Document:

Exhibit 10.11

GATHERING AND COMPRESSION
AGREEMENT

(KENTUCKY OPERATIONS)

THIS GATHERING AND COMPRESSION AGREEMENT (the “Agreement”)
effective as of January 5, 2007, by and between VINLAND ENERGY GATHERING, LLC,
a Delaware limited liability company (“VEG”); VANGUARD NATURAL GAS, LLC, a
Kentucky limited liability company, and its subsidiary TRUST ENERGY COMPANY,
LLC, a Tennessee limited liability company (collectively referred to as “VANGUARD”);
and (solely with respect to Section 4.1 hereof) VINLAND ENERGY EASTERN, LLC, a
Delaware limited liability company (“VEE”).

WITNESSETH:

WHEREAS, VANGUARD anticipates producing and/or
developing substantial quantities of natural gas in Bell, Clay, Harlan, Laurel,
Leslie, McCreary, Knox, Bell, and Whitley Counties, Kentucky (as described in
the list of fields, leases and wells contained on EXHIBIT “A”
attached hereto and incorporated by referenced herein, hereinafter the “Properties”),
and, in order to produce VANGUARD’s natural gas production from the Properties,
VANGUARD and VEG are hereby entering in this agreement pertaining to the
gathering and trunk lines and other facilities (as described on EXHIBIT “B” — identifying the lines and  facilities) currently owned and operated by
VEG;

WHEREAS, VANGUARD desires to contract with VEG to
gather and compress natural gas produced from the Properties and re-deliver
said natural gas to certain designated interconnects with third party
transporters.

WHEREAS, VEG is willing to receive VANGUARD’s natural
gas from the Properties into its gathering and trunk lines for compression,
dehydration (utilizing VEG’s compression and

 1
 

dehydration
facilities) and delivery to various delivery points at existing
interconnections between the systems of VEG and certain third party
transporters;

WHEREAS, VEG has confirmed to VANGUARD that third
party transporters, Columbia Gas Transmission, Delta Natural Gas, TranEX,
Somerset Gas and Chesapeake Natural Gas, have as of the date of this Agreement
agreed to receive the gathered volumes at the existing interconnection outlined
below.

NOW THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained, VANGUARD and VEG agree as
follows:

ARTICLE I. 
DEFINITIONS

1.1                                 The
term “day” shall mean a period of twenty-four (24) consecutive hours, beginning
and ending at 10:00 a.m., Eastern U.S. Time.

1.2           The term “point of receipt” shall
mean a point mutually agreeable to VANGUARD and VEG where VANGUARD’s wellhead
gathering lines are or may be connected to VEG’s field gathering lines on VEG’s
gathering system

1.3           The term “point of delivery” shall
mean a point mutually agreeable to VANGUARD and VEG where VEG’s field gathering
lines are, or may be connected, to a third party transporter’s transportation
lines or such other mutually agreeable points as VANGUARD and VEG may agree
upon from time to time.

1.4           The term “third party transporter”
shall mean Columbia Gas Transmission, Delta Natural Gas, TranEX, Somerset Gas
and Chesapeake Natural Gas, or such other entity accepting VANGUARD’s natural
gas off of VEG’s facilities for further transportation.

1.5           The term “Mcf” shall mean one
thousand (1,000) cubic feet of gas.

 2
 

1.6           The term “Btu” shall mean one (1)
British thermal unit.

1.7           The term “Dekatherm” or Dth” shall
mean the quantity of gas containing 1,000,000 Btu.

1.8           The term “psia” shall mean “pounds
per square inch absolute.”

1.9           The term “psig” shall mean “pounds
per square inch gauge.”

1.10         The term “facilities” shall with
respect to VANGUARD mean VANGUARD’s wellhead equipment and  well pipelines hooked to the wells and
appurtenant property.  With respect to
VEG, the term “facilities” shall mean all compressors, meters, dehydrators or
other contractual agreements, rights, equipment or property used in connection
therewith and all of VEG’s field gathering lines connected to the VANGUARD well
pipelines, all rights of way, easements and licenses pertaining to said
pipelines.

1.11         The term “Wells” shall mean a well or
wells capable of producing  natural gas
that have been drilled and completed by VANGUARD and /or VEE after the
effective date of this Agreement.

ARTICLE II.  
GATHERING and DELIVERY

2.1           Subject
to the terms of this Agreement, VEG agrees that it will connect to its
gathering system any Wells on the Properties and further, VEG agrees to receive
for the account of VANGUARD all natural gas tendered by VANGUARD to VEG at
mutually agreeable points of receipt on VEG’s facilities for delivery to the
following specified locations in Bell, Clay, Knox, Leslie, Whitley and McCreary
Counties, Kentucky (the “Delivery Points”):

 3
 

 

	
  FIELD

  	
   

  	
  METER/STATION

  	
   

  	
  CURRENT CAPACITY

  	
   

  	
  CURRENT VOL

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SMEPA

  	
   

  	
  Station 135

  	
   

  	
  [3,250 Dth/day]

  	
   

  	
  [3,000 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Asher

  	
   

  	
  Station 136

  	
   

  	
  [3,250 Dth/day]

  	
   

  	
  [3,000 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prewitt Bend

  	
   

  	
  Station 233

  	
   

  	
  [50 Dth/day]

  	
   

  	
  [26 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canadatown

  	
   

  	
  Station 239

  	
   

  	
  [500 Dth/day]

  	
   

  	
  [400 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flinn Heirs

  	
   

  	
  Station 300 /CNR930091

  	
   

  	
  [25 Dth/day]

  	
   

  	
  [20 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jellico Creek

  	
   

  	
  Station 340

  	
   

  	
  [500 Dth/day]

  	
   

  	
  [462Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flat Lick

  	
   

  	
  Station 440

  	
   

  	
  [450 Dth/day]

  	
   

  	
  [442 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tope Owens

  	
   

  	
  Station 441

  	
   

  	
  [50 Dth/day]

  	
   

  	
  [30 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gregory Branch

  	
   

  	
  Station 442

  	
   

  	
  [1,000 Dth/day]

  	
   

  	
  [800 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lay Branch

  	
   

  	
  Station 443

  	
   

  	
  [1,000 Dth/day]

  	
   

  	
  [800Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lewis Heirs

  	
   

  	
  Station 450

  	
   

  	
  [2,500 Dth/day]

  	
   

  	
  [1,800 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mountain

  	
   

  	
  Station 615

  	
   

  	
  [450 Dth/day]

  	
   

  	
  [350 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gausdale

  	
   

  	
  Station 623

  	
   

  	
  [2,750 Dth/day]

  	
   

  	
  [2,000 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Paint Hill (CNR)

  	
   

  	
  Station 625

  	
   

  	
  [800 Dth/day]

  	
   

  	
  [750 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Spruce Creek

  	
   

  	
  Station 629

  	
   

  	
  [300 Dth/day]

  	
   

  	
  [225 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mackey Bend

  	
   

  	
  Station 634

  	
   

  	
  [500 Dth/day]

  	
   

  	
  [450 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wofford (611)

  	
   

  	
  Station 635

  	
   

  	
  [250 Dth/day]

  	
   

  	
  [200 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mudd Creek

  	
   

  	
  Station 720

  	
   

  	
  [500 Dth/day]

  	
   

  	
  [450 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sugar Creek

  	
   

  	
  (800 Prefix wells) TranEx

  	
   

  	
  [200 Dth/day]

  	
   

  	
  [100 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Falls (C&H
  Dev’t)

  	
   

  	
  Station 842

  	
   

  	
  [250 Dth/day]

  	
   

  	
  [120 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clay County

  	
   

  	
  Station 930085

  	
   

  	
  [10 Dth/day]

  	
   

  	
  [3 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clay County

  	
   

  	
  Station 930089

  	
   

  	
  [10 Dth/day]

  	
   

  	
  [6 Dth/day]

  

 

 4
 

 

	
  Clay County

  	
   

  	
  Station 930092

  	
   

  	
  [15 Dth/day]

  	
   

  	
  [11 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clay County

  	
   

  	
  Station 930099 (CNR)

  	
   

  	
  [30 Dth/day]

  	
   

  	
  [25 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clay County

  	
   

  	
  Station 930100 (CNR)

  	
   

  	
  [150 Dth/day]

  	
   

  	
  [128 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Knox County

  	
   

  	
  930142 (Columbus Mills)

  	
   

  	
  [30 Dth/day]

  	
   

  	
  [24 Dth/day]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Knox County

  	
   

  	
  923028 (Valentine)

  	
   

  	
  [10 Dth/day]

  	
   

  	
  [4 Dth/day]

  

 

2.2           To
the extent of its current capacity as stated above, VEG shall accept  VANGUARD’s gas at any time from each of the
fields listed above (the “Fields”) and dehydrate, compress and deliver same to
the Delivery Points.  All receipts of gas
by VEG onto VEG’s facilities shall be delivered to the Delivery Points on a
reasonable basis to the extent the receiving pipeline has capacity. VANGUARD
expressly understands that VEG will make every reasonable effort to deliver
VANGAURD’s volumes of natural gas to the Delivery Points, but that VEG may from
time to time interrupt service at various compression and dehydration stations
due to force majeure (as described in Article XII hereof), and scheduled and
unscheduled repairs, maintenance, upgrade of facilities, pigging of lines, or
for reasons beyond its control by third party transporters.

