ex10-6.htm


    Exhibit
      10.6

    NET
      PROFITS INTEREST AGREEMENT

     

    NEW
      CENTURY ENERGY CORP.

     

    and

     

    CENTURY
      RESOURCES, INC.

     

    “WI
      Owners”

     

    and

     

    VALENS
      U.S. SPV I, LLC


     

    and


     

    VALENS
      OFFSHORE SPV II, CORP.


     

    “Assignees”


     

    Dated
      as of


     

    November
      30, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NET
      PROFITS INTEREST AGREEMENT

     

    THIS
      NET PROFITS INTEREST AGREEMENT (“Agreement”) is made and entered
      into as of this 30th day of November, 2007, and is between NEW CENTURY ENERGY
      CORP. (“NCEC”), a Colorado corporation, and CENTURY RESOURCES, INC.
      (“CRI”), a Delaware corporation (each a “WI Owner” and,
      collectively, “WI Owners”), and VALENS U.S. SPV I, LLC, a Delaware
      limited liability company, and VALENS OFFSHORE SPV II, CORP., a Delaware
      corporation (collectively, “Assignees”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      WI Owners are the owners of various interests in the Leases; and

     

    WHEREAS,
      NCEC desires to drill up to six (6) new Hydrocarbon wells and rework two (2)
      other existing wells on the Leases, and to acquire two (2) additional oil and
      gas leases, in each case financed, in part, by loans provided to NCEC by the
      Creditor Parties pursuant to the Securities Purchase Agreement; and

     

    WHEREAS,
      as a condition to the obligation of the Creditor Parties to make the loans
      provided for in the Securities Purchase Agreement, WI Owners must convey to
      Assignees a Net Profits Interest to be discharged out of Hydrocarbons produced
      from the wells financed, in part, by the Creditor Parties pursuant to the
      Securities Purchase Agreement.

     

    NOW,
      THEREFORE, in consideration of the mutual benefits and obligations of the
      Parties contained herein and the benefits to be received by Assignees pursuant
      to the Securities Purchase Agreement, Assignees and WI Owners agree as
      follows:

     

    ARTICLE
      1.

     

    DEFINITIONS

     

    1.1           Defined
      Terms.  In addition to the terms defined in the introductory
      paragraph and the Recitals of this Agreement, for purposes hereof, the
      capitalized expressions and terms set forth in Schedule 1.1 shall have
      the meanings set forth therein, unless expressly indicated
      otherwise.  Other terms may be defined elsewhere in this Agreement and
      shall, for purposes hereof, have the meanings so specified, unless expressly
      indicated otherwise.

     

    1.2           References.  The
      words “hereby,” “herein,” “hereinabove,” “hereinafter,” “hereinbelow,” “hereof,”
“hereto,” “hereunder,” and words of similar import when used in this Agreement
      shall refer to this Agreement as a whole and not to any particular article,
      section, or provision of this Agreement.  References in this Agreement
      to articles, sections, exhibits, or schedules are to such articles, sections,
      exhibits, or schedules of this Agreement unless otherwise
      specified.

     

    1.3           Articles
      and Sections.  This Agreement, for convenience only, has been
      divided into articles and sections.  The rights and other legal
      relations of the Parties shall be
      determined from this Agreement as an entirety and without regard to the
      aforesaid division into articles and sections and without regard to headings
      prefixed to such articles and sections.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    1.4           Number
      and Gender.  Whenever the context requires, reference herein
      made to a single number shall be understood to include the plural; and likewise,
      the plural shall be understood to include the singular.  Words
      denoting sex shall be construed to include the masculine, feminine, and neuter,
      when such construction is appropriate; and specific enumeration shall not
      exclude the general but shall be construed as cumulative.  Definitions
      of terms defined in the singular or plural shall be equally applicable to the
      plural or singular, as applicable, unless otherwise indicated.

     

    ARTICLE
      2.

     

    CONVEYANCE
      OF NET PROFITS INTEREST

     

    2.1           Initial
      NPI Conveyance.  Subject to and in accordance with the terms
      hereof, in satisfaction of the terms of Section 3.2 of the Securities Purchase
      Agreement, and in connection with the initial advance of funds by the Creditor
      Parties to NCEC as contemplated in the Restricted Account Documents, WI Owners
      agree to convey to Assignees, effective as of the Effective Date, the Net
      Profits Interest in and with respect to the Initial Subject
      Interests.  The specific terms and conditions applicable to the Net
      Profits Interest are set forth in the Initial NPI
      Conveyance.  Concurrently with the execution of this Agreement, (a) WI
      Owners and Assignees have executed, acknowledged, and delivered counterparts
      of
      the Initial NPI Conveyance in sufficient numbers to permit recording and filing
      in all relevant jurisdictions, and (b) WI Owners have delivered to Assignees
      all
      consents, waivers, and other matters pertaining to the Initial Subject Interests
      required to be obtained by WI Owners to cause the representation and warranty
      contained in Section 3.1(g) to be true and correct with respect to the
      Initial Subject Interests as of the date of execution hereof.

     

    2.2           Supplemental
      NPI Conveyance.  No later than two (2) Business Days prior to the
      date on which the Creditor Parties make the second advance of funds to NCEC
      in
      accordance with the terms of the Restricted Account Documents, WI Owners shall
      execute and deliver to Assignees a supplement and amendment to the Initial
      NPI
      Conveyance in form and substance satisfactory to Assignees (the “Supplemental
      NPI Conveyance”), pursuant to which WI Owners will cause the Supplemental
      Subject Interests identified by WI Owners and agreed upon by the Creditor
      Parties to become subject to the terms of the Initial NPI Conveyance and the
      Net
      Profits Interest.  From and after the execution and delivery by WI
      Owners and Assignees of the Supplemental NPI Conveyance, the Net Profits
      Interest shall constitute a single net profits overriding royalty interest
      burdening both the Initial Subject Interests and the Supplemental Subject
      Interests.  When requested to do so by the Creditor Parties in
      connection with the making of the second advance of funds to NCEC in accordance
      with the Restricted Account Documents, (a) WI Owners and Assignees shall execute
      and deliver an amendment to this Agreement that amends (i) Exhibit A to
      include the description of the Supplemental Subject Interests and (ii) the
      Schedules hereto to the extent necessary to reflect any additional disclosures
      relating to the Supplemental Subject Interests agreed upon by WI Owners
      and Assignees; (b) WI Owners and Assignees shall execute, acknowledge, and
      deliver counterparts of the Supplemental NPI Conveyance in sufficient numbers
      to
      permit recording and filing in all relevant jurisdictions; and (c) WI Owners
      shall deliver to Assignees all consents, waivers, and other matters pertaining
      to the Supplemental Subject Interests required to be obtained by WI Owners
      to
      cause the representation and warranty contained in Section 3.1(g) to be
      true and correct with respect to the Supplemental Subject Interests as of the
      date of execution hereof.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    ARTICLE
      3.

