment.

(h)      In lieu of receiving the normal form of benefit, an unmarried
         Participant with a vested Account balance not subject to section 7.3(a)
         may elect an optional form described in this section under procedures
         prescribed by the Benefits Committee that do not require the consent of
         anyone other than the Participant. In contrast, a Participant who is
         married on the annuity starting date for paying his or her benefits and
         has a vested Account balance not subject to section 7.3(a) shall be
         deemed to have automatically elected a Qualified Joint and Survivor
         Annuity unless this normal form of benefit is waived as follows. To
         receive an optional form in lieu of a Qualified Joint and Survivor
         Annuity, the Participant must make an election to which the
         Participant's spouse consents in a writing that is notarized or
         witnessed by a Plan representative and acknowledges the effect of the
         spouse's consent and recognizes and accepts the specific nonspouse
         Beneficiary, if any, who may receive benefits in the event of the
         Participant's death. Spousal consent to the Participant's waiver of a
         Qualified Joint and Survivor Annuity shall be effective only with
         respect to the


                                       23



         spouse signing the consent. Such consent shall not be required if the
         Participant establishes to the satisfaction of the Benefits Committee
         that the consent cannot be obtained for valid reasons described in the
         Code or regulations thereunder.

(i)      A married Participant who wishes to elect an optional benefit form
         shall receive (by mail or personal delivery), no less than 30 days nor
         more than 90 days before the annuity starting date, a written
         explanation of--

         (1)  the terms and conditions of the automatic election of a Qualified
              Joint and Survivor Annuity in the previous paragraph;

         (2)  the Participant's right to make (and the effect of) an election to
              waive such benefit;

         (3)  the right of the Participant's spouse to consent in writing to
              such waiver;

         (4)  the fact that the waiver and consent are irrevocable or, if
              applicable, the right to make (and the effect of) a revocation of
              such waiver during the 90-day election period that precedes the
              annuity starting date; and

         (5)  the eligibility conditions and other material features and
              relative values of optional forms of benefits.

(j)      Notwithstanding the preceding subsection, effective as of September 22,
         1995, the Participant's annuity starting date may occur as soon as
         eight days subsequent to the delivery of notice to the Participant (or
         any earlier date permitted under IRS regulations), provided that the
         Participant is afforded the opportunity to consider whether to take an
         election for at least 30 days, but affirmatively elects (subject to
         spousal consent, if applicable) to have his retirement benefit commence
         prior to the expiration of the 30-day period. Any such election shall
         be revocable by the Participant until the later of--

         (1)  the expiration of the seven-day period following the delivery of
              notice; or

         (2)  the Participant's annuity starting date (which may precede the
              date of the Participant's election).

         Although the procedures described in the preceding two paragraphs shall
         normally apply, it shall be permissible for the Benefits Committee to
         provide the written explanation described above after the Participant's
         annuity starting date, so as to permit retroactive payment of benefits.
         Under these circumstances, the 30-day and eight-day timing requirements
         described above shall continue to apply.


                                       24



7.4 DEATH BENEFITS

Upon the death of a Participant whose benefit payments have already commenced,
the death benefits, if any, shall be determined under form of payment in
progress. If a Participant dies before the annuity starting date for his or her
benefit payments and leaves a surviving spouse, the death benefit shall be paid
as a Qualified Preretirement Survivor Annuity, subject to the following. For
this purpose, a "Qualified Preretirement Survivor Annuity" means an annuity
described in Code section 417(c) that can be purchased with the Participant's
vested Account balance and provides payments for the spouse's life in the amount
which can be purchased from an insurance company with such balance. The
Participant and spouse may not waive a Qualified Preretirement Survivor Annuity
in order to allow the Participant to designate a different Beneficiary or a
different benefit form in the event of his or her death prior to the
commencement of any benefit payments. Notwithstanding the foregoing, after the
Participant's death and prior to the commencement of any benefit payments, the
surviving spouse may elect an immediate lump sum distribution of the
Participant's vested Account balance in lieu of the Qualified Preretirement
Survivor Annuity.

Upon the death of an unmarried Participant prior to the annuity starting date
for such Participant's benefit payments, the Plan shall pay the Participant's
entire vested Account balance to the Beneficiary in a single sum payment. The
Account balance shall be the amount determined as of the Valuation Date on which
the payment is made to the Beneficiary. The payment to the Beneficiary shall be
made as soon as practicable; provided, however, that if the Beneficiary is the
Participant's spouse and the vested Account balance, prior to any distributions,
exceeds $3,500 ($5,000 effective January 1, 1998), then payment shall not be
made without the spouse's written consent prior to the date that the Participant
would have attained Normal Retirement Age. If the spouse defers receipt of the
death benefit described in this section, the Account balance to be distributed
shall be determined under the procedures in section 7.3 for distributions
requiring the Participant's consent, except that the spouse's consent shall be
substituted for the Participant's consent.

The Benefits Committee may require such proper proof of death and such evidence
of the right of any person to receive payment of the value of the Participant's
vested Account as the Benefits Committee may deem desirable. The Benefits
Committee's determination of death and of the right of any person to receive
payment shall be conclusive.

7.5 MINIMUM DISTRIBUTION REQUIREMENTS

This section provides for the latest time that the Participant's vested Account
may be distributed; it takes precedence over any inconsistent Plan provision.
All distributions required under this section shall be determined and made in
accordance with Code sections 401(a)(9) and 401(a)(14) as well as regulations
thereunder, including the minimum distribution incidental benefit requirements,
which are incorporated herein by this reference.

Payment of benefits to a Participant shall be made or commence not later than
the sixtieth day after the close of the Plan Year in which occurs the later of
the Participant's Separation


                                       25



from Service or the Participant's attainment of Normal Retirement Age. If for
any reason the amount which is required to be paid cannot be ascertained on the
date payment would be due hereunder, payment shall be made not later than 90
days after the earliest date on which the amount of such payment can be
ascertained.

Moreover, distribution of the Participant's vested Account must begin not later
than the April 1 following the calendar year in which the Participant attains
age 70 1/2 even if the Participant has not incurred a Separation from Service by
such date.

If distribution of the Participant's benefit has commenced before the
Participant dies, the remaining benefit, if any, shall be distributed at least
as rapidly as the method in effect at the Participant's death. If distribution
of the Participant's benefit has not commenced before the Participant dies, then
any death benefit payable to a nonspouse Beneficiary under the terms of the Plan
shall be paid within one year of the Participant's death. If the distribution
has not commenced when the Participant dies and the death benefit is to be paid
to the Participant's surviving spouse, the payment of such death benefit must
commence no later than the end of the Plan Year following the calendar year in
which the Participant would have attained age 70 1/2.

7.6 LUMP SUMS AND OTHER ELIGIBLE ROLLOVER DISTRIBUTIONS

Lump sums and other eligible rollover distributions under the Plan shall comply
with the requirements of Code section 401(a)(31) as follows. This section
applies to distributions made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a distributee's
election under this section, a distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover. For purposes of this section, the following
definitions shall apply.

An "eligible rollover distribution" is any distribution of all or any portion of
the balance to the credit of the distributee, except that an "eligible rollover
distribution" does not include: any distribution that is one of a series of
substantially equal period payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section 401(a)(9)
of the Code; any hardship distribution made from a 401(k) or 403(b) plan after
1998; and the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation with
respect to employer securities); and provided further that the determination of
what constitutes an "eligible rollover distribution" shall at all times be made
in accordance with the current rules of Code section 402(c), which shall be
controlling for this purpose.

An "eligible retirement plan" is an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in section 403(a) of the
Code, or a qualified trust described in


                                       26



section 401(a) of the Code that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an "eligible retirement plan" is an individual retirement
account or individual retirement annuity.

A "distributee" includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former spouse.

A "direct rollover" is a payment by the Plan to the eligible retirement Plan
specified by the distributee.

In prescribing the manner of making elections with respect to eligible rollover
distributions, as described above, the Committee may provide for the uniform,
nondiscriminatory application of any restrictions permitted under applicable
sections of the Code and related rules and regulations, including a requirement
that a distributee may not elect a partial direct rollover in an amount less
than $500 and a requirement that a distributee may not elect to make a direct
rollover from a single eligible rollover distribution to more than one eligible
retirement plan. Moreover, if a distribution is one to which sections 401(a)(11)
and 417 of the Code do not apply, such distribution may commence less than 30
days after the notice required under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that--

(1)      the Plan administrator clearly informs the Participant that the
         Participant has a right to a period of at least 30 days after receiving
         the notice to consider the decision of whether or not to elect a
         distribution (and, if applicable, a particular distribution option);
         and

(2)      the Participant, after receiving the notice, affirmatively elects a
         distribution.

7.7 LOANS TO PARTICIPANTS

The Benefits Committee, upon written application by an eligible Participant,
shall permit the Plan to make a loan to such Participant, provided that all
loans shall comply with such rules and regulations as the Benefits Committee may
establish for making Plan loans consistent with the following terms and
conditions:

(a)      Loans shall be made available to all Participants, subject to the
         following conditions, provided that loans granted on or after July 1,
         1994, shall be available only to Participants who are "parties in
         interest" for purposes of section 3(14) of ERISA. These loans shall at
         all times be available on a nondiscriminatory and reasonably equivalent
         basis under uniform rules prescribed by the Benefits Committee in
         accordance with the requirements of the Code and ERISA and this section
         7.7.


                                       27



(b)      Loans may be processed as of any Valuation Date following such
         reasonable notice as the Benefits Committee may require. To receive a
         loan from the Plan, a Participant and his or her spouse, if any, must
         execute a promissory note and have their signatures witnessed by a
         notary public on a form prescribed by the Benefits Committee that shows
         the loan amount and authorize payroll deductions for payment of
         interest and principal in accordance with procedures adopted by the
         Benefits Committee. To secure repayment of the loan, the Participant
         (and the Participant's spouse, if any) shall, within the 90 day period
         before the loan is made, consent to any distribution resulting from a
         setoff of the loan against the Participant's Account under subsection
         (h). Any consent by a Participant's spouse must comply with the Plan's
         requirements for waiving a Qualified Joint and Survivor Annuity or a
         Qualified Preretirement Survivor Annuity. Therefore, the consent must
         be in writing, must acknowledge the effect of the loan, and must be
         witnessed by a notary public.

(c)      The amount of the loan shall not be less than $1,000 nor more than 50
         percent of the first $100,000 of the vested balance in the
         Participant's Account. The 50 percent limitation shall be reduced by
         the highest outstanding balance of loans to the Participant from the
         Plan during the 1-year period ending on the day before the date on
         which the loan is made. If such Participant is also covered under
         another qualified plan maintained by the Company, Affiliate, or
         Associated Company, the above limitations shall be applied as though
         all such qualified plans are one plan. In no event may a Participant
         have more than one outstanding loan from this Plan at any time.

(d)      The loan repayment period shall not exceed 60 months. However, loans
         which are used to acquire the Participant's principal residence may be
         repaid over a reasonable period not exceeding 180 months. Moreover, in
         no event shall the loan repayment period for a loan granted on or after
         July 1, 1994 end later than the end of the second month following the
         month in which the Participant ceases to be a party in interest for
         purposes of section 3(14) of ERISA.