2.3           VEG’s
gathering and compression obligation hereunder shall be discharged in a good and
workmanlike manner and in accordance with good oilfield practice, subject to
allowance for the amount of gas attributable to system fuel consumption and
unaccounted for gas arising in the course of system operations proportional to
the Company’s gathered volume.  Such
obligation shall be subject to (a) VANGUARD’s existing leasehold and other
contractual obligations; (b) to VANGUARD’s obligations to any retail and
transportation customers served pursuant to statute (KRS 278.485 et seq.) and Kentucky Public Service Commission (“PSC”)
regulations; (c) to orders, rules, statutes and regulations of any lawful
authority having

 5
 

jurisdiction;
and (d) to any matter constituting a ‘force majeure” as outlined below.  VEG shall account to VANGUARD in the same
manner as provided in Article IX of this Agreement for all volumes of gas
produced from the Properties and delivered to VEG hereunder.

2.4           VANGUARD
expressly acknowledges that it has been apprised of the limitations and
understands that the gathering and compression of gas contemplated herein may
be interrupted or limited from time to time by the constraints of available
system capacity and the limitations set forth in Sections 2.3 (a), (b) (c) and
(d) above; otherwise VEG shall gather, compress and deliver such gas through
its facilities for the account of VANGUARD, and use VEG’s facilities, including
compressors, compressor site agreements, dehydrators, rights of way and
easements, to accomplish same.

ARTICLE III.    
FACILITIES

3.1           VEG
shall utilize its field gathering lines (and otherwise provide or cause to be
provided, such facilities) and VEG’s dehydration and compression facilities
(owned or leased by VEG) as well as interconnections with the pipeline
facilities of Columbia Gas Transmission, Delta Natural Gas, TranEX, Somerset
Gas and Chesapeake Natural Gas that are necessary to effectuate the gathering
and compression service for VANGUARD as described in Article II hereof.  VANGUARD will provide or cause to be provided
all facilities necessary (utilizing VANGUARD’s wellhead equipment and well
gathering lines) to deliver gas to VEG against the varying pressure in VEG’s
facilities.  Subject to the terms of this
Agreement, VEG will maintain or caused to be maintained and installed
telemetering equipment at those Delivery Points capable of delivering in excess
of 1,000 Mcf of gas per day on a sustained basis if requested by VANGUARD or
any third party transporter of gas.

 6
 

ARTICLE IV.   
TERM

4.1           This
Agreement and all rights hereunder shall commence on the date first above
written and shall continue in full force and effect for so long as the
Properties, in the sole opinion of VANGUARD, are capable of producing gas in
economic quantities.  Provided, however,
in the event the volume of gas gathered from the Properties located in any
Field or portion thereof is, in the sole opinion of VEG, insufficient to
generate revenues sufficient for VEG to fulfill its obligations hereunder, then
VEG shall provide VANGUARD written notice of its intention to increase the
gathering and compression rate to a rate under which VEG would continue to
provide the services provided for herein. Within thirty (30) days after receipt
of said notice, VANGUARD shall either accept the new rate proposed by VEG or
VANGUARD shall  terminate this Agreement
to the extent it pertains to the subject portion of facilities by providing VEG
ninety (90) days written notice of its intent to do so. Included in any such
termination notice, VANGUARD shall 
request an assignment and VEG shall deliver an assignment of the subject
portion of the VEG facilities in such Field used in performance of the
gathering and compression services set forth herein in order to maintain its
production of gas and shall thereafter bear all the costs and expenses of
maintaining and operating said pipeline assets. 
In such event, VANGUARD shall provide gathering and compression services
to VEE (to the extent of its interests in the oil and gas production in such
Field) on the same basis as the then current gathering rates provided for in
Article VIII.

ARTICLE V.   
QUALITY

5.1           VANGUARD
acknowledges and agrees that in order for gas to be delivered into VEG’s
facilities, such gas must comply with the following terms and conditions.

 7
 

5.2           All
gas delivered and redelivered hereunder shall be commercially free from air,
dust, gum, gum-forming constituents, harmful or noxious vapors, or other solid
or liquid matter which might interfere with its merchantability or cause injury
to or interference with proper operation of the lines, regulators, meters and
other equipment of the receiving party.

5.3           The
gas delivered and redelivered shall not contain in excess of:

(a)           seven
(7) pounds of water vapor per million cubic feet of gas at the base pressure
and temperature of fourteen and seven-tenths (14.7) pounds per square inch
absolute and sixty degrees Fahrenheit. 
The water vapor will be determined by the use of a Bureau of Mines type
dew point apparatus or in accordance with the latest approved methods in use in
the industry generally;

(b)           four
percent (4%) by volume of a combined total of carbon dioxide and nitrogen
components, provided, however, that the total carbon dioxide content shall not
exceed three percent (3%) by volume;

(c)           twenty-five
hundredths (0.25) grains of hydrogen sulfide per one hundred (100) cubic feet
of gas;

(d)           twenty
(20) grains of total sulphur per one hundred (100) cubic feet.

5.4           The
gas delivered and redelivered shall have a total heating value of not less than
one-thousand (1,000) (Btu) British Thermal Units per standard cubic foot.  The total heating value of the gas shall be
determined by taking samples of the gas at the delivery point at such
reasonable times as may be designated by either party and having the Btu
content per cubic foot determined by an accepted type calorimeter (or other
suitable instrument) for a cubic foot of gas at a temperature of sixty degrees
Fahrenheit when saturated with water vapor and at an absolute pressure of 14.73
psi.  The gas delivered shall have a utilization
factor of one thousand three

 8
 

hundred
(1,300) plus or minus six percent (6%). 
The unitization factor is defined as that number obtained by dividing
the heating value of the gas by the square root of its specific gravity.

5.5           If
the gas delivered by VANGUARD to VEG’s facilities fails to meet the quality
specifications set forth in this Article V, then, upon instruction by VANGUARD,
VEG agrees to take such steps and measures as instructed to bring the gas into
conformity with such specifications and all additional costs in connection with
such measures shall be borne by the VANGUARD in proportion to their respective
interests in the wells.  VEG agrees that,
to the extent any gas delivered hereunder fails to meet such specifications
such gas may be blended with other gas in the VEG system, at VEG’s sole and
absolute discretion, so that the commingled gas will conform to such
specifications.  To assure that the gas
delivered by VANGUARD to VEG conforms to the above specifications, the gas may
be analyzed by VEG at least twice a year and more frequently if any third party
transporter requests.

ARTICLE VI.   
DELIVERY PRESSURE

6.1           All
gas delivered by VANGUARD to VEG shall be delivered by VANGUARD at pressures
sufficient to enter the into VEG’s system or against the prevailing pressure at
such point.  VEG shall maintain a
pressure at each delivery point that is reasonable.

ARTICLE VII.  
MEASUREMENT AND MEASURING EQUIPMENT

7.1           For
the purpose of this Agreement, the unit of volumetric measurement shall be a
standard cubic foot of gas at a pressure base of fourteen and seventy-three
hundredths (14.73) pounds per square inch absolute, a temperature base of sixty
(60) degrees Fahrenheit (five hundred twenty degrees (520) absolute) and
without adjustments for water vapor.

7.2           All
said gas delivered at the Delivery Points shall be measured by an orifice,
turbine or displacement type meter or other approved measuring device of equal
accuracy to be

 9
 

owned
and installed by VEG or a third party transporter of gas.  All said gas redelivered to any additional
transporter or purchaser shall likewise be measured by such type meter or other
device to be owned, installed and operated by such additional transporter or
purchaser.

7.3           For
orifice meter measurements, the methods of computation shall conform with the recommendations
contained in Report No. 3 of the Gas Measurement Committee of the American Gas
Association, including any revision made thereto, applied in a practical
manner.  The specific gravity of the gas
being measured shall be determined at the beginning of this delivery and as
often thereafter as conditions may warrant.

7.4           For
displacement or turbine meters or other approved measuring device, the meter
readings at varying pressures shall be converted to gas quantities at base
conditions set forth in Section 7.1 hereof.

7.5           In
connection with the use of any type of measuring device, an atmospheric
pressure of fourteen and four tenths (14.4) pounds per square inch shall be
assumed, with no allowance for variation in atmospheric pressure.  The flowing gas temperature may be recorded
at VEG’s discretion.  In the absence of a
flowing gas temperature recorder, sixty degrees Fahrenheit will be assumed.

