Unassociated Document


    
      
        
           

          
            


            
              	
                      EXHIBIT
                        10.19  

                    	
                      FINAL
                        EXECUTION VERSION

                    


            

            06/12/08

             

          

          FORBEARANCE
            AGREEMENT AND AMENDMENT NO. 1

          TO
            CREDIT AGREEMENT

           

          THIS
            FORBEARANCE AGREEMENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT (this
“Agreement”),
            dated
            as of June 2, 2008, is among Aurora Oil & Gas Corporation, a Utah
            corporation (the “Borrower”),
            BNP
            PARIBAS, as administrative agent for the Lenders (in such capacity together
            with
            any successors thereto, the “Administrative
            Agent”),
            the
            Lenders and the Secured Swap Providers.

           

          RECITALS

           

          WHEREAS,
            the Borrower, the Administrative Agent and the Lenders entered into that
            certain
            Amended and Restated Credit Agreement, dated as of August 20, 2007 (together
            with all amendments, restatements, supplements or other modifications
            from time
            to time made thereto, the “Credit
            Agreement”),
            pursuant to which the Lenders have made Loans to the Borrower; 

           

          WHEREAS,
            the Borrower has notified the Administrative Agent that it has suffered
            certain
            identified Defaults or Events of Default and failed or may shortly fail
            to
            comply with certain covenants set forth in the Credit Agreement, with
            the result
            being that certain identified Defaults or Events of Default have occurred
            or may
            occur and be continuing under the Credit Agreement;

           

          WHEREAS,
            the Borrower has requested that the Administrative Agent, the Secured
            Swap
            Providers and the Lenders (1) permanently waive certain identified Events
            of
            Default, and (2) forbear and not waive, but instead refrain from exercising
            any
            available rights and remedies in respect of certain other potential identified
            Defaults or Events of Default, and the Administrative Agent, the Secured
            Swap
            Providers and the Lenders are willing to do so but only on the terms,
            conditions
            and limitations hereinafter set forth; 

           

          WHEREAS,
            Borrower, Hudson Pipeline & Processing Co., LLC (the “Guarantor”)
            and
            the other signatories hereto also intend to amend the Credit Agreement
            as
            hereinafter set forth;

           

          NOW,
            THEREFORE, in consideration of the foregoing, the mutual agreements herein
            contained and for other good and valuable consideration, the receipt
            and
            sufficiency of which are hereby acknowledged, the parties hereby agree
            as
            follows:

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

             

          

          SECTION
            1. DEFINED
            TERMS.
            

           

          Unless
            expressly defined herein, all defined terms used herein shall have the
            same
            meanings as set forth in the Credit Agreement. Section references are
            to
            sections in the Credit Agreement unless otherwise noted.

           

          SECTION
            2. WAIVER
            AND CONSENT. 

           

          2.1  Waiver
            of Defaults.
            The
            Borrower has informed the Administrative Agent and the Lenders that it
            has
            failed to comply with the financial covenant in Section 9.01(a) for the
            period
            ending prior to and including March 31, 2008. In addition, the Borrower
            has
            informed the Administrative Agent and the Lenders that it has failed
            to achieve
            daily production required in Section 8.18 as of March 31, 2008. The Borrower
            hereby requests, and the Lenders hereby do, permanently waive any Default
            or
            Event of Default under Section 10.01(d) and (e) resulting from the
            non-compliance with Sections 9.01(a) and 8.18 for any date of determination
            occurring on or prior to and including March 31, 2008 (such Defaults
            and Events
            of Default being referred to herein as the “Waived
            Defaults”).
            The
            waiver in this Section 2.1 is limited to the Waived Defaults and shall
            not be
            construed as a waiver of any Defaults or Events of Default under such
            Sections
            of the Credit Agreement for any periods other than those specified herein
            and
            shall not apply to any other Defaults or Events of Default that may exist
            or
            arise later.