(e)      The Benefits Committee shall determine the interest rate for Plan loans
         or the method for determining such rate and communicate it to
         Participants in advance. For this purpose, the following rules shall
         apply. Each loan shall bear an interest rate equal to the prime rate of
         a bank selected by the Benefits Committee or equal to the prime rate as
         reported in the WALL STREET JOURNAL or other Benefits
         Committee-selected publication of general circulation. The interest
         rate so determined shall be the one in effect at the time the loan is
         granted and shall remain fixed for the term of the loan.
         Notwithstanding the foregoing, the Benefits Committee may select and
         publish another method for determining the interest rate that complies
         with applicable law if it determines that the use of a method like the
         foregoing is not permitted under ERISA or other applicable law.


                                       28



(f)      The Benefits Committee shall establish a Loan Fund representing the
         Participant's individual investment in the loan of amounts that were
         withdrawn from various Investment Funds in which the Participant's
         Account was invested and prior to being lent to the Participant. Unpaid
         loan amounts shall remain in the Loan Fund under the Participant's
         Account, which shall serve as security for the loan to the extent so
         invested. The Accounts and Investment Funds of the Participant that are
         used to provide the amount lent to the Participant shall be determined
         under uniform procedures established by the Benefits Committee after
         consulting with the Trustee and recordkeeper as appropriate to ensure
         their feasibility. Each repayment of principal on the loan received by
         the Trustee from the Participant shall reduce the Participant's
         investment in his Loan Fund and such repayment of principal together
         with each payment of loan interest shall increase pro rata the amount
         invested in each other Investment Fund in accordance with the
         Participant's investment elections at the time of such repayment,
         subject to any Investment Fund restrictions.

(g)      Except as otherwise provided below, repayment in equal installments of
         interest and principal shall be accomplished through regular payroll
         deductions. The obligation to make repayments of principal and interest
         shall be suspended during the period not to exceed one year that the
         Participant is on an authorized leave of absence without pay. If the
         unpaid leave continues thereafter, the Participant shall be required to
         recommence repayments, on a monthly basis by check, until he returns to
         pay status and resumes regular repayments by means of payroll
         deductions. To satisfy legal requirements, the Benefits Committee may
         specify rules for redetermining the amount, timing, or manner of
         repayments following a period of suspension due to unpaid leave; but
         such redetermination shall not be made for other reasons. The
         obligation to make repayments shall continue during a paid leave of
         absence or a transfer to a paid status as an Employee who is no longer
         an Eligible Employee. Where it is not feasible in such a case to
         continue processing the loan repayments as payroll deductions under a
         payroll system that currently covers the Participant, the repayments
         shall be made by the Participant by check on a monthly basis. A
         Participant shall be entitled at any time to prepay, without penalty,
         any or all of the accrued interest and outstanding principal amount of
         the loan by direct payment. Notwithstanding the foregoing, loan
         repayments will be suspended under this Plan as permitted under section
         414(u)(4) of the Code.

(h)      If a Participant incurs a Separation from Service and either receives
         an immediate distribution of his remaining interest in the Plan or does
         not pay the total accrued interest and outstanding principal amount of
         the loan within 60 days, the Participant's note shall be canceled and
         the principal deemed distributed by the Trust Fund to him or, if
         applicable, his Beneficiary. This paragraph shall not apply, however,
         to any loan granted before July 1, 1994, nor shall it apply to any loan
         granted after such date in the case of a Participant who,
         notwithstanding his Separation from Service, continues to be a party in
         interest under section 3(14) of


                                       29



         ERISA, who, while not in default on his regular loan repayments, is
         legally entitled to continue his loan. Any Participant whose loan
         continues following Separation from Service pursuant to this paragraph
         shall be allowed to make required loan repayments by monthly checks or
         other appropriate means approved by the Benefits Committee once he or
         she ceases to be covered by a payroll of the Company, Affiliate, or
         Associated Company.

(i)      The Company and the Trustee may make suitable arrangements, consistent
         with the requirements of the Code and ERISA, for holding the
         Participant's note under an agency, subtrust or other vehicle that
         provides adequate safeguards while simplifying the handling of the loan
         and eliminating the need to transfer the note to the Trustee.

(j)      The foregoing provisions of this section notwithstanding, the Benefits
         Committee reserves the right to stop granting loans to Participants at
         any time.


                                       30



ARTICLE 8. INVESTMENT ELECTIONS

8.1 INVESTMENT OF NEW CONTRIBUTIONS

All contributions made by and on behalf of a Participant each Plan Year shall be
invested as the Participant shall designate in the Investment Funds then
available in increments of 1 percent of the aggregate amount of such
contributions. If the Participant fails to make a valid election, contributions
made by and on behalf of the Participant shall be invested in the Schwab money
market fund.

Notwithstanding the preceding paragraph, the Benefits Committee, in its sole
discretion, may permit Participants to exercise full investment discretion over
their Accounts by instructing the Broker as to the investment of the assets held
by the Trustee in the Participant's Account in the available Investment Funds as
described in section 2.1(t)(2). The Benefits Committee reserves the authority to
restrict a Participant's investment in certain of the investment vehicles which
constitute Investment Funds. A separate account at the Broker shall be
established for each Participant who exercises full investment discretion over
his Account. For purposes of this paragraph, the term "Broker" means Charles
Schwab & Co., Inc. or its successor or assign serving from time to time, which
shall be a broker-dealer registered under the Securities Exchange Act of 1934,
as amended.

8.2 INVESTMENT TRANSFERS

Subject to any investment instructions and procedures that may apply from time
to time, each Participant, including inactive and former Participants, may elect
to transfer any amounts invested in an Investment Fund to one or more other
Investment Funds at any time. Each Participant, including inactive and former
Participants, who is instructing the Broker as to the investment of the assets
in his Account may direct the Broker to reinvest such assets at any time and
from time to time, subject to the internal rules and policies of the Broker.
Further, each Participant, including inactive and former Participants, may elect
to transfer all amounts invested in Investment Funds to a separate account with
the Broker for the purpose of exercising full investment discretion over his
Account. Alternatively, each Participant including inactive and former
Participants, may elect to transfer all amounts which are held in an account
with the Broker to one or more of the Investment Funds. Any investment transfer
shall become effective as soon as administratively possible, according to the
rules and procedures established by the Benefits Committee, recordkeeper,
Trustee, and/or Broker, as applicable.

8.3 INVESTMENT ELECTIONS

Each Participant may make the election described in section 8.1 by filing an
election form with the Benefits Committee upon becoming a Participant. The
elections described in sections 8.1 and 8.2 may be changed together or
separately by making an election in the manner acceptable to the Benefits
Committee.


                                       31



Subject to such rules as the Benefits Committee may prescribe, Beneficiaries and
alternate payees shall have the same investment election rights as Participants
under this Plan.

8.4 TRANSFER OF ASSETS

The Benefits Committee shall establish procedures to transmit investment
directions of the Participants to the recordkeeper. The recordkeeper shall
instruct the Trustee to invest and reinvest assets held in the Participants'
Accounts based on such directions.

8.5 PARTICIPANT-DIRECTED INVESTMENTS

(a)      INTENT TO MEET ERISA SECTION 404(c). The Plan provisions pertaining to
         Participant-directed investments are intended to permit the Plan and
         Participant-directed transactions under it to comply with requirements
         in ERISA section 404(c) and related regulations so that a Participant
         will not be deemed to be a fiduciary by reason of exercising control
         over assets in his or her Account, and no person who is otherwise a
         fiduciary shall be liable, either for any loss or by reason of any
         breach, which results from the exercise of such control. For purposes
         of carrying out this intent, any Plan reference to a Participant who
         exercises control over Account assets shall be deemed to include a
         Beneficiary or an alternate payee who exercises such control, and any
         reference to a specific Department of Labor regulation shall be deemed
         to include a reference to any other currently applicable rule or
         regulation pertaining to the same subject.

(b)      FIDUCIARY FOR DISCLOSURES AND INSTRUCTIONS. To comply with ERISA
         section 404(c) and Department of Labor regulation 2550.404(c)-1
         thereunder, the Benefits Committee is designated as the Plan fiduciary
         responsible for giving Participants, Beneficiaries and alternate payees
         (together referred to as "eligible investors") all required
         information, receiving and carrying out investment directions from
         eligible investors and giving eligible investors written confirmation
         of instructions received from them. Accordingly, the Benefits Committee
         (or a person or persons designated by the Benefits Committee to act on
         its behalf) shall provide information to eligible investors in
         accordance with section 1((b)(2)(B) of the above Department of Labor
         regulation, shall receive investment instructions provided by such
         eligible investors in accordance with this article of the Plan, and
         shall provide eligible investors with written confirmation of such
         instructions. The Benefits Committee and any person or persons it has
         designated to act on its behalf shall comply with all such investment
         instructions from eligible investors except in cases where the Benefit
         Committee declines to implement such instructions in accordance with
         sections 1(b)(2)(ii)(B) and 1(d)(2)(ii) of the above Department of
         Labor regulation.


                                       32



ARTICLE 9. PARTICIPANT ACCOUNTS AND RECORDS

9.1 ACCOUNTS AND RECORDS

The accounts and records of the Plan shall be maintained at the direction of the
Benefits Committee and shall accurately disclose the value of the Account of
each Participant or Beneficiary in the Plan. Such accounts and records may be
kept in dollars or in units or both, as determined in accordance with generally
accepted principles of trust accounting approved by the Benefits Committee.

Each subaccount of a Participant's Account shall be assigned a share of each
Investment Fund in which the Participant's Account is invested in the proportion
which the balance of such subaccount bears to the total Participant's Account.
The Benefits Committee shall cause records to be maintained relative to a
Participant's Account so that there may be determined as of any Valuation Date
the current value of the Participant's Account in the Trust Fund and the
adjustments from the previous Valuation Date that have produced such current
value. If the Participant is exercising full investment discretion over his
Account, such Participant's Account shall be credited with the earnings, gains,
and losses attributable to the assets in the Participant's Account.

9.2 VALUATION ADJUSTMENTS

As of each Valuation Date, the recordkeeper shall credit the Accounts of
Participants and Beneficiaries with contributions made during the day and debit
such Accounts with withdrawals and distributions during such day. The net worth
of an Investment Fund shall be determined in accordance with generally accepted
principles of trust accounting and shall be conclusive and binding upon all
persons having an interest under the Plan.


                                       33



ARTICLE 10. FINANCING

10.1 FUNDING OF THE PLAN

The Company shall maintain a Trust Fund to finance the benefits under the Plan,
by entering into one or more Trust Agreements or insurance and bank investment
contracts approved by the Company, or by causing insurance and bank investment
contracts to be held under a Trust Agreement. Any Trust Agreement is designated
as and shall constitute a part of this Plan. All rights which may accrue to any
person under this Plan shall be subject to all the terms and provisions of such
Trust Agreement. A Trustee shall be appointed by the Company and shall have such
powers as provided in the Trust Agreement. The Company may modify any Trust
Agreement or insurance and bank investment contract from time to time to
accomplish the purpose of the Plan and may replace any insurance company or bank
or appoint a successor Trustee or Trustees. By entering into such Trust
Agreements or insurance or bank investment contracts, the Company shall vest in
the Trustee, or in one or more investment managers appointed under the terms of
the Trust Agreement from time to time by action of the Benefits Committee,
responsibility for the management and control of the Trust Fund. In the event
the Benefits Committee appoints any such investment manager, the Trustee shall
not be liable for the acts or omissions of the investment manager or have any
responsibility to invest or otherwise manage any portion of the Trust Fund
subject to the management and control of the investment manager. The Company
from time to time shall establish a funding policy which is consistent with the
objectives of the Plan and shall communicate it to the Trustee and each
investment manager so that they may coordinate investment policies with such
funding policy. Nothing in this section shall eliminate the responsibility of
Participants for the results of investment elections that are within their
control, as provided in Article 8.