7.6           VEG
(or a third party transporter) shall read the meter, furnish the charts, place
and remove any and all recording gauge charts, calculate the deliveries, and
perform any other service necessary in connection with the measurement of said
gas.

7.7           If,
upon any test, any measuring equipment at any receipt point is found to be in
error, such errors shall be taken into account in a practical manner in
computing the deliveries.  If the
resultant aggregate error in the computed deliveries is not more than two
percent (2%), then previous deliveries shall be considered accurate.  All equipment shall, in any case, be

 10
 

adjusted
at the time of test to record correctly. 
If, however, the resultant aggregate error in computed deliveries
exceeds two percent (2%) at a recording corresponding to the average hourly
rate of gas flow for the period since the last preceding test, previous
recordings of such equipment shall be corrected to zero error for any period
which is known definitely or agreed upon, but in case the period is not known
definitely or agreed upon, such correction shall be for a period extending over
one-half of the time elapsed since the date of the last test, not exceeding a
correction period of sixteen (16) days.

7.8           At
delivery points with third party transporters or purchasers, if upon any test,
any measuring equipment is found to be in error such errors shall be taken into
account as stipulated by the agreement covering said transportation or purchase
with the third party.  In the absence of
such an agreement, if the meter on test shall prove to be accurate within plus
or minus two percent (2%), previous deliveries corrected in such a manner shall
be considered accurate. If however the resultant aggregate error in computed
deliveries exceeds two percent (2%) previous recordings of such equipment shall
be corrected to zero error for any period which is known definitely or agreed
upon, but in case the period is not known definitely or agreed upon such
correction shall be for a period extending over one — half of the elapsed time
since the date of the last test, not exceeding a correction period of sixteen
(16) days.

7.9           In
the event any measuring equipment is out of service for test or repair, or is
inoperable for any reason, deliveries through such equipment shall be estimated
utilizing all available information to determine the volume of gas for the
delivery period affected.

7.10         Upon
written request from the party not maintaining meter charts respecting a
particular measurement station, meter charts shall be forwarded to such party
for inspection, subject to return to the other within ten (10) days after receipt
thereof.  VEG or any third party

 11
 

transporter
shall keep charts on file for two (2) years after date of delivery, during
which time they will be open for inspection by authorized parties during normal
working hours.

7.11         Considering
the possibility of inadvertent errors in measurement or calculating of amounts
due and payable or paid, nothing herein contained shall constitute accord and
satisfaction, waiver, release, full payment, satisfaction, laches, estoppel, or
other defense to a claim by or against VANGUARD or VEG for the true and actual
amount accurately due and payable, for the full period of two (2) years in
arrears.  Errors in VEG’s favor shall be
rectified in full, without interest, by VANGUARD within ninety (90) days of
notice and substantiation of such inaccuracy. 
Errors in VANGUARD’s favor shall be rectified in full, without interest,
by VEG within ninety (90) days of notice and substantiation of such inaccuracy.

ARTICLE VIII.   
RATE

8.1           For
all quantities of gas gathered, compressed and re-delivered by VEG to the
Delivery Point(s) from the wells listed on Exhibit “A”, VANGUARD shall pay VEG
$0.25 per Mcf of gas gathered, compressed and re-delivered..

8.2           For
all quantities of gas gathered, compressed and re-delivered from any well
drilled and completed by or for VANGUARD after the date of this Agreement, the
$0.25 per Mcf price referenced in the preceding sentence shall be increased to
$0.55 per Mcf for natural gas produced from such wells.

8.3.          Beginning
January 1, 2011, the gathering and compression rates stipulated in Sections 8.1
and 8.2 shall increased by eleven percent (11%) and shall be adjusted annually
thereafter based on the wage index adjustment published annually by COPAS.

8.4           VEG
may, from time to time, propose to VANGUARD facility upgrades and improvements
that could be to the economic benefit of VANGUARD. In the event such

 12

upgrades
and improvements cannot be undertaken economically by VEG based on the rates
outlined in 8.1 and 8.2, VEG will send VANGUARD a letter requesting  financial support for said project. Any such
letter will describe the project, its contemplated benefits to VANGUARD, and
the specific request for additional financial support from VANGUARD, which may
include either (i) an increased gathering and compression rate for a specific
period of time, or (ii) an up-front or deferred payments as agreed to between the
parties . Within thirty (30) days after receipt of the financial support
letter, VANGUARD shall provide written response to VEG with its election. No
response shall be assumed to be a non-consent by VANGUARD. VANGUARD shall have
the absolute right to reject financial participation in any project proposed
under this section.

ARTICLE IX.   
STATEMENTS AND PAYMENT

9.1                                 Billing.    On or before the thirtieth day of each
calendar month hereof, VEG shall render to VANGUARD statements on which is
reported the metered quantities of gas produced, the metered quantities
gathered and delivered (including provision for line loss and system fuel) to a
third party transporter at the Delivery Points for the account of VANGUARD
during the previous month and the metered quantity of gas re-delivered by the
third party transporter to the purchaser or the purchaser’s transporter for the
account of VANGUARD hereunder during the previous month together with a
computation of the amount due VEG pursuant to this Agreement.

9.2                                 Payments.     Payments shall be made by check, payable
to the order of VEG at the address contained in Section 15.1 of this Agreement,
and shall be sent to VEG within fifteen (15) days after receipt by VANGUARD of
the statement described in Section 9.1. 
Late payments and refunds of disputed amounts shall bear interest at a
rate equal to the Prime Rate designated as such from time to time by Citibank,
N.A. plus five percent (5%), on the unpaid

 13
 

balance.

 

ARTICLE X.   
TITLE TO GAS; APPLICATIONS, REPORTS

10.1                           VANGUARD
warrants that it will have good title to, or to its knowledge, be in lawful
possession of all gas delivered or caused to be delivered to VEG under this
Agreement and that to VANGUARD’s knowledge, such gas will be free and clear of
all liens, encumbrances and claims whatsoever; that it will at the time of
delivery have the right to deliver or cause to be delivered the gas hereunder;
and that it will indemnify VEG and save it harmless from suits, actions, debts,
accounts, damages, costs, losses and expenses arising from or out of adverse
claims of any and all persons to said gas or to royalties, taxes, license fees
or charges thereon, to the extent such claims arise out of VANGUARD not having
good title or not being in lawful possession of such gas or such gas being
subject to liens.

10.2                           VANGUARD
and VEG mutually covenant and agree that each shall timely execute all
necessary applications and reports to such federal, state and local regulatory
authorities as each is required by statute, regulation or rule to make, and
continue to pursue same until all such necessary applications and reports are
filed and accepted.  Each party shall
keep the other timely advised of all such reporting and application activities.

ARTICLE XI.   
RESPONSIBILITY

11.1                           Except
as otherwise provided in this Agreement, it is agreed that from the time gas is
received onto VEG’s facilities until the delivery of such gas to any third
party transporter at the Delivery Points, VEG will assume all responsibility
for the gathering and compression of such gas, will indemnify and hold VANGUARD
harmless against any injuries or damages caused thereby and VEG will have the
unqualified right to commingle such gas with other gas in its pipeline system
and to handle and treat such as its own. 
Otherwise, VANGUARD shall have 

 14
 

all
responsibility for such gas and will indemnify and hold VEG harmless for any
injuries or damages caused thereby.

ARTICLE XII.   
FORCE MAJEURE

12.1                           In
case either party to this Agreement fails to perform any obligations hereunder
assumed by it and such failure is due to acts of God or a public enemy,
strikes, riots, vandalism, sabotage, eco-terrorism, injunctions or other
interference through legal proceedings, breakage or accident to machinery or
lines or wells, blowouts, the failure of wells in whole or part, or the
compliance with any statute, either State or Federal, or with any other of the
Federal Government or any branch thereof, or of the Governments of the State
wherein subject premises are situated, or to any causes not reasonably within
the control of the party claiming force majeure, or is caused by the necessity
for making repairs or alterations in machinery or lines of pipe, such failure
shall not be deemed to be a violation by such party of its obligations hereunder,
but such party shall use due diligence to again put itself in position to carry
out all of the obligations which by the terms hereof it has assumed.  It is expressly understood and agreed,
however, that this Article XII shall not apply to the obligation of VANGUARD to
pay VEG for the gathering, and compression of gas hereunder.

ARTICLE XIII. 
GOVERNMENTAL REGULATION

13.1                           This
Agreement shall be subject to all applicable and valid statutes, rules orders
and regulations of any federal, state or local governmental authority or agency
having jurisdiction over the parties, their facilities or gas supply, this
Agreement or any provision hereof.  The
parties agree that should any state, federal or local governmental authority or
agency with jurisdiction over this Agreement or transactions herein require
approval for the gathering or sale of gas hereunder, then each party shall make
all necessary applications or filings and shall 

 15
 

submit
any records or data required by such governmental authority or agency.