     

    REPRESENTATIONS
      AND WARRANTIES OF WI OWNERS

     

    3.1           Representations
      and Warranties of WI Owners.  As a principal cause and
      material inducement to Assignees to execute this Agreement and the NPI
      Conveyances and to consummate the transactions described herein and therein,
      WI
      Owners have made the representations and warranties set forth
      below.  The representations and warranties set forth in this
Section 3.1 are made as of the date of execution of this Agreement and
      the Initial NPI Conveyance and shall be deemed to be made again as of the date
      of execution of the Supplemental NPI Conveyance.  Unless expressly
      provided to the contrary, representations and warranties made herein with
      respect to the Subject Interests (i) as of the date of execution of this
      Agreement and the Initial NPI Conveyance, refer to the Initial Subject
      Interests, subject to the matters disclosed in the Schedules to this Agreement,
      and (ii) as of the date of execution of the Supplemental NPI Conveyance, refer
      to the Supplemental Subject Interests, subject to the matters disclosed in
      such
      Schedules as modified by the Parties with respect thereto.  Subject to
      the forgoing, WI Owners hereby represent and warrant to Assignees, as
      follows:

     

    (a)           NCEC
      is a corporation duly organized, validly existing, and in good standing under
      the Laws of the State of Colorado.  CRI is a corporation duly
      organized, validly existing, and in good standing under the Laws of the State
      of
      Delaware.  Each WI Owner is qualified to do business in, and is in
      good standing under the Laws of, the State of Texas.  Each WI Owner
      has all requisite legal right, power, and authority to own and operate its
      properties and to carry on its business as now conducted.

     

    (b)           Each
      WI Owner has full capacity, legal right, power, and authority to enter into
      and
      perform this Agreement, the NPI Conveyances, and the transactions contemplated
      herein and therein.  The execution, delivery, and performance by each
      WI Owner of this Agreement, the NPI Conveyances, and the transactions
      contemplated herein and therein have been duly and validly authorized and
      approved by all necessary corporate action of each WI Owner.  This
      Agreement and the Initial NPI Conveyance have been duly executed and delivered
      by each WI Owner, and as of its date of execution, the Supplemental NPI
      Conveyance will have been duly executed and delivered by each WI
      Owner.  This Agreement and the Initial NPI Conveyance constitute, and
      as of its date of execution, the Supplemental NPI Conveyance will constitute,
      the legal, valid, and binding obligations of each WI Owner, enforceable against
      each WI Owner in accordance with their respective terms, subject to the effects
      of bankruptcy, insolvency, reorganization, moratorium, and similar Laws, as
      well
      as to principles of equity (regardless
      of whether such enforceability is considered in a proceeding in equity or at
      law).

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (c)           The
      execution, delivery, and performance by each WI Owner of this Agreement and
      the
      NPI Conveyances do not and will not (i) conflict with or result in a breach
      of
      any of the provisions of the organizational and governing documents of either
      WI
      Owner; (ii) violate any provision of any Law or any order, writ, judgment,
      decree, or determination currently in effect having applicability to either
      WI
      Owner; (iii) result in a breach of or constitute a default under any indenture,
      bank loan, securities purchase agreement, credit agreement, Lease, Property
      Agreement, Marketing Agreement, or other agreement or instrument to which either
      WI Owner is a party or by which either of WI Owners or the Subject
      Interests  may be currently bound or affected; or (iv) result in or
      require the creation or imposition of any mortgage, lien, pledge, security
      interest, charge, or other encumbrance upon any of the Subject Interests under
      any such indenture, bank loan, securities purchase agreement, credit agreement,
      Lease, Property Agreement, Marketing Agreement, or other agreement or
      instrument.  Neither WI Owner is in default under any such order,
      writ, judgment, decree, determination, indenture, agreement, or instrument
      in
      any way that now or in the future will materially adversely affect the ability
      of either WI Owner to perform its obligations under this Agreement or the NPI
      Conveyances.

     

    (d)           Upon
      the due execution and delivery by WI Owners of the NPI Conveyances, the Net
      Profits Interest will constitute an interest in real property under the Laws
      of
      the State of Texas.

     

    (e)           Except
      as set forth on Schedule 3.1(e), there is no suit, action, Claim,
      investigation, or inquiry by any person or entity or by any administrative
      agency or governmental body, and no legal, administrative, or arbitration
      proceeding (including, without limitation, bankruptcy or insolvency-related
      proceedings) pending or, to either WI Owner’s Knowledge, threatened against
      either of WI Owners or the Subject Interests, or to which either WI Owner is
      a
      party, that reasonably may be expected to (i) result in the material impairment
      of either WI Owner’s title to any of the Subject Interests; (ii) hinder or
      impede the operation of all or any portion of the Leases; (iii) cause the Leases
      to be subject to reduced rates of production or other penalties because of
      Hydrocarbon production in excess of applicable allowables or otherwise; or
      (iv)
      otherwise have a Material Adverse Effect upon (A) the Subject Interests, (B)
      the
      validity or enforceability of this Agreement or the NPI Conveyances, (C) the
      ability of either WI Owner to consummate the transactions contemplated in this
      Agreement or perform its obligations under the NPI Conveyances, or (D) generally
      the business, properties, assets, or condition, financial or otherwise, of
      WI
      Owners.

     

    (f)           No
      authorization, consent, approval, exemption, franchise, permit, or license
      of,
      or filing with, any Governmental Authority is required to authorize, or is
      otherwise required in connection with, the valid execution, delivery, and
      performance by WI Owners of this Agreement and the NPI Conveyances.

     

    
      
        
        

      

      
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    (g)           Except
      as set forth in Schedule 3.1(g), none of the Subject Interests is subject
      to a preferential right to purchase, third Person consent to assignment
      requirement, right of first refusal, right of first offer or similar right
      or
      restriction, the operation of which is triggered by the execution and delivery
      of this Agreement or the NPI Conveyances.  All consents to assignment
      and waivers of preferential purchase or other rights necessary to permit the
      valid conveyance to Assignees of the Net Profits Interest and the execution
      and
      delivery of this Agreement and the NPI Conveyances have been obtained or the
      time for giving such consents or waivers has expired following a written request
      therefor.  All advance notifications to third Persons of the
      transactions contemplated herein and in the NPI Conveyances necessary to permit
      the valid conveyance to Assignees of the Net Profits Interest and the execution
      and delivery of this Agreement and the NPI Conveyances have been timely and
      properly given.

     

    (h)           The
      Subject Interests are free and clear of any liens, mortgages, deeds of trust,
      pledges, security interests, or other encumbrances, except as set forth on
      Schedule 3.1(h).

     

    (i)           All
      Taxes imposed or assessed with respect to, measured by, charged against, or
      attributable to the Subject Interests have been duly paid.

     

    (j)           Each
      Lease is in full force and effect, at a minimum, with respect to the lands
      described in conjunction therewith on Exhibit A as comprising the Subject
      Interests and with respect to the all subsurface intervals to be included in
      the
      Subject Interests.  Neither WI Owner is in material breach or material
      default, and there has occurred no event, fact, or circumstance that, with
      the
      lapse of time or the giving of notice, or both, would constitute such a breach
      or default by either WI Owner, with respect to any of its obligations under
      any
      Lease, and, to each WI Owner’s Knowledge, no other Person owning any interest in
      any Lease is in material breach or material default with respect to any of
      its
      obligations thereunder.  No lessor under any Lease has given or, to
      each WI Owner’s Knowledge, threatened to give notice of any action to terminate,
      cancel, rescind, repudiate, or procure a judicial reformation of any Lease
      or
      any provision thereof.

     

    (k)           Each
      WI Owner has correctly made, or caused to be correctly made, all payments,
      including, without limitation, royalties, rentals, shut-in well payments, and
      other lease maintenance payments, due in respect of the Leases
      thereunder.  All operations proposed to be conducted in connection
      with the existing and proposed wells listed on Exhibit A will be
      conducted within the subsurface intervals included in the Subject
      Interests.