10.2 EMPLOYER CONTRIBUTIONS

Each Employer shall make the contributions to the Trust Fund that are required
of it under the terms of this Plan, subject to the right of the Company to
discontinue the Plan.

10.3 NONREVERSION

Anything in this Plan to the contrary notwithstanding, it shall be impossible at
any time for the contributions of the Company (or any Employer) or any part of
the Trust Fund to revert to the Company, Affiliate, or Associated Company or to
be used for or diverted to any purpose other than the exclusive benefit of
Participants or their Beneficiaries, except that--

(a)      if all or a portion of any contribution is made by an Employer by a
         mistake of fact, upon written request to the Trustee, such contribution
         or such portion (less any investment losses attributable thereto) and
         any increment thereon shall be returned to the Employer within one year
         after the date of payment; and

(b)      in the event that a deduction for any contributions made by the
         Employer is disallowed by the Internal Revenue Service in any Plan
         Year, then that portion of the Employer contribution (less any
         investment losses attributable thereto) that is not deductible shall be
         returned to the Employer within one year from the date of receipt of
         notice by the Internal Revenue Service of the disallowance of the
         deduction.


                                       34



ARTICLE 11. ADMINISTRATION

11.1 THE BENEFITS COMMITTEE

The Plan shall be administered by a Benefits Committee appointed by the Board of
Directors. The Benefits Committee shall be composed of as many members as the
Board may appoint from time to time, but not fewer than three members, and shall
hold office at the pleasure of the Board. Such members may, but need not, be
Employees of the Company.

Any member of the Benefits Committee may resign by delivering a written
resignation to the Board and to the Benefits Committee Secretary with 30 days'
advance notice. Such resignation shall be effective no earlier than the date of
the written notice.

Vacancies in the Benefits Committee arising by resignation, death, removal or
otherwise, shall be filled by the Board.

11.2 COMPENSATION AND EXPENSES

The members of the Benefits Committee shall serve without compensation for
services as a member of the Benefits Committee. Any member of the Benefits
Committee may receive reimbursement by the Company of expenses properly and
actually incurred in the performance of duties as a Benefits Committee member.

All administrative expenses of the Plan shall be paid out of Plan assets if not
paid directly by the Company. Such expenses shall include any expenses incident
to the functioning of the Benefits Committee and the Trustee, including, but not
limited to, fees of the Plan's accountants, outside counsel and other
specialists, Trustee's fees, asset management fees, and other costs of
administering the Plan.

11.3 MANNER OF ACTION

A majority of the members of the Benefits Committee at the time in office shall
constitute a quorum for the transaction of business. All resolutions adopted,
and other actions taken by the Benefits Committee at any meeting shall be by the
vote of a majority of those present at any such meeting. Upon the unanimous
written consent of the members at the time in office, action of the Benefits
Committee may be taken otherwise than at a meeting.

11.4 CHAIRMAN, SECRETARY, AND EMPLOYMENT OF SPECIALISTS

The members of the Benefits Committee shall elect one of their number as
Chairman and shall elect a Secretary who may, but need not, be a member of the
Benefits Committee. They may authorize one or more of their number or any agent
to execute or deliver any instrument or instruments on their behalf, and may
employ such counsel, auditors, and other specialists and such clerical, medical,
actuarial and other services as they may require in carrying out the provisions
of the Plan.


                                       35



11.5 SUBCOMMITTEES

The Benefits Committee may appoint one or more subcommittees and delegate such
of its power and duties as it deems desirable to any such subcommittee, in which
case every reference herein made to the Benefits Committee shall be deemed to
mean or include the subcommittees as to matters within their jurisdiction. The
members of any such subcommittee shall consist of such officers or other
Employees of the Company and such other persons as the Benefits Committee may
appoint.

11.6 OTHER AGENTS

The Benefits Committee may also appoint one or more persons or agents to aid it
in carrying out its duties as Plan administrator. The Benefits Committee may
delegate such of its powers and duties as it deems desirable to such persons or
agents.

11.7 RECORDS

All resolutions, proceedings, acts and determinations of the Benefits Committee
shall be recorded under the Secretary's supervision. All such records, together
with such documents and instruments as may be necessary for the administration
of the Plan, shall be preserved in the custody of the Secretary.

11.8 RULES

Subject to the limitations contained in the Plan, the Benefits Committee shall
be empowered from time to time in its discretion to adopt by-laws and establish
rules for the conduct of its affairs and the exercise of the duties imposed upon
it under the Plan.

11.9 BENEFITS COMMITTEE'S POWERS AND DUTIES

The Benefits Committee shall have responsibility for the general administration
of the Plan and for carrying out its provisions. The Benefits Committee shall
have such powers and duties as may be necessary to discharge its functions
including, but not limited to, the following:

(a)      to construe and interpret the Plan, to decide all questions of
         eligibility and determine the amount, manner and time of payment of any
         benefits hereunder;

(b)      to make a determination as to the right of any person to an allocation,
         and the amount thereof;

(c)      to obtain from the Employees and Employers such information as shall be
         necessary for the proper administration of the Plan and, when
         appropriate, to furnish such information promptly to the Trustees or
         other persons entitled thereto;

(d)      to prepare and distribute, in such manner as the Company determines to
         be appropriate, information explaining the Plan;


                                       36



(e)      to establish and maintain such accounts in the name of each Participant
         as are necessary;

(f)      to instruct the Trustee with respect to the payment of benefits
         hereunder;

(g)      to provide for any required bonding of fiduciaries and other persons
         who may from time to time handle Plan assets;

(h)      to prepare and file any reports required by ERISA;

(i)      to engage an independent public accountant to conduct such examinations
         and to render such opinions as may be required by ERISA;

(j)      to allocate contributions and Trust Fund gains or losses to the
         Accounts of Participants; and

(k)      to correct any mistakes and cure any defects in the administration of
         the Plan.

11.10 INVESTMENT RESPONSIBILITIES

The Benefits Committee shall have the authority and responsibility to direct the
Trustee with respect to the investment and management of the Trust Fund. Except
as otherwise provided in ERISA, the Benefits Committee may delegate such
authority and responsibility to direct the Trustee to any person who
acknowledges in writing that it is a fiduciary with respect to the Plan and who
provides the Benefits Committee with a written affirmation that it is qualified
to act as an investment manager within the meaning of ERISA. If the Benefits
Committee delegates to an investment manager the authority and responsibility to
so direct the Trustee, such investment manager, and not the Benefits Committee
or the Trustee, shall have sole responsibility for the investment and management
of so much of the Trust Fund as has been entrusted to his or her management and
control, and, except to the extent otherwise required by ERISA, such delegation
shall relieve the Benefits Committee and the members thereof of all duties and
responsibilities with respect to the authority and responsibility so delegated.

The Benefits Committee may relinquish to the Trustee the Benefits Committee's
power to direct the Trustee with respect to the investment and management of the
Trust Fund. In the event the Benefits Committee so relinquishes said power to
the Trustee and the Trustee accepts such responsibility in writing, the Trustee
shall have sole and exclusive power and responsibility with respect to the
investment and management of the Trust Fund. The Benefits Committee may regain
the power so relinquished by appropriate Benefits Committee action and notice to
the Trustee.

Nothing in this section shall eliminate the responsibility of Participants for
the results of investment elections that are within their control, as provided
in Article 8.


                                       37



11.11 BENEFITS COMMITTEE'S DECISIONS CONCLUSIVE

Benefits under this Plan shall be paid only if the Benefits Committee decides in
its discretion that the applicant is entitled to them. The Benefits Committee
shall have the exclusive right and discretionary authority to interpret the
terms and provisions of the Plan and to resolve all questions arising
thereunder, including, without limitation, the right to resolve and remedy
ambiguities, inconsistencies, or omissions in the Plan; provided, however, that
the construction necessary for the Plan to conform to the Code shall in all
cases control. The Benefits Committee shall endeavor to act in such a way as not
to discriminate in favor of any class of Employees, Participants, or other
persons. Any and all disputes with respect to the Plan that may arise involving
Participants, Beneficiaries, or alternate payees shall be referred to the
Benefits Committee, and its decisions shall be final, conclusive, and binding.
All findings of fact, interpretations, determinations, and decisions of the
Benefits Committee in respect of any matter or question arising under the Plan
shall be final, conclusive, and binding upon all persons, including, without
limitation, Employees, Participants, Beneficiaries, alternate payees, and any
and all other persons having, or claiming to have, any interest in or under the
Plan and shall be given the maximum possible deference allowed by law.

11.12 INDEMNITY

The Company shall indemnify each member of the Benefits Committee (which, for
purposes of this section, includes any Employee to whom the Benefits Committee
has delegated fiduciary or other duties) against any and all claims, losses,
damages, expenses, including counsel fees, incurred by the member and any
liability, including any amounts paid in settlement with the Company's approval,
arising from the member's or the Company's action or failure to act, except when
the same is judicially determined to be attributable to the gross negligence or
willful misconduct of such member. The right of indemnity described in the
preceding sentence shall be conditioned upon--

(a)      the timely receipt of notice by the Company of any claim asserted
         against the member, which notice, in the event of a lawsuit shall be
         given within 90 days after receipt by the member of the complaint; and

(b)      the receipt by the Company of an offer from the member of an
         opportunity to participate in the settlement or defense of such claim.

11.13 FIDUCIARIES

The fiduciaries named in this Article shall have only those specific powers,
duties, responsibilities and obligations as are specifically given them under
this Plan or the Trust Agreement. The Employers shall have the sole
responsibility for making the contributions under the Plan. Except as provided
in section 12.1, the Company shall have the sole authority to amend or
terminate, in whole or in part, this Plan or the Trust Agreement and to appoint
or remove the Trustee. The Benefits Committee shall be the Named Fiduciary under
the Plan and shall have the sole responsibility for the administration of this
Plan. The officers and


                                       38



Employees of the Company shall have the responsibility of implementing the Plan
and carrying out its provisions as the Benefits Committee shall direct. Except
as provided under ERISA with respect to investment and elections of Participants
allowed under Article 8, the Benefits Committee, the Trustee, and any investment
manager shall have the sole responsibility for the administration of the Trust
Fund and the management of the assets held under the Trust Agreement. A
fiduciary may rely upon any direction, information or action of another
fiduciary as being proper under this Plan or the Trust Agreement, and is not
required under this Plan or the Trust Agreement to inquire into the propriety of
any such direction, information or action. It is intended under this Plan and
the Trust Agreement that each fiduciary shall be responsible for the proper
exercise of that fiduciary's own powers, duties, responsibilities and
obligations under this Plan and the Trust Agreement and shall not be responsible
for any act or failure to act of another fiduciary. No fiduciary guarantees the
Trust Fund in any manner against investment loss or depreciation in asset value.
Any party may serve in more than one fiduciary capacity with respect to the Plan
or the Trust Agreement.