13.2                           VEG
shall not be liable for failure to perform hereunder if such failure is due to
compliance with rules, regulations, laws, orders or directives of any state,
federal or local governmental regulatory authority or agency having
jurisdiction.

13.3                           Nothing
in this Agreement shall prevent either party from contesting the validity of
any law, order, rule regulation or directive of any state, federal or other
governmental regulatory authority or agency, nor shall anything in this
Agreement be construed to require either party to waive its right to assert the
lack of jurisdiction of such regulatory body, governmental entity, or agency
over this Agreement or any party hereto.

13.4                           This
Agreement is subject to the terms and conditions of any thirty party rules and
regulations for gathering of gas for others, off-system utilization, as set
forth in such third party’s tariffs on file with any lawful authority, as same
may be changed from time to time.

13.5                           The
parties understand and agree that the gathering and compression services
contemplated by this Agreement shall occur wholly intrastate.  It is not the understanding or intent of the
parties that VEG be considered a “transporter” or “seller” of natural gas in
interstate commerce within the meaning of the Natural Gas Act (15 U.S.C. 717 et. seq.), the Natural Gas Policy Act of 1978 (15 U.S.C.
3301 et. seq.), or any successor or other
statute regulating oil and gas transportation and sale.

ARTICLE XIV.    
TRANSFER AND ASSIGNMENT

14.1                           Any
company which shall succeed by purchase, merger or consolidation to the
properties, substantially as an entirety, of VANGUARD or of VEG, as the case
may be, shall be entitled to the rights and shall be subject to the obligations
of its predecessor in title under this Agreement.  Either VANGUARD or VEG may, without relieving
itself of its obligations under 

 16
 

this
Agreement, assign any of its rights and obligations hereunder to either the
parent corporation or a wholly-owned subsidiary at the time of such
assignment.  Otherwise no assignment of
this Agreement or any of its rights or obligations hereunder shall be made by
VANGUARD or VEG without the written consent of the other first obtained which
consent shall not be unreasonably withheld. 
However, the provisions of this Article shall not in any way prevent
either party to this Agreement from pledging or mortgaging its rights hereunder
as security for its indebtedness.  This
Agreement shall be binding upon and shall inure to the benefit of the respective
successors and assigns of the parties hereto.

ARTICLE XV.   
NOTICES

15.1                           All
notices, requests, statements and other communications hereunder shall be in
writing and shall be delivered as follows:

	
  To VANGUARD:

  	
  Vanguard Natural Gas, LLC

  
	
   

  	
  700 San Felipe,
  Suite 485

  
	
   

  	
  Houston, Texas
  77063

  
	
   

  	
  Attention: Scott
  W. Smith, President

  
	
   

  	
   

  
	
  With copies to
  VANGUARD’s lender:

  
	
   

  	
   

  
	
   

  	
  Citibank, N.A.

  
	
   

  	
  8401 N. Central Expressway, Suite 500

  
	
   

  	
  Dallas, TX 75225

  
	
   

  	
  Attention: Ms. Angela McCracken

  
	
   

  	
  Telecopy: 972-419-3334

  
	
   

  	
  Telephone: 972-419-3343

  
	
   

  	
   

  
	
   

  	
  Citibank, N.A.

  
	
   

  	
  8401 N. Central Expressway, Suite 500

  
	
   

  	
  Dallas, TX 75225

  
	
   

  	
  Attention: Ms. Donna Schwark

  
	
   

  	
  Telecopy: 972-419-3334

  
	
   

  	
  Telephone: 972-419-3369

  
	
   

  	
   

  
	
   

  	
  To VEG:Vinland
  Energy Gathering, LLC

  
	
   

  	
  104 Nami Plaza,
  Suite 1

  
	
   

  	
  London, Kentucky
  40741

  

 

 17
 

 

	
  

  	
  Attn: Thomas H.
  Blake

  

 

The
parties may, from time to time, designate other addresses for notices and other
communications by first giving notice of such change of address, in writing, as
provided above.

ARTICLE XVI.   
WAIVER

16.1                           A
waiver by either party of any one or more defaults by the other in the
performance of any provisions hereof shall not operate as a waiver of any
future default.

ARTICLE XVII.   
SEVERABILITY

17.1                           Except
as otherwise provided herein, any provision of this Agreement declared or
rendered unlawful by a statute, court of law or regulatory agency with
jurisdiction over the parties or either of them, shall not affect the other
obligations of the parties hereunder.

ARTICLE XVIII.   
DEFAULT AND REMEDIES

18.1                           The following shall be Events of Default
under the terms of this Agreement and the terms “Events of Default” or “Default”
shall mean, whenever they are used in this Agreement, any one or more of the
following events:

(a)                                If VANGUARD shall
fail to pay any sums due to VEG for a period of five (5) or more days after VEG
has given VANGUARD written notice thereof;

(b)                               If either party
shall file a voluntary petition for bankruptcy or shall be
adjudicated bankrupt or insolvent, or shall file any petition or any answer
seeking or acquiescing in any reorganization, arrangement, composition,
adjustment, liquidation, dissolution, or similar relief for itself under any
then current federal, state or other statute, law, or regulation, or shall
seek, consent to, or acquiesce in the appointment of any trustee, receiver, or
liquidator of such party, or shall make any general assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts 

 18
 

generally as they become due;

(c)                                If either party
shall materially fail to perform or observe any covenant, provision, term,
restriction, or condition required to be performed or observed by such party
under the terms of this Agreement (other than the obligation to pay money
referenced in subsection (a) above) which continues for more than ninety (90)
days after such party has received written notice thereof; provided that if
such failure cannot be cured within such ninety-day period, no default shall
occur if the relevant party has begun good faith efforts to cure the failure
within such ninety days.  In the event of
a dispute between the parties whether a material failure to perform has
occurred, no termination of this Agreement shall occur until the defaulting
party has the opportunity to cure provided by this section, after the existence
of such failure has been determined in accordance with this Agreement.

18.2                           If
any of the Events of Default enumerated in Section 18.1 occurs, then in such
event and as often as the same occurs, the non-defaulting party may terminate
this Agreement.

18.3                           Exercise
of the foregoing remedies shall not preclude the parties from exercising every
other remedy provided herein or at law, it being the intention of the parties
that parties’ remedies shall be cumulative and shall survive termination of
this Agreement.

ARTICLE XIX.   
GOVERNING LAW; SUBMISSION TO PROCESS

19.1                           THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF KENTUCKY, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.  EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF KENTUCKY
AND THE COUNTY OF LAUREL AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE
MADE UPON IT IN ANY LEGAL PROCEEDING RELATING HERETO BY ANY MEANS ALLOWED UNDER
KENTUCKY OR FEDERAL LAW.  EACH OF THE
PARTIES HERETO

 19
 

IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

ARTICLE XX.    WAIVER OF JURY TRIAL, PUNITIVE DAMAGES,
ETC.

20.1                           EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT
NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR ASSOCIATED HEREWITH, BEFORE OR AFTER MATURITY; (B) WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY PUNITIVE DAMAGES, (C) CERTIFIES THAT NO PARTY HERETO
NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION.

ARTICLE XXI.   
ARBITRATION

21.1                           If any
controversy, claim or dispute arising out of or relating to this Agreement or
the breach or performance thereof occurs, the parties shall meet and exert
reasonable efforts to reach an amicable settlement for a period not to exceed
twenty (20) days from the date written notice of the controversy, claim or
dispute is served by the complaining party to the other party under this
Agreement.  If for any reason such
settlement fails to occur within such twenty-day period (or such other period
as the parties may agree in writing), the parties will then enlist the services
of a mutually agreed upon industry representative to facilitate negotiations
for an additional twenty (20) day period in an attempt to resolve the controversy.
If a favorable resolution is not attained within the additional twenty (20) day
period, then the controversy, 

 20
 

claim or dispute shall be
finally and conclusively resolved by a binding arbitration administered by the
American Arbitration Association in accordance with its Commercial Arbitration
Rules (“AAA Rules”) and subject to the Federal Arbitration Act, 9 U.S.C.
Sections 1 et  seq., and judgment on any award thereby rendered
may be entered in any court having jurisdiction thereof.

21.2                           Any such arbitration
shall proceed as promptly and as expeditiously as possible (and the parties
shall cooperate to this end) before three arbitrators, consisting of one
arbitrator appointed by the claimant, one arbitrator appointed by the
respondent, and the third arbitrator appointed by the two party-appointed
arbitrators.  Arbitration shall be
initiated by written notice of intention to arbitrate made pursuant the AAA
Rules.  The claimant shall identify its
appointed arbitrator in the notice of intention to arbitrate, and the
respondent shall identify its appointed arbitrator within ten (10) days of its
receipt of the notice of intention to arbitrate.  The two party-appointed arbitrators shall
agree upon and appoint the third arbitrator within the ten (10) day period following
the appointment of the second party-appointed arbitrator.  If either the claimant or the respondent fail
to appoint an arbitrator pursuant to the foregoing, or if the two
party-appointed arbitrators fail to agree upon and appoint the third arbitrator
within the above-referenced ten (10) day period, then such arbitrator or
arbitrators shall be appointed by the AAA pursuant to the AAA Rules.  The arbitrators chosen or appointed shall
have expertise and/or experience in the oil and gas industry.