     

    (l)           Each
      Lease authorizes surface operations on the lands covered thereby for the
      drilling, development, operation, and production of Hydrocarbon wells, or for
      those Leases as to which surface operations are restricted or impractical for
      operational or regulatory reasons, there exist Leases covering contiguous
      acreage from which surface operations with respect to such surface-restricted
      Leases may be conducted.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (m)           There
      are no agreements, instruments, or documents affecting the Subject Interests
      other than the Property Agreements and the Marketing Agreements described on
      Schedule 3.1(m).  WI Owners have furnished or made available to
      Assignees true and complete copies of all of the Property Agreements and
      Marketing Agreements.  With respect to the Property Agreements and
      Marketing Agreements:  (i) all of the Property Agreements and
      Marketing Agreements are in full force and effect; (ii) neither WI Owner is
      in
      material breach or material default, and there has occurred no event, fact,
      or
      circumstance that, with the lapse of time or the giving of notice, or both,
      would constitute such a breach or default by either WI Owner, with respect
      to
      any of its obligations under any Property Agreement or Marketing Agreement;
      (iii) to each WI Owner’s Knowledge, no other Person who is a party thereto is in
      material breach or material default with respect to any of its obligations
      under
      any Property Agreement or Marketing Agreement; and (iv) neither of WI Owners
      nor, to either WI Owner’s Knowledge, any other party to any Property Agreement
      or Marketing Agreement has given or threatened to give notice of any action
      to
      terminate, cancel, rescind, or procure a judicial reformation of such Property
      Agreement or Marketing Agreement or any provision thereof.

     

    (n)           Except
      as set forth on Schedule 3.1(n), the Subject Interests are not subject to
      any area of mutual interest provision, interest reversion or conversion, or
      other contract or provision thereof under which WI Owners or Assignees may
      be
      obligated to make assignments to third parties of interests in any Subject
      Interest prior to the Effective Date.

     

    (o)           All
      costs and expenses incurred in connection with the operation of the Subject
      Interests for which WI Owners are responsible and have received invoices from
      the operator(s) thereof have been paid, and there are no outstanding calls
      or
      payments due from either WI Owner under the terms of the Property Agreements
      or
      the Marketing Agreements.  Neither the Leases nor the Property
      Agreements contain any expressed contractual obligations to drill additional
      wells or to engage in other development operations, except for obligations
      arising under offset well provisions and obligations arising under Property
      Agreements that allow the parties thereto to elect whether to
      participate.  There are no material operations on any Lease under any
      of the Property Agreements with respect to which either of WI Owners or any
      other Person has become a non-consenting party.

     

    (p)           The
      Subject Interests are not subject to any regulatory refund obligation, and,
      to
      each WI Owner’s Knowledge, there has occurred no event, fact, or circumstance
      that, with the lapse of time or the giving of notice, or both, would give rise
      to such a regulatory refund obligation.

     

    (q)           No
      third party has any call, right of first refusal, or preferential right to
      purchase any Hydrocarbons produced from or allocable to the Subject
      Interests.

     

    (r)           Except
      as set forth in Schedule 3.1(r), neither WI Owner is a party to or bound
      by, and the Subject Interests and the Hydrocarbons attributable thereto are
      not
      encumbered or affected by, any gas balancing, deferred production, gas banking,
      or similar
      agreement or arrangement.  Except as shown on Schedule 3.1(r),
      neither WI Owner is in an “overlift,” “overproduced,” “underproduced”, or
      similar status under any such agreement or arrangement.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (s)           Neither
      the Subject Interests nor the Hydrocarbons attributable thereto are subject
      to
      any contract, agreement, or arrangement (including, without limitation, advance
      payment agreements, prepayments, take-or-pay makeup obligations, or otherwise)
      whereby the owner of the Hydrocarbons or any part thereof is not entitled to
      convey the Hydrocarbons or to market the Hydrocarbons and to obtain the full
      market price or value of the same at the time of delivery.

     

    (t)           To
      each WI Owner’s Knowledge, no Casualty Event or Environmental Liability
      adversely affecting any material portion of the Subject Interests or the
      operation thereof, or adversely affecting the ability of either WI Owner to
      perform its obligations under this Agreement or the NPI Conveyances, has
      occurred or accrued.

     

    (u)           Each
      WI Owner and, to each WI Owner’s Knowledge, the operators of the Leases, have
      complied in all material respects with all Laws (including, without limitation,
      Environmental Laws), licenses, and permits relating to the Assets, other than
      violations that could not (either individually or collectively) reasonably
      be
      expected to have a Material Adverse Effect on WI Owners.  Each WI
      Owner and, to each WI Owner’s Knowledge, the operator(s) of the Leases, as
      applicable, have all approvals, authorizations, consents, licenses, and permits
      from Governmental Authorities required under applicable Laws (including, without
      limitation, Environmental Laws) in connection with the ownership and operation
      of the Leases, and have properly made all filings necessary or appropriate
      to
      obtain such approvals, authorizations, consents, licenses, and
      permits.  All of such licenses, permits, filings, approvals,
      authorizations, and consents are in full force and effect.  Neither of
      WI Owners nor, to each WI Owner’s Knowledge, any other Person has received
      notice from any Governmental Authority having jurisdiction over the Leases
      that
      any such applicable Law, permit, license, or filing has been violated or not
      complied with by either WI Owner or any other Person.

     

    (v)           Without
      limiting the representations and warranties contained in Section 3.1(u),
      neither WI Owner has (i) received notice or otherwise learned of any
      Environmental Liability in, on, affecting, or otherwise relating in any way
      to
      any Lease that could, individually or in the aggregate, reasonably be expected
      to have a Material Adverse Effect on either WI Owner arising in connection
      with
      (A) any non-compliance with or violation of any Environmental Law or (B) the
      Release (or threatened Release) of a Hazardous Substance, or (ii) received
      notice or otherwise learned of any federal or state investigation evaluating
      whether any remedial action is needed to respond to a Release (or threatened
      Release) of a Hazardous Substance in, on, affecting, or otherwise relating
      in
      any way to any Lease for which either WI Owner may be liable.  No
      Release of Hazardous Substances by either WI Owner in, on, from, affecting,
      or
      relating in any way to any Lease or any property of either WI Owner adjacent
      thereto has occurred, and neither WI Owner has received any Environmental
      Complaint.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (w)           There
      are no bankruptcy, insolvency, reorganization, or arrangement proceedings
      pending, being contemplated by, or to each WI Owner’s Knowledge, threatened
      against either WI Owner or any Affiliate that controls either WI
      Owner.

     

    ARTICLE
      4.

     

    MISCELLANEOUS

     

    4.1           Further
      Assurances.  WI Owners and Assignees agree to take all such
      further actions and to execute, acknowledge, and deliver all such further
      documents as are necessary or useful to effectuate the conveyance of the Net
      Profits Interest and to carry out the purposes of this Agreement and the NPI
      Conveyances.

     

    4.2           Survival.  The
      representations, warranties, covenants, agreements, and indemnities in this
      Agreement shall survive the execution and delivery of the NPI Conveyances and
      the consummation of the transactions described herein and therein.