           

          2.2  Consent
            to Sale of Woodford Shale Oil and Gas Properties.
            Subject
            to compliance with the following sentence, the Lenders hereby consent
            under
            Section 9.12 to the sale of certain Oil and Gas Properties located in
            Cleveland,
            Pottawatomie and McClain Counties in Oklahoma which do not contain any
            proved
            reserves as of the date of this Agreement and which are commonly known
            as the
            Woodford Shale (the “Woodford
            Shale Oil and Gas Properties”)
            or all
            of the Equity Interests of the Wholly-Owned Subsidiary owning the Woodford
            Shale
            Oil and Gas Properties (which owns no other Properties other than Properties
            ancillary thereto); provided that (a) no Default or Event of Default
            under any
            Section of the Credit Agreement (other than the Designated Defaults or
            the
            Waived Defaults) exists at the time of such sale and (b) such sale is
            for
            substantially all cash and results in a gross cash amount in excess of
            the
            aggregate purchase price paid for the Woodford Shale Oil and Gas Properties.
            In
            the event the Borrower sells all or any material portion of the Woodford
            Shale
            Oil and Gas Properties (or the Equity Interests in the Wholly-Owned Subsidiary
            owning such Properties), the Borrower will, on the next Business Day
            after it
            receives any cash proceeds associated therewith, use 50% of the net cash
            proceeds to prepay Loans outstanding under the Credit Agreement, including
            any
            Borrowing Base Deficiency, to be applied in accordance with Section 3.04,
            as it
            may be modified by Section 3.2(f) of this Agreement. 

           

          SECTION
            3. FORBEARANCE.

           

          3.1  Acknowledgement
            of Designated Defaults and Borrowing Base Deficiency.
            The
            Borrower and the Guarantor acknowledge and agree as follows: 

           

          
            
              
              

            

            
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          (a)  the
            Borrower is or may be in default of, is or may be in or breach of or
            has failed
            or may fail to comply with certain covenants contained in the Loan Documents,
            as
            and to the extent further described on Schedule I attached hereto (such
            defaults
            being collectively referred to herein as the “Designated
            Defaults”);

           

          (b)  the
            Majority Lenders in accordance with, and subject to, the terms of the
            Loan
            Documents have the right to accelerate the Loans outstanding under the
            Credit
            Agreement and to make demands upon the Borrower and the Guarantor for
            the
            payment in full of the Indebtedness for the Designated Defaults;
            and

           

          (c)  as
            of
            June 6, 2008, the Administrative Agent sent to the Borrower a New Borrowing
            Base
            Notice which contained a Borrowing Base Deficiency, but which provided
            that any
            amortization of such deficiency required by the Credit Agreement may
            be modified
            by the subsequent agreement of the Lenders and the Borrower.

           

          3.2  Agreement
            to Standstill and Deferral of Amortization of Borrowing Base
            Deficiency.
            

           

          (a)  The
            Administrative Agent, for itself and on behalf of the Lenders and each
            of the
            Secured Swap Providers, agrees, subject to the complete satisfaction
            of the
            conditions precedent set forth in Section 6 hereof, to forbear and refrain
            during the period from June 2, 2008, until and including August 15, 2008
            (the
“Standstill
            Period”)
            from
            (i) accelerating any Loans outstanding under the Credit Agreement, (ii)
            exercising all rights and remedies and (iii) taking any other enforcement
            action
            under the Loan Documents at law or otherwise, in each case, as a result
            of the
            Designated Defaults. Nothing contained in this Agreement shall prejudice
            any
            rights or remedies that the Administrative Agent, any of the Secured
            Swap
            Providers or any of the Lenders may have to exercise any rights and remedies
            during the Standstill Period with respect to any Defaults or Event of
            Default
            (whether now existing or hereafter occurring) other than the Designated
            Defaults. Moreover, nothing contained in this Agreement shall prejudice
            any
            rights or remedies the Administrative Agent, any of the Secured Swap
            Providers
            or any of the Lenders may have to exercise any rights and remedies with
            respect
            to the Designated Defaults (other than the Waived Defaults) after expiration
            of
            the Standstill Period. The Standstill Period shall terminate upon the
            occurrence
            of any Forbearance Termination Event (as defined below).

           

          (b)  During
            the Standstill Period, the Administrative Agent and the Lenders agree
            to forbear
            and refrain from initiating an Interim Redetermination of the Borrowing
            Base
            under Section 2.07(b). The foregoing shall not affect any adjustment
            occurring
            to the Borrowing Base under Section 9.12(d). 

           

          (c)  Notwithstanding
            Section 2.04(e) to the contrary, during the Standstill Period, the Designated
            Defaults shall not serve to prevent the interest elections of the Borrower
            otherwise permitted under Section 2.04. The Lenders will not impose Post-Default
            Rate interest for the Designated Defaults during the Standstill Period
            or
            thereafter.