11.14 NOTICE OF ADDRESS

For purposes of distributing benefits, the Benefits Committee may rely upon the
address of record of the Participant, Beneficiary or other payee on file with
the Benefits Committee. Each person entitled to benefits from the Plan must file
with the Benefits Committee, in writing, each change of post office address. Any
communication, statement or notice addressed to such a person at his or her
latest reported post office address shall be binding upon that person for all
purposes of the Plan, and neither the Benefits Committee nor the Company or any
Trustee shall be obliged to search for or ascertain the person's whereabouts.

11.15 DATA

All persons entitled to benefits from the Plan must furnish to the Benefits
Committee such documents, evidence, or information, including information
concerning marital status, as the Benefits Committee considers necessary or
desirable for the purpose of administering the Plan. It is an express condition
of this Plan that each such person must furnish such information and sign such
documents as the Benefits Committee may require before any benefits become
payable from the Plan. The Benefits Committee shall be entitled to distribute
benefits to a nonspouse Beneficiary in reliance upon the signed statement of the
Participant that the Participant is unmarried without any further liability to a
spouse if such statement is false.

11.16 NONALIENATION

(a)      Plan benefits may not be assigned unless the Plan authorizes a specific
         exception to this general rule. Accordingly, except as permitted by the
         Plan in accordance with Code section 401(a)(13) and ERISA section
         206(d) with respect to assignments to alternate payees under qualified
         domestic relations orders, no benefit payable at any time under the
         Plan shall be subject to the debts or liabilities of a Participant or
         his or her Beneficiary, and any attempt to alienate, sell, transfer,
         assign, pledge, or


                                       39



         otherwise encumber any such benefit, whether presently or thereafter
         payable, shall be void. Effective as of August 5, 1997, the Plan may
         offset payments described in a judgment, order, decree, or settlement
         agreement relating to a breach of fiduciary duty or criminal act
         against the Plan, as further described in Code section 401(a)(13).
         Subject to the foregoing exceptions, no benefit under the Plan shall be
         subject in any manner to attachment, garnishment, or encumbrance of any
         kind.

(b)      Assignments of Plan benefits may be made in accordance with the
         following specific exception for qualified domestic relations orders.
         Pursuant to procedures established by the Benefits Committee that are
         consistent with Code section 414(p) (including procedures requiring
         prompt notification of the affected Participant and each alternate
         payee of the Plan's receipt of a domestic relations order and its
         procedures for determining the qualified status of such order),
         judicial orders for purposes of enforcing family support obligations or
         pertaining to domestic relations (which orders do not alter the amount,
         timing or form of benefit other than to have it commence at the
         earliest permissible date) shall be honored by the Plan if the Benefits
         Committee determines that they constitute qualified domestic relations
         orders.

         (1)      Except as may otherwise be required by Department of Labor
                  regulations, a qualified domestic relations order may not
                  require a retroactive transfer of all or part of a
                  Participant's Account to or from the benefit of an alternate
                  payee without permitting an appropriate adjustment for
                  earnings and investment gains or losses that have occurred in
                  the interim, nor shall such orders require the Plan to provide
                  loans, self-directed investment elections, or other rights to
                  alternate payees that are not available to Beneficiaries
                  generally.

         (2)      To the full extent permitted by Code section 414(p)(10) and by
                  the terms of a qualified domestic relations order, amounts
                  assigned to an alternate payee may be paid as soon as possible
                  in a lump sum, notwithstanding the age, financial hardship,
                  employment status, or other factors affecting the ability of
                  the Participant to make a withdrawal or otherwise receive a
                  distribution of balances to the Participant's credit under the
                  Plan. In cases where such full and prompt payment of amounts
                  assigned to an alternate payee will not be made, the assigned
                  amounts shall be transferred within a reasonable time to the
                  Investment Funds selected by the alternate payee or to the
                  Schwab money market fund if the alternate payee does not make
                  a valid election within a reasonable time, as determined by
                  the Benefits Committee.

11.17 INCOMPETENCY

Every person receiving or claiming benefits under the Plan shall be conclusively
presumed to be mentally competent and of age until the date on which the
Benefits Committee receives a written notice, in a form and manner acceptable to
the Benefits Committee, that such person


                                       40



is incompetent or a minor, for whom a guardian or other person legally vested
with the care of the person or estate has been appointed; provided, however,
that if the Benefits Committee shall find that any person to whom a benefit is
payable under the Plan is unable to care for his or her affairs because of
incompetency, or is a minor, any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal representative) may be paid to
the spouse, a child, a parent or a brother or sister, or to any person or
institution deemed by the Benefits Committee to have incurred expense for such
person otherwise entitled to payment. To the extent permitted by law, any such
payment so made shall be a complete discharge of liability therefor under the
Plan.

In the event a guardian of the estate of any person receiving or claiming
benefits under the Plan shall be appointed by a court of competent jurisdiction,
benefit payments may be made to such guardian, provided that proper proof of
appointment and continuing qualification is furnished in a form and manner
acceptable to the Benefits Committee. To the extent permitted by law, any such
payment so made shall be a complete discharge of any liability therefor under
the Plan.

11.18     MISSING PERSONS

If the Benefits Committee is unable, within two years after the Participant's
distribution becomes due, to make payment because the identity or whereabouts of
the Participant or Beneficiary cannot be ascertained, the Benefits Committee may
mail a notice by registered mail to the last known address of such person
stating that unless such person makes written reply to the Benefits Committee
within 60 days from the mailing of such notice, the Benefits Committee shall
direct that the Participant's Account shall be forfeited and all further
benefits with respect to such person shall be discontinued and all liability for
the payment thereof shall terminate. In the event of the subsequent reappearance
of the Participant or Beneficiary prior to termination of the Plan, the benefits
which were due and payable and which such person failed to receive shall be paid
in a single sum, and any future benefits due such person shall be reinstated in
full. The amount payable to such person shall be equal to the benefit forfeited,
without interest on such amount for the period commencing on the date such
benefit was forfeited and ending on the date of the claim. If the Participant's
Account is reinstated under this section and available forfeitures are
insufficient to cover the reinstatement, then the Company shall contribute to
the Trust an amount which shall equal the reinstatement described above, without
interest or earnings for the period between such reallocation and the
reappearance.

11.19 APPEALS FROM DENIAL OF CLAIMS

(a)      If a Participant, Beneficiary or alternate payees (each of which may be
         "Claimant") believes he or she is entitled to a benefit, or a benefit
         different from the one received, then the Claimant may file a claim for
         the benefit by writing a letter to the Benefits Committee or its
         authorized delegate. If any claim for benefits under the Plan is wholly
         or partially denied, the Claimant shall be given notice in writing of
         such denial within 90 days after receipt of the claim or within an
         additional 90 days if


                                       41



         special circumstances require an extension of time, and written notice
         of the extension shall be furnished to the Claimant. If special
         circumstances justify extending the claim period up to an additional 90
         days, the Claimant shall be given written notice of this extension
         within the original 90-day period, and such notice shall set forth the
         special circumstances and the date a decision is expected.

(b)      A notice of the denial, written in a manner calculated to be understood
         by the Claimant, shall set forth the following information:

         (1)      the specific reason or reasons for the denial;

         (2)      specific reference to pertinent Plan provisions on which
                  denial is based;

         (3)      a description of any additional material or information
                  necessary for the claimant to perfect the claim and an
                  explanation of why such material or information is necessary;

         (4)      an explanation that a full and fair review by the Benefits
                  Committee of the decision denying the claim may be requested
                  by the claimant or the claimant's authorized representative by
                  filing with the Benefits Committee, within 60 days after such
                  notice has been received, a written request for such review;
                  and

(c)      If such request is so filed, the claimant or the claimant's authorized
         representative may review pertinent documents and submit issues and
         comments in writing within the same 60-day period.

(d)      The decision of the Benefits Committee upon review shall be made
         promptly, and not later than 60 days after the Benefits Committee's
         receipt of the request for review, unless special circumstances require
         an extension of time for processing, in which case the claimant shall
         be so notified and a decision shall be rendered as soon as possible,
         but not later than 120 days after receipt of the request for review. If
         the claim is denied, wholly or in part, the claimant shall be given a
         copy of the decision promptly. The decision shall be in writing and
         shall include specific reasons for the denial, specific references to
         the pertinent Plan provisions on which the denial is based and shall be
         written in a manner calculated to be understood by the claimant.

(e)      All decisions made under the procedure set out in this section shall be
         final, and there shall be no further right of appeal. No person may
         initiate a lawsuit before fully pursuing the procedures set out in this
         section, including appeal. In addition, no legal action with respect to
         a claim for benefits may be initiated after the later of--

         (1)      365 days after receiving the written response of the Benefits
                  Committee to the Claimant's request for review pursuant to
                  subsection (d); or

         (2)      two years after the Claimant's original claim for benefits
                  pursuant to subsection (a).


                                       42



ARTICLE 12. AMENDMENT AND TERMINATION

12.1 AUTHORITY TO AMEND OR TERMINATE

The Company expects the Plan to be permanent and continue indefinitely, but
since future conditions affecting the Company cannot be anticipated or foreseen,
the Company must necessarily and does hereby reserve the right to amend, modify
or terminate the Plan at any time by action of its Board of Directors. The
Benefits Committee may make any modifications or amendments to the Plan that are
necessary or appropriate to meet the requirements of ERISA, the Code or any
other law. The Benefits Committee may also make any technical or clerical
amendments which do not significantly increase or decrease benefit levels or
costs. No amendment of the Plan shall cause any part of the Trust Fund to be
used for, or diverted to, purposes other than for the exclusive benefit of the
Participants or their Beneficiaries covered by the Plan. Plan amendments may not
decrease the Account balance of any Participant. In addition, neither the
Company nor the Benefits Committee may, through the exercise of discretion or by
Plan amendment, deny a Participant a benefit or right protected under Code
section 411(d)(6) and the related regulations to which the Participant is
otherwise entitled.

Notwithstanding the preceding paragraph of this section 12.1, Oceanic
Exploration Company is hereby authorized to amend or modify the Plan solely with
respect to the employees of Oceanic Exploration Company and its Affiliates and
their participation under the Plan, at any time by action of the Board of
Directors of Oceanic Exploration Company.

12.2 DISTRIBUTION ON TERMINATION

Upon termination of the Plan, in whole or in part, or upon complete
discontinuance of contributions to the Plan by the Company, the value of the
proportionate interest in the Trust Fund of each Participant affected by such
termination having an interest in the Trust Fund shall be determined by the
Benefits Committee as of the date of such termination or discontinuance. The
Accounts of such Participants shall be fully vested and nonforfeitable.
Thereafter, distribution shall be made to such Participants as directed by the
Benefits Committee.

Upon the partial termination of the Plan, the Benefits Committee shall determine
the timing of a distribution of the balance of the affected Participants'
Accounts.