     

    4.3           Expenses;
      Taxes.  WI Owners shall bear and pay all fees, costs, and
      expenses incurred by both WI Owners and Assignees in negotiating this Agreement
      and the NPI Conveyances and consummating the transactions contemplated herein
      and therein.  All required documentary, filing, and recording fees and
      expenses incurred in connection with the filing and recording of the NPI
      Conveyances, as well as all state sales and use taxes and real estate transfer
      taxes (including any applicable interest or penalties) incurred or imposed
      with
      respect to the transactions described in this Agreement and the NPI Conveyances,
      shall be borne and paid by WI Owners.  Each Party shall assume
      responsibility for, and shall bear and pay, all federal and state income,
      franchise, and other similar taxes (including any applicable interest or
      penalties) incurred by or imposed upon such Party with respect to the
      transactions described in this Agreement.  Prior to the Effective
      Date, all Taxes based upon or measured by the ownership of the Subject
      Interests, Hydrocarbon production therefrom, or the receipt of proceeds thereof,
      shall be borne and paid by WI Owners, and after the Effective Date, shall be
      allocated as set forth in the NPI Conveyance.

     

    4.4           Notices.  All
      notices, requests, demands, instructions and other communications required
      or
      permitted to be given hereunder shall be in writing and shall be (a) delivered
      personally, (b) mailed by certified U.S. mail, postage prepaid and return
      receipt requested, (c) sent by bonded courier, or (d) sent by facsimile, as
      follows:

     

    
      	
              If
                to WI Owners:

               

              New
                Century Energy Corp.

              Century
                Resources, Inc.

              5851
                San Felipe, Suite 775

              Houston,
                Texas  77057

              Attention:  Chief
                Financial Officer

              Facsimile
                No.:  (713) 266-4358

            	
              If
                to Assignees:

              Valens
                U.S. SPV I, LLC

              Valens
                Offshore SPV II, Corp.

              c/o
                Valens Capital Management, LLC

              335
                Madison Avenue, 10th
                Floor

              New
                York, New York  10017

              Attention:  Portfolio
                Services

              Facsimile
                No.:  (212) 581-5037

            


    

     

     

    
 

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
      	 	 	 
	
              with
                a copy to:

               

              David
                M. Loev, Esquire

              The
                Loev Law Firm, PC

              6300
                West Loop South, Suite 280

              Bellaire,
                Texas  77401

              Facsimile
                No.:  (713) 524-4122

            	
              with
                a copy to:

               

              Loeb
                & Loeb, LLP

              345
                Park Avenue

              New
                York, New York  10154

              Attention:  Scott
                J. Giordano, Esq.

              Facsimile
                No.:  (212) 407-4990

            
	 	 
	 	
              and
                to:

               

              Jackson
                Walker L.L.P.

              1401
                McKinney, Suite 1900

              Houston,
                Texas  77010

              Attention:  Michael
                P. Pearson, Esquire

              Facsimile
                No.:  (713) 752-4221

            
	 	 


    

    or
      to
      such other place within the United States of America as either Party may
      designate as to itself by written notice to the other.  All notices
      given by personal delivery, courier, or mail shall be effective on the date
      of
      actual receipt at the appropriate address.  Notice given by telecopier
      shall be effective upon actual receipt if received during recipient’s normal
      business hours or at the beginning of the next Business Day after receipt if
      received after the recipient’s normal business hours.

     

    4.5           Indemnification.

     

    (a)           Notwithstanding
      the execution of the NPI Conveyances, regardless of any investigation made
      at
      any time by or on behalf of Assignees or any information Assignees may have,
      and
      regardless of the presence or absence of insurance, WI Owners shall indemnify
      and hold harmless Assignees and Assignees’ respective successors, assigns,
      Affiliates, shareholders, partners, members, directors, officers, managers,
      employees, agents, and representatives (collectively, the “Indemnified
      Parties”) from and against any and all Claims caused by, arising out of,
      resulting from, or relating in any way to, and shall pay the Indemnified Parties
      any sum that the Indemnified Parties pay or become obligated to pay on account
      of: (i) any breach or default in the performance by either WI Owner of any
      covenant or agreement of WI Owners contained in this Agreement or the NPI
      Conveyances; (ii) any breach of a warranty or an inaccurate or erroneous
      representation made by either WI Owner in this Agreement or the NPI Conveyances;
      and (iii) all liability or obligation to third Persons (including,
      without limitation, liabilities resulting from injury to or death of any Person,
      Persons, or other living things, or loss or destruction of or damage to
      property, as well as Environmental Liabilities), whether arising in
      contract, in tort, or by operation of Law, arising out of, resulting from,
      or
      relating in any way to the ownership, use, possession, and operation of the
      Subject Interests and the production, handling, and marketing of Hydrocarbons
      therefrom by WI Owners; provided, however, that in no event shall the terms
      of
      this Section 4.5(a) be deemed to create personal liability on the part of
      WI Owners with respect to the satisfaction or discharge of the Net Profits
      Interest.  IT IS THE
      INTENT OF THE PARTIES THAT THE FOREGOING INDEMNITY BE WITHOUT REGARD TO THE
      CAUSE OR CAUSES OF THE CLAIM TO BE INDEMNIFIED, INCLUDING, WITHOUT LIMITATION,
      THE NEGLIGENCE OF ASSIGNEES, OR EITHER OF THEM, WHETHER SUCH NEGLIGENCE BE
      SOLE,
      JOINT, OR CONCURRENT, OR ACTIVE OR PASSIVE, OR THE STRICT LIABILITY OF
      ASSIGNEES, OR EITHER OF THEM.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (b)           Assignees
      shall give to WI Owners prompt written notice and particulars of any Claim
      for
      which indemnification is sought.  At their option, WI Owners
      may:  (i) permit Assignees to respond to the Claim in the manner set
      forth in its notice; or (ii) assume responsibility for and conduct the
      negotiation, defense, or settlement of the Claim; provided, however, that
      Assignees shall at all times have the right to participate in the defense
      thereof and to be represented, at their sole expense, by counsel selected by
      them.  No such Claim shall be compromised or settled by either WI
      Owners or Assignees, as applicable, in any manner that might adversely affect
      the interest of the other Party without the prior written consent of such other
      Party.

     

    4.6           Governing
      Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
      CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
      TO
      ANY CONFLICTS OF LAW PRINCIPLES.

     

    4.7           Limitation
      on Damages.  For the breach or non-performance by any Party
      of any representation, warranty, covenant, or agreement contained in this
      Agreement, the liability of the obligor shall be limited to direct actual
      damages only, except to the extent that the obligee is entitled to specific
      performance or injunctive relief.  NEITHER WI OWNERS NOR
      ASSIGNEES SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE,
      EXEMPLARY, OR INDIRECT DAMAGES, LOST PROFITS, OR OTHER BUSINESS INTERRUPTION
      DAMAGES, IN TORT, IN CONTRACT, UNDER ANY INDEMNITY PROVISION, ARISING BY
      OPERATION OF LAW, OR OTHERWISE AS TO ANY MATTER RELATING TO THIS AGREEMENT,
      THE
      NPI CONVEYANCES, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR
      THEREIN.  Without limiting the foregoing, if the NPI
      Conveyances or any Lease is rejected as an unexpired lease or executory contract
      pursuant to any of the terms of Section 365 of the United States Bankruptcy
      Code, the damages recoverable as a result of such rejection shall equal the
      value as of the date of rejection of the future obligations remaining under
      the
      NPI Conveyances at the time of the rejection, determined in a commercially
      reasonably manner.