21.3                           Nothing in this
Section shall be deemed to preclude any party from applying to any court of
competent jurisdiction at any time prior to the formation of the arbitration
panel (including before or during the twenty (20) day negotiation period
referenced in the first sentence of this Section) for injunctive, provisional
or other emergency relief pertaining to the subject matter of a controversy,
claim or dispute that is arbitrable hereunder, or applying for such relief 

 21
 

in aid of arbitration
after formation of the arbitration panel, where (i) the arbitration award to
which the party may be entitled may be rendered ineffectual without such
relief, (ii) the party seeking such relief is not in breach of this Section,
and (iii) the relief sought will not materially delay or frustrate the
arbitration.  The grant or denial of any
court-ordered relief pursuant to this paragraph shall not constitute or be
deemed to be a ruling on the merits of the matter to be arbitrated, nor shall
any application for such relief be deemed to be a waiver of any right to
arbitration hereunder.

21.4                           The parties hereby
agree that the costs and expenses, including attorneys’ fees, incurred in
connection with any arbitration or court proceeding hereunder shall be awarded
in favor of the prevailing party and against the losing party as determined by
the arbitration panel or court, as the case may be.

ARTICLE XXII.   
HEADINGS

22.1                           The
headings of the provisions of this Agreement are used for convenience only and
shall not be deemed to affect the meaning or construction of such provision.

ARTICLE XXIII. FAVORED NATIONS AGREEMENT

23.1                           After
the effective date of this Agreement, it is expressly agreed and understood
between the parties hereto that should VEG enter in to any gathering and
compression  agreement with an affiliate
or a third party which provides for rates below the rates set forth in Sections
8.1 and 8.2 herein, then effective as of the date of such agreement, VANGUARD’s
gas production will also be subject to the lower rate structure.

 22
 

ARTICLE XXIV.    ENTIRE AGREEMENT

24.1                           This
Agreement contains the entire agreement between the parties and there are no
promises, agreements, warranties, obligations, assurances or conditions other
than those contained herein.

[Signatures on following page]

 23
 

WITNESS the authorized signatures of the parties
hereto, hereunto subscribed and affixed effective as of the day and year first
hereinabove written.

	
  

  	
  (“VANGUARD”)

  
	
   

  	
   

  
	
   

  	
  VANGUARD
  NATURAL GAS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott W.
  Smith

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Manager

  
	
   

  	
   

  
	
   

  	
  TRUST
  ENERGY COMPANY, LLC

  
	
   

  	
  By: Vanguard
  Natural Gas, LLC

  
	
   

  	
  Its: Manager

  
	
   

  	
  By:

  	
  /s/ Scott W.
  Smith

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Manager

  
	
   

  	
   

  
	
   

  	
  (“VEG”)

  
	
   

  	
   

  
	
   

  	
  VINLAND
  ENERGY GATHERING, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Majeed S.
  Nami

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Manager

  
	
   

  	
   

  
	
   

  	
  (“VEE”)

  
	
   

  	
  (As To Section
  4.1 Only)

  
	
   

  	
   

  
	
   

  	
  VINLAND
  ENERGY EASTERN, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Majeed S.
  Nami

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Manager

  
					

 

 24

EXHIBIT A

to the Gathering and Compression Agreement (Kentucky)

VANGUARD WELLS

Intentionally
Omitted

EXHIBIT B

to the Gathering and Compression Agreement (Kentucky)

LINES AND FACILITIES

Intentionally
OmittedExhibit 10.12

 

GATHERING AND COMPRESSION
AGREEMENT

(NRC-VEG ASHER WELLS)

THIS GATHERING AND COMPRESSION AGREEMENT (the “Agreement”)
effective as of January 5, 2007, by and between VINLAND ENERGY GATHERING, LLC,
a Delaware limited liability company (“VEG”) and NAMI RESOURCES COMPANY L.L.C.,
a Kentucky limited liability company (“NRC”).

WITNESSETH:

WHEREAS, NRC anticipates
producing and/or developing natural gas from the wells listed on EXHIBIT “A” attached hereto and incorporated by referenced
herein, hereinafter the “Wells”), and, in order to produce NRC’s natural gas
production from the Wells, NRC and VEG are hereby entering in this agreement
pertaining to the gathering and trunk lines and other facilities currently
owned and operated by VEG which relate to the Wells;

WHEREAS, NRC desires to contract
with VEG to gather and compress natural gas produced from the Wells and
re-deliver said natural gas to certain designated interconnects with third
party transporters.

WHEREAS, VEG is willing to
receive NRC’s natural gas from the Wells into its gathering and trunk lines for
compression, dehydration (utilizing VEG’s compression and dehydration
facilities) and delivery to various delivery points at existing
interconnections between the systems of VEG and certain third party
transporters;

NOW THEREFORE, in consideration
of the premises and the mutual covenants and agreements herein contained, NRC
and VEG agree as follows:

 1
 

ARTICLE I.

DEFINITIONS

1.1                              The
term “day” shall mean a period of twenty-four (24) consecutive hours, beginning
and ending at 10:00 a.m., Eastern U.S. Time.

1.2                              The
term “point of receipt” shall mean a point mutually agreeable to NRC and VEG
where NRC’s wellhead gathering lines are or may be connected to VEG’s field
gathering lines on VEG’s gathering system

1.3                              The
term “point of delivery” shall mean a point mutually agreeable to NRC and VEG
where VEG’s field gathering lines are, or may be connected, to a third party
transporter’s transportation lines or such other mutually agreeable points as
NRC and VEG may agree upon from time to time.

1.4                              The
term “third party transporter” shall mean Columbia Gas Transmission, Delta
Natural Gas, TranEX, Somerset Gas and Chesapeake Natural Gas, or such other
entity accepting NRC’s natural gas off of VEG’s facilities for further
transportation.

1.5                              The
term “Mcf” shall mean one thousand (1,000) cubic feet of gas.

1.6                              The
term “Btu” shall mean one (1) British thermal unit.

1.7                              The
term “Dekatherm” or Dth” shall mean the quantity of gas containing 1,000,000
Btu.

1.8                              The
term “psia” shall mean “pounds per square inch absolute.”

1.9                              The
term “psig” shall mean “pounds per square inch gauge.”

1.10                        The
term “facilities” shall with respect to NRC mean NRC’s wellhead equipment and
Well pipelines hooked to the Wells and appurtenant property.  With respect to VEG, the term “facilities”
shall mean all compressors, meters, dehydrators or other 

 2
 

contractual agreements,
rights, equipment or property used in connection therewith and all of VEG’s
field gathering lines connected to the NRC Well pipelines, all rights of way,
easements and licenses pertaining to said pipelines.

1.11                        The
term “Wells” shall mean the Wells listed on EXHIBIT “A”
hereto.

ARTICLE II.

GATHERING AND DELIVERY

2.1                                 Subject
to the terms of this Agreement, VEG agrees that it will connect to its
gathering system any of the Wells and further, VEG agrees to receive for the
account of NRC all natural gas tendered by NRC to VEG at mutually agreeable
points of receipt on VEG’s facilities for delivery to such locations as the parties
may agree (“Delivery Points”).

2.2                                 To
the extent of its then-current capacity, VEG shall accept NRC’s gas at any time
from the Wells and dehydrate, compress and deliver same to the Delivery
Points.  All receipts of gas by VEG onto
VEG’s facilities shall be delivered to the Delivery Points on a reasonable
basis to the extent the receiving pipeline has capacity.  NRC expressly understands that VEG will make
every reasonable effort to deliver NRC’s volumes of natural gas to the Delivery
Points, but that VEG may from time to time interrupt service at various
compression and dehydration stations due to force majeure (as described in
Article XII hereof), and scheduled and unscheduled repairs, maintenance,
upgrade of facilities, pigging of lines, or for reasons beyond its control by
third party transporters.

2.3                                 VEG’s
gathering and compression obligation hereunder shall be discharged in a good
and workmanlike manner and in accordance with good oilfield practice, subject
to allowance for the amount of gas attributable to system fuel consumption and
unaccounted for gas arising in the 

 3
 

course
of system operations.  Such obligation
shall be subject to (a) NRC’s existing leasehold and other contractual
obligations; (b) to NRC’s obligations to any retail and transportation
customers served pursuant to statute (KRS 278.485 et seq.)
and Kentucky Public Service Commission (“PSC”) regulations; (c) to orders,
rules, statutes and regulations of any lawful authority having jurisdiction;
and (d) to any matter constituting a ‘force majeure” as outlined below.  VEG shall account to NRC in the same manner
as provided in Article IX of this Agreement for all volumes of gas produced
from the Wells and delivered to VEG hereunder.

