Exhibit 10.1 









PARTICIPATION AGREEMENT 


BETWEEN 


ENTEK GRB LLC 


AS FARMEE, 


AND 


NEW FRONTIER ENERGY, INC., 


AS FARMOR


DATED AS OF AUGUST 10, 2009






TABLE OF CONTENTS


	
 

	
 

	
 


	
Article I.
  DEFINITIONS

	
1


	
Section 1.1

	
Certain
  Defined Terms

	
1


	
Article II.
  ASSET PURCHASE; CERTAIN COVENANTS

	
6


	
Section 2.1

	
Initial
  Asset Purchase

	
6


	
Section 2.2

	
Optional
  Asset Purchase

	
7


	
Section 2.3

	
Restrictions
  on NFEI’s Operations

	
7


	
Section 2.4

	
Stull Ranch
  Settlement

	
7


	
Section 2.5

	
Third Party
  Preferential Rights and Consents

	
8


	
Section 2.6

	
Permitted
  Encumbrances

	
9


	
Article III.
  CERTAIN OPERATING EXPENSES

	
9


	
Section 3.1

	
Operating
  Expenses

	
9


	
Article IV.
  RIGHT TO EARN; DEVELOPMENT PHASES

	
9


	
Section 4.1

	
Grant of
  Right to Earn

	
9


	
Section 4.2

	
Phase I
  Development

	
9


	
Section 4.3

	
Phase II
  Development

	
10


	
Section 4.4

	
Phase III
  Development

	
11


	
Section 4.5

	
Acceleration

	
12


	
Section 4.6

	
Accounting
  True-Up

	
13


	
Article V.
  FORM OF ASSIGNMENT

	
13


	
Section 5.1

	
Form of
  Assignment

	
13


	
Article VI.
  NFEI’S REPRESENTATIONS AND WARRANTIES

	
13


	
Section 6.1

	
NFEI’s
  Representations and Warranties

	
13


	
Section 6.2

	
Disclaimer
  of Representations and Warranties

	
18


	
Article VII.
  ENTEK’S REPRESENTATIONS AND WARRANTIES

	
18


	
Section 7.1

	
Entek’s
  Representations and Warranties

	
18


	
Section 7.2

	
Disclaimer
  of Additional Warranties

	
19


	
Article
  VIII. OPERATING COMMITTEE

	
19


	
Section 8.1

	
Operating
  Committee

	
19


	
Section 8.2

	
Committee
  Membership

	
20


	
Section 8.3

	
Committee
  Meetings

	
20


	
Section 8.4

	
Committee
  Action Without Meeting

	
20


	
Section 8.5

	
Minutes of
  Committee Meetings

	
20


	
Section 8.6

	
Development
  of Work Program

	
21


	
Section 8.7

	
Non-consent

	
21


	
Section 8.8

	
Operations

	
21


	
Section 8.9

	
Audit Rights

	
22


	
Section 8.10

	
Accounts

	
22


	
Section 8.11

	
NFEI Board Meetings

	
22


	
Article IX.
  AREA OF MUTUAL INTEREST AND PREFERENTIAL RIGHT

	
23


	
Section 9.1

	
Area of Mutual
  Interest

	
23


	
Section 9.2

	
Preferential
  Right

	
24


	
Article X.
  DUE DILIGENCE REVIEW OF THE PROPERTIES

	
24


	
Section 10.1

	
No Further Due Diligence

	
24


	
Section 10.2

	
Inspection of Records

	
25





i






	
 

	
 

	
 


	
Section 10.3

	
Physical
  Inspection of the Underlying Leases

	
25


	
Section 10.4

	
Notice of
  Claims

	
25


	
Section 10.5

	
Confidentiality

	
25


	
Article XI.
  MUTUAL INDEMNITIES

	
26


	
Section 11.1

	
Mutual
  Indemnities

	
26


	
Article XII.
  FORCE MAJEURE

	
26


	
Section 12.1

	
Force
  Majeure

	
26


	
Article
  XIII. NOTICES

	
26


	
Section 13.1

	
Notices

	
26


	
Article XIV.
  TERMINATION

	
27


	
Section 14.1

	
Termination

	
27


	
Article XV.
  MISCELLANEOUS

	
28


	
Section 15.1

	
Waiver of
  Consequential and Punitive Damages

	
28


	
Section 15.2

	
Insurance

	
28


	
Section 15.3

	
No
  Partnership

	
28


	
Section 15.4

	
Further
  Assurances

	
28


	
Section 15.5

	
Parties Bear
  Own Expenses

	
28


	
Section 15.6

	
Public
  Announcements

	
28


	
Section 15.7

	
Waiver

	
28


	
Section 15.8

	
Governing
  Law; Venue

	
29


	
Section 15.9

	
Joint
  Preparation

	
29


	
Section 15.10

	
Severance of
  Invalid Provisions

	
29


	
Section 15.11

	
Modifications

	
29


	
Section 15.12

	
Priority of
  Agreement

	
29


	
Section 15.13

	
Headings

	
29


	
Section 15.14

	
Exhibits

	
30


	
Section 15.15

	
Interpretation

	
30


	
Section 15.16

	
Counterpart
  Execution.

	
30


	
Section 15.17

	
Entirety

	
30


	
Section 15.18

	
Survival

	
30


	
Section 15.19

	
Successors
  and Assigns

	
30


	
Section 15.20

	
Third-Party
  Beneficiaries

	
30








	
 

	
 

	
 


	
EXHIBITS AND
  SCHEDULES

	
 


	
 

	
 

	
 


	
Exhibit A 

	
Underlying
  Leases

	
 


	
Exhibit AA 

	
Prospect
  Area

	
 


	
Exhibit B 

	
Excluded
  Assets

	
 


	
Exhibit C 

	
Focus Ranch
  Unit Agreement

	
 


	
Exhibit D 

	
Focus Ranch
  Unit Operating Agreement

	
 


	
Exhibit E 

	
Fly Creek
  Operating Agreement

	
 


	
Exhibit F 

	
Permitted
  Encumbrances

	
 


	
Exhibit G 

	
Stull Ranch
  Settlement Agreement

	
 


	
Exhibit H 

	
Energy
  Investment Litigation Materials

	
 


	
Exhibit I 

	
Closed
  Leases

	
 


	
Exhibit J 

	
Clayton
  Williams Farmout Agreement

	
 





ii






	
 

	
 


	
Exhibit K

	
SDG Note


	
Exhibit L

	
[Intentionally Omitted.]


	
Exhibit M

	
Form of
  Assignment








	
 

	
 


	
Schedule
  6.1(i)

	
Missed
  Rentals


	
Schedule
  6.1(j)

	
Claims and
  Litigation


	
Schedule
  6.1(l)

	
Preferential
  Rights


	
Schedule
  6.1(n)

	
Partnership
  Interests


	
Schedule
  6.1(p)

	
Partnership
  Liabilities


	
Schedule
  6.1(t)

	
NFEI
  Liabilities





iii






PARTICIPATION AGREEMENT


          This
PARTICIPATION AGREEMENT (“Agreement”)
is dated August 10, 2009 (the “Effective
Date”), and is between ENTEK GRB LLC, a Delaware limited
liability company (“Entek”),
and NEW FRONTIER ENERGY, INC., a Colorado corporation (“NFEI”). Each of Entek and NFEI is
sometimes referred to herein as a “Party”
and they are sometimes collectively referred to herein as the “Parties.” 


W I T N E S S E T H


          WHEREAS
NFEI has acquired leasehold interests in and to certain oil and gas leases,
coal bed methane leases, and mineral fee interests, covering approximately
66,000 gross acres of land within the Prospect Area (as defined herein), that
are more particularly described in those leases listed in Exhibit A attached
hereto and made a part hereof (hereinafter the “Underlying Leases”); and 


          WHEREAS
Entek desires the right to participate in the development of the Underlying
Leases in order to earn up to 55% of NFEI’s interest in the Underlying Leases
in accordance with the terms and conditions of this Agreement. 


          NOW,
THEREFORE, in consideration of the mutual covenants herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Entek and NFEI hereby agree as follows: 


ARTICLE I. 

DEFINITIONS


          Section
1.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning provided below: 


                    (a)
“Accounting Consultant”
means an accounting or financial consultant engaged by NFEI, and approved by
Entek in its sole discretion, to provide services with respect to accounting
matters relating to the Work Program. 


                    (b)
“Accounting Quarter” means
each of the respective three-month periods ending May 31, August 31, November
30, and February 28 (or, if applicable, February 29) of each year. 


                    (c)
“Additional Asset Purchase”
has the meaning provided in Section 2.2. 


                    (d)
“Additional Interest” has
the meaning provided in Section 9.1(b). 


                    (e)
“Agreement” has the
meaning provided in the preamble above.



                    (f)
“AMI” has the meaning
provided in Section 9.1(a). 


                    (g)
“Arbitrator’s Award” has
the meaning provided in Section 2.4. 


1






                    (h)
“Area of Mutual Interest”
has the meaning provided in Section 9.1(a). 


                    (i)
“Assignment” has the
meaning provided in Section 5.1. 


                    (j)
“Claims” means any and all
direct or indirect, demands, claims, notices of violation, notices of probable
violation, filings, investigations, administrative proceedings, actions, causes
of action, suits, and other legal proceedings, judgments, assessments, damages,
deficiencies, taxes, penalties, fines, obligations, responsibilities,
liabilities, payments, charges, costs, and expenses (including without
limitation costs and expenses of operating the Underlying Properties) of any
kind or character (whether known or unknown, fixed or unfixed, conditional or
unconditional, based on negligence, strict liability, breach of representation,
warranty or agreement, or otherwise, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent, or
otherwise), including without limitation penalties and interest on any amount
payable as a result of any of the foregoing, any legal or other costs and
expenses incurred in connection with investigating or defending any Claim, and
all amounts paid in settlement of Claims. 


                    (k)
“Clayton Williams” means
Clayton Williams Energy, Inc. 


                    (l)
“Clayton Williams Farmout Agreement”
means that certain Farmout Agreement, dated September 1, 2008, between Clayton
Williams and NFEI, a true and correct copy of which is attached to this
Agreement as Exhibit “J.” 


                    (m)
“Committee” has the
meaning provided in Section 8.1. 


                    (n)
“Defensible Title” means,
with respect to the Underlying Leases, such title and ownership by NFEI that
(a) entitles NFEI to receive and retain, without reduction, suspension or
termination, not less than the Net Revenue Interest percentage set forth in
Exhibit “A” of all hydrocarbons produced, saved and marketed from the
Underlying Leases; (b) obligates NFEI to bear not greater than the Working
Interest percentage set forth in Exhibit “A” of the costs and expenses relating
to the maintenance, development and operation of the Underlying Leases (unless
there is a corresponding increase in Net Revenue Interest); and (c) is free and
clear of all liens, Claims and encumbrances, except Permitted Encumbrances. 