     

    4.8           Successors
      and Assigns.

     

    (a)           This
      Agreement shall be binding upon and, subject to the following restriction,
      shall
      inure to the benefit of the Parties and their respective permitted successors
      and assigns.  Nothing contained herein shall in any way limit or
      restrict the right of Assignees, or Assignees’ successors and assigns, to sell,
      convey, assign, transfer, mortgage, pledge, or create a lien or security
      interest in their respective rights
      or
      obligations hereunder in whole or in part; provided, however, that (i) any
      such transfer shall expressly be made subject to the terms of this Agreement
      and
      the NPI Conveyances and (ii) the prospective transferee from Assignees
      shall expressly agree to assume and perform all of Assignees’ covenants and
      obligations under the terms of this Agreement and the NPI
      Conveyances.  WI Owners shall not Transfer their rights or obligations
      hereunder separately from the Subject Interests without the prior written
      consent of Assignees.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    (b)           Transfers
      by WI Owners, or either of them, of the Subject Interests shall be subject
      to
      the terms of Section 7.2 of the Initial NPI Conveyance.  In the event
      of a Transfer by WI Owners, or either of them, that includes only the Subject
      Interests, or any portion thereof, and the Net Profits Interest attributable
      thereto, WI Owners shall pay to Assignees, as consideration for Assignees’
reconveyance to WI Owners of the Net Profits Interest in advance of such
      Transfer as required under Section 7.2(b) of the Initial NPI Conveyance, an
      amount equal to forty-nine percent (49%) of the total purchase price (net of
      all
      applicable adjustments) to be paid by the prospective transferee to WI Owners
      (or the WI Owner Transferring its interest) with respect to the Subject
      Interests (including the Net Profits Interest) being Transferred as part of
      the
      same transaction or series of transactions.

     

    (c)           In
      the event of a Transfer by WI Owners, or either of them, that includes the
      Subject Interests, or any portion thereof, and the Net Profits Interest
      attributable thereto, as part of a larger transaction, WI Owners shall pay
      to
      Assignees, as consideration for Assignees’ reconveyance to WI Owners of the Net
      Profits Interest in advance of such Transfer as required under Section 7.2(b)
      of
      the Initial NPI Conveyance, an amount equal to forty-nine percent (49%) of
      the
      portion of the total purchase price (net of all applicable adjustments) to
      be
      paid by the prospective transferee to WI Owners (or the WI Owner Transferring
      its interest) with respect to all properties, assets, and interests of every
      kind and character being Transferred by WI Owners (or the WI Owner Transferring
      its interest) to such prospective transferee as part of the same transaction
      or
      series of related transactions that is allocable, under the terms of the
      relevant acquisition document(s), to the Subject Interests, or the portion
      thereof being Transferred, and the Net Profits Interest attributable
      thereto.  Notwithstanding the preceding sentence of this Section
      4.8(c) to the contrary, in the absence of such an allocation of values to
      the individual properties, assets, and interests being Transferred in the
      relevant acquisition documents, or if Assignees determine, in the good faith
      exercise of their business judgment, that the values allocated to the relevant
      Subject Interests (including the Net Profits Interest) set forth in the
      acquisition documents are not at least equivalent to the values established
      for
      such Subject Interests (including the Net Profits Interest) in the most recent
      reserve report provided by WI Owners to the Creditor Parties pursuant to Section
      6.18 of the Securities Purchase Agreement (adjusted to reflect production from
      or allocable to such Subject Interests during the period from the effective
      date
      of such reserve report through the effective date of the Transfer), the
      consideration payable to Assignees for the reconveyance to WI Owners (or the
      WI
      Owner Transferring its interest) of the Net Profits Interest, or relevant
      portion thereof, in advance of such Transfer shall be an amount equal to
      forty-nine percent (49%) of the values established for the Subject Interests
      being transferred (including the Net Profits Interest) in such reserve
      report.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    4.9           Unenforceable
      or Inapplicable Provisions.  If any provision hereof is
      invalid or unenforceable in any jurisdiction, the other provisions hereof shall
      remain in full force and effect in such jurisdiction, and the remaining
      provisions hereof shall be liberally construed in favor of Assignees, and their
      successors and assigns, in order to effectuate the terms hereof, and the
      invalidity of any provision hereof in any jurisdiction shall not affect the
      validity or enforceability of any such provision in any other
      jurisdiction.

     

    4.10           Execution
      in Counterparts. This Agreement has been executed in several
      counterparts, each of which shall be deemed to be an original and all of which
      are identical.  All of such counterparts together shall constitute but
      one and the same agreement.  All of said documents are integral parts
      of one consolidated transaction and are to be construed as a single
      transaction.

     

    4.11           Entire
      Agreement.  This Agreement, together with the NPI
      Conveyances, shall constitute the entire agreement between the Parties covering
      the subject matter hereof, and there are no agreements, modifications,
      conditions, or understandings, written or oral, expressed or implied, pertaining
      to the subject matter hereof which are not contained herein or
      therein.

     

    4.12           Amendment;
      Waiver.  This Agreement shall not be modified or changed
      except in writing signed by all Parties.  No provision of this
      Agreement shall be waived except in writing signed by the Party granting the
      waiver.  A waiver of any breach or a failure to enforce any of the
      terms or conditions of this Agreement shall not in any way affect, limit, or
      waive a Party’s rights under this Agreement at any time to enforce strict
      compliance thereafter with every term or condition of this
      Agreement.

     

    EXECUTED
      on the date first set forth above.

     

    WI
      OWNERS:


     

    


     

    NEW
      CENTURY ENERGY
      CORP.

    
 

     

    By:
/s/
      Edward R.
      DeStefano

      Edward
      R.
      DeStefano

      President
      and Chief
      Executive Officer

     

    


     

    CENTURY
      RESOURCES,
      INC.

     

    


     

    By:
/s/
      Edward R.
      DeStefano

      Edward
      R.
      DeStefano

      President
      and Chief
      Executive Officer

     

    


    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    ASSIGNEES:

     

    


     

    VALENS
      U.S. SPV I,
      LLC

     

    By: Valens
      Capital Management,
      LLC, its
      Investment Manager


     

    


     

    By:
/s/
      Patrick
      Regan

    Name:
Patrick
      Regan

              Authorized
      Signatory

     

     

    VALENS
      OFFSHORE SPV II,
      CORP.


     

    By: Valens
      Capital Management,
      LLC, its
      Investment Manager

     

    


     

    By: /s/
      Patrick
      Regan

    Name:
Patrick
      Regan

              Authorized
      Signatory

     

    SCHEDULES

     

    
      	
              Schedule
                1.1

            	
              -

            	
              Definitions

            
	
              Schedule
                3.1(e)

            	
              -

            	
              WI
                Owners’ Litigation

            
	
              Schedule
                3.1(g)

            	
              -

            	
              Preferential
                Purchase Rights; Required Third Person Consents to
                Assignment

            
	
              Schedule
                3.1(h)

            	
              -

            	
              Liens
                and Encumbrances

            
	
              Schedule
                3.1(m)

            	
              -

            	
              Property
                Agreements; Marketing Agreements

            
	
              Schedule
                3.1(n)

            	
              -

            	
              Future
                Assignment Obligations

            
	
              Schedule
                3.1(r)

            	
              -

            	
              Production
                Imbalances and Related Items

            
	 	 	 


    

     

    EXHIBITS

     

    
      	
              Exhibit
                A

            	
              -

            	
              Subject
                Interests

            
	
              Exhibit
                B

            	
              -

            	
              Form
                of Conveyance of Net Profits Overriding Royalty
                Interest

            
	 	 	 


    

     

     

    
 

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.1

     

    


     

    Definitions

     

    “Affiliate”
      means, with respect to any person, any other person that directly, or indirectly
      through one or more intermediaries, controls, is controlled by, or is under
      common control with such person.  The term “control” (including, with
      correlative meaning, the terms “controlled by” and “under common control with”)
      as used with respect to any person, means the possession, directly or
      indirectly, of the power to direct or cause the direction of the management
      and
      policies of such person, whether through the ownership of voting securities,
      by
      contract, or otherwise.