2.4                                 NRC
expressly acknowledges that it has been apprised of the limitations and
understands that the gathering and compression of gas contemplated herein may
be interrupted or limited from time to time by the constraints of available
system capacity and the limitations set forth in Sections 2.3 (a), (b) (c) and
(d) above; otherwise VEG shall gather, compress and deliver such gas through
its facilities for the account of NRC, and use VEG’s facilities, including
compressors, compressor site agreements, dehydrators, rights of way and
easements, to accomplish same.

ARTICLE III.

FACILITIES

3.1                                 VEG
shall utilize its field gathering lines (and otherwise provide or cause to be
provided, such facilities) and VEG’s dehydration and compression facilities
(owned or leased by VEG) as well as interconnections with the pipeline
facilities of Columbia Gas Transmission, Delta Natural Gas, TranEX, Somerset
Gas and Chesapeake Natural Gas that are necessary to effectuate the gathering
and compression service for NRC as described in Article II hereof.  NRC will provide or cause to be provided all
facilities necessary (utilizing NRC’s wellhead equipment and well gathering
lines) to deliver gas to VEG against the varying pressure in VEG’s
facilities.  Subject to 

 4
 

the
terms of this Agreement, VEG will maintain or caused to be maintained and
installed telemetering equipment at those Delivery Points capable of delivering
in excess of 1,000 Mcf of gas per day on a sustained basis if requested by NRC
or any third party transporter of gas.

ARTICLE IV.

TERM

4.1                                 This
Agreement and all rights hereunder shall commence on the date first above
written and shall continue in full force and effect for so long as the Wells,
in the sole opinion of NRC, are capable of producing gas in economic
quantities.  Provided, however, in the
event the volume of gas gathered from the Wells is, in the sole opinion of VEG,
insufficient to generate revenues sufficient for VEG to fulfill its obligations
hereunder, then VEG shall provide NRC written notice of its intention to
increase the gathering and compression rate to a rate under which VEG would
continue to provide the services provided for herein. Within thirty (30) days
after receipt of said notice, NRC shall either accept the new rate proposed by
VEG or NRC shall  terminate this
Agreement to the extent it pertains to the subject portion of facilities by
providing VEG ninety (90) days written notice of its intent to do so.

ARTICLE V.

QUALITY

5.1                                 NRC
acknowledges and agrees that in order for gas to be delivered into VEG’s
facilities, such gas must comply with the following terms and conditions.

5.2                                 All
gas delivered and redelivered hereunder shall be commercially free from air,
dust, gum, gum-forming constituents, harmful or noxious vapors, or other solid
or liquid matter which might interfere with its merchantability or cause injury
to or interference with proper operation of the lines, regulators, meters and
other equipment of the receiving party.

 5
 

5.3                                 The
gas delivered and redelivered shall not contain in excess of:

(a)                                  seven
(7) pounds of water vapor per million cubic feet of gas at the base pressure
and temperature of fourteen and seven-tenths (14.7) pounds per square inch
absolute and sixty degrees Fahrenheit. 
The water vapor will be determined by the use of a Bureau of Mines type
dew point apparatus or in accordance with the latest approved methods in use in
the industry generally;

(b)                                 four
percent (4%) by volume of a combined total of carbon dioxide and nitrogen
components, provided, however, that the total carbon dioxide content shall not
exceed three percent (3%) by volume;

(c)                                  twenty-five
hundredths (0.25) grains of hydrogen sulfide per one hundred (100) cubic feet
of gas;

(d)                                 twenty
(20) grains of total sulphur per one hundred (100) cubic feet.

5.4                                 The
gas delivered and redelivered shall have a total heating value of not less than
one-thousand (1,000) Btu (British Thermal Units) per standard cubic foot.  The total heating value of the gas shall be
determined by taking samples of the gas at the delivery point at such reasonable
times as may be designated by either party and having the Btu content per cubic
foot determined by an accepted type calorimeter (or other suitable instrument)
for a cubic foot of gas at a temperature of sixty degrees Fahrenheit when
saturated with water vapor and at an absolute pressure of 14.73 psi.  The gas delivered shall have a utilization
factor of one thousand three hundred (1,300) plus or minus six percent
(6%).  The utilization factor is defined
as that number obtained by dividing the heating value of the gas by the square
root of its specific gravity.

5.5                                 If
the gas delivered by NRC to VEG’s facilities fails to meet the quality
specifications set forth in this Article V, then, upon instruction by NRC, VEG
agrees to take such 

 6
 

steps
and measures as instructed to bring the gas into conformity with such
specifications and all additional costs in connection with such measures shall
be borne by NRC.  VEG agrees that, to the
extent any gas delivered hereunder fails to meet such specifications such gas
may be blended with other gas in the VEG system, at VEG’s sole and absolute
discretion, so that the commingled gas will conform to such
specifications.  To assure that the gas
delivered by NRC to VEG conforms to the above specifications, the gas may be
analyzed by VEG at least twice a year and more frequently if any third party
transporter requests.

ARTICLE VI.

DELIVERY PRESSURE

6.1                                 All
gas delivered by NRC to VEG shall be delivered by NRC at pressures sufficient
to enter the into VEG’s system or against the prevailing pressure at such point.  VEG shall maintain a pressure at each
delivery point that is reasonable.

ARTICLE VII.

MEASUREMENT AND MEASURING EQUIPMENT

7.1                                 For
the purpose of this Agreement, the unit of volumetric measurement shall be a
standard cubic foot of gas at a pressure base of fourteen and seventy-three
hundredths (14.73) pounds per square inch absolute, a temperature base of sixty
(60) degrees Fahrenheit (five hundred twenty (520) degrees absolute) and
without adjustments for water vapor.

7.2                                 All
said gas delivered at the Delivery Points shall be measured by an orifice,
turbine or displacement type meter or other approved measuring device of equal
accuracy to be owned and installed by VEG or a third party transporter of
gas.  All said gas redelivered to any
additional transporter or purchaser shall likewise be measured by such type
meter or other device to be owned, installed and operated by such additional
transporter or purchaser.

 7
 

7.3                                 For
orifice meter measurements, the methods of computation shall conform to the
recommendations contained in Report No. 3 of the Gas Measurement Committee of
the American Gas Association, including any revision made thereto, applied in a
practical manner.  The specific gravity
of the gas being measured shall be determined at the beginning of this delivery
and as often thereafter as conditions may warrant.

7.4                                 For
displacement or turbine meters or other approved measuring device, the meter
readings at varying pressures shall be converted to gas quantities at base
conditions set forth in Section 7.1 hereof.

7.5                                 In
connection with the use of any type of measuring device, an atmospheric
pressure of fourteen and four tenths (14.4) pounds per square inch shall be
assumed, with no allowance for variation in atmospheric pressure.  The flowing gas temperature may be recorded
at VEG’s discretion.  In the absence of a
flowing gas temperature recorder, sixty (60) degrees Fahrenheit will be
assumed.

7.6                                 VEG
(or a thirty party transporter) shall read the meter, furnish the charts, place
and remove any and all recording gauge charts, calculate the deliveries, and
perform any other service necessary in connection with the measurement of said
gas.

7.7                                 If,
upon any test, any measuring equipment at any receipt point is found to be in
error, such errors shall be taken into account in a practical manner in
computing the deliveries.  If the
resultant aggregate error in the computed deliveries is not more than two
percent (2%), then previous deliveries shall be considered accurate.  All equipment shall, in any case, be adjusted
at the time of test to record correctly. 
If, however, the resultant aggregate error in computed deliveries
exceeds two percent (2%) at a recording corresponding to the average hourly
rate of gas flow for the period since the last preceding test, previous
recordings of such equipment shall be corrected to zero 

 8
 

error
for any period which is known definitely or agreed upon, but in case the period
is not known definitely or agreed upon, such correction shall be for a period
extending over one-half of the time elapsed since the date of the last test,
not exceeding a correction period of sixteen (16) days.

7.8                                 At
delivery points with third party transporters or purchasers, if upon any test,
any measuring equipment is found to be in error such errors shall be taken into
account as stipulated by the agreement covering said transportation or purchase
with the third party.  In the absence of
such an agreement, if the meter on test shall prove to be accurate within plus
or minus two percent (2%), previous deliveries corrected in such a manner shall
be considered accurate. If however the resultant aggregate error in computed
deliveries exceeds two percent (2%) previous recordings of such equipment shall
be corrected to zero error for any period which is known definitely or agreed
upon, but in case the period is not known definitely or agreed upon such
correction shall be for a period extending over one – half of the elapsed time
since the date of the last test, not exceeding a correction period of sixteen
(16) days.

