EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT , dated as of the 16 ^th day of October, 2006, by and between Nathaniel Energy Corporation, a Delaware corporation (the “Company”) and Brad Bailey (the “Executive”).

WHEREAS , the Company and the Executive desire to enter into an employment agreement which will set forth the terms and conditions upon which the Executive shall be employed by the Company and upon which the Company shall compensate the Executive;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth, the parties hereto have agreed, and do hereby agree, as follows:

1.    EMPLOYMENT TERM; POSITION

The Company will employ the Executive in its business, and the Executive will work for the Company therein, as the Company’s Chief Executive Officer. The Executive’s employment is “at will” and as such the Executive’s employment may be terminated by the Company or the Executive at any time for any or no reason. The period during which the Executive is employed the Company hereunder is referred to as the “Employment Period”.

2.    DUTIES

2.1    As the Company’s Chief Executive Officer of the Company, he shall be responsible for coordinating and directing the Company’s activities in accordance with the policies and objectives established by the Company’s Board of Directors, and assisting the Board of Directors in developing policies regarding corporate functions and short and long term planning and strategy, and he shall have such further duties of an executive character as shall, from time to time, be delegated or assigned to him by the Board of Directors of the Company consistent with Employee’s position. Employee shall be vested with such authority as is generally concomitant with the position to which he is appointed. He shall report to the Board of Directors of the Company. 

2.2    The Executive shall perform the duties hereunder at the Company = s offices in Englewood, Colorado (unless Executive is traveling for Company business).

3.    DEVOTION OF TIME

The Executive shall expend all of his working time for the Company, shall devote his best efforts, energy and skill to the services of the Company and the promotion of its interests, and shall not take part in activities detrimental to the best interests of the Company.

4.    COMPENSATION

4.1    For all services to be rendered by the Executive during the Employment Period and in consideration of the Executive = s representations and covenants set forth in this Agreement, the Executive shall be entitled to the compensation set forth in Paragraph 4.2.

4.2    The Executive shall be entitled to receive from the Company during the Employment Period salary at the rate of One Hundred Thirty Thousand Dollars ($130,000.00) per annum, [ The Executive shall be entitled to such additional increments as shall be determined from time to time by the Board of Directors of the Company in its sole discretion. ] All amounts due hereunder shall be payable in accordance with the Company = s standard payroll practices.

5.    REIMBURSEMENT OF EXPENSES

The Company shall pay directly, or reimburse the Executive for, all reasonable and necessary expenses and disbursements incurred by the Executive for and on behalf of the Company in the performance of his duties during the Employment Period pursuant to the Company = s expense reimbursement policy.

6.    RESTRICTIVE COVENANT

6.1    The services of the Executive are unique and extraordinary and essential to the business of the Company, especially since the Executive shall have access to the Company = s Confidential Information (as hereinafter defined which is essential to the Company = s business. Therefore, the Executive agrees that, if the Employment Period hereunder shall expire or his employment shall at any time terminate, the Executive will not at any time within [ two (2) ] years after such expiration or termination (the “Restrictive Covenant Period”), without the prior written approval of the Company, directly or indirectly, whether individually or as a principal, officer, employee, partner, director, member, manager, agent of or consultant for any entity, (a) cause or seek to persuade any director, officer, employee, customer, agent, consultant, vendor, supplier, co-venturer, investor or lender of the Company to discontinue the status, employment or relationship of such person or entity with the Company, or to become employed or engaged in any activity similar to or competitive with the activities of the Company; (b) cause or seek to persuade any prospective customer, account, vendor, supplier, co-venturer, investor or lender of the Company (which at the date of cessation of the Executive = s employment with the Company was then actively being solicited by the Company) to determine not to enter into a business relationship with Company; or (c) solicit with a view to hiring or retaining any director, officer or employee of the Company. The foregoing restrictions set forth in this Paragraph 6.1 shall apply likewise during the Employment Period.

6.2    (a) The Executive represents that he has been informed that it is the policy of the Company to maintain as secret all Confidential Information (as hereinafter defined) relating to the Company, including, without limitation, any and all knowledge or information with respect to secret or confidential methods, processes, plans, materials, customer lists or data, vendor and supplier lists or data, or with respect to any other confidential or secret aspect of the Company = s activities, and further acknowledges that such Confidential Information is of great value to the Company. The Executive recognizes that, by reason of his employment with the Company, he has acquired and will acquire Confidential Information as aforesaid. The Executive confirms that it is reasonably necessary to protect the Company = s goodwill, and, accordingly, hereby agrees that he will not, directly or indirectly (except where authorized by the Board of Directors of the Company for the benefit of the Company or as required by law, or regulation or applicable legal regulatory or administrative process or by a court of competent jurisdiction), at any time during the term of this Agreement or thereafter divulge to any person, or use, or cause or authorize any person, firm or other entity to use, any such Confidential Information.

(b) The Executive agrees that he will not, at any time, remove, transfer or send from the Company = s premises any drawings, notebooks, data, magnetic tape, floppy disks, CD-ROMS or any other means of storing electronic data, or other Confidential Information relating to the business and procedures heretofore or hereafter acquired, developed and/or used by the Company, except where necessary in the fulfillment of his duties hereunder.

(c) The Executive agrees that, upon the expiration or termination of this Agreement for any reason whatsoever, or at anytime upon the Company = s demand, he shall promptly deliver to the Company any material relating to any Confidential Information, Discoveries (as hereinafter defined) or Trade Secrets (as hereinafter defined), as well as all memoranda, notes, records, drawings, documents, or other writings or data whatsoever made, compiled, acquired, or received by the Executive during the term of this Agreement, in the form of writing, electronic data or any other medium, arising out of, in connection with, or related to any activity or business of the Company including, but not limited to, the customers, vendors, suppliers, co-venturers, investors, lenders or others with whom the Company has a business relationship, the arrangements of the Company with such parties, as well as any expansion policies and strategies for the future development or growth of the Company, and