     

     “Business
      Day” means any day which is not a day on which national banking institutions
      in New York, New York, are closed as authorized or required by Law.

     

    “Casualty
      Event” means, with respect to all or any material portion of an Asset, any
      destruction by fire, blowout, leak, explosion, or other casualty (above or
      below
      ground) or any taking, or pending or threatened taking, in condemnation or
      under
      the right of eminent domain, of any Lease or portion thereof.

     

    “Central
      Time” means Central Standard Time or Central Daylight Savings Time, as in
      effect in Houston, Texas, on the day in question.

     

    “Claims”
      means any and all claims, demands, liens, notices of non-compliance or
      violation, notices of liability or potential liability, investigations, actions
      (whether judicial, administrative, or arbitrational), causes of action, suits,
      controversies, losses, judgments, damages, liabilities, costs, expenses,
      interest, penalties, taxes, fines, obligations, and deficiencies, including,
      without limitation, reasonable attorneys’ fees and other costs and expenses of
      the Party defending a claim incident to the investigation and defense thereof
      that results in litigation or arbitration, or the settlement of any claim,
      or,
      in the case of a claim subject to indemnification hereunder, the enforcement
      by
      the Party receiving indemnification of the provisions of Section 4.5, as
      applicable.

     

    “Creditor
      Parties”, as defined in the Securities Purchase Agreement, means,
      collectively, Assignees, as “Purchasers” under the terms of the Securities
      Purchase Agreement, and LV Administrative Services, Inc., as administrative
      and
      collateral agent for each Purchaser.

     

    “Effective
      Date” means 7:00 A.M., Central Time, on the first Day of the Month following
      the first to occur of (a) the payment in full by NCEC to Assignees of all
      amounts (including principal and accrued interest) owed by NCEC under the terms
      of the Notes, or (b) the “Maturity Date” of the Notes (as such term is defined
      therein).

     

    “Environmental
      Complaint” means any written or oral complaint, order, directive, claim,
      citation, notice of environmental report or investigation, or other notice
      by
      any governmental authority or any other Person with respect to (a) air
      emissions, (b) spills, releases, or discharges to soils, any improvements
      located thereon, surface water, groundwater,
      or the sewer, septic, waste treatment, storage, or disposal systems servicing
      any Lease, (c) solid or liquid waste disposal, (d) the use, generation, storage,
      transportation, or disposal of any Hazardous Substance, or (e) other
      environmental, health, or safety matters affecting any Lease or the business
      conducted thereon.

     

    
      
        
        

      

      
        Schedule
          1.1-i

        
          

        

      

      
        
        

      

    

    “Environmental
      Laws” means (a) the following federal laws as they may be cited, referenced,
      and amended from time to time:  the Clean Air Act, the Clean Water
      Act, the Safe Drinking Water Act, the Comprehensive Environmental Response,
      Compensation and Liability Act, the Endangered Species Act, the Resource
      Conservation and Recovery Act, the Hazardous Materials Transportation Act,
      the
      Superfund Amendments and Reauthorization Act, and the Toxic Substances Control
      Act; (b) any and all equivalent environmental statutes of any state in which
      any
      Lease is situated, as they may be cited, referenced and amended from time to
      time; (c) any rules or regulations promulgated under or adopted pursuant to
      the
      above federal and state laws; and (d) any other equivalent federal, state,
      or
      local statute or any requirement, rule, regulation, code, ordinance, or order
      adopted pursuant thereto, including those relating to the generation,
      transportation, treatment, storage, recycling, disposal, handling, or Release
      of
      Hazardous Substances.

     

    “Environmental
      Liability”  means any claim, demand, obligation, cause of action,
      accusation, allegation, order, violation, damage, injury, judgment, penalty
      or
      fine, cost of enforcement, cost of remedial action, or any other cost or expense
      whatsoever, including reasonable attorneys’ fees and disbursements, resulting
      from the violation or alleged violation of any Environmental Law or the
      imposition of any Environmental Lien.

     

    “Environmental
      Lien” means a lien in favor of a Governmental Authority or other Person for
      (a) any liability under an Environmental Law or (b) damages arising from or
      costs incurred by such Governmental Authority or other Person in response to
      a
      Release (or threatened Release) of Hazardous Substances into the
      environment.

     

    “Governmental
      Authority” means any governmental or quasi-governmental federal, state,
      provincial, county, city, or other political subdivision of the United States,
      any foreign country, or any department, bureau, agency, commission, court,
      or
      other statutory or regulatory body or instrumentality thereof.

     

    “Hazardous
      Substances” shall mean flammables, explosives, radioactive materials,
      hazardous wastes, asbestos, or any material containing asbestos, polychlorinated
      biphenyls (PCBs), toxic substances or related materials, petroleum, petroleum
      products, associated oil or natural gas exploration, production, and development
      wastes, or any substances defined as “hazardous substances,” “hazardous
      materials,” “hazardous wastes,” or “toxic substances” under the Comprehensive
      Environmental Response, Compensation and Liability Act, as amended, the
      Superfund Amendments and Reauthorization Act, as amended, the Hazardous
      Materials Transportation Act, as amended, the Resource Conservation and Recovery
      Act, as amended, the Toxic Substances Control Act, as amended, or any other
      Environmental Laws.

     

    
      
        
        

      

      
        Schedule
          1.1-ii

        
          

        

      

      
        
        

      

    

    “Hydrocarbons”
      shall have the meaning given that term in the Initial NPI
      Conveyance.

     

    The
      term
“Indemnified Parties” is defined in Section 4.5(a).

     

    “Initial
      NPI Conveyance” means the Conveyance of Net Profits Overriding
      Royalty Interest to be executed by WI Owners in favor of Assignee concurrently
      with the execution of this Agreement, creating the Net Profits Interest in
      and
      with respect to the Initial Subject Interests, substantially in the form
      attached hereto as Exhibit B.