12.3 CORPORATE REORGANIZATIONS

In the event the Company is dissolved or liquidated or shall by appropriate
legal proceedings be adjudged a bankrupt, or in the event judicial proceedings
of any kind result in the involuntary dissolution of the Company, the Plan shall
be terminated. The merger, consolidation or reorganization of the Company, or
the sale of the Company or of all or substantially all of its assets or stock,
shall not terminate the Plan if there is delivery to the Company, by its
successor or by the purchaser of all or substantially all of its stock or
assets, a written instrument requesting that it be substituted for the Company
and agreeing to


                                       43



perform all the provisions hereof which the Company is required to perform
hereunder. Upon the receipt of said instrument, with the approval of the
Company, the successor or the purchaser shall be substituted for the Company
herein, and the Company shall be relieved and released from all obligations of
any kind, character or description herein or in any trust agreement.

12.4 PLAN MERGER OR TRANSFER

This Plan shall not merge or consolidate with, or transfer assets and
liabilities to, or accept a transfer from, any other employee benefit plan
unless each Participant in this Plan will (if the Plan had then terminated)
receive a benefit immediately after the merger, consolidation or transfer which
is not less than the benefit the Participant would have been entitled to receive
immediately before the merger, consolidation or transfer of assets (if this Plan
had then terminated).


                                       44



ARTICLE 13. TOP-HEAVY PROVISIONS

13.1 APPLICATION

The provisions of this Article shall be interpreted and administered in
accordance with the requirements of Code section 416 and related Treasury
regulations. Because the Plan is a multiple employer plan, as described in Code
section 413(c), the top-heavy requirements of Code section 416 and related
Treasury regulations apply to each controlled group Employer separately to the
extent that benefits under the Plan are provided to Employees with respect to
service for that controlled group Employer. For purposes of this Article, the
term "Employer" includes an Employer under the Plan and only those Affiliates of
such entity that must be aggregated and treated as a single employer for
purposes of Code section 414 and related Treasury regulations.

If, as of the Determination Date in any Plan Year, the sum of the Accounts of
Employees who are Key Employees of a controlled group Employer for such Plan
Year exceeds 60 percent of the sum of the Accounts of all Employees of the
controlled group Employer and their Beneficiaries or the Plan is part of a
Top-Heavy Group, then the following provisions under this Article shall apply
for such Plan Year. The foregoing notwithstanding, the provisions of this
Article shall not apply to the Plan in any Plan Year during which it is part of
an Aggregation Group (as defined in Plan section 13.3(a)) with respect to a
controlled group Employer, whether or not it is top-heavy as a single plan,
unless the Aggregation Group of which it is a part is top-heavy with respect to
the controlled group Employer in such Plan Year.

The "Determination Date," which is the date for determining the applicability of
this Article, is--

(a)      for the first Plan Year beginning after 1983, the last day of the Plan
         Year; and

(b)      for any other Plan Year, the last day of the preceding Plan Year.

13.2     KEY EMPLOYEES

(a)      For purposes of this Article, the term "Key Employee" means any
         Employee or former Employee (and the Beneficiary of such an Employee)
         who at any time during the Plan Year in which a determination of
         top-heaviness is made or any of the four preceding Plan Years is--

         (1)      an officer of the controlled group Employer whose Section 415
                  Compensation during the relevant Plan Year exceeded 50 percent
                  of the dollar limitation in effect under Code section
                  415(b)(1)(A); provided, however, that no more than the lesser
                  of--

                  (A)      50 Employees; or


                                       45



                  (B)      the greater of three Employee or 10 percent of all
                           Employees shall be treated as officers;

         (2)      one of the ten Employees having Section 415 Compensation for
                  the relevant Plan Year in excess of the dollar limitation in
                  effect under Code section 415(c)(1)(A) and owning (or
                  considered as owning within the meaning of Code section 318,
                  as modified by Code section 416(i)(1)(B)) the largest
                  interests in the controlled group Employer; provided, however,
                  that if two Employees have the same interest in the controlled
                  group Employer, then the Employee with the greater Section 415
                  Compensation shall be treated as having the larger interest;

         (3)      a 5-percent owner of the controlled group Employer; or

         (4)      a 1-percent owner of the controlled group Employer having
                  annual Section 415 Compensation of more than $150,000.

(b)      A 5-percent owner is any Employee who owns (or is considered as owning
         within the meaning of Code section 318, as modified by Code section
         416(i)(1)(B)) more than 5 percent of the value of the outstanding stock
         of the Employer or stock possessing more than 5 percent of the total
         combined voting power of all stock of the Employer. Similarly, a
         1-percent owner is any Employee who owns (or is considered as owning
         within the meaning of Code section 318, as modified by Code section
         416(i)(1)(B)) more than 1 percent of the value of the outstanding stock
         of the Employer or stock possessing more than 1 percent of the total
         combined voting power of all stock of the Employer. For purposes of
         determining 5-percent and 1-percent owners, the aggregation and other
         rules of subsections (b), (c) and (m) of Code section 414 do not apply.

(c)      If an Employee who has not terminated employment ceases to be a Key
         Employee, such Employee's Account balance or accrued benefit shall be
         disregarded under the top-heavy plan computation for any Plan Year
         following the last Plan Year for which the individual was treated as a
         Key Employee. The Account balance or accrued benefit of any Employee or
         former Employee, who has not performed any services for the controlled
         group Employer at any time during the five-year period ending on the
         Determination Date, shall not be taken into account to determine
         whether the Plan or Aggregation Group is top-heavy.

A "non-Key Employee" means any Participant who is not a Key Employee, but who is
an Employee on the last day of the Plan Year.

13.3 TOP-HEAVY GROUP

For purposes of determining whether the Plan is a part of a Top-Heavy Group, the
following rules shall apply:


                                       46



(a)      AGGREGATION GROUP. The Aggregation Group shall include any plan
         maintained by the controlled group Employer which covers a Key Employee
         and any other plan which enables a plan covering a Key Employee to meet
         the requirements of Code section 401(a)(4) or 410.

(b)      TOP-HEAVY GROUP. An Aggregation Group is a Top-Heavy Group if the sum
         of the account balances of Key Employees under all defined contribution
         plans included in the group and the present value of the accumulated
         accrued benefits for Key Employees under all defined benefit plans in
         the group exceeds 60 percent of a similar sum determined for all
         Employees and their Beneficiaries under all such plans in the group.
         The present value of accrued benefits under defined benefit plans and
         the account balances under defined contribution plans shall be
         determined separately as of each plan's determination date. For
         purposes of determining whether an Aggregation Group is a Top-Heavy
         Group, the present value of accrued benefits under all defined benefit
         plans in the Aggregation Group shall be determined using a single set
         of actuarial assumptions, as defined in such defined benefit plans. The
         determination of whether the Aggregation Group is a Top-Heavy Group
         shall be made using each plan's results as of that plan's determination
         date which falls within the calendar year. In any Plan Year, in testing
         for top-heaviness under this Article, the controlled group Employer
         may, in its discretion, take into account accumulated accrued benefits
         and account balances in any other plan maintained by it so long as such
         expanded Aggregation Group continues to meet the requirements of Code
         sections 401(a)(4) and 410.

13.4 ADDITIONAL RULES

In determining the present value of the accrued benefits under a defined benefit
plan and the sum of the account balances under a defined contribution plan,
Employer contributions and voluntary Employee contributions shall be taken into
account and any rollover contribution or similar transaction initiated by the
Employee, which results in a transfer to this Plan, shall not be taken into
account. The present value of the accrued benefits in a defined benefit plan and
the account balance in a defined contribution plan shall include any amount
distributed to an Employee or Beneficiary within the five-year period ending on
that plan's determination date.

The present value of any Employee's accrued benefit under any defined benefit
plan as of any determination date shall be calculated--

(a)      as of the most recent Actuarial Valuation Date which is within a
         12-month period ending on the Determination Date;

(b)      as if employment terminated as of such valuation date; and

(c)      without regard to the automatic preretirement survivor annuity benefit
         or any other nonproportional subsidy.


                                       47



The term "Actuarial Valuation Date" shall mean the valuation date used for
computing plan costs for minimum funding.

13.5 COMBINED LIMIT FOR KEY EMPLOYEES

If the Plan is determined to be top-heavy in any Plan Year, then the combined
limits of Code section 415(e) and section 6.4 of the Plan shall be applied in
accordance with Code section 416(h)(1) by substituting "1.0" for "1.25" in
computing the defined benefit fraction and the defined contribution fraction
under paragraphs (2)(B) and (3)(B) of Code section 415(e). Notwithstanding the
foregoing, the limitation described in this section shall not apply to Plan
Years beginning on or after January 1, 2000.

13.6 MINIMUM CONTRIBUTION

If this Plan is determined to be top-heavy in any Plan Year, then the aggregate
contributions to be made by the Employer on behalf of each non-Key Employee for
the Plan Year (excluding contributions attributable to a Code section 401(k)
salary reduction arrangement) shall not be less than 3 percent of the
Participant's Section 415 Compensation for such year (or such lesser percentage
as represents the maximum percentage of Section 415 Compensation contributed on
behalf of a Key Employee for the Plan Year), as determined under Code section
416(c).

13.7 TOP-HEAVY VESTING

If this Plan is determined to be top-heavy in any Plan Year, the vesting
schedule specified in section 7.1 shall continue to apply.


                                       48



ARTICLE 14. MISCELLANEOUS PROVISIONS

14.1 EMPLOYMENT RIGHTS

Nothing contained in this Plan or any modification of the Plan or act done in
pursuance hereof shall be construed as giving any person any legal or equitable
right against the Company, Affiliate, or Associated Company, the Trustee or the
Trust Fund, unless specifically provided herein, or as giving any person a right
to be retained in the employ of the Company, Affiliate, or Associated Company.
All Participants shall remain subject to assignment, reassignment, promotion,
transfer, layoff, reduction, suspension and discharge to the same extent as if
this Plan had never been established.

14.2 NO EXAMINATION OR ACCOUNTING

Neither this Plan nor any action taken thereunder shall be construed as giving
any person the right to an accounting or to examine the books or affairs of the
Company, Affiliate, or Associated Company.

14.3 INVESTMENT RISK

The Participants and their Beneficiaries shall assume all risks in connection
with any decrease in the value of any assets or funds which may be invested or
reinvested in the Trust Fund which supports this Plan.

14.4 SEVERABILITY

In the event any provision of this Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of
this Plan, and it shall be construed and enforced as if such illegal or invalid
provision had never been inserted herein.

14.5 COUNTERPARTS

This Plan may be executed in any number of counterparts, each of which shall be
deemed to be an original. All the counterparts shall constitute but one and the
same instrument and may be sufficiently evidenced by any one counterpart.

14.6 SERVICE OF LEGAL PROCESS

The Secretary of the Company is hereby designated agent of the Plan for the
purpose of receiving service of summons, subpoena or other legal process.

14.7 HEADINGS OF ARTICLES AND SECTIONS

The headings of sections and subsections are included solely for convenience of
reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.

14.8 APPLICABLE LAW

Except to the extent superseded or preempted by ERISA, the Plan and all rights
hereunder shall be governed, construed and administered in accordance with the
laws of the State of Colorado with the exception that any Trust Agreement which
may constitute a part of the Plan may provide that it will be construed and
enforced in all respects under and by the laws of the state in which the Trustee
thereunder is located.

                               * * * * * * * * * *


                                       49


IN WITNESS WHEREOF, Cordillera Corporation has caused this restated Plan to be
executed this 7th day of December, 2001, to be effective as indicated in section
1.3.