                    (o)
“Effective Date” has the
meaning provided in the preamble above. 


                    (p)
“Entek” has the meaning
provided in the preamble above. 


                    (q)
“Excluded Assets” means
the wells, facilities and other property to described on Exhibit “B” attached
hereto, which shall be retained by NFEI and in which Entek shall not earn an
interest pursuant to hereto. 


                    (r)
“Fly Creek Operating Agreement”
means that certain operating agreement, dated February 28, 2003, between Cedar
Ridge LLC, as operator, and the non-operators party thereto, a copy of which is
attached as Exhibit “E” hereto. 


2






                    (s)
“Focus Ranch Unit” means
that certain unit covering approximately 38,695 gross acres in Routt County,
Colorado, as more fully described in the Focus Ranch Unit Agreement. 


                    (t)
“Focus Ranch Unit Agreement” means
that certain Unit Agreement, dated August 6, 1999, between Stone and Wolf, LLC,
et al, relating to the Focus
Ranch Unit, a copy of which is attached as Exhibit “C” hereto. 


                    (u)
“Focus Ranch Unit Operating Agreement”
means that certain operating agreement, dated August 6, 1999, between Stone and
Wolf, LLC, as operator, and the non-operators party thereto, relating to the
operation of the Focus Ranch Unit, a copy of which is attached as Exhibit “D”
hereto. 


                    (v)
“Force Majeure” has the
meaning provided in Section 12.1. 


                    (w)
“Initial Assignment” has
the meaning provided in Section 2.1. 


                    (x)
“Net Proceeds” means the proceeds received by the Parties from the sale
of hydrocarbons produced from the Subject Assets less (i) severance,
production, and other taxes payable out of or measured by production, and (ii)
all royalties, overriding royalties, production payments and other similar
interests payable out of or measured by production, to the extent such
interests are in effect as of the Effective Date or, if created after the
Effective Date, are mutually agreed to by the Parties. 


                    (y)
“Net Revenue Interest” means
that share of hydrocarbons produced from or allocated to a particular Lease,
unit or Well (or the share of revenues received from the sale of hydrocarbons
from or allocated to a particular Lease, unit or Well) that a party is entitled
to receive by virtue of its ownership of such Lease, unit or Well after
deducting any hydrocarbons or proceeds or revenues allocable to any royalty
interest, overriding royalty interest, production payment, net profits interest
or other similar interest, other than taxes, that constitutes a burden on such
interest or is measured by or payable out of the production of hydrocarbons or
the proceeds realized from the sale or other disposition thereof. 


                    (z)
“NFEI” has the meaning
provided in the preamble above. 


                    (aa)
“NFEI Insolvency” means
cash reserves plus the expected cash flow to be received in the next Accounting
Quarter is insufficient to discharge NFEI’s debts and other obligations which
shall come due in the next Accounting Quarter. For the purposes of this
definition, NFEI’s expected cash flow to be received in the next Accounting
Quarter shall be presumed to be equal to the cash flow produced by NFEI in the
current Accounting Quarter unless either Party can demonstrate a reasonable
basis for a change in anticipated cash flow. For the purposes of this
definition, any potential dividends payable on preferred stock shall not be
included in the calculation of NFEI’s debts and obligations. 


3






                    (bb)
“Operating Expenses” means
any items defined as “Operating Expenses” in the Focus Ranch Unit Operating
Agreement and such other operating expenses as may be approved by the Committee
as provided in Section 8.1. 


                    (cc)
“Party” and “Parties” has the meaning provided in the
preamble above. 


                    (dd)
“Partnership Agreement”
has the meaning provided in Section 6.1(n). 


                    (ee)
“Partnership Interests”
has the meaning provided in Section 6.1(n). 


                    (ff)
“Permitted Encumbrances”
means the following: 


                              (i)
Liens for current taxes or assessments not yet delinquent or, if delinquent,
being contested in good faith by appropriate actions diligently pursued; 


                              (ii)
Materialmen’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s
and other similar liens or charges arising in the ordinary course of business
(i) foreclosure of which is barred by applicable limitations periods, or (ii)
for amounts not yet delinquent (including any amounts being withheld as
provided by law), or if delinquent, being contested in good faith by
appropriate actions diligently pursued; provided that the assigning Party takes
such steps as may be reasonably required to ensure that such liens or charges
do not result in the foreclosure on the affected Underlying Lease; 


                              (iii)
All rights to consent by, required notices to, filings with, or other actions
by governmental authorities in connection with the transfer of the Underlying
Leases or any portion thereof; 


                              (iv)
All rights reserved to or vested in any governmental authorities to control or
regulate any of the Underlying Leases in any manner and all obligations and
duties under all applicable laws, rules and orders of any such governmental
authorities or under any franchise, grant, license or permit issued by any such
governmental authorities; 


                              (v)
The leases, unit agreements, pooling agreements, operating agreements,
production sales contracts, and other contracts, agreements and instruments
applicable to the Underlying Leases identified on Exhibit “F”; 


                              (vi)
Easements, rights-of-way, servitudes, permits, surface leases, surface use
and/or right-of-way agreements, licenses, and other rights relating to or
restricting surface operations which do not materially detract from the value
of or materially interfere with the use or ownership of the Underlying Leases
subject thereto or affected thereby; 


4






                              (vii)
Production Payment in favor of Clayton Williams pursuant to the Clayton
Williams Farmout Agreement, in the amount of Two Million and No/100 Dollars
($2,000,000.00), payable out of the net proceeds of the Focus Ranch 12-1 well,
Focus Ranch 3-1, or any other well drilled on the Focus Ranch Unit; and 


                              (viii)
Liens and security interests covering the Slater Dome Gathering System to
secure NFEI’s obligations under the Note attached as Exhibit “K.” 


                    (gg)
“Phase” has the meaning
provided in Section 4.1. 


                    (hh)
“Phase I” has the meaning
provided in Section 4.2. 


                    (ii)
“Phase
I Interest” has the meaning provided in Section 4.2. 


                    (jj)
“Phase I Threshold Amount”
has the meaning provided in Section 4.2. 


                    (kk)
“Phase II” has the meaning
provided in Section 4.3(a). 


                    (ll)
“Phase II Interest” has
the meaning provided in Section 4.3(a). 


                    (mm)
“Phase II Threshold” has
the meaning provided in Section 4.3(c). 


                    (nn)
“Phase II Funding Shortfall Amount”
has the meaning provided in Section 4.3(c). 


                    (oo)
“Phase III” has the
meaning provided in Section 4.4(a). 


                    (pp)
“Phase III Funding Shortfall Amount”
has the meaning provided in Section 4.4(c). 


                    (qq)
“Phase III Interest” has
the meaning provided in Section 4.4(c). 


                    (rr)
“Phase III Threshold” has
the meaning provided in Section 4.4(c). 


                    (ss)
“Prospect Area” means an
area consisting of the lands, located in Colorado, Wyoming, and Utah, and
included within the outline on the map as Exhibit “AA” hereto. The only depth
restriction applied to the Prospect Area shall be those, if any, contained in
the applicable Underlying Leases, and in leases hereafter acquired pursuant to
this Agreement. 


                    (tt)
“Qualifying Development Expenditures”
means such expenses that are (a) set forth in an Authority for Expenditure
approved by the Committee or otherwise approved or ratified by the Committee;
and (b) actually incurred and paid. For the purpose of this definition, payment
of any expense by an instrument which is jointly executed by the Parties shall
be deemed a ratification of such expense unless contemporaneously stated
otherwise in writing. Such costs shall not include any Non-Consent operations
conducted by Entek pursuant to Section 8.7. 


5






                    (uu)
“Segregated Account” has
the meaning provided in Section 4.2. 


                    (vv)
“Slater Dome Gathering, LLLP”
or “SDG” means that
certain Colorado limited liability partnership that owns the Slater Dome
Gathering System. 


                    (ww)
“Slater Dome Gathering System”
means that certain six inch (6”) gas gathering line that connects from the
compressor station near the CF&I well in the Slater Dome Field to the
Slater Dome Tap 344, connecting to the natural gas pipeline owned by Questar at
Baggs, Wyoming. 


                    (xx)
“Stull Ranch Account” has
the meaning provided in Section 2.4. 


                    (yy)
“Stull Ranch Settlement Agreement”
means that certain Settlement Agreement between Stull Ranches, LLC, on the one
hand, and NFEI and Clayton Williams, on the other hand, a copy of which is
attached as Exhibit “G” hereto. 


                    (zz)
“Subject Assets” means (i)
the interests in the Underlying Leases that NFEI owned as of the Effective
Date, together with the wells, gathering systems, facilities, equipment,
rights-of-way, easements, permits, licenses, contracts, agreements, and other
real or personal property located thereon or used in connection therewith, save
and except for the Excluded Assets, if any; and (ii) the Partnership Interests
in SDG owned by NFEI, as of the Effective Date. 


                    (aaa)
“Underlying Leases” has
the meaning provided in the recitals above. 


                    (bbb)
“Working Interest” means
an interest in property that entitles the owner of that interest to share in
the mineral production from the property after the payment of costs and
royalties and obligates it to bear a share of the costs, expenses, burdens, and
obligations attributable to the property.



                    (ccc)
“Work Program” means the
business plans and budgets for the proposed expenditures to be determined by
the Operating Committee for each Phase. The Work Program shall set out the
projects to be conducted hereunder, the drilling program for each such project,
the cash requirements for each project and the overall cash requirements for
all of the projects. 


ARTICLE II.

ASSET PURCHASE; CERTAIN COVENANTS 


          Section
2.1 Initial Asset Purchase. Contemporaneously with the execution of this
Agreement, Entek shall purchase from NFEI, and NFEI shall sell and assign to
Entek, an undivided 4.0625% interest in and to the Subject Assets (the “Initial Asset Purchase”). The purchase
price for the Initial Asset Purchase shall be One Million and No/100 Dollars
($1,000,000.00), payable by Entek by wire transfer of immediately available
funds, contemporaneously with the execution of this Agreement.
Contemporaneously with the execution of this Agreement, NFEI shall execute,
acknowledge, and deliver to Entek an assignment, in the form of Exhibit “M”
attached hereto, of an undivided 20.3125% interest in the Subject Assets (the “Initial Assignment”),
representing the
Initial Asset Purchase and the Phase I Interest.  