     

    “Initial
      Subject Interests” means:  (a) the undivided leasehold interests
      and the associated net revenue interests of WI Owners described more
      particularly on Exhibit A in and to the Leases and the other rights and
      interests described more particularly in Exhibit A, INSOFAR ONLY AS the
      Leases cover and include the lands identified in Exhibit A, which
      comprise the drill site locations for the proposed wells listed on Exhibit
      A, all as provided in Exhibit A; (b) all rights, titles, and
      interests of WI Owners in and to all Hydrocarbons produced, saved, and marketed
      from or allocable to the proposed Hydrocarbon wells listed on
Exhibit A once such wells are drilled and completed, and any
      Hydrocarbon wells drilled thereafter on the Leases, INSOFAR ONLY AS the Leases
      cover and include the lands identified in Exhibit A, and any unit into
      which any such Lease, INSOFAR ONLY AS such Lease covers and includes the lands
      identified in Exhibit A, is pooled or unitized; and (c) any and all other
      rights, titles, and interests of WI Owners in or with respect to all voluntary
      or compulsory pooling or unitization agreements or orders, farmout agreements,
      farmin agreements, operating agreements, Hydrocarbon purchase and sale
      agreements, licenses, permits, and all other contracts of any kind whatsoever
      covering or affecting the production or marketing of Hydrocarbons from the
      Leases, INSOFAR ONLY AS the Leases cover and include the lands identified in
      Exhibit A, and any unit into which any such Lease, INSOFAR ONLY AS such
      Lease covers and includes the lands identified in Exhibit A, is pooled or
      unitized, and attributable to the interests of WI Owners therein.

     

    “Knowledge”
      means, for purposes of Article 3, (a) knowledge of those matters of which
      a Person is charged with constructive notice under applicable Law, and (b)
      actual knowledge.

     

    “Laws”
      means all constitutions, laws, statutes, ordinances, rules,  and
      regulations of the United States, any foreign country, or any domestic or
      foreign state, and any local, state, or federal political subdivision or agency
      thereof, as well as all decisions of courts having the effect of law in each
      such jurisdiction.

     

    “Leases”
      means the oil and gas leases, fee mineral interests, and other interests
      described, referred to, or identified in Exhibit A (as Exhibit A
      may be supplemented and amended pursuant to Section 2.2) as to all lands
      covered thereby (or the applicable part or portion thereof if specifically
      limited in depth and/or areal extent), together with, in the case of an oil
      and
      gas lease, any renewal or extension of such lease (as to all or any part or
      portion thereof), and any replacement lease taken upon or in anticipation of
      the
      expiration or termination of such lease (if executed and delivered during the
      term of or within
      one (1) year after expiration of the predecessor lease), as to all lands and
      depths described in the predecessor lease (unless the predecessor lease is
      specifically limited in depth or geographic extent, in which event only such
      portion of such lease shall be considered a renewal or extension or a
      replacement lease subject to this Agreement).

     

    
      
        
        

      

      
        Schedule
          1.1-iii

        
          

        

      

      
        
        

      

    

    “Marketing
      Agreements” means the Hydrocarbon processing, sale, purchase, exchange,
      gathering, transportation, and other marketing-related contracts, agreements,
      and rights owned by WI Owners or to which either WI Owner is a party and that
      are appurtenant to or affect the Subject Interests, described more particularly
      on Schedule 3.1(m) (as such schedule may be amended in connection with
      the addition of the Supplemental Subject Interests).

     

    “Material
      Adverse Effect” shall have the meaning given to that term in the Securities
      Purchase Agreement.

     

     “Net
      Profits Interest” means the net profits overriding royalty interest to be
      conveyed by WI Owners to Assignee out of the Subject Interests as provided
      in
      this Agreement, subject to and in accordance with the terms of the NPI
      Conveyances.

     

    “Notes”
      mean, collectively, (a) the Secured Term Note dated of even date herewith,
      from
      NCEC to Valens U.S. SPV I, LLC, in the original principal amount of
      $2,300,000.00, and (b) the Secured Term Note dated of even date herewith, from
      NCEC to Valens Offshore SPV II, Corp., in the original principal amount of
      $3,000,000.00.

     

    “Parties”
      shall mean, collectively, WI Owners and Assignees.

     

    “Permitted
      Encumbrances” shall have the meaning given that term in the Initial NPI
      Conveyance.

     

    “Person”
      means any individual, natural person, corporation, joint venture, partnership,
      limited partnership, limited liability company, limited liability partnership,
      trust, estate, business trust, association, governmental entity or other
      entity.

     

    “Property
      Agreements” means all of the operating agreements, unit operating
      agreements, processing plant operating agreements, pooling and unitization
      agreements, and other contracts, agreements, and rights owned by WI Owners,
      in
      whole or in part, to the extent that they are appurtenant to or affect the
      Subject Interests, described more particularly on Schedule 3.1(m) (as
      such schedule may be amended in connection with the addition to this Agreement
      of the Supplemental Subject Interests).

     

    “Release
      of Hazardous Substances” means any emission, spill, release, disposal, or
      discharge, except in accordance with a valid permit, license, certificate,
      or
      approval of the relevant governmental authority, of any Hazardous Substance
      into
      or upon (a) the air, (b) soils or any improvements located thereon, (c) surface
      water or groundwater, or (d) the sewer or septic system, or the waste treatment,
      storage, or disposal system servicing any Lease, with respect to which either
      WI
      Owner is legally obligated to respond under applicable
      Environmental Laws by notifying the relevant Governmental Authority,
      investigating, or undertaking corrective action.

     

    
      
        
        

      

      
        Schedule
          1.1-iv

        
          

        

      

      
        
        

      

    

    “Restricted
      Account Documents” means, collectively, (a) the Restricted Account Agreement
      dated of even date herewith, among North Fork Bank, NCEC, and LV Administrative
      Services, Inc., as administrative and collateral agent for the “Purchasers”
under the terms of the Securities Purchase Agreement, and (b) the letter
      agreement regarding Restricted Account mechanics dated of even date herewith,
      executed by NCEC and LV Administrative Services, Inc., as Agent.

     

    “Securities
      Purchase Agreement” means the Securities Purchase Agreement dated of even
      date herewith, between NCEC, the “Purchasers” from time to time a party thereto,
      and LV Administrative Services, Inc., as administrative and collateral agent
      for
      each Purchaser.

     

     “Subject
      Interests” means, collectively, the Initial Subject Interests and the
      Supplemental Subject Interests.

     

    “Supplemental
      NPI Conveyance” has the meaning given to that term in Section
      2.2.

     

    “Supplemental
      Subject Interests” means (a) the undivided leasehold interests, the
      associated net revenue interests, and the other rights and interests of WI
      Owners in and to the Leases to be described in Exhibit A to the
      Supplemental NPI Conveyance, INSOFAR ONLY AS such Leases cover and include
      the
      lands identified in Exhibit A to the Supplemental NPI Conveyance, which
      comprise the drill site locations for the proposed wells agreed upon by WI
      Owners and the Creditor Parties and listed on Exhibit A to the
      Supplemental NPI Conveyance; (b) all rights, titles, and interests of WI Owners
      in and to all Hydrocarbons produced, saved, and marketed from or allocable
      to
      the proposed Hydrocarbon wells listed on Exhibit A to the
      Supplemental NPI Conveyance once such wells are drilled and completed, and
      any
      Hydrocarbon wells drilled thereafter on such Leases, INSOFAR ONLY AS such Leases
      cover and include the lands identified in Exhibit A to the Supplemental
      NPI Conveyance, and any unit into which any such Lease, INSOFAR ONLY AS such
      Lease covers and includes the lands identified in Exhibit A to the
      Supplemental NPI Conveyance, is pooled or unitized; and (c) any and all other
      rights, titles, and interests of WI Owners in or with respect to all voluntary
      or compulsory pooling or unitization agreements or orders, farmout agreements,
      farmin agreements, operating agreements, Hydrocarbon purchase and sale
      agreements, licenses, permits, and all other contracts of any kind whatsoever
      covering or affecting the production or marketing of Hydrocarbons from the
      Leases described in Exhibit A to the Supplemental NPI Conveyance, INSOFAR
      ONLY AS such Leases cover and include the lands identified in Exhibit A
      to the Supplemental NPI Conveyance, and any unit into which any such Lease,
      INSOFAR ONLY AS such Lease covers and includes the lands identified in
Exhibit A to the Supplemental NPI Conveyance, is pooled or unitized, and
      attributable to the interests of WI Owners therein.