                                             CORDILLERA CORPORATION


ATTEST:
                                             By  /s/ John E. Jones
                                                 -----------------
                                                 John E. Jones
                                                 Its: Executive Vice President
By   /s/ Lettie S. Flower
     --------------------
     Lettie S. Flower
     Its: Assistant Secretary                             (Corporate Seal)



                                       50



APPENDIX A. SPECIAL RULES RELATED TO GUARANTEED INVESTMENT CONTRACT OF EXECUTIVE
LIFE INSURANCE COMPANY OF CALIFORNIA

(1)      APPLICABILITY. This appendix supplements the Cordillera and Affiliated
         Companies Money Purchase Pension Plan (the "Plan") and provides the
         special rules applicable to amounts held in the Trust Fund and
         previously invested through Fund A (as defined by the Plan as in
         effect prior to January 1, 2001) in the guaranteed investment contract
         issued by Executive Life Insurance Company of California (the
         "Executive Life GIC"). As explained herein, this appendix is generally
         effective April 1, 1991.

(2)      BACKGROUND. In April, 1991, the California State Insurance Commission
         took court-supervised conservatorship of Executive Life Insurance
         Company. The Benefits Committee, in response to this extraordinary
         event and in the exercise of its duties and responsibilities under the
         Plan, took prompt action to protect the interests of Participants and
         Beneficiaries. By way of documentation and not limitation, these
         actions are reflected in this appendix. Nothing in this appendix shall
         be construed or interpreted to limit or restrict the authority of the
         Benefits Committee to take any further action concerning the Executive
         Life GIC that it deems appropriate in the interest of Participants and
         Beneficiaries.

(3)      ACTION STEPS. In response to the court appointment of the California
         Insurance Commission as conservator of Executive Life Insurance Company
         and to protect the interests of Participants and Beneficiaries, the
         following steps were implemented:

         (a)      All Plan transactions, including valuation of Accounts,
                  through and as of the March 31, 1991 Valuation Date were
                  completed under the terms of the Plan, without regard to
                  events subsequent to that Valuation Date.

         (b)      As of April 1, 1991, the Executive Life GIC is segregated from
                  the other assets of Fund A. No new contributions or investment
                  transfers are allocated to the segregated Executive Life GIC.

         (c)      A proportionate allocation of the Executive Life GIC
                  investment is identified for each Account invested in Fund A
                  as of April 1, 1991.

         (d)      A temporary hold is placed on each such proportionate
                  allocation in the Executive Life GIC. Until the status of the
                  Executive Life GIC under the court-supervised conservatorship
                  is resolved, the proportionate allocation shall not be--

                  (1)      transferable to other Investment Funds pursuant to
                           Article 8;



                                       51



                  (2)      available for distribution under the Plan, including
                           distributions specified under Plan section 7.3 on
                           account of Separation from Service, Plan section 7.4
                           on account of the Participant's death, or under Plan
                           section 7.5 relating to the minimum distribution
                           rules.

(e)      As of April 1, 1991, the investment return for the nonsegregated assets
         in Fund A does not include investment results related to the Executive
         Life GIC.

(f)      The Plan was amended, effective as of April 1, 1991, to provide that
         distributions on account of Separation from Service or death are valued
         as of the Valuation Date following the Separation from Service or death
         or, if the distribution is deferred, as of a later Valuation Date as
         further described in Plan sections 7.3 and 7.4.

(g)      The temporary hold described above in section 3(d) of this appendix
         shall be lifted as follows. As Executive Life GIC settlement proceeds
         become available to the plan in liquid form following the
         reorganization of Executive Life pursuant to its court-supervised
         conservatorship, the Benefits Committee shall:

         (1)      cause each affected Participant's proportionate share in such
                  proceeds to be determined based on the value of the
                  Participant's interest relative to the value of the interest
                  of all Participants in the Executive Life GIC as of April 1,
                  1991; and

         (2)      provide each affected Participant--

                  (A)      with an election to transfer his or her share of the
                           available settlement proceeds to other Investment
                           Funds in the time and manner prescribed by the
                           Benefits Committee; and

                  (B)      if eligible, the ability to receive such settlement
                           proceeds in the form of a loan or a distribution from
                           the Plan in accordance with applicable Plan
                           provisions.

         The above process shall be repeated as soon as practicable after each
         occasion on which Executive Life GIC settlement proceeds become
         available to the Plan so that no liquid settlement proceeds will remain
         in the segregated Executive Life GIC that continues to be subject to
         the temporary hold described in section 3(d) of Appendix A. If a
         Participant fails to make a valid election pursuant to paragraph (2)(A)
         above, the Participant's share of available settlement proceeds shall
         be transferred to the Cash Reserves Fund (or, effective April 1, 1997,
         the Schwab money market fund). When the last payment of Executive Life
         GIC settlement proceeds has been received and processed as described
         above, Appendix A shall cease to apply.


                                       52

EX-10.22

                                                                   EXHIBIT 10.22


                       CORDILLERA AND AFFILIATED COMPANIES
                        401(k) DEFERRED COMPENSATION PLAN

                         RESTATED ADOPTION AGREEMENT FOR
                         OCEANIC EXPLORATION COMPANY AND
                  OCEANIC INTERNATIONAL PROPERTIES CORPORATION


         All capitalized terms used in this Adoption Agreement that are
         not explicitly defined herein shall have the meanings set
         forth in the Cordillera and Affiliated Companies 401(k)
         Deferred Compensation Plan.

WHEREAS, the Cordillera and Affiliated Companies 401(k) Deferred Compensation
Plan (the "Plan") provides that any other Affiliate or Associated Company may,
with the consent of Cordillera Corporation (the "Sponsoring Employer"), adopt
the Plan and participate therein by a properly executed document evidencing said
intent of said Affiliate or Associated Company; and

WHEREAS, Oceanic Exploration Company and Oceanic International Properties
Corporation are Associated Companies that have previously adopted the Plan.

NOW, THEREFORE, BE IT RESOLVED THAT Oceanic Exploration Company, on its own
behalf and on behalf of its subsidiary, Oceanic International Properties
Corporation (the two companies shall collectively be referred to as "Adopting
Employer"), hereby ratifies its prior adoption of the Plan, with such
ratification effective as of January 1, 2001, for the benefit of its Eligible
Employees.

RESOLVED FURTHER THAT Adopting Employer agrees to be bound by such terms and
conditions relating to the Plan as the Sponsoring Employer may reasonably
require.

RESOLVED FURTHER THAT Adopting Employer agrees to comply with all qualification
requirements and employee benefit rules of the Code, ERISA and related
regulations and hereby acknowledges the authority of the Sponsoring Employer to
review Adopting Employer's compliance procedures and to require changes in such
procedures to protect the Plan's qualification.

RESOLVED FURTHER THAT Adopting Employer acknowledges that it has assumed all
obligations and liabilities of an Employer under the Plan, and that it will
cooperate with the Sponsoring Employer and Plan officials by providing such
information and taking such other actions as they deem appropriate for the
efficient administration of the Plan and the Trust Fund.




                                       1


RESOLVED FURTHER THAT Adopting Employer acknowledges that its status as an
Employer under the Plan is expressly conditioned on its being and continuing to
be an Associated Company of the Sponsoring Employer.

RESOLVED FURTHER THAT this restated adoption agreement shall supercede any prior
adoption agreement executed by Adopting Employer and the Sponsoring Employer.

RESOLVED FURTHER THAT the following provisions shall apply to the Adopting
Employer's Eligible Employees to the extent such provisions differ from those of
the Plan:

1.       Section 2.1:

         (b)      "AFFILIATE" means any business entity which is controlled by
                  or under common control with Oceanic, within the meaning of
                  Code sections 414 and 1563. The determination of control shall
                  be made without reference to paragraphs (a)(4) and (e)(3)(C)
                  of Code section 1563, and solely for the purposes of applying
                  the limitations of Articles 6 and 13, the phrase "more than 50
                  percent" shall be substituted for the phrase "at least 80
                  percent" each place it appears in Code section 1563(a)(1).

                  In addition, to the extent required by Code section 414 and
                  related regulations, Affiliate means--

                  (1)      any member of an affiliated service group (within the
                           meaning of Code section 414(m)) of which Oceanic or
                           any Affiliate is a member; and

                  (2)      any entity which, pursuant to Code section 414(o) and
                           the regulations thereunder, must be aggregated with
                           Oceanic or any other Affiliate for plan qualification
                           purposes.

2.       Section 2.1:

         (g)      "BREAK IN SERVICE" means, solely with respect to Employees of
                  Oceanic and its Affiliates, any year used in measuring Years
                  of Service in which an Employee is not credited with more than
                  500 Hours of Service. However, if an Employee is absent from
                  employment due to pregnancy, birth of the Employee's child,
                  adoption of a child by the Employee, or child care immediately
                  following such birth or adoption, any Hour of Service for
                  which the Employee would have received credit (or if not
                  determinable, eight hours for each day of absence) during such
                  absence, up to a maximum of 501 Hours of Service, shall be
                  credited to the Employee solely to prevent the Employee from
                  incurring a Break in Service. Any such Hours of Service shall
                  be credited for the Plan Year in which the absence begins if
                  necessary to prevent a Break in Service during that Plan Year
                  and, in all other cases, in the immediately following Plan
                  Year.




                                       2


3.       Section 2.1:

         (k)      "ELIGIBLE EMPLOYEE" means, solely with respect to Employees of
                  Oceanic and its Affiliates, any Employee except--

                  (1)      any Employee who is included in a unit of Employees
                           covered by a collective bargaining agreement, if
                           there is evidence that retirement benefits were the
                           subject of good faith bargaining, unless such
                           agreement provides for participation of those
                           Employees in this Plan;

                  (2)      any Employee who is a nonresident alien and who
                           receives no earned income from Oceanic or any of its
                           Affiliates which constitutes income from sources
                           within the United States;

                  (3)      any Employee who is a leased employee, within the
                           meaning of Code section 414(n)(2); and

                  (4)      effective from April 1, 2000 through December 31,
                           2001, any employee of the Alliance Staffing Division
                           of Oceanic.

4.       Section 2.1:

         (p)      "HOUR OF SERVICE" means, solely with respect to Employees of
                  Oceanic and its Affiliates--

                  (1)      each hour for which the Employee is paid or entitled
                           to payment for the performance of duties.

                  (2)      each hour for which the Employee is paid or entitled
                           to payment on account of a period of time during
                           which no duties are performed (irrespective of
                           whether the employment relationship has terminated)
                           due to vacation, holiday, illness, incapacity
                           (including disability), layoff, jury duty, or leave
                           of absence. No more than 501 Hours of Service shall
                           be credited to an Employee on account of any single
                           continuous period during which the Employee performs
                           no duties.

                  (3)      each hour for which back pay (irrespective of
                           mitigation of damages) is either awarded or agreed
                           to, with no duplication of credit for hours under
                           paragraph (1) or (2) and this paragraph (3).

                  (4)      each hour credited pursuant to applicable ERISA
                           regulations for unpaid periods of absence for service
                           in the United States armed forces or Public Health
                           Service during which the Employee's reemployment
                           rights are guaranteed by law, provided that the
                           Employee is reemployed as an Employee within the time
                           limits prescribed by such law.