6






          Section
2.2 Optional Asset Purchase. In the event that, within one hundred and
eighty (180) days after the Effective Date, Entek believes in good faith that
there exists a danger of an NFEI Insolvency, Entek shall have the option, but
not the obligation, to purchase an additional 8.125% undivided interest in the
Subject Assets (the “Additional Asset
Purchase”) for a purchase price of One Million and No/100
Dollars ($1,000,000.00). Entek shall exercise such option upon written notice
delivered to NFEI no earlier than thirty (30) days after the Effective Date and
no later than 180 days after the Effective Date. At the conclusion of the 180
day period described herein Entek shall have no right to purchase any interest
from NFEI under this Section. Closing of such additional purchase shall occur
within ten (10) days after NFEI’s receipt of Entek’s notice. At closing, Entek
shall deliver the purchase price for the Additional Asset Purchase, by wire
transfer of immediately available funds, and NFEI shall deliver to Entek an
assignment thereof, in the form of Exhibit “M” attached hereto. Further, in the
event Entek exercises such option then, (i) the Phase III Threshold shall be
reduced to Two Million Five Hundred Thirty Eight Thousand Five Hundred Dollars
($2,538,500.00), and (ii) the Phase III Interest shall be reduced to an
undivided 10.3125% interest in the Subject Assets. 


          Section
2.3 Restrictions on NFEI’s Operations. Until the earliest to occur of
(i) NFEI providing documentation to Entek evidencing that NFEI has secured a
non-debt third party investment in NFEI of at least One Million and No/100
Dollars ($1,000,000.00); (ii) NFEI demonstrating to Entek’s reasonable
satisfaction that an NFEI Insolvency is not reasonably foreseeable within 180
days, or (iii) NFEI has positive cash flow of at least Seventy-Five Thousand
and No/100 Dollars ($75,000.00) for two consecutive months and cash reserves
exceeding NEFI’s obligations due and payable during the succeeding three (3)
month period (which obligations shall not include any potential dividends
payable on preferred stock) by at least Two Hundred and Fifty Thousand and
No/100 Dollars ($250,000.00), NFEI shall not, without Entek’s prior written
consent, engage, directly or indirectly through any affiliate, in any business
other than the business of oil and gas exploration, development, production,
gathering and transportation in the Prospect Area. Notwithstanding the
foregoing, Entek shall not withhold such consent if NFEI demonstrates to
Entek’s reasonable satisfaction that NFEI has secured from third parties
sufficient non-debt funding for working capital sufficient to reasonably
support such new business during the term of this Agreement. 


          Section
2.4 Stull Ranch Settlement. Prior to the execution of this Agreement, NFEI
shall cause Mr. Samyak Veera, or such other third party as may be arranged by
NFEI, to deposit Five Hundred Thousand and No/100 Dollars ($500,000.00) into an
NFEI-owned segregated bank account at a bank reasonably acceptable to Entek
(the “Stull Ranch Account”).
Funds deposited into the Stull Ranch Account shall not be commingled with other
NFEI funds, and all disbursements from the Stull Ranch Account shall require
the signatures of at least two persons, one of whom shall be an officer or
other designated representative of NFEI, and the other of whom shall be the
Accounting Consultant. Such deposit shall not be a debt of NFEI. In the event
NFEI has insufficient funds available, without giving rise to an NFEI
Insolvency, to satisfy NFEI’s share of the arbitrator’s award in the
arbitration conducted pursuant to the Stull Ranch Settlement Agreement (the “Arbitrator’s Award”), and either
Stull
Ranches, LLC or Clayton Williams obtains the entry of a judgment entitling
either party to collection of the Arbitrator’s Award from NFEI, and such
judgment remains unsatisfied for sixty (60) days or longer, then NFEI shall
draw upon the funds in the Stull Ranch Account to satisfy the balance of the
Arbitrator’s Award. The amounts held in the Stull Ranch Account shall be
released to the depositor thereof upon the occurrence of (i) NFEI provides
documentation to Entek evidencing that NFEI has secured a non-debt third party
investment in NFEI of at least One Million and No/100 Dollars ($1,000,000.00);
or (ii) NFEI demonstrates to Entek’s reasonable satisfaction that, upon
satisfaction of the Arbitrator’s Award, an NFEI Insolvency is not reasonably
foreseeable within 180 days.  


7






          Section
2.5 Third Party Preferential Rights and Consents.  


                    (a)
As set forth in Schedule 6.1(l), NFEI has informed Entek of the existence of
certain preferential purchase rights held by third parties under the Fly Creek
Operating Agreement and the SDG Partnership Agreement. NFEI shall defend,
indemnify and hold harmless Entek and its affiliates, and their respective
directors, officers, agents, and employees, from, and shall promptly pay the
amount of any damages arising from or in connection with, any Claims arising
from or relating to such preferential purchase rights, insofar as they may be
applicable to the transactions contemplated herein. Within five (5) business
days following the Effective Date, NEFI shall deliver notices of this Agreement
to the holders of such preferential purchase rights, such notices to be in form
and substance reasonably satisfactory to Entek. Provided that NFEI timely
delivers preferential right notices as provided above, if the holder of a
preferential purchase right timely exercises such preferential purchase right
in accordance with the terms of the applicable agreement creating such right,
then NFEI shall provide notice of such exercise to Entek, and the following
shall occur: (a) Within five (5) business days after receipt of such notice,
(i) Entek shall deliver to NFEI reassignments of all right, title and interest
in the Subject Assets, free and clear of all liens, Claims and encumbrances
arising by, through or under Entek, and (ii) NFEI shall refund to Entek the
purchase price for the Initial Asset Purchase, the Phase I Threshold Amount,
and any other amounts paid by Entek to, or on behalf of, NFEI pursuant to this
Agreement; and (b) this Agreement shall terminate; provided, however, that the indemnity set forth in this
Section 2.5 shall survive such termination 


                    (b)
Promptly after the Effective Date, NFEI shall use commercially reasonable
efforts to obtain the consent of the Class A Limited Partners, as defined in
the Partnership Agreement, to NFEI’s assignment of a portion of its General
Partner interest in SDG to Entek. NFEI shall defend, indemnify and hold
harmless Entek and its affiliates, and their respective directors, officers,
agents, and employees, from, and shall promptly pay the amount of any damages
arising from or in connection with, any Claims arising from or relating to such
consent, or the failure to obtain same, insofar as it may be applicable to the
transactions contemplated herein. 


8






          Section
2.6 Permitted Encumbrances. Exhibit “F” sets forth certain incomplete
descriptions of rights-of-way and surface agreements that encumber the Subject
Assets. NFEI agrees that, within ten (10) days after the Effective Date, it
will furnish an amended Exhibit “F” setting forth more detailed descriptions of
such instruments, which amended Exhibit “F” shall be in form and substance
acceptable to Entek in its sole discretion. Exhibit “F” also describes certain
liens that encumber certain of the Subject Assets. The Parties agree that such
liens shall be Permitted Encumbrances only to the extent NFEI causes them to be
promptly discharged and released after the Effective Date; provided that NFEI shall retain the right
to dispute any of such liens in good faith by appropriate proceedings, and further provided that NFEI shall defend,
defend, indemnify and hold harmless Entek and its affiliates, and their
respective directors, officers, agents, and employees, from, and shall promptly
pay the amount of any damages sustained by Entek, arising from or in connection
with, such liens. 


ARTICLE III.

CERTAIN OPERATING EXPENSES 


          Section
3.1 Operating Expenses. Upon execution of this Agreement, all Operating
Expenses shall be paid out of the Parties’ Net Proceeds from the Underlying
Leases. In the event there are not sufficient Net Proceeds to pay for all
Operating Expenses, then, subject to the other terms hereof, Entek shall be
solely responsible for the payment of the remaining Operating Expenses through
the conclusion of each development Phase in which Entek elects to participate,
as provided in Article IV. Any amounts so paid by Entek shall be deemed
Qualifying Development Expenditures. After the conclusion of the last such
Phase, each Party shall be responsible for any Operating Expenses in proportion
to its Working Interest in the Underlying Leases. Each Party shall be entitled
to receive, on a monthly basis, all Net Proceeds attributable to its Working
Interest in the Underlying Leases to the extent such Net Proceeds received in
such month exceed the Party’s proportionate share of Operating Expenses for
such month. The Operating Expenses shall be reviewed by the Committee, in good
faith, on a quarterly basis.  


ARTICLE IV.

RIGHT TO EARN; DEVELOPMENT PHASES 


          Section
4.1 Grant of Right to Earn. Subject to the terms and provisions hereof,
NFEI grants to Entek the right to participate in the exploration and
development of the Underlying Leases, and the right to earn assignments of
interests therein, as provided hereunder. Exploration and development of the
Prospect Area shall be conducted in three (3) phases (each, a “Phase”), as provided herein. 


          Section
4.2 Phase I Development. As used herein and subject to Section 4.5 and
Section 12.1, “Phase I”
means the period between the Effective Date and the first anniversary of the
Effective Date. Contemporaneously with the execution of this Agreement, Entek
shall pay to NFEI, by wire transfer of immediately available funds, the sum of
Three Million and No/100 Dollars ($3,000,000.00) (the “Phase I Threshold Amount”) to be used
by NFEI solely for the payment of Qualifying Development Expenditures
attributable to operations conducted pursuant to the Work Program for Phase I.
Such amount shall be held by NFEI in a segregated bank account (the “Segregated Account”) and shall not be
commingled with other NFEI funds. All disbursements from the Segregated Account
shall require the signatures of at least two persons, one of whom shall be an
officer or other designated representative of NFEI, and the other of whom shall
be the Accounting Consultant. By payment of the Phase I Threshold Amount, Entek
shall have earned an undivided 16.25% interest in the Subject Assets (the “Phase I Interest”). Provided that
Entek elects to proceed with Phase II, as provided in Section 4.3(b), any
portion of the Phase I Threshold Amount not expended during Phase I shall be
expended on the Work Program in one or more subsequent development Phases. In
the event Entek elects not to proceed with Phase II, Entek shall retain the
Phase I Interest and any remaining funds in the Segregated Account shall be
used in accordance with the Phase I Work Program or so as to benefit the
Subject Assets in a manner directed by the Committee. However, in the event
such funds are not expended within 365 days after the expiration or termination
of Phase I, such funds shall belong exclusively to NFEI, unless the NFEI
representative to the Committee withheld consent to one or more proposed
operations that, if approved, would have resulted in expenditure of such funds.



9






          Section
4.3 Phase II Development. 


                    (a)
As used herein and subject to Section 4.5 and Section 12.1, “Phase II” means the period between the
first anniversary of the Effective Date and the second anniversary of the
Effective Date. 