7.9                                 In
the event any measuring equipment is out of service for test or repair, or is
inoperable for any reason, deliveries through such equipment shall be estimated
utilizing all available information to determine the volume of gas for the
delivery period affected.

7.10                           Upon
written request from the party not maintaining meter charts respecting a
particular measurement station, meter charts shall be forwarded to such party
for inspection, subject to return to the other within ten (10) days after receipt
thereof.  VEG or any third party
transporter shall keep charts on file for two (2) years after date of delivery,
during which time they will be open for inspection by authorized parties during
normal working hours.

7.11                           Considering
the possibility of inadvertent errors in measurement or calculating of amounts
due and payable or paid, nothing herein contained shall constitute accord and
satisfaction, 

 9
 

waiver,
release, full payment, satisfaction, laches, estoppel, or other defense to a
claim by or against NRC or VEG for the true and actual amount accurately due
and payable, for the full period of two (2) years in arrears.  Errors in VEG’s favor shall be rectified in
full, without interest, by NRC within ninety (90) days of notice and
substantiation of such inaccuracy. 
Errors in NRC’s favor shall be rectified in full, without interest, by
VEG within ninety (90) days of notice and substantiation of such inaccuracy.

ARTICLE VIII.

RATE

8.1                                 For
all quantities of gas gathered, compressed and re-delivered by VEG to the
Delivery Point(s) from the Wells, NRC shall pay VEG $0.25 per Mcf of gas
gathered, compressed and re-delivered.

8.2                                 Beginning
January 1, 2011, the gathering and compression rates stipulated in Sections 8.1
shall increased by eleven percent (11%) and shall be adjusted annually
thereafter based on the wage index adjustment published annually by COPAS.

8.4                             VEG
may, from time to time, propose to NRC facility upgrades and improvements that
could be to the economic benefit of NRC. 
In the event such upgrades and improvements cannot be undertaken
economically by VEG based on the rates outlined in 8.1 and 8.2, VEG will send
NRC a letter requesting financial support for said project. Any such letter
will describe the project, its contemplated benefits to NRC, and the specific
request for additional financial support from NRC, which may include either (i)
an increased gathering and compression rate for a specific period of time, or
(ii) an up-front or deferred payments as agreed to between the parties. Within thirty
(30) days after receipt of the financial support letter, NRC shall provide
written response to VEG with its election. No response shall be assumed to be a
non-consent by NRC.  NRC shall have 

 10
 

the
absolute right to reject financial participation in any project proposed under
this section.

ARTICLE IX.

STATEMENTS AND PAYMENT

9.1                                 Billing.    On or before the thirtieth day of each
calendar month hereof, VEG shall render to NRC statements on which is reported
the metered quantities of gas produced, the metered quantities gathered and
delivered (including provision for line loss and system fuel) to a third party
transporter at the Delivery Points for the account of NRC during the previous
month and the metered quantity of gas re-delivered by the third party
transporter to the purchaser or the purchaser’s transporter for the account of
NRC hereunder during the previous month together with a computation of the
amount due VEG pursuant to this Agreement.

9.2                                 Payments.     Payments shall be made by check, payable
to the order of VEG at the address contained in Section 15.1 of this Agreement,
and shall be sent to VEG within fifteen (15) days after receipt by NRC of the
statement described in Section 9.1.  Late
payments and refunds of disputed amounts shall bear interest at a rate equal to
the Prime Rate designated as such from time to time by Citibank, N.A. plus five
percent (5%), on the unpaid balance.

ARTICLE X.

TITLE TO GAS; APPLICATIONS, REPORTS

10.1                           NRC
warrants that it will have good title to, or to its knowledge, be in lawful
possession of all gas delivered or caused to be delivered to VEG under this
Agreement and that to NRC’s knowledge, such gas will be free and clear of all
liens, encumbrances and claims whatsoever; that it will at the time of delivery
have the right to deliver or cause to be delivered the gas hereunder; and that
it will indemnify VEG and save it harmless from suits, actions, debts,
accounts, damages, costs, losses and expenses arising from or out of adverse
claims of any and all 

 11
 

persons
to said gas or to royalties, taxes, license fees or charges thereon, to the
extent such claims arise out of NRC not having good title or not being in
lawful possession of such gas or such gas being subject to liens.

10.2                           NRC
and VEG mutually covenant and agree that each shall timely execute all
necessary applications and reports to such federal, state and local regulatory
authorities as each is required by statute, regulation or rule to make, and
continue to pursue same until all such necessary applications and reports are
filed and accepted.  Each party shall
keep the other timely advised of all such reporting and application activities.

ARTICLE XI.

RESPONSIBILITY

11.1                           Except
as otherwise provided in this Agreement, it is agreed that from the time gas is
received onto VEG’s facilities until the delivery of such gas to any third
party transporter at the Delivery Points, VEG will assume all responsibility
for the gathering and compression of such gas, will indemnify and hold NRC
harmless against any injuries or damages caused thereby and VEG will have the
unqualified right to commingle such gas with other gas in its pipeline system
and to handle and treat such as its own. 
Otherwise, NRC shall have all responsibility for such gas and will
indemnify and hold VEG harmless for any injuries or damages caused thereby.

ARTICLE XII.

FORCE MAJEURE

12.1                           In
case either party to this Agreement fails to perform any obligations hereunder
assumed by it and such failure is due to acts of God or a public enemy,
strikes, riots, vandalism,

 12

sabotage,
eco-terrorism, injunctions or other interference through legal proceedings,
breakage or accident to machinery or lines or wells, blowouts, the failure of
wells in whole or part, or the compliance with any statute, either State or
Federal, or with any other of the Federal Government or any branch thereof, or
of the Governments of the State wherein subject premises are situated, or to
any causes not reasonably within the control of the party claiming force
majeure, or is caused by the necessity for making repairs or alterations in
machinery or lines of pipe, such failure shall not be deemed to be a violation
by such party of its obligations hereunder, but such party shall use due
diligence to again put itself in position to carry out all of the obligations
which by the terms hereof it has assumed. 
It is expressly understood and agreed, however, that this Article XII
shall not apply to the obligation of NRC to pay VEG for the gathering, and
compression of gas hereunder.

ARTICLE XIII.

GOVERNMENTAL REGULATION

13.1                           This
Agreement shall be subject to all applicable and valid statutes, rules orders
and regulations of any federal, state or local governmental authority or agency
having jurisdiction over the parties, their facilities or gas supply, this
Agreement or any provision hereof.  The
parties agree that should any state, federal or local governmental authority or
agency with jurisdiction over this Agreement or transactions herein require
approval for the gathering or sale of gas hereunder, then each party shall make
all necessary applications or filings and shall submit any records or data
required by such governmental authority or agency.

13.2                           VEG
shall not be liable for failure to perform hereunder if such failure is due to
compliance with rules, regulations, laws, orders or directives of any state,
federal or local governmental regulatory authority or agency having
jurisdiction.

13.3                           Nothing
in this Agreement shall prevent either party from contesting the validity of 

 13
 

any
law, order, rule regulation or directive of any state, federal or other
governmental regulatory authority or agency, nor shall anything in this
Agreement be construed to require either party to waive its right to assert the
lack of jurisdiction of such regulatory body, governmental entity, or agency
over this Agreement or any party hereto.

13.4                           This
Agreement is subject to the terms and conditions of any thirty party rules and
regulations for gathering of gas for others, off-system utilization, as set
forth in such third party’s tariffs on file with any lawful authority, as same
may be changed from time to time.

13.5                           The
parties understand and agree that the gathering and compression services
contemplated by this Agreement shall occur wholly intrastate.  It is not the understanding or intent of the
parties that VEG be considered a “transporter” or “seller” of natural gas in
interstate commerce within the meaning of the Natural Gas Act (15 U.S.C. 717 et. seq.), the Natural Gas Policy Act of 1978 (15 U.S.C.
3301 et. seq.), or any successor or other
statute regulating oil and gas transportation and sale.

ARTICLE XIV.

TRANSFER AND ASSIGNMENT

14.1                           Any
company which shall succeed by purchase, merger or consolidation to the
properties, substantially as an entirety, of NRC or of VEG, as the case may be,
shall be entitled to the rights and shall be subject to the obligations of its
predecessor in title under this Agreement. 
Either NRC or VEG may, without relieving itself of its obligations under
this Agreement, assign any of its rights and obligations hereunder to either
the parent corporation or a wholly-owned subsidiary at the time of such
assignment.  Otherwise no assignment of
this Agreement or any of its rights or obligations hereunder shall be made by NRC
or VEG without the written consent of the other first obtained which consent
shall not be unreasonably withheld. 
However, the provisions of 

 14
 

this
Article shall not in any way prevent either party to this Agreement from
pledging or mortgaging its rights hereunder as security for its indebtedness.  This Agreement shall be binding upon and
shall inure to the benefit of the respective successors and assigns of the
parties hereto.

ARTICLE XV.