     

    
      
        
        

      

      
        Schedule
          1.1-v

        
          

        

      

      
        
        

      

    

    “Taxes”
      means all ad valorem, property, occupation, gathering, pipeline regulating,
      windfall profit, severance, gross production, gross receipts, Btu, energy,
      excise, and other taxes and governmental charges and assessments imposed on
      the
      Subject Interests, the Net Profits Interest, the Hydrocarbons attributable
      thereto, or the proceeds therefrom, other than income, franchise, or similar
      taxes.

     

    “Transfer”
      means, for purposes of Section 4.8, as applicable, (a) a sale,
      exchange, assignment, conveyance, gift, bequest, devise, disposition, or other
      direct transfer of title to an asset, (b) a transfer of the equity
      interests of the Person owning the relevant asset or, in the case of an entity
      other than an individual, the direct parent of such entity, or (c) a
      merger, consolidation, reorganization, or other business combination of such
      Person or, in the case of an entity other than an individual, the direct parent
      of such entity.

     

    


    
      
        
        

      

      
        Schedule
          1.1-vi

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(e)

    WI
      OWNERS’ LITIGATION

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      3.1(g)

     

    PREFERENTIAL
      PURCHASE RIGHTS; REQUIRED THIRD

     

    PERSON
      CONSENTS TO ASSIGNMENT

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(h)


     

    LIENS
      AND ENCUMBRANCES

     

    


    


    
      	
              1.

            	
              Mortgage,
                Deed of Trust, Security Agreement, Financing Statement and Assignment
                of
                Production, from New Century Energy Corp. and Century Resources,
                Inc., as
                Mortgagors, to Eugene Grin, as Trustee, for the benefit of Laurus
                Master
                Fund, Ltd., as Mortgagee, dated June 30, 2005, filed and recorded
                as
                follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 055103, Official
                Records

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 255765, Volume 614 Page 333,
                Official Records

            


    

    


    
      	
              2.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, relating to the Mortgage dated as of June 30, 2005, and covering
                fixtures and as-extracted collateral, filed and recorded as
                follows:

            
	 	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 055104, Official
                Records

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 255766, Volume 614 Page 358,
                Official Records

            


    

    


    
      
        
        

      

      
        Schedule
          3.1(h)-i

        
          

        

      

      
        
        

      

    

    
      	
              3.

            	
              Mortgage,
                Deed of Trust, Security Agreement, Financing Statement and Assignment
                of
                Production from New Century Energy Corp. and Century Resources, Inc.,
                as
                Mortgagors, to Eugene Grin, as Trustee, for the benefit of Laurus
                Master
                Fund, Ltd., as Mortgagee, dated as of September 19, 2005, filed and
                recorded as follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on September 20, 2005, under Instrument No. 057328, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on September 20, 2005, Volume 163 Page 276

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on September 21, 2005, under Instrument No. 257742, Volume 624
                Page 304, Official Records

            


    

    


    
      	
              4.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, relating to the Mortgage dated as of September 19, 2005, and
                covering fixtures and as-extracted collateral, filed and recorded
                as
                follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on September 20, 2005, under Instrument No. 057329, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on September 20, 2005, Volume 163 Page 308

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on September 21, 2005, under Instrument No. 257743, Volume 624
                Page 330, Official Records

            


    

    


    
      
        
        

      

      
        Schedule
          3.1(h)-ii

        
          

        

      

      
        
        

      

    

    
      	
              5.

            	
              Amended
                and Restated Mortgage, Deed of Trust, Security Agreement, Financing
                Statement and Assignment of Production from New Century Energy Corp.
                and
                Century Resources, Inc., as Mortgagors, to Eugene Grin, as Trustee,
                for
                the benefit of Laurus Master Fund, Ltd., as Mortgagee, dated April
                26,
                2006, filed and recorded as follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on April 27, 2006, under Instrument No. 063043, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on April 27, 2006, Volume 168 Page 336

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on April 27, 2006, under Instrument No. 263022, Volume 650 Page 320,
                Official Records

            


    

     

    
      	
              6.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, relating to the Mortgage dated April 26, 2006, and covering
                fixtures and as-extracted collateral, filed and recorded as
                follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on April 28, 2006, under Instrument No. 063108

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on April 28, 2006, Volume 168 Page 413

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on April 28, 2006, under Instrument No. 263056, Volume 650 Page 481,
                Official Records

            


    

    


    
      	
              7.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, covering fixtures and as-extracted collateral, filed and recorded
                as follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on January 5, 2007, under Instrument No. 070109, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on January 9, 2007, Volume 173 Page 13

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on January 5, 2007, under Instrument No. 269469, Volume 683 Page
                99,
                Official Records

            


    

    


    


    
      
        
        

      

      
        Schedule
          3.1(h)-iii

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(m)

     

    


     

    PROPERTY
      AGREEMENTS; MARKETING AGREEMENTS

     

    
      	
              A.

            	
              Property
                Agreements

            


    

     

    
      	
               

            	
              Operating
                Agreement dated March 1, 2004, among Century Resources, Inc., as
                Operator,
                and Acquatic Cellulose International Corp., as Non-Operator, covering
                certain leases, wells, and facilities in Wharton County,
                Texas.

            


    

     

    
      	
              B.

            	
              Marketing
                Agreements

            


    

     

    
      	
               

            	
              1.

            	
              Base
                Contract for Sale and Purchase of Natural Gas dated as of July 17,
                2002,
                among Century Resources, Inc., as Seller, and Harvest Pipeline Company,
                as
                Buyer, relating to the Subject Interests in Matagorda County,
                Texas.

            


    

    


    
      	
               

            	
              2.

            	
              Crude
                Oil Purchase Agreement, Flint Hills Resources, LP Contact No. 4762,
                dated
                August 7, 2007, among New Century Energy Corp., as Seller and Flint
                Hills
                Resources, LP, as Buyer, relating to the Subject Interests in Wharton
                County, Texas.

            


    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      3.1(n)

    FUTURE
      ASSIGNMENT OBLIGATIONS

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      3.1(r)

    PRODUCTION
      IMBALANCES AND RELATED ITEMS

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      A

     

    Attached
      to and made a part of Net Profits Interest Agreement

    dated
      as of November 30, 2007, between

    New
      Century Energy Corp. and CenturyResources, Inc., as WI Owners,
      and

    Valens
      U.S. SPV I, LLC, and Valens Offshore SPV II, Corp., as
      Assignees


     

    SUBJECT
      INTERESTS

     

     

    [CONFIDENTIAL
      INFORMATION REMOVED]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    
 

    Attached
      to and made a part of Net Profits Interest Agreement

    dated
      as of November 30, 2007, between New Century Energy Corp.
      and

    Century
      Resources, Inc., as WI Owners, and

    Valens
      U.S. SPV I, LLC, and Valens Offshore SPV II, Corp., as
      Assignees

    Form
      of Conveyance of Net Profits Overriding Royalty
      Interest