                    (b)
Entek shall have the option, but not the obligation, to participate in Phase II
development of the Underlying Leases. If Entek desires to participate in Phase
II, it shall provide NFEI with written notice of such intention at least thirty
(30) days prior to the expiration of Phase I, unless the Acceleration provision
in Section 4.5 is applicable. If Entek elects not to participate in Phase II,
the following shall occur: 


                              (i)
this Agreement shall terminate upon exhaustion of the Phase I Threshold Amount
in accordance with the Phase I Work Program or as directed by the Committee; 


                              (ii)
NFEI shall have no obligation to assign Entek any further interests in the
Subject Assets; and 


                              (iii)
The Area of Mutual Interest described in Section 9.1 shall not continue until
the exhaustion of the Phase I Threshold Amount, but rather shall terminate
immediately. 


                    (c)
If Entek elects to participate in Phase II, then, subject to the terms below,
Entek shall pay Phase II Qualifying Development Expenditures attributable to
operations conducted pursuant to the Work Program in an amount equal to Four
Million and No/100 Dollars ($4,000,000.00) (the “Phase II Threshold”) or more. Upon paying Phase II
Qualifying Development Expenditures in an amount equal to or greater than the
Phase II Threshold, Entek shall have earned an undivided 16.25% interest in the
Subject Assets (the “Phase II Interest”).
If during Phase II, Entek fails to pay Qualifying Development Expenditures in
an amount equal to or greater than the Phase II Threshold, Entek shall have the
right, but not the obligation, within ten (10) days after the end of Phase II
to deposit the difference between the Phase II Threshold and Entek’s actual
expenditures (the “Phase II Funding
Shortfall Amount”) into the Segregated Account. The amount so
deposited into the Segregated Account shall be expended on the Work Program in
Phase III or thereafter. 


10






                    (d)
By timely depositing the Phase II Funding Shortfall Amount into the Segregated
Account, Entek shall have earned the Phase II Interest. If Entek elects not to
deposit the Phase II Funding Shortfall Amount, or any portion thereof, into the
Segregated Account, then (i) Entek shall nevertheless have earned an additional
interest in the Subject Assets equal to 16.25%, multiplied by a fraction, the
numerator of which is Entek’s Qualifying Development Expenditures during Phase
II (including any portion of the Phase II Funding Shortfall Amounts deposited
into the Segregated Account) and the denominator of which is the Phase II
Threshold; and (ii) this Agreement shall terminate; provided, however, that NFEI’s obligation to deliver to
Entek an assignment of interests earned by Entek during Phase II shall survive
such termination. NFEI shall execute, acknowledge and deliver to Entek an
assignment of the Phase II Interest, or such portion thereof, if any, as is
earned by Entek, within twenty (20) days after written request by Entek for
such an assignment, such request to be accompanied by reasonable supporting
documentation of Phase II Qualifying Development Expenditures incurred by
Entek. 


          Section
4.4 Phase III Development. 


                    (a)
As used herein and subject to Section 4.5 and Section 12.1, “Phase III” means the period between the
second anniversary of the Effective Date and the third anniversary of the
Effective Date. 


                    (b)
Entek shall have the option, but not the obligation, to participate in Phase
III development of the Underlying Leases. If Entek desires to participate in
Phase III, it shall provide NFEI with written notice of such intention at least
thirty (30) days prior to the expiration of Phase II, unless the Acceleration
provision in Section 4.5 is applicable. If Entek elects not to participate in
Phase III, the following shall occur: 


                              (i)
this Agreement shall terminate; 


                              (ii)
NFEI shall have the immediate right to any remaining funds in the Segregated
Account and shall have no obligation to reimburse Entek any amount of these
funds;  


                              (iii)
any remaining funds in the Segregated Account shall be used in accordance with
the Phase II Work Program as directed by the Committee, and NFEI shall have no
obligation to assign Entek any further interests in the Subject Assets;
provided, however, that Entek shall retain the Initial Asset Purchase, the
Additional Asset Purchase (if applicable), the Phase I Interest, and any
portion of the Phase II Interest earned by it; provided,
however, that in the event such funds are not expended within 365
days after the expiration or termination of Phase II, such funds shall belong
exclusively to NFEI, unless the NFEI representative to the Committee withheld
consent to one or more proposed operations that, if approved, would have
resulted in expenditure of such funds; and 


11






                              (iv)
The Area of Mutual Interest described in Section 9.1 shall terminate
immediately. 


                    (c)
If Entek elects to participate in Phase III, then, subject to the terms below,
Entek shall incur and pay during Phase III Qualifying Development Expenditures
attributable to operations conducted pursuant to the Work Program in an amount
equal to Four Million Five Hundred Thirty Eight Thousand Five Hundred and
No/100 Dollars ($4,538,500.00) (the “Phase
III Threshold”) or more. Upon incurring Phase III Qualifying
Development Expenditures in an amount equal to or greater than the Phase III
Threshold, Entek shall have earned an undivided 18.4375% interest in the
Subject Assets (the “Phase III Interest”).
If during Phase III, Entek fails to incur Qualifying Development Expenditures
in an amount equal to or greater than the Phase III Threshold, Entek shall have
the right, but not the obligation, within ten (10) days after the end of Phase
III to deposit the difference between the Phase III Threshold and Entek’s
actual expenditures (the “Phase III
Funding Shortfall Amount”) into the Segregated Account. The
amount so deposited into the Segregated Account shall be expended on the Work
Program.  


                    (d)
By timely depositing the Phase III Funding Shortfall Amount into the Segregated
Account, Entek shall have earned the Phase III Interest. If Entek elects not to
deposit the Phase III Funding Shortfall Amount, or any portion thereof, into
the Segregated Account, then (i) Entek shall nevertheless have earned an
additional interest in the Subject Assets equal to 18.4375%, multiplied by a
fraction, the numerator of which is Entek’s Qualifying Development Expenditures
during Phase III (including any portion of the Phase III Funding Shortfall
Amounts deposited into the Segregated Account) and the denominator of which is
the Phase III Threshold; and (ii) this Agreement shall terminate, and neither
Party shall have any further obligations hereunder; provided, however, that NFEI’s obligations to deliver to
Entek assignments earned by Entek during Phase III shall survive such
termination. NFEI shall execute, acknowledge and deliver to Entek an assignment
of the Phase III Interest, or such portion thereof, if any, as is earned by
Entek, within twenty (20) days after written request by Entek for such an
assignment, such request to be accompanied by reasonable supporting
documentation of Phase III Qualifying Development Expenditures incurred by
Entek. 


          Section
4.5 Acceleration. At any time after Entek has incurred Qualifying
Development Expenditures in an amount equal to or greater than 90% of the Phase
I Threshold or the Phase II Threshold, Entek shall have the right, upon written
notice to NFEI, to end such current Phase, effective upon the date upon which
Entek’s Qualifying Development Expenditures for such Phase meet the applicable
Threshold for such Phase, and the following Phase shall immediately begin. 


12







          Section
4.6 Accounting True-Up. Notwithstanding any other provision hereof, if
an expense is incurred prior to the expiration of a Phase that, in accordance
with generally accepted accounting principals, is attributable to such Phase,
but Entek receives and timely pays the invoice therefor following the
conclusion of such Phase, such expenditure shall nevertheless be considered an
expenditure made prior to the conclusion of such Phase and shall be counted
toward the qualifying expenditure threshold for such Phase. Further, the
Parties recognize that, if invoices for Qualifying Development Expenditures
attributable to a Phase are received and paid after the conclusion of such
Phase, the actual Funding Shortfall Amount for such Phase may be less than the
amount deposited by Entek into the Segregated Account. Upon such determination,
such difference shall be distributed from the Segregated Account to Entek.


ARTICLE V.

FORM OF ASSIGNMENT


          Section
5.1 Form of Assignment. Each assignment delivered by NFEI to Entek
hereunder shall be in the form of Exhibit “M” attached hereto (“Assignment”),
and shall include a special warranty of title against Claims arising, by,
through or under NFEI, subject to Permitted Encumbrances. To the extent
transferable, NFEI shall grant to Entek and its successors and assigns, full
power and right of substitution and subrogation in and to all covenants,
indemnities and warranties (including warranties of title) given or made to
NFEI by its predecessors in title. The effective date of the Initial Assignment
shall be the Effective Date, and the effective date of each subsequent
Assignment shall be the day on which Entek earned the right to receive such
Assignment. Each such Assignment shall be made subject to the terms of the
Underlying Leases, and shall provide that Entek shall abide by the terms
thereof.


ARTICLE VI.

NFEI’S REPRESENTATIONS AND WARRANTIES


          Section
6.1 NFEI’s Representations and Warranties. NFEI represents and warrants
to Entek that the following statements are true and accurate:


                    (a)
Corporate Authority. NFEI is duly organized and in good standing under
the laws of its state of incorporation/formation, is duly qualified to carry on
its business in the states in which the Underlying Leases are located, and has
all the requisite power and authority to enter into and perform this Agreement.


                    (b)
Authorization. (i) This Agreement and all Assignments and other
transaction documents NFEI is to execute and deliver pursuant hereto (a) have
been duly executed by the authorized representatives of NFEI, (b) constitute
the valid and legally binding obligation of NFEI, and (c) are enforceable
against it in accordance with their respective terms; and (ii) it has taken all
necessary actions pursuant to its articles of incorporation and by-laws, as
applicable, and other governing documents to fully authorize (a) the execution
and delivery of this Agreement, the Assignments and any transaction documents
related to this Agreement, and (b) the consummation of the transactions
contemplated by this Agreement.


13






                    (c)
No Violation of Contractual Restrictions. The execution, delivery, and
performance of this Agreement do not conflict with or violate any agreement or
instrument to which NFEI is a party or by which it or the Underlying Properties
are bound. 


                    (d)
No Violation of Other Legal Restrictions. The execution, delivery, and
performance of this Agreement does not violate any law, rule, regulation,
ordinance, judgment, decree, or order to which NFEI or the Underlying
Properties are subject. 


                    (e)
No Restraining Litigation. Other than as disclosed in Section 6.1(j).
there is no action, suit, arbitration, proceeding, Claim, or investigation by
any person, entity, administrative agency, or governmental body pending or, to
its knowledge, threatened, against NFEI before any court, arbitrator or
governmental agency that seeks damages in connection with, or seeks to
restrain, enjoin, impair, or prohibit the consummation of all or part of the
transactions contemplated hereunder.


                    (f)
Bankruptcy. There are no bankruptcy, reorganization, or receivership
proceedings pending, being contemplated by, or to its knowledge, threatened
against NFEI


                    (g)
Broker’s Fees. It has not incurred any obligation for brokers, finders,
or similar fees for which Entek or its affiliates would be liable or
responsible in any way.