                                       3


               For any period that includes any hours for which an Hour of
               Service would otherwise be credited to an Employee above, the
               Benefits Committee may, in accordance with rules applied in a
               uniform and nondiscriminatory manner, elect instead to credit
               Hours of Service using one or more of the following equivalences:


               
               
               BASIS UPON WHICH                           CREDIT GRANTED TO
               RECORDS ARE MAINTAINED                     INDIVIDUAL FOR PERIOD
               ------------------------------------------ ---------------------------

                                                       
               Shift                                      Actual hours for full shift
               Day                                        10 Hours of Service
               Week                                       45 Hours of Service
               Semi-monthly period                        95 Hours of Service
               Month                                      190 Hours of Service
               ------------------------------------------ ---------------------------


                  Anything to the contrary in this Section 2.1(p)
                  notwithstanding--

                  (A)      No Hours of Service shall be credited to an Employee
                           for any period merely because, during such period,
                           payments are made or due him under a plan maintained
                           solely for the purpose of complying with applicable
                           workers' compensation, unemployment compensation, or
                           disability insurance laws.

                  (B)      No Hours of Service shall be credited to an Employee
                           with respect to payments solely to reimburse for
                           medical or medically related expenses.

                  (C)      No Hours of Service shall be credited twice.

                  (D)      Hours of Service shall be credited at least as
                           liberally as required by the rules set forth in U.S.
                           Department of Labor Regulation section 2530.200b-2(b)
                           and (c).

                  (E)      In the case of an Employee who is such solely by
                           reason of service as a leased employee within the
                           meaning of section 414(n) or 414(o) of the Code,
                           Hours of Service shall be credited as if such
                           Employee were employed and paid with respect to such
                           service (or with respect to any related absences or
                           entitlements) by Oceanic or any of its Affiliates
                           that is the recipient thereof.

5.       Section 2.1:

         (dd)     "YEAR OF SERVICE" means, solely with respect to Oceanic and
                  its Affiliates, a period of 12 consecutive months during which
                  the Employee completes at least 1,000 Hours of Service, where
                  the first such period is measured from the date on





                                       4


                  which the Employee first performs an Hour of Service after
                  being hired or after being rehired after a Break in Service,
                  and each subsequent period is the Plan Year, beginning with
                  the Plan Year that commences with or within the first period.

                  Effective April 1, 2000, in no event shall an Employee's
                  employment service with Alliance Staffing Associates, Inc. or
                  Alliance Services Associates, Inc. be considered for
                  determining Years of Service hereunder.

                  Notwithstanding any Plan provision to the contrary, in no
                  event shall an Employee's Years of Service on or after January
                  1, 2002 be less than such Employee's Years of Service credited
                  to him on December 31, 2001 under the Plan as in effect on
                  that date.

                  Furthermore, in the case of an Employee who transfers to
                  Oceanic or one of Oceanic's Affiliates from the Company or one
                  of the Company's Affiliates, the Employee shall be credited,
                  in the Plan Year that includes the date of transfer, with 190
                  Hours of Service for each month prior to the date of transfer
                  that the Employee was required to be credited with at least
                  one Hour of Service under 29 CFR section 2530.200b-2.

6.       Section 2.1:

         (ee)     "OCEANIC" means Oceanic Exploration Company or its successor
                  in interest.

7.       Section 3.1:

         3.1 DATE OF PARTICIPATION

         Every Employee of Oceanic or one of its Affiliates who was an Eligible
         Employee and a Participant on December 31, 2001, and continues to be an
         Eligible Employee shall continue to be a Participant thereafter. On and
         after January 1, 2002, every other Eligible Employee of Oceanic or one
         of its Affiliates shall become a Participant in the Plan on the first
         January 1 or July 1 Plan entry date that coincides with or next follows
         the date he or she has attained age 21, has completed one Year of
         Service, and has become an Eligible Employee.

8.       Section 7.1:

         (a)      VESTING. Solely with respect to Participants who are employed
                  by Oceanic or one of its Affiliates, each Participant's
                  interest in his or her Pretax Deferral Account and Rollover
                  Account shall be fully vested at all times, including the time
                  at which the Participant attains Normal Retirement Age.




                                       5


                  Solely with respect to Participants who are employed by
                  Oceanic or one of its Affiliates, each Participant shall vest
                  in his or her Matching Account based on the Participant's
                  Years of Service pursuant to the following table:


               
               
               YEARS OF SERVICE             PERCENTAGE VESTED
               ---------------------------- ---------------------

                                         
               Less than 2                        0%
               2                                 20%
               3                                 40%
               4                                 60%
               5                                 80%
               6 or more                        100%
               ---------------------------- ---------------------



                  Notwithstanding the above, if a Participant is fully vested in
                  his Matching Account as of December 31, 2001 or at the time he
                  transfers to employment with Oceanic or one of Oceanic's
                  Affiliates from the Company or one of the Company's
                  Affiliates, then he shall remain fully vested in his Matching
                  Account at all times.

         (b)      FORFEITURE AND REINSTATEMENT OF CONTINGENT INTERESTS. Any
                  portion of a Participant's Matching Account that is not vested
                  upon a distribution of the Participant's vested Account
                  balance following Separation from Service shall be forfeited
                  on such date. If the Participant's vested Account is not
                  distributed, the nonvested portion of the Account shall be
                  forfeited when the Participant completes five consecutive
                  Breaks in Service. Any such forfeiture shall be used as soon
                  as possible to reduce Matching Contributions made by Oceanic
                  and its Affiliates.

                  If a Participant is rehired after incurring five consecutive
                  Breaks in Service, previously forfeited amounts shall not be
                  restored to the Participant's Account. If a Participant is
                  rehired before incurring five consecutive Breaks in Service,
                  then any amount previously forfeited shall be restored to the
                  Participant's Account by means of a special contribution by
                  Oceanic or its Affiliates, but only if the Participant repays,
                  without interest, to the Plan the full amount of the
                  distribution received on account of the prior Separation from
                  Service. The repayment must be made within five years after
                  the date the Participant is rehired and will be credited to
                  the Participant's Rollover Account and treated as a fully
                  vested after-tax payment for purposes of any subsequent
                  distributions.

                  If a Participant returns to employment and receives a
                  reinstatement of a previously forfeited balance, as provided
                  above, the Participant's vested amount





                                       6


                  in his or her Regular Account prior to the Participant's full
                  vesting therein shall be equal to--

                                 P(AB + D) - D,

                  Where P is the vested percentage and AB is the Regular Account
                  balance at the time the vesting is determined, and D is the
                  amount of the prior distribution.

                               * * * * * * * * * *

IN WITNESS WHEREOF, Adopting Employer and the Sponsoring Employer have caused
this restated adoption agreement to be executed by their authorized
representatives.


                                    ADOPTING EMPLOYER



Date  6 December 2001               By   /s/ Charles N. Haas
      ---------------                    ---------------------------------------

                                    Its   President
                                          --------------------------------------



                                    On behalf of Cordillera Corporation, the
                                    Benefits Committee, which is responsible for
                                    the proper administration of the
                                    above-referenced Plan, hereby consents to
                                    the above adoption and states that no
                                    further instrument of adoption is required.



Date   December 7, 2001             By   /s/ John E. Jones
       ----------------                  ---------------------------------------
                                         Member of the Benefits Committee



                                       7

EX-10.23

                                                                   EXHIBIT 10.23



                       CORDILLERA AND AFFILIATED COMPANIES
                           MONEY PURCHASE PENSION PLAN

                         RESTATED ADOPTION AGREEMENT FOR
                         OCEANIC EXPLORATION COMPANY AND
                  OCEANIC INTERNATIONAL PROPERTIES CORPORATION


         All capitalized terms used in this Adoption Agreement that are
         not explicitly defined herein shall have the meanings set
         forth in the Cordillera and Affiliated Companies Money
         Purchase Pension Plan.

WHEREAS, the Cordillera and Affiliated Companies Money Purchase Pension Plan
(the "Plan") provides that any other Affiliate or Associated Company may, with
the consent of Cordillera Corporation (the "Sponsoring Employer"), adopt the
Plan and participate therein by a properly executed document evidencing said
intent of said Affiliate or Associated Company; and

WHEREAS, Oceanic Exploration Company and Oceanic International Properties
Corporation are Associated Companies that have previously adopted the Plan.

NOW, THEREFORE, BE IT RESOLVED THAT Oceanic Exploration Company, on its own
behalf and on behalf of its subsidiary, Oceanic International Properties
Corporation (the two companies shall collectively be referred to as "Adopting
Employer"), hereby ratifies its prior adoption of the Plan, with such
ratification effective as of January 1, 2001, for the benefit of its Eligible
Employees.

RESOLVED FURTHER THAT Adopting Employer agrees to be bound by such terms and
conditions relating to the Plan as the Sponsoring Employer may reasonably
require.

RESOLVED FURTHER THAT Adopting Employer agrees to comply with all qualification
requirements and employee benefit rules of the Code, ERISA and related
regulations and hereby acknowledges the authority of the Sponsoring Employer to
review Adopting Employer's compliance procedures and to require changes in such
procedures to protect the Plan's qualification.

RESOLVED FURTHER THAT Adopting Employer acknowledges that it has assumed all
obligations and liabilities of an Employer under the Plan, and that it will
cooperate with the Sponsoring Employer and Plan officials by providing such
information and taking such other actions as they deem appropriate for the
efficient administration of the Plan and the Trust Fund.




                                       1


RESOLVED FURTHER THAT Adopting Employer acknowledges that its status as an
Employer under the Plan is expressly conditioned on its being and continuing to
be an Associated Company of the Sponsoring Employer.

RESOLVED FURTHER THAT this restated adoption agreement shall supercede any prior
adoption agreement executed by Adopting Employer and the Sponsoring Employer.

RESOLVED FURTHER THAT the following provisions shall apply to the Adopting
Employer's Eligible Employees to the extent such provisions differ from those of
the Plan:

1.       Section 2.1:

         (b)      "AFFILIATE" means any business entity which is controlled by
                  or under common control with Oceanic, within the meaning of
                  Code sections 414 and 1563. The determination of control shall
                  be made without reference to paragraphs (a)(4) and (e)(3)(C)
                  of Code section 1563, and solely for the purposes of applying
                  the limitations of Articles 6 and 13, the phrase "more than 50
                  percent" shall be substituted for the phrase "at least 80
                  percent" each place it appears in Code section 1563(a)(1).

                  In addition, to the extent required by Code section 414 and
                  related regulations, Affiliate means--

                  (1)      any member of an affiliated service group (within the
                           meaning of Code section 414(m)) of which Oceanic or
                           any Affiliate is a member; and

                  (2)      any entity which, pursuant to Code section 414(o) and
                           the regulations thereunder, must be aggregated with
                           Oceanic or any other Affiliate for plan qualification
                           purposes.

2.       Section 2.1:

         (g)      "BREAK IN SERVICE" means, solely with respect to Employees of
                  Oceanic and its Affiliates, any year used in measuring Years
                  of Service in which an Employee is not credited with more than
                  500 Hours of Service. However, if an Employee is absent from
                  employment due to pregnancy, birth of the Employee's child,
                  adoption of a child by the Employee, or child care immediately
                  following such birth or adoption, any Hour of Service for
                  which the Employee would have received credit (or if not
                  determinable, eight hours for each day of absence) during such
                  absence, up to a maximum of 501 Hours of Service, shall be
                  credited to the Employee solely to prevent the Employee from
                  incurring a Break in Service. Any such Hours of Service shall
                  be credited for the Plan Year in which the absence begins if
                  necessary to prevent a Break in Service during that Plan Year
                  and, in all other cases, in the immediately following Plan
                  Year.