NOTICES

15.1                           All
notices, requests, statements and other communications hereunder shall be in
writing and shall be delivered as follows:

	
  To NRC:

  	
  Nami Resources Company L.L.C.

  
	
   

  	
  104 Nami Plaza,
  Suite 1

  
	
   

  	
  London, Kentucky
  40741

  
	
   

  	
   

  
	
  To VEG:

  	
  Vinland Energy Gathering, LLC

  
	
   

  	
  104 Nami Plaza,
  Suite 1

  
	
   

  	
  London, Kentucky
  40741

  
	
   

  	
  Attn: Thomas H.
  Blake

  

 

The
parties may, from time to time, designate other addresses for notices and other
communications by first giving notice of such change of address, in writing, as
provided above.

ARTICLE XVI.

WAIVER

16.1                           A
waiver by either party of any one or more defaults by the other in the
performance of any provisions hereof shall not operate as a waiver of any
future default.

ARTICLE XVII.

SEVERABILITY

17.1                           Except
as otherwise provided herein, any provision of this Agreement declared or
rendered unlawful by a statute, court of law or regulatory agency with
jurisdiction over the parties or either of them, shall not affect the other
obligations of the parties hereunder.

 15
 

ARTICLE XVIII.

DEFAULT AND REMEDIES

18.1                           The following shall be Events of Default
under the terms of this Agreement and the terms “Events of Default” or “Default”
shall mean, whenever they are used in this Agreement, any one or more of the
following events:

(a)                                If NRC shall fail
to pay any sums due to VEG for a period of five (5) or more days after VEG has
given NRC written notice thereof;

(b)                               If either party
shall file a voluntary petition for bankruptcy or shall be
adjudicated bankrupt or insolvent, or shall file any petition or any answer
seeking or acquiescing in any reorganization, arrangement, composition,
adjustment, liquidation, dissolution, or similar relief for itself under any
then current federal, state or other statute, law, or regulation, or shall
seek, consent to, or acquiesce in the appointment of any trustee, receiver, or
liquidator of such party, or shall make any general assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts
generally as they become due;

(c)                                If either party
shall materially fail to perform or observe any covenant, provision, term,
restriction, or condition required to be performed or observed by such party
under the terms of this Agreement (other than the obligation to pay money
referenced in subsection (a) above) which continues for more than ninety (90)
days after such party has received written notice thereof; provided that if
such failure cannot be cured within such ninety (90) day period, no default
shall occur if the relevant party has begun good faith efforts to cure the
failure within such ninety (90) days.  In
the event of a dispute between the parties whether a material failure to
perform has occurred, no 

 16
 

termination of this Agreement shall occur
until the defaulting party has the opportunity to cure provided by this
section, after the existence of such failure has been determined in accordance
with this Agreement.

18.2                           If
any of the Events of Default enumerated in Section 18.1 occurs, then in such
event and as often as the same occurs, the non-defaulting party may terminate
this Agreement.

18.3                           Exercise
of the foregoing remedies shall not preclude the parties from exercising every
other remedy provided herein or at law, it being the intention of the parties
that parties’ remedies shall be cumulative and shall survive termination of
this Agreement.

ARTICLE XIX.

GOVERNING LAW; SUBMISSION TO PROCESS

19.1                           THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF KENTUCKY, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS ITSELF TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE
OF KENTUCKY AND THE COUNTY OF LAUREL AND AGREES AND CONSENTS THAT SERVICE OF
PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING RELATING HERETO BY ANY MEANS
ALLOWED UNDER KENTUCKY OR FEDERAL LAW. 
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

ARTICLE XX.

WAIVER OF JURY TRIAL,
PUNITIVE DAMAGES, ETC.

20.1                           EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT
NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR ASSOCIATED HEREWITH, BEFORE OR AFTER MATURITY; (B) WAIVES, TO THE 

 17
 

MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY PUNITIVE DAMAGES, (C) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS,
AND (D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS CONTAINED IN THIS SECTION.

ARTICLE XXI.

ARBITRATION

21.1                           If any
controversy, claim or dispute arising out of or relating to this Agreement or
the breach or performance thereof occurs, the parties shall meet and exert
reasonable efforts to reach an amicable settlement for a period not to exceed
twenty (20) days from the date written notice of the controversy, claim or dispute
is served by the complaining party to the other party under this
Agreement.  If for any reason such
settlement fails to occur within such twenty (20) day period (or such other
period as the parties may agree in writing), the parties will then enlist the
services of a mutually agreed upon industry representative to facilitate
negotiations for an additional twenty (20) day period in an attempt to resolve
the controversy. If a favorable resolution is not attained within the
additional twenty (20) day period, then the controversy, claim or dispute shall
be finally and conclusively resolved by a binding arbitration administered by
the American Arbitration Association in accordance with its Commercial
Arbitration Rules (“AAA Rules”) and subject to the Federal Arbitration Act, 9
U.S.C. Sections 1 et  seq., and judgment on any award thereby
rendered may be entered in any court having jurisdiction thereof.

21.2                           Any such
arbitration shall proceed as promptly and as expeditiously as possible (and the
parties shall cooperate to this end) before three arbitrators, consisting of
one arbitrator appointed by the claimant, one arbitrator appointed by the
respondent, and the third arbitrator appointed by the 

 18
 

two party-appointed
arbitrators.  Arbitration shall be
initiated by written notice of intention to arbitrate made pursuant the AAA
Rules.  The claimant shall identify its
appointed arbitrator in the notice of intention to arbitrate, and the
respondent shall identify its appointed arbitrator within ten (10) days of its
receipt of the notice of intention to arbitrate.  The two party-appointed arbitrators shall
agree upon and appoint the third arbitrator within the ten (10) day period
following the appointment of the second party-appointed arbitrator.  If either the claimant or the respondent fail
to appoint an arbitrator pursuant to the foregoing, or if the two
party-appointed arbitrators fail to agree upon and appoint the third arbitrator
within the above-referenced ten (10) day period, then such arbitrator or
arbitrators shall be appointed by the AAA pursuant to the AAA Rules.  The arbitrators chosen or appointed shall
have expertise and/or experience in the oil and gas industry.

21.3                           Nothing in this
Section shall be deemed to preclude any party from applying to any court of
competent jurisdiction at any time prior to the formation of the arbitration
panel (including before or during the twenty (20) day negotiation period
referenced in the first sentence of this Section) for injunctive, provisional
or other emergency relief pertaining to the subject matter of a controversy,
claim or dispute that is arbitrable hereunder, or applying for such relief in
aid of arbitration after formation of the arbitration panel, where (i) the
arbitration award to which the party may be entitled may be rendered
ineffectual without such relief, (ii) the party seeking such relief is not in
breach of this Section, and (iii) the relief sought will not materially delay
or frustrate the arbitration.  The grant
or denial of any court-ordered relief pursuant to this paragraph shall not
constitute or be deemed to be a ruling on the merits of the matter to be
arbitrated, nor shall any application for such relief be deemed to be a waiver
of any right to arbitration hereunder.

21.4                           The parties hereby
agree that the costs and expenses, including attorneys’ fees, incurred in
connection with any arbitration or court proceeding hereunder shall be awarded
in favor 

 19
 

of the prevailing party
and against the losing party as determined by the arbitration panel or court,
as the case may be.

ARTICLE XXII.

HEADINGS

22.1                           The
headings of the provisions of this Agreement are used for convenience only and
shall not be deemed to affect the meaning or construction of such provision.

ARTICLE XXIII.

FAVORED NATIONS AGREEMENT

23.1                           After
the effective date of this Agreement, it is expressly agreed and understood
between the parties hereto that should VEG enter in to any gathering and
compression agreement with an affiliate or a third party which provides for
rates below the rates set forth in Sections 8.1 and 8.2 herein, then effective
as of the date of such agreement, NRC’s gas production will also be subject to
the lower rate structure.

ARTICLE XXIV.

ENTIRE AGREEMENT

24.1                           This
Agreement contains the entire agreement between the parties and there are no
promises, agreements, warranties, obligations, assurances or conditions other
than those contained herein.

[Signatures on following page]

 20
 

WITNESS the authorized signatures of the parties
hereto, hereunto subscribed and affixed effective as of the day and year first
hereinabove written.

	
  

  	
  (“NRC”)

  
	
   

  	
   

  
	
   

  	
  NAMI
  RESOURCES COMPANY L.L.C.

  
	
   

  	
   

  
	
   

  	
  By: Nami Service
  Company, LLC

  
	
   

  	
   

  
	
   

  	
  Its: Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Majeed S.
  Nami

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (“VEG”)

  
	
   

  	
   

  
	
   

  	
  VINLAND
  ENERGY GATHERING, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Majeed S.
  Nami

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: Manager

  

 

 21

EXHIBIT A

to the Gathering and Compression Agreement

NRC-VEG WELLS

Intentionally Omitted

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