                    (h)
The Underlying Leases. NFEI holds the rights to certain interests in the
Underlying Leases described in Exhibit “A” free and clear of any liens, Claims,
burdens or encumbrances, other than Permitted Encumbrances. The Underlying
Leases and the Focus Ranch Unit are in full force and effect, NFEI is not in
breach in any material respect of the terms and provisions thereof, nor, to
NFEI’s knowledge is any third party in breach in any material respect of the
terms and provisions thereof, and no notice of breach, default or termination
has been received by NFEI, or to the knowledge of NFEI, by any other party. The
Underlying Leases, the Focus Ranch Unit Agreement, the Focus Ranch Unit
Operating Agreement, and the Fly Creek Operating Agreement, together with
applicable law, contain the entirety of NFEI’s obligation to the lessors, and
no other understanding or agreement exists between NFEI and any lessor in
relation to the subject matter of this Agreement, except as otherwise stated in
this Agreement.


                    (i)
Instruments; Rentals. NFEI has provided Entek with complete and correct
copies of the Underlying Leases, the Focus Ranch Unit Agreement, the Focus
Ranch Unit Operating Agreement, and the Fly Creek Operating Agreement. These
documents are attached to this agreement as Exhibits “C,” “D,” and “E,”
respectively. NFEI hereby warrants that, except as set forth in Schedule
6.1(i), all rental payments due concerning the Focus Ranch Unit and the other
Underlying Leases have been paid in a timely manner, and there are no rentals due
as of the date hereof concerning such leases. 


14






                    (j)
Claims and Litigation. Except as set forth in Schedule 6.1(j), there are
no actions, suits, governmental inquiries, or proceedings pending, or to NFEI’s
knowledge, threatened in connection with or relating to the Subject Assets
which could have an adverse effect upon the consummation of the transactions
contemplated by this Agreement or the ownership or operation of any of the
Subject Assets.


                    (k)
Closed Leases. NFEI has advised Entek of certain leases subject to this
Agreement that the Bureau of Land Management and/or the Mineral Management
Service has represented are “Closed”. These leases are listed in Exhibit “I,”
attached hereto. 


                    (l)
Preferential Rights. Except as set forth on Schedule 6.1(l), NFEI is
aware of no preferential rights held by any third person which will be
triggered by the execution of this Agreement or any Assignment delivered
pursuant hereto. Without limiting the generality of the foregoing, NEFI
represents and warrants that the preferential right set forth in the Fly Creek
Operating Agreement is inapplicable to the transactions contemplated hereunder
due to suspension of the counterparty’s rights thereunder due to uncured
default, as provided in Section XV.20(a) of such agreement.


                    (m)
Title. NFEI represents and warrants to Entek that, subject to Permitted
Encumbrances, NFEI has Defensible Title to the Underlying Leases free and clear
of all Claims arising by, through or under NFEI, but not otherwise. NFEI makes
no warranty of title concerning the Underlying Leases, except with respect to
any Claims arising by, through or under NFEI. NFEI agrees to indemnify Entek
solely regarding Claims of any and all persons claiming by, through or under
NFEI, but not otherwise. NFEI expressly disclaims any liability for title
issues concerning the Underlying Leases which arose prior to NFEI taking a
legal interest in any leases concerned.


                    (n)
SDG. NFEI is the general partner of SDG and owns 74.4% of the issued and
outstanding limited partnership interests in SDG before payout (as “payout” is
defined in the Slater Dome Gathering LLLP Partnership Agreement), and 62.1% of
the issued and outstanding limited partnership interests in SDG after payout,
together with a 10% general partnership interest in SDG before payout, and a
25% general partnership interest in SDG after payout, in each case free and
clear of all liens, purchase options or agreements, proxies, voting trusts,
restrictions, rights of first refusal or other encumbrances, other than
Permitted Encumbrances. NFEI has furnished to Entek a true, correct, and
complete copy of SDG’s partnership agreement (the “Partnership Agreement”),
Certificate of Formation, and other governing documents, together with any
amendments thereto, and each such agreement or instrument is in full force and
effect and is binding and enforceable against each party thereto. The
respective partnership interests of the partners of SDG (the “Partnership
Interests”) are as stipulated in Schedule 6.1(n). NFEI’s
Partnership Interests have been validly issued and are fully paid (to the
extent required under the Partnership Agreement) and are non-assessable. There
are no agreements or arrangements to which NFEI is a party that would prohibit
or otherwise restrict the ability of NFEI to transfer to Entek such portion of
the Partnership Interests as may be purchased or earned by Entek, as provided
herein, free and clear of any restriction, lien or encumbrance, other than
Permitted Encumbrances. There are no outstanding subscriptions, options,
convertible securities, warrants, or calls of any kind issued or granted by, or
binding upon, SDG or NFEI to purchase or otherwise acquire or to sell or
otherwise dispose of any of NFEI’s Partnership Interests. 


15






                    (o)
Partnership Subsidiaries; Assets. SDG does not own any stock,
partnership interest, or other ownership interest in any other entity. The
assets of SDG consist solely of the Slater Dome Gathering System and related
equipment, facilities, rights-of-way, contracts and other related real and
personal property. SDG has never engaged in any business other than the gas
gathering business.


                    (p)
Partnership Liabilities. Except as set forth on Schedule 6.1(p), SDG has
no existing, contingent, or threatened liabilities or obligations (including,
without limitation, any liability, debt, or obligation which SDG may owe to any
of its partners or its or their affiliates), and to the knowledge of NFEI,
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, Claim or demand against SDG giving rise to
any such liability or obligation.


                    (q)
Formation; Good Standing. SDG is duly organized and in good standing
under the laws of the State of Colorado, and is duly qualified to carry on its
business in the State of Colorado.


                    (r)
SDG’s Taxes. 


                              (i)
Tax returns of SDG have not been audited by the Internal Revenue Service or
other taxing authority; all tax returns and reports of SDG required by law to
be filed have been filed or valid extensions have been obtained; the tax
returns which have been filed are true and correct in all material respects;
and all taxes owed by or imposed on SDG (whether or not shown as due on a tax
return) have been paid. 


                              (ii)
There are no agreements, waivers or other arrangements providing for an
extension of time with respect to the filing of any tax returns or reports, or
extending the statutory period of limitations applicable to the payment of, or
assessment of any tax with respect to SDG or any of its income, properties, or
operations.


                              (iii)
There are no liens for taxes upon any properties or assets of SDG except for
liens for current taxes which are not yet delinquent and no notice has been
given of any event that could lead to any such lien.


                              (iv)
SDG has properly charged and collected, accrued, and paid or remitted, all
applicable sales, use and similar taxes.


                              (v)
SDG has withheld and paid all material taxes required to have been withheld and
paid in connection with amounts paid or owing to any partner or third party.


                              (vi)
There is no pending or, to NFEI’s knowledge, threatened Claim against SDG or
its assets for payment of any additional taxes; and SDG has not joined in a consolidated
tax return. 


16






                              (vii)
SDG has been treated as a partnership for tax purposes since its formation. 


                              (viii)
SDG is not a party to any tax sharing or tax indemnity agreement. 


                              (ix)
For purposes of this Section, “tax” (including, with correlative meaning,
“taxes”) means (i) any net income, gross income, business and occupation,
admissions, gross receipts, sales, use, value added, ad valorem, transfer,
transfer gains, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, rent, recording, occupation, premium, real or
personal property, intangibles, environmental or windfall profits tax,
alternative or add-on minimum tax, customs duty or other tax, fee, duty, levy,
impost, assessment or charge of any kind whatsoever, together with (ii) any
interest and any penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such tax.


                    (s)
Title to the Gathering System. SDG has good and defensible title to the
Slater Dome Gathering System, free and clear of all Claims, liens and
encumbrances, except Permitted Encumbrances. 


                    (t)
NFEI Liabilities. Except as set forth on Schedule 6.1(t), NFEI has no
existing, contingent, or threatened liabilities or obligations, and to the
knowledge of NFEI, there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, Claim or demand against
NFEI giving rise to any such liability or obligation. Schedule 6.1(t) sets
forth a true and correct list of NFEI’s debtors and creditors, including
amounts owed by or to each, as of June 30, 2009.


                    (u)
Financial Statements. The audited and unaudited financial statements
(including any notes thereto or schedules included therein) filed by NEFI prior
to the date hereof with the Securities Exchange Commission (“SEC”)
(the “NEFI
Financial Statements”), at the time filed (except to the extent
corrected by a document filed by NEFI with the SEC prior to the date of this
Agreement) (i) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, (ii) complied in all material respects with the
applicable requirements of Securities Exchange Act of 1934, as amended, or the
Securities Act of 1933, as amended, as applicable, and (iii) complied in all
material respects with the rules and regulations of the SEC. The NEFI Financial
Statements were prepared in accordance with accounting principles generally
accepted in the United States as in effect from time to time applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) and fairly present (subject in the case of unaudited
statements to normal, recurring and year-end audit adjustments) in all material
respects the consolidated financial position and status of the business of NEFI
as of the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended.


17






          Section
6.2 Disclaimer of Representations and Warranties


                    (a)
Except for the representations and warranties provided in this article and the
Assignments to be delivered by NFEI pursuant to this Agreement, NFEI makes no,
and disclaims any, warranty or representation of any kind, either express,
implied, statutory, or otherwise, including, without limitation, the accuracy
or completeness of any data, reports, records, projections, information, or materials
now or heretofore furnished or made available to Entek in connection with this
Agreement. 


                    (b)
Entek acknowledges that NFEI makes no warranties regarding the oil and gas
potential related to or the likelihood of success of the Focus Ranch Unit
Project.


ARTICLE VII.

ENTEK’S REPRESENTATIONS AND WARRANTIES.


          Section
7.1 Entek’s Representations and Warranties. Entek represents and
warrants to NFEI that the following statements are true and accurate:


                    (a)
Company Authority. Entek is duly organized and in good standing under
the laws of its state of organization, is (or prior to its commencement of
operations on the Underlying Leases will be) duly qualified to carry on its
business in the States in which the Underlying Leases are located, and has all
the requisite power and authority to enter into and perform this Agreement.


                    (b)
Authorization. (i) This Agreement and all Assignments and other
transaction documents Entek is to execute and deliver pursuant hereto (a) have
been duly executed by the authorized representatives of Entek, (b) constitute
the valid and legally binding obligation of Entek, and (c) are enforceable
against it in accordance with their respective terms; and (ii) it has taken all
necessary actions pursuant to its certificate of formation, limited liability
company agreement and other governing documents to fully authorize (a) the
execution and delivery of this Agreement, the Assignments and any transaction
documents related to this Agreement, and (b) the consummation of the
transactions contemplated by this Agreement.


                    (c)
No Violation of Contractual Restrictions. The execution, delivery, and
performance of this Agreement do not conflict with or violate any agreement or
instrument to which Entek is a party or by which it is bound. 