                                       2


3.       Section 2.1:

         (m)      "ELIGIBLE EMPLOYEE" means, solely with respect to Employees of
                  Oceanic and its Affiliates, any Employee except--

                  (1)      any Employee who is included in a unit of Employees
                           covered by a collective bargaining agreement, if
                           there is evidence that retirement benefits were the
                           subject of good faith bargaining, unless such
                           agreement provides for participation of those
                           Employees in this Plan;

                  (2)      any Employee who is a nonresident alien and who
                           receives no earned income from Oceanic or any of its
                           Affiliates which constitutes income from sources
                           within the United States;

                  (3)      any Employee who is a leased employee, within the
                           meaning of Code section 414(n)(2); and

                  (3)      effective from April 1, 2000 through December 31,
                           2001, any employee of the Alliance Staffing Division
                           of Oceanic.

4.       Section 2.1:

         (s)      "HOUR OF SERVICE" means, solely with respect to Employees of
                  Oceanic and its Affiliates--

                  (1)      each hour for which the Employee is paid or entitled
                           to payment for the performance of duties.

                  (2)      each hour for which the Employee is paid or entitled
                           to payment on account of a period of time during
                           which no duties are performed (irrespective of
                           whether the employment relationship has terminated)
                           due to vacation, holiday, illness, incapacity
                           (including disability), layoff, jury duty, or leave
                           of absence. No more than 501 Hours of Service shall
                           be credited to an Employee on account of any single
                           continuous period during which the Employee performs
                           no duties.

                  (3)      each hour for which back pay (irrespective of
                           mitigation of damages) is either awarded or agreed
                           to, with no duplication of credit for hours under
                           paragraph (1) or (2) and this paragraph (3).

                  (4)      each hour credited pursuant to applicable ERISA
                           regulations for unpaid periods of absence for service
                           in the United States armed forces or Public Health
                           Service during which the Employee's reemployment
                           rights are guaranteed by law, provided that the
                           Employee is reemployed as an Employee within the time
                           limits prescribed by such law.




                                       3


               For any period that includes any hours for which an Hour of
               Service would otherwise be credited to an Employee above, the
               Benefits Committee may, in accordance with rules applied in a
               uniform and nondiscriminatory manner, elect instead to credit
               Hours of Service using one or more of the following equivalences:


               
               
               BASIS UPON WHICH                           CREDIT GRANTED TO
               RECORDS ARE MAINTAINED                     INDIVIDUAL FOR PERIOD
               ------------------------------------------ ----------------------------

                                                       
               Shift                                      Actual hours for full shift
               Day                                        10 Hours of Service
               Week                                       45 Hours of Service
               Semi-monthly period                        95 Hours of Service
               Month                                      190 Hours of Service
               ------------------------------------------ ----------------------------



                  Anything to the contrary in this Section 2.1(s)
                  notwithstanding--

                  (A)      No Hours of Service shall be credited to an Employee
                           for any period merely because, during such period,
                           payments are made or due him under a plan maintained
                           solely for the purpose of complying with applicable
                           workers' compensation, unemployment compensation, or
                           disability insurance laws.

                  (B)      No Hours of Service shall be credited to an Employee
                           with respect to payments solely to reimburse for
                           medical or medically related expenses.

                  (C)      No Hours of Service shall be credited twice.

                  (D)      Hours of Service shall be credited at least as
                           liberally as required by the rules set forth in U.S.
                           Department of Labor Regulation section 2530.200b-2(b)
                           and (c).

                  (E)      In the case of an Employee who is such solely by
                           reason of service as a leased employee within the
                           meaning of section 414(n) or 414(o) of the Code,
                           Hours of Service shall be credited as if such
                           Employee were employed and paid with respect to such
                           service (or with respect to any related absences or
                           entitlements) by Oceanic or any of its Affiliates
                           that is the recipient thereof.

5.       Section 2.1:

         (ee)     "YEAR OF SERVICE" means, solely with respect to Oceanic and
                  its Affiliates, a period of 12 consecutive months during which
                  the Employee completes at least





                                       4


                  1,000 Hours of Service, where the first such period is
                  measured from the date on which the Employee first performs an
                  Hour of Service after being hired or after being rehired after
                  a Break in Service, and each subsequent period is the Plan
                  Year, beginning with the Plan Year that commences with or
                  within the first period.

                  Effective April 1, 2000, in no event shall an Employee's
                  employment service with Alliance Staffing Associates, Inc. or
                  Alliance Services Associates, Inc. be considered for
                  determining Years of Service hereunder.

                  Notwithstanding any Plan provision to the contrary, in no
                  event shall an Employee's Years of Service on or after January
                  1, 2002 be less than such Employee's Years of Service credited
                  to him on December 31, 2001 under the Plan as in effect on
                  that date.

                  Furthermore, in the case of an Employee who transfers to
                  Oceanic or one of Oceanic's Affiliates from the Company or one
                  of the Company's Affiliates, the Employee shall be credited,
                  in the Plan Year that includes the date of transfer, with 190
                  Hours of Service for each month prior to the date of transfer
                  that the Employee was required to be credited with at least
                  one Hour of Service under 29 CFR section 2530.200b-2.

6.       Section 2.1:

         (ff)     "OCEANIC" means Oceanic Exploration Company or its successor
                  in interest.

7.       Section 3.1:

         3.1 DATE OF PARTICIPATION

         Every Employee of Oceanic or one of its Affiliates who was an Eligible
         Employee and a Participant on December 31, 2001, and continues to be an
         Eligible Employee shall continue to be a Participant thereafter. On and
         after January 1, 2002, every other Eligible Employee of Oceanic or one
         of its Affiliates shall become a Participant in the Plan on the first
         January 1 or July 1 Plan entry date that coincides with or next follows
         the date he or she has attained age 21, has completed one Year of
         Service, and has become an Eligible Employee.

8.       The second paragraph of Section 5.1:

         Solely with respect to Participants who are employed by Oceanic or one
         of its Affiliates, a Participant shall be eligible for an Employer
         Contribution for a Plan Year under this section if the Participant has
         completed at least 1,000 Hours of Service during the Plan Year, and has
         satisfied one of the following conditions:




                                       5


         (a)      the Participant is an Employee of Oceanic or one of its
                  Affiliates on the last day of the Plan Year;

         (b)      the Participant retired during the Plan Year after attaining
                  his or her Normal Retirement Age;

         (c)      the Participant died while still an Employee of Oceanic or one
                  of its Affiliates during the Plan Year; or

         (d)      the Participant incurred a Disability while still an Employee
                  of Oceanic or one of its Affiliates during the Plan Year.

         For purposes of determining whether an Employee who has transferred
         employment to Oceanic or one of Oceanic's Affiliates from the Company
         or one of the Company's Affiliates has completed 1,000 Hours of Service
         in the Plan Year, which includes the date of transfer, the Employee
         shall be credited for such Plan Year with 190 Hours of Service for each
         month prior to the date of transfer that the Employee was required to
         be credited with at least one Hour of Service under 29 CFR section
         2530.200b-2.

                               * * * * * * * * * *

IN WITNESS WHEREOF, Adopting Employer and the Sponsoring Employer have caused
this restated adoption agreement to be executed by their authorized
representatives.


                                    ADOPTING EMPLOYER


Date   6 December 2001              By   /s/ Charles N. Haas
       ---------------                   ---------------------------------------

                                    Its   President
                                          --------------------------------------


                                    On behalf of Cordillera Corporation, the
                                    Benefits Committee, which is responsible for
                                    the proper administration of the
                                    above-referenced Plan, hereby consents to
                                    the above adoption and states that no
                                    further instrument of adoption is required.


Date December 7, 2001               By   /s/ John E. Jones
     ----------------                    ---------------------------------------
                                         Member of the Benefits Committee





                                       6

EX-10.24

                                                                   EXHIBIT 10.24


                            SERVICE AGREEMENT BETWEEN

                           OCEANIC EXPLORATION COMPANY

                                       AND

                             CORDILLERA CORPORATION

THIS AGREEMENT, made as of the 1st day of September 2002, between Oceanic
Exploration Company, a corporation with offices at 7800 East Dorado Place, Suite
250, Englewood, Colorado 80111 ("Oceanic"), and Cordillera Corporation, a
corporation with offices at 7800 East Dorado Place, Suite 250, Englewood,
Colorado 80111 ("Cordillera").

                                    RECITALS

WHEREAS, Oceanic wishes Cordillera to provide it with management services in
support of Oceanic efforts regarding the East Timor Project, and Cordillera is
willing to provide such services; and

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

                          ARTICLE 1, STATEMENT OF WORK

Cordillera shall provide Oceanic with the management support services of Mr.
Karsten Blue.

                        ARTICLE 2, PERIOD OF PERFORMANCE

This Agreement shall continue from year to year except that either party may
terminate this Agreement at any time by giving not less than 30 days written
notice to the other party. On termination, each party shall be released from all
obligations accruing under the Agreement from and after the termination date but
Oceanic shall remain obligated for all direct charges incurred by Cordillera
prior to said date, whether or not known, asserted or invoiced prior to said
date.

                      ARTICLE 3, CONSIDERATION AND PAYMENT

For the performance of services described in Article 1, Oceanic shall compensate
and reimburse Cordillera as follows:

         a.       The fee will be paid at the fixed rate of $1,250 per week, not
                  to exceed $65,000 per year. This payment will be due and
                  payable on the last day of each month. If payment is not made
                  by the fifteenth day of the following month, the unpaid
                  balance shall bear interest monthly at the rate of 10% per
                  annum.




         b.       Oceanic will reimburse Cordillera for all Oceanic approved
                  out-of-pocket business expenses incurred by Mr. Karsten Blue
                  on behalf of Oceanic. These reimbursements will be due and
                  payable upon receipt of invoice from Cordillera to Oceanic.

                          ARTICLE 4, STATUS OF EMPLOYER

It is understood and agreed that Karsten Blue shall be and remain the employee
of Cordillera, and the compensation and benefits to be paid to him shall be
determined by Cordillera.

                               ARTICLE 5, NOTICES

All notices required or permitted by this Agreement shall be in writing and
shall be deemed to have been delivered to the other party when delivered in
person or transmitted by mail, postage and charges prepaid, addressed to
Cordillera at the address set out above, or by facsimile.

                               ARTICLE 6, GENERAL

         a.       This Agreement shall be governed by the laws of the State of
                  Colorado, United States of America.

         b.       The provisions hereof inure to the benefit of and are binding
                  upon the successors in interest of each party.

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


OCEANIC EXPLORATION COMPANY             CORDILLERA CORPORATION


/s/ Charles N. Haas                     /s/ John E. Jones
- --------------------------------        ---------------------------------------
Charles N. Haas                         John E. Jones
President                               Executive Vice President

EX-23.1

                                                                    EXHIBIT 23.1



                         CONSENT OF INDEPENDENT AUDITORS


The Board of Directors
Oceanic Exploration Company:


We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.


                                    KPMG LLP


Denver, Colorado



October 2, 2002