                    (d)
No Violation of Other Legal Restrictions. The execution, delivery, and
performance of this Agreement does not violate any law, rule, regulation,
ordinance, judgment, decree, or order to which Entek is subject. 


                    (e)
No Restraining Litigation. There is no action, suit, arbitration,
proceeding, Claim, or investigation by any person, entity, administrative
agency, or governmental body pending or, to its knowledge, threatened, against
it before any court, arbitrator or governmental agency that seeks damages in
connection with, or seeks to restrain, enjoin, impair, or prohibit the
consummation of all or part of the transactions contemplated hereunder.


18






                    (f)
Bankruptcy. There are no bankruptcy, reorganization, or receivership
proceedings pending, being contemplated by, or to its actual knowledge,
threatened against it.


                    (g)
Broker’s Fees. It has not incurred any obligation for brokers, finders,
or similar fees for which NFEI would be liable or responsible in any way.


                    (h)
Availability of Funds. Entek has sufficient funds to enable it to
perform its obligations under this Agreement.


          Section
7.2 Disclaimer of Additional Warranties. Except for the representations
and warranties expressly provided in this article, Entek makes no, and
disclaims any, warranty or representation of any kind, either express, implied,
statutory, or otherwise. 


ARTICLE VIII.

OPERATING COMMITTEE


          Section
8.1 Operating Committee. The Parties hereby establish an operating
committee (the “Committee”), which shall be
responsible for the preparation, approval and modification of an annual Work
Program for each Phase and the determination of a budget (the “Budget”)
for each such Phase. Each Work Program established must be approved unanimously
by the Committee. The designated operator, as provided in Section 8.8, shall,
as a reasonable, prudent operator, in a good and workmanlike manner, implement
the Work Program; provided, however, that, without the prior written approval
of the Committee, the operator shall not undertake any single project
reasonably estimated to require an expenditure in excess of Ten Thousand and
No/100 Dollars ($10,000.00), except in connection with an operation that has
been previously approved by the Committee in an Authority for Expenditure
executed by the Committee. Any action by the Committee approving an expenditure
under this Section in excess of Ten Thousand and No/100 Dollars ($10,000.00)
must be unanimous. Regarding Work Programs or operations previously approved by
the Committee, the designated operator shall not exceed the budget estimates by
more than the greater of (a) Ten Thousand and No/100 Dollars ($10,000.00) or
(b) 10%. In the event of expected cost overruns in excess of these figures the
designated operator shall submit an AFE to the Parties seeking approval of the
cost overruns. In the event a Party withholds approval of a cost overrun, then
the consenting Parties may continue the operation as a non-consent procedure in
accordance with Section 8.7, and the non-consenting Party shall have no further
liability for such cost overrun. The same procedures and provisions shall apply
as would apply to a standard AFE under this Agreement. Notwithstanding the
foregoing, in case of explosion, fire, flood or other sudden emergency, whether
of the same or different nature, the operator may take such steps and incur
such expenses as in its opinion are required to deal with the emergency to
safeguard life and property but operator, as promptly as possible, shall report
the emergency to the Committee.


19






          Section
8.2 Committee Membership. Initially, the Operating Committee shall
consist of two individuals, one designated by each Party. Each Party shall
designate in writing a person to serve on the Committee and shall also
designate another person, as an alternate to serve in the stead of its member
of the Committee in the event its member is not available to act in that
capacity. Each such designation shall state the address and telephone number of
the member of the Committee and of his designated alternate. Each member and
alternate shall be vested by the Party appointing him with the authority to act
and vote at the meetings of the Committee. Any written notice to any such
member or to any such alternate to be given under the terms of this Agreement
shall be addressed to him at his address so stated. Any designation of a member
of the Committee or an alternate may be rescinded by the Party appointing such
member or alternate by delivering written notice to that effect to the Chairman
of the Committee, or his alternate, and designating another person to act in
the stead of the member or alternate whose authority has been rescinded. The
member appointed by Entek, or his alternate, shall act as Chairman of the
Committee. Any permitted assignee of all or a portion of a Party’s interest
under this Agreement that acquires a Working Interest of at least 10% of 8/8th
in the Subject Assets shall have a right to appoint a member to the Committee.


          Section
8.3 Committee Meetings. All meetings of the Committee shall be held in
NFEI’s office in Littleton, Colorado, or at such other places unanimously
agreed upon by the Committee. Either Party may call a meeting of the Committee
at any time, and shall call a meeting upon request of any other Party. When
feasible, the Chairman shall give each member notice at least seventy two (72)
hours in advance of each meeting. Any member of the Committee who will not be
present at a meeting of the Committee may vote on any item to be considered at
such meeting by telephone communication to the Chairman, or by mail or wire,
addressed to the Chairman. The vote of each member present on any question
submitted to the meeting shall also be recorded in the Minutes. All action
taken by the Committee (whether or not at a meeting) shall require a unanimous
favorable vote, whether or not present at the meeting, and any action so
approved shall be binding on the parties. 


          Section
8.4 Committee Action Without Meeting. The Committee may take action without an assembled meeting by communications
between the Chairman and the other member(s) of the Committee. The Chairman may
submit any matter or matters by giving the other member(s) notice by mail,
electronic mail, or telephone (confirmed in writing as soon there after as
practicable). Each member of the Committee may communicate his vote thereon to
the Chairman by mail, facsimile, electronic mail or telephone (confirmed in
writing as soon thereafter as practicable). All action so taken by the
Committee shall have the same effect and be binding on the Parties to the same
extent as though taken at a duly called meeting.


          Section
8.5 Minutes of Committee Meetings. Minutes of each Committee meeting and
Committee action taken without a meeting shall be kept and copies of all such
Minutes shall be mailed by the Chairman to each party and to each member and
alternate sitting on the Committee promptly after the meeting or action.


20






          Section
8.6 Development of Work Program. Within ten (10) days after the
execution of this Agreement, the Committee shall vote on an initial Work
Program for Phase I and a Phase I Budget, to be proposed by Entek. Such initial
Work Program shall include Phase I operations. Thereafter, the Committee shall
vote on a new Work Program at least once each calendar year. Subject to the
other terms and provisions hereof, Entek shall bear 100% of the costs of
implementing the Work Program(s), as such may be amended from time to time,
(excluding Operating Expenses, which shall be borne as provided in Section 3.1)
until such time as Entek has satisfied its obligations with respect to
Qualifying Development Expenditures pursuant to Article IV, and, thereafter,
each Party shall bear a share of such costs proportionate to its respective
Working Interest.


          Section
8.7 Non-consent. In the event the Committee does not approve a proposed
operation, any Party may still choose to go forward with the operation at such
Party’s sole cost and expense. The Party who does not participate in the
Operation shall be known as the Non-Consenting Party. The Non-Consenting Party
shall not be obligated for any expenses associated with the operation. However,
the Non-Consenting Party shall not be entitled to any share of production or
proceeds thereof attributable to the operation until each Consenting Party to
the operation has recouped from such production proceeds 300% of the expenses
it incurred in relation to the operation. In the event Entek is the
Non-Consenting Party, the costs paid by Entek with respect to such operation
shall not be considered Qualifying Development Expenditures.


          Section
8.8 Operations.


                    (a)
When conducting operations on lands within the Focus Ranch Unit, the Parties
agree to be bound by, and to comply with the terms of, the Focus Ranch Unit
Agreement, the Focus Ranch Unit Operating Agreement, and any other existing
contracts or agreements applicable to, or otherwise relating to, operations in
the Focus Ranch Unit. Further, when conducting operations on lands subject to
the Fly Creek Operating Agreement the Parties agree to be bound by, and to comply
with the terms of, the Fly Creek Operating Agreement and any other existing
contracts or agreements applicable to, or otherwise relating to operations in
the lands subject to the Fly Creek Operating Agreement. 


                    (b)
Subject to the terms of the applicable operating agreement, NFEI shall be the
initial operator charged with implementation of the Work Program(s) approved by
the Committee. Notwithstanding the foregoing, NFEI agrees that, provided that
Entek has elected to proceed with Phase II, then, at such time as Entek has
obtained all required qualifications and approvals with applicable regulatory
authorities, including, without limitation, the Bureau of Land Management, NFEI
shall vote its interest in favor of Entek’s election as operator under the
Focus Ranch Unit Operating Agreement and the Fly Creek Operating Agreement. In
the event either such Operating Agreement must be amended to accommodate
Entek’s election as operator thereunder, NFEI agrees to support such amendment.



21






                    (c)
In the event the Parties conduct operations under this Agreement, on lands
which are subject to this Agreement, but not subject to any existing Operating Agreement,
the Parties hereby agree to enter into an Operating Agreement with respect to
such lands in the form of the AAPL Form 610-1989 Model Form Operating
Agreement, or such other form as may be mutually acceptable to the parties.
NFEI shall be the initial operator thereunder. However, NFEI agrees that,
provided that Entek has elected to proceed with Phase II, then, at such time as
Entek has obtained all required qualifications and approvals with applicable
regulatory authorities, including, without limitation, the Bureau of Land
Management, NFEI shall support the designation or election of Entek as operator
thereunder.


          Section
8.9 Audit Rights. The operator of the Work Program shall maintain, in
accordance with generally accepted accounting principles, adequate books and
records with respect to Operating Expenses and Qualifying Development
Expenditures. Such books and records shall be made available for inspection and
audit by the other Party or its duly authorized representative, at the auditing
Party’s expense, in the operator’s offices during the operator’s normal business
hours. 


          Section
8.10 Accounts. 


                    (a)
To the extent that Sections 3.1, 8.1 or other provisions of this Agreement do
not apply, the Parties shall manage the accounts and accounting in accordance
with the applicable operating agreements. 


                    (b)
On or before the 15th day of each month, the operator shall deliver
to the other Party a full accounting of Operating Expenses and Qualifying
Development Expenditures relating to the Work Program, including a detailed statement
of all disbursements made from the Segregated Account and a listing of credits
and pending invoices and other outstanding financial obligations associated
with the Work Program. In addition, the operator shall, upon request, furnish
copies of invoices and other reasonably requested supporting documentation and
financial information relating to the Work Program. The operator shall use all
commercially reasonable efforts to provide such financial information to the
other Party with respect to the Work Program as may be reasonably necessary for
timely completion of such other Party’s annual financial reporting requirements
(it being recognized that, as of the date hereof, NFEI’s fiscal year ends on
February 28 or, in the case of leap years, February 29, and Entek’s fiscal year
ends on June 30).


          Section
8.11 NFEI Board Meetings. During the term of this Agreement, NFEI shall
provide Entek at least forty-eight (48) hours’ notice prior to any meeting of
NFEI’s Board of Directors, and Entek shall have the right to cause a
representative to be present, either via teleconference or in person, at such
meeting in the capacity of an observer. Entek shall be an observer only and
shall not have any vote or any NFEI governance authority or responsibility as a
result of attendance of any such meeting. Entek agrees to maintain the
confidentiality of the proceedings of each such meeting as provided in Section
10.5 herein.


22






ARTICLE IX.

AREA OF MUTUAL INTEREST AND PREFERENTIAL RIGHT


          Section
9.1 Area of Mutual Interest. 


                    (a)
The Parties hereby create an area of mutual interest (“Area of Mutual Interest”
or “AMI”)
covering all lands located within (i) Routt County, Colorado, (ii) Moffat
County, Colorado, (iii) Sweetwater County, Wyoming, and (iv) Carbon County,
Wyoming, without any depth limitation. Entek shall be entitled to participate
for up to 55% (at Entek’s election) in any Additional Interest, as defined
below, acquired within the Area of Mutual Interest by NFEI. Similarly, NFEI
shall be entitled to participate for up to 45% (at NFEI’s election) in any
Additional Interest acquired within the AMI by Entek. The terms and conditions
of participation shall be the same as those applied to the acquiring party, and
the Party electing to participate under the AMI shall be responsible for its
proportionate share of acquisition costs and expenses. 


                    (b)
As used herein, “Additional Interest” means any oil and/or gas leasehold
interest, mineral fee interest, royalty interest, overriding royalty interest,
net profits interest, production payment, or any other oil & gas interest,
together with any contractual rights to acquire any of the foregoing, including
farm-in rights and purchase options, covering any portion of the lands within
the AMI which is acquired by a Party hereto or its affiliate. Additional
Interests shall not include interests in the Subject Assets earned by Entek
pursuant to the terms hereof.


                    (c)
Upon acquiring an Additional Interest subject to this AMI, the Party acquiring
such interest shall send written notice to the other Party of such acquisition.
Such notice shall include a reasonably detailed description of the Additional
Interest acquired, the lands and depths covered thereby, and the consideration
paid therefor, and shall also include true, correct and complete copies of any
farmout agreement, purchase agreement, lease, option, assignment, or other
instruments or agreements pursuant to which the interest was acquired or to
which it is subject. The non-acquiring Party shall have twenty (20) days after
receipt of such notice to elect in writing to participate in up to the relevant
percentage specified in Section 9.1(a) of the Additional Interest and to
reimburse the acquiring Party for its proportionate share of acquisition costs
paid by the acquiring Party. Upon receiving such funds the acquiring Party
shall assign the proportionate share of the Additional Interest to the other
Party within twenty (20) days of receiving such funds, such assignment to be
free of all encumbrances arising, by, through or under the acquiring party,
other than burdens reserved by or granted to its lessor, grantor, or assignor
in connection with the acquisition of the acquired interest. If the
non-acquiring Party fails to provide its proportionate share of acquisition
costs paid by the non-acquiring party within twenty (20) days of receiving
written notice of the acquisition, the non-acquiring Party shall irrevocably be
deemed to have elected not to participate in the acquisition of the interest.
Such election not to participate shall have no effect on future elections under
the AMI going forward, and the AMI shall remain in full force and effect. 


23






                    (d)
The Area of Mutual Interest may be terminated by mutual written agreement of
the Parties. In addition, either Party may advise the other Party, upon ninety
(90) days’ prior written notice, that it is withdrawing from the AMI; provided,
however, that neither Party may withdraw from the AMI during any Phase in which
Entek has elected to participate.


                    (e)
This Area of Mutual Interest shall not be assignable by either Party, but shall
be personal to NFEI and Entek.


          Section
9.2 Preferential Right. Should any Party desire to sell, exchange or
otherwise transfer all or any portion of its interests in the Subject Assets or
in any jointly owned Additional Interest, it shall promptly give written notice
to the other Party, with full information concerning its proposed disposition,
which shall include the name and address of the prospective purchaser (who must
be ready, willing and able to purchase), the purchase price, and all other
terms of the offer. The other Party shall then have an optional prior right,
for a period of thirty (30) days after receipt of the notice, to purchase on
the same terms and conditions the interest which the other Party proposes to
sell; and, if this optional right is timely exercised, the purchasing Party
shall pay the purchase price for the offered interest and the offering Party
shall deliver an assignment thereof, all in accordance with the terms of the
offer. This preferential right to purchase shall not apply in those cases where
any Party wishes to mortgage its interests, or to dispose of its interests by
merger, reorganization, consolidation, or sale of all or substantially all of
its assets to a subsidiary or parent company or to a subsidiary of a parent
company, or to any company or other entity in which a Party owns a majority of
the stock or other equity interests.


ARTICLE X.

DUE DILIGENCE REVIEW OF THE PROPERTIES


          Section
10.1 No Further Due Diligence. NFEI has made available to Entek all
geologic and geophysical information in its possession regarding the Underlying
Leases. This information includes, but is not limited to, seismic and geologic
data, well logs, cement bond logs, well samples, and coring data. NFEI makes no
representations of accuracy regarding such data. Entek agrees to keep all such
information confidential, subject to Section 10.5. NFEI has made available to
Entek copies of the Underlying Leases, the Focus Ranch Unit Agreement, the
Focus Ranch Unit Operating Agreement, and all title documentation material to
the Subject Assets which NFEI has in its possession. Such title documentation
has been provided without any warranty by NFEI. While Entek retains the
continuing right to inspect the Subject Assets and records relating thereto, as
provided below, the effectiveness of this Agreement is not subject to the conduct
of any further due diligence by either Party. 


24






          Section
10.2 Inspection of Records. At any time after the execution of this
Agreement, NFEI shall afford to Entek and its authorized representatives
reasonable access during normal business hours to the books and records of NFEI
relating to the Underlying Leases, including the right to make copies of such
books and records at Entek’s cost and expense, in order for Entek to conduct
such title and other examination of the Underlying Leases as it may in its sole
discretion choose to conduct. Such books and records shall include, without
limitation, all abstracts of title, title opinions, title files, ownership
maps, lease files, assignments, division orders, operating records and
agreements, well files, financial and accounting records, contract files,
environmental compliance records, and geological, geophysical and engineering
records, in each case insofar as same may be in existence and in the possession
or control of NFEI, excluding, however, any information that NFEI is prohibited
from disclosing by third-party confidentiality restrictions; provided, however,
that, at Entek’s request, NFEI shall request waivers of such confidentiality
restrictions. The cost and expense of Entek’s examination of NFEI’s books and
records relating to the Underlying Lease shall be borne solely by Entek. In the
event that this Agreement is terminated in accordance with the terms hereof,
Entek agrees to return and/or destroy copies of any books or records acquired
from NFEI, at NFEI’s request.


          Section
10.3 Physical Inspection of the Underlying Leases. At any time after the
execution of this Agreement, Entek shall have the right to conduct a physical
inspection of the Underlying Leases, including an environmental review thereof.
NFEI shall be provided at least forty-eight (48) hours’ prior notice of any
such inspection, and NFEI’s representative(s) shall have the right to witness
all such inspections. With respect to any samples taken in connection with
Entek’s inspection, Entek shall take split samples, providing one of each such
sample, properly labeled and identified, to NFEI. The cost and expense of
Entek’s inspection of the Underlying Leases shall be borne solely by Entek.


          Section
10.4 Notice of Claims. NFEI shall promptly notify Entek and provide
details regarding the occurrence of: (i) any written notice of default or
termination received or given to NFEI with respect to the Underlying Leases or
the Focus Ranch Unit, (ii) any written notice of any pending or threatened
Claim, demand, action, suit, inquiry or proceeding related to the Underlying
Leases or the Focus Ranch Unit.


          Section
10.5 Confidentiality. Entek shall maintain the confidentiality of any
data or information which was acquired by it in the course of its due diligence
examination of the Underlying Leases and the records relating thereto in
accordance with the terms hereof. Notwithstanding the foregoing, (a) Entek may
disclose such data or information to the extent such disclosure is required
under applicable law or stock exchange regulation or rule; and (b) Entek may
disclose data or information that is or becomes publicly available or that is
available from a third party, in each case other than by breach of this
Agreement. In addition, Entek may make such data or information available to:
(i) affiliates of Entek; (ii) outside professional consultants for the purpose
of evaluation; (iii) current and bona fide potential investors and reputable
financial institutions and counter-parties in connection with current or
potential future financial arrangements; (iv) third parties with whom Entek may
be engaged in a bona fide effort to effect a merger or consolidation, sell all
or a controlling part of Entek’s stock, or sell all or any portion of the
assets of Entek or its affiliate. 


25








ARTICLE XI. 

MUTUAL INDEMNITIES


          Section
11.1 Mutual Indemnities. NFEI agrees to indemnify, defend and hold
harmless Entek, its affiliates, and their respective directors, officers,
agents, and employees, from, and to promptly pay the amount of any damages
arising from or in connection with, any Claims arising from NFEI’s breach of
any of its representations, warranties or covenants in this Agreement.
Likewise, Entek will indemnify, defend and hold harmless NFEI, its affiliates,
and their respective directors, officers, agents, and employees, from , and to
promptly pay the amount of any damages arising from or in connection with, any
Claims arising from Entek’s breach of any of its representations, warranties or
covenants in this Agreement. 


ARTICLE XII. 

FORCE MAJEURE.


          Section
12.1 Force Majeure. If either Party is rendered unable, in whole or in
part, to carry out its obligations under this Agreement due to Force Majeure,
such Party’s performance is excused, to the extent it is affected by the Force
Majeure, during the period of Force Majeure. As used herein, “Force Majeure” means an act of God,
strike, lockout or other industrial disturbance, act of the public enemy, war
blockage, public riot, lightning, fire, flood, explosion, governmental action,
governmental delay, restraint, or inaction, delays in obtaining permits,
unavailability of equipment, and any other cause, whether of the kind
specifically enumerated above or otherwise, which is not reasonably within the
control of the Party claiming Force Majeure. Either Party claiming Force
Majeure shall give notice to the other Party of the Force Majeure as soon as
possible after the event occurs reasonably describing the event constituting
the Force Majeure and shall pursue with due diligence commercially reasonable
steps to overcome such Force Majeure; provided,
however, that the Parties agree that the settlement of strikes,
lockouts or other industrial disturbances shall be within the sole discretion
of the Party experiencing such disturbance. For avoidance of doubt, a Force
Majeure event shall extend by the duration of the Force Majeure event the time
periods for performance and deadlines set forth in this Agreement. Without
limiting the generality of the foregoing, a Force Majeure event shall extend
the duration of the Phase during which such Force Majeure event occurs by the
period of time that the Force Majeure remains in effect. 


ARTICLE XIII. 

NOTICES


          Section
13.1 Notices. All notices authorized or required between the Parties by
any of the provisions of this Agreement shall be in writing and delivered in
person or by courier service or by any electronic means of transmitting written
communications which provides written confirmation of complete transmission,
and properly addressed to the other Party at the address specified below.
Verbal communication does not constitute notice for purposes of this Agreement,
and e-mail addresses and telephone numbers for the Parties are listed below as
a matter of convenience only. A notice given under any provision of this
Agreement shall be deemed delivered only when received by the Party to whom
such notice is directed, and the time for such Party to deliver any notice in
response to such originating notice shall run from the date the originating
notice is received. “Received” for purposes of this Article shall mean actual
delivery of the notice to the address of the Party specified hereunder. 


26






	
 

	
 


	
 

	
If to NFEI:


	
 

	
 


	
 

	
New Frontier
  Energy, Inc.


	
 

	
1789 W.
  Littleton Blvd.


	
 

	
Littleton,
  CO 80120


	
 

	
Attn: Paul
  Laird


	
 

	
Phone:
  303-730-9994 x 225


	
 

	
Email:
  plaird@nfeinc.com


	
 

	
 


	
 

	
If to Entek


	
 

	
 


	
 

	
Entek GRB
  LLC


	
 

	
5120 Woodway
  Dr., Suite 5004


	
 

	
Houston,
  Texas 77056-1725


	
 

	
Attn: Mr.
  Russell Brimage


	
 

	
Phone:
  ___________________________


	
 

	
Fax:
  _____________________________


	
 

	
Email:
  reb@entekenergy.com.au


	
 

	
 


	
 

	
With copy to
  Entek Australia office:


	
 

	
 


	
 

	
Entek Energy
  Limited


	
 

	
15 Rheola
  Street


	
 

	
West Perth,
  Western Australia 6005


	
 

	
Attn: Mr.
  Russell Brimage


	
 

	
Phone:
  ___________________________


	
 

	
Fax:
  _____________________________


	
 

	
Email:
  reb@entekenergy.com.au





ARTICLE XIV. 

TERMINATION


          Section
14.1 Termination. Prior to the completion of Phase III, the Parties
shall work in good faith to amend the Fly Creek Operating Agreement and the
Focus Ranch Unit Operating Agreement to incorporate in such agreements Sections
8.1, 8.2 and 8.7 of this Agreement. In the event the Parties amend the Fly
Creek Operating Agreement and the Focus Ranch Unit Operating Agreement as
described above, and both Parties execute and become bound by such operating
agreements, this Agreement shall terminate upon completion of Phase III.
However, in the event the Parties are unable, for any reason, to amend either
of the above operating agreements in the manner described above, this Agreement
shall not terminate, but shall continue in all terms and shall have precedence,
as between the Parties, over both the Fly Creek Operating Agreement and the
Focus Ranch Unit Operating Agreement. 


27






ARTICLE XV. 

MISCELLANEOUS.


          Section
15.1 Waiver of Consequential and Punitive Damages. NEITHER PARTY SHALL
BE ENTITLED TO RECOVER FROM THE OTHER, AND EACH PARTY RELEASES THE OTHER PARTY
FROM, ANY LOSSES, COSTS, EXPENSES, OR DAMAGES ARISING UNDER THIS AGREEMENT OR
IN CONNECTION WITH OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED IN THIS
AGREEMENT IN EXCESS OF THE ACTUAL COMPENSATORY DAMAGES SUFFERED BY SUCH PARTY.
EACH PARTY WAIVES AND RELEASES THE OTHER PARTY FROM ANY RIGHT TO RECOVER
PUNITIVE, SPECIAL, EXEMPLARY, INDIRECT, INCIDENTAL AND CONSEQUENTIAL DAMAGES
ARISING IN CONNECTION WITH OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED IN
THIS AGREEMENT. 


          Section
15.2 Insurance. During all times that operations are conducted on the
Underlying Leases pursuant to this Agreement, each Party shall maintain
workmen’s compensation insurance meeting statutory requirements and general
liability insurance with limits of at least Five Million and No/100 Dollars
($5,000,000.00) single limit per occurrence. 


          Section
15.3 No Partnership. The obligations, duties and liabilities of the
Parties shall be several and not joint or collective. Nothing in this Agreement
is intended to create, or shall be construed as creating, a partnership, joint
venture, association for profit or other business entity between or among the
Parties, and for federal and state income tax purposes, the Parties elect to be
excluded from the application of the provisions of Subchapter K, Chapter 1,
Subtitle A of the Internal Revenue Code of 1986, as amended, as permitted and
authorized by Section 761 of said Code and the regulations promulgated
thereunder. 


          Section
15.4 Further Assurances. Each of the Parties shall do all such acts and
execute and deliver all such documents as shall be reasonably required in order
to fully perform and carry out the terms of this Agreement. 


          Section
15.5 Parties Bear Own Expenses. Each Party shall bear and pay all
expenses (including, without limitation, legal fees) incurred by it in
connection with the transaction contemplated by this Agreement. 


          Section
15.6 Public Announcements. No Party may make press releases or other
public announcements concerning this agreement without the other’s prior
written approval, except for such announcements as may be required by
applicable laws or rules and regulation of any governmental agency or stock
exchange. 


          Section
15.7 Waiver. No waiver by any Party of any one or more defaults by
another Party in the performance of any provision of this Agreement shall
operate or be construed as a waiver of any future default or defaults by the
same Party whether of a like or of a different character. Except as expressly
provided in this Agreement, no Party shall be deemed to have waived, released
or modified any of its right under this Agreement unless such Party has
expressly stated, in writing, that it does waive, release or modify such right.



28






          Section
15.8 Governing Law; Venue. This Agreement has been entered into and
shall be construed and enforced in accordance with the laws of the State of
Colorado, without reference to the choice of law principles thereof. This
Agreement shall be subject to the exclusive jurisdiction of the courts in
Arapahoe County in the State of Colorado. The Parties to this Agreement agree
that any breach of any term or condition of this Agreement shall be deemed to
be a breach occurring in the State of Colorado by virtue of a failure to
perform an act required to be performed in the State of Colorado and
irrevocably and expressly agree to submit to the jurisdiction of the courts of
the State of Colorado for the purpose of resolving any disputes among the
Parties relating to this Agreement or the transactions contemplated hereby. The
Parties irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement, or any
judgment entered by any court in respect hereof brought in the State of
Colorado, and further irrevocably waive any Claim that any suit, action or
proceeding brought in the State of Colorado has been brought in an inconvenient
forum. 


          Section
15.9 Joint Preparation. Each provision of this Agreement shall be
construed as though all Parties participated equally in the drafting of the
same. Any rule of construction that a document is to be construed against the
drafting party shall not be applicable to this Agreement. 


          Section
15.10 Severance of Invalid Provisions. If and for so long as any
provision of this Agreement shall be deemed to be judged by any court of
competent jurisdiction to be invalid for any reason whatsoever, such invalidity
shall not affect the validity or operation of any other provision of this
Agreement except only so far as shall be necessary to give effect to the
construction of such invalidity, and any such invalid provision shall be deemed
severed from this Agreement without affecting the validity of the balance of
this Agreement. 


          Section
15.11 Modifications. There shall be no modification or amendment of this
Agreement except by written agreement of both Parties. 


          Section
15.12 Priority of Agreement. In the event of any conflict between the
provisions of the main body of this Agreement and its Exhibits, the provisions
of the main body of the Agreement shall prevail. In the event of any conflict
between this Agreement and the Focus Ranch Unit Agreement, the Focus Ranch Unit
Operating Agreement, or the Fly Creek Operating Agreement currently applicable
to the Underlying Leases, as between the Parties hereto, this Agreement shall
have priority. 


          Section
15.13 Headings. The topical headings used in this Agreement are for
convenience only and shall not be construed as having any substantive
significance or as indicating that all of the provisions of this Agreement
relating to any topic are to be found in any particular article. 


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          Section
15.14 Exhibits. The Exhibits and Schedules attached to this Agreement
are incorporated into and made a part of this Agreement for all purposes. 


          Section
15.15 Interpretation. In construing this Agreement, the following
principles will apply. 


                    (a)
The term “knowledge,” as applied to each Party, shall mean the actual knowledge
of such Party or such Party’s officers, managers, and directors. 


                    (b)
The plural shall be deemed to include the singular, and vice versa. 


                    (c)
The term “including” means “including, without limitation.” 


                    (d)
The term “Person” (whether or not capitalized) means any individual,
corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, enterprise, unincorporated
organization, or governmental entity. 


          Section
15.16 Counterpart Execution. This Agreement may be executed in any
number of counterparts and each such counterpart shall be deemed an original
Agreement for all purposes; provided that no Party shall be bound to this
Agreement unless and until all Parties have executed a counterpart. For
purposes of assembling all counterparts into one document, either party is
authorized to detach the signature page from one or more counterparts and,
after signature thereof by the respective Party, attach each signed signature
page to a counterpart. 


          Section
15.17 Entirety. With respect to the subject matter contained herein,
this Agreement (i) is the entire agreement of the Parties; and (ii) supersedes
all prior understandings and negotiations of the Parties. 


          Section
15.18 Survival. This Agreement shall not merge but shall survive all
Assignments delivered pursuant hereto. 


          Section
15.19 Successors and Assigns. This Agreement binds and inures to the benefit
of the Parties hereto and their respective permitted successors and assigns,
and nothing contained in this Agreement, express or implied, is intended to
confer upon any other person or entity any benefits, rights, or remedies. This
Agreement may not be assigned or transferred by either Party, in whole or in
part, without the prior written consent of the other Party, which consent shall
not be unreasonably withheld. 


          Section
15.20 Third-Party Beneficiaries. It is understood and agreed that there
shall be no third-party beneficiaries of this Agreement, and that the
provisions hereof do not impart enforceable rights, benefits, or remedies in
anyone who is not a Party or a successor or permitted assign of a Party hereto.



30






          IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
set forth above. 


	
 

	
 

	
 


	
 

	
ENTEK GRB
  LLC


	
 

	
 

	
 


	
 

	
By:

	
/s/ Russell Brimage


	
 

	
 

	



	
 

	
Name:
  Russell Brimage


	
 

	
Title:
  President


	
 

	
 

	
 


	
 

	
NEW FRONTIER
  ENERGY, INC.


	
 

	
 

	
 


	
 

	
By:

	
/s/ Paul   G. Laird


	
 

	
 

	



	
 

	
Name: Paul   G. Laird


	
 

	
Title: Chief
  Executive Officer





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