           

          
            
              
              

            

            
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          (d)  During
            the Standstill Period, the Secured Swap Providers agree to forbear and
            refrain
            from declaring Defaults, Events of Default or Termination Events (as
            defined in
            the Swap Agreements) that results from any of the Designated
            Defaults.

           

          (e)  The
            Borrower shall continue to have and reserves all rights to invoke an
            Interim
            Redetermination of the Borrowing Base under the Credit Agreement (provided
            that
            any election after August 1, 2008 shall not result in a deferral of the
            August
            18, 2008 Borrowing Base Deficiency payment (if any) resulting from the
            New
            Borrowing Base Notice delivered on or about June 6, 2008).

           

          (f)  The
            Lenders acknowledge and agree that, unless otherwise accelerated under
            Section
            10.02 (to the extent not prohibited by this Agreement), the first payment
            (if
            any) required to amortize the Borrowing Base Deficiency (if any) noted
            in the
            New Borrowing Base Notice will be deferred until August 18, 2008. For
            the
            avoidance of doubt, the parties agree that any prepayment made under
            Section 2.2
            of this Agreement with the net cash proceeds from the sale of the Woodford
            Shale
            Oil and Gas Properties (or the Equity Interests of the Wholly-Owned Subsidiary
            owning such Properties) may be applied to reduce the amount of any installment
            due in respect of such Borrowing Base Deficiency in direct order of
            maturity.

           

          3.3  Forbearance
            Covenants.
            The
            Borrower agrees to comply with each of the following covenants during
            the
            Standstill Period: 

           

          (a)  Monthly
            Financial Reports.
            The
            Borrower shall deliver to the Administrative Agent on or before the twentieth
            business day of each month, a detailed monthly financial reporting package
            for
            the previous month that shall include an account payables aging, status
            of
            working capital, monthly production reports and lease operating
            statements.

           

          (b)  Calls
            with Lenders.
            The
            Borrower and its advisors shall participate in monthly conference calls
            with the
            Administrative Agent, the Secured Swap Providers, the Lenders and their
            advisors
            during which a Financial Officer of the Borrower shall provide the
            Administrative Agent with an update on restructuring and cost reduction
            efforts.

           

          (c)  Additional
            Mortgages.
            No
            later than August 18, 2008, the Borrower will execute and deliver (or
            cause to
            be executed and delivered) additional mortgages in form and substance
            reasonably
            satisfactory to the Administrative Agent such that after giving effect
            to such
            additional mortgages, the Administrative Agent, for the benefit of the
            Lenders
            and the Secured Swap Providers, will have first priority Liens on not
            less than
            90% of the PV10 of all proved Oil and Gas Properties evaluated in the
            Reserve
            Report most recently delivered prior to such date.

           

          3.4  Forbearance
            Termination Events.
            Each of
            the following events shall constitute a “Forbearance Termination
            Event”:

           

          (a)  Failure
            of the Borrower or the Guarantor to observe or perform any term, covenant,
            condition or agreement applicable to it contained in this Agreement or
            the
            failure of any representation or warranty made in this Agreement to be
            true in
            all material respects when made; or

           

          
            
              
              

            

            
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          (b)  The
            occurrence of any Event of Default under the Credit Agreement or any
            other Loan
            Document, other than the Designated Defaults.

           

          The
            Borrower and the Guarantor acknowledge and agree that upon the earlier
            of (i)
            the occurrence of a Forbearance Termination Event, or (ii) August 15,
            2008, the
            Standstill Period shall terminate without the need for any further action
            by, or
            notice being due from, the Administrative Agent, any of the Secured Swap
            Providers or any of the Lenders. Further, upon the occurrence of a Forbearance
            Termination Event, the Administrative Agent, each of the Secured Swap
            Providers
            and each of the Lenders shall be entitled (but not required) to exercise
            any or
            all of their rights and remedies under and in accordance with the Loan
            Documents, Swap Agreements or applicable law as a result of the Designated
            Defaults (other than the Waived Defaults) and/or any other Defaults,
            Events of
            Default or Termination Events (as defined in the Swap Agreements) under
            the Loan
            Documents or the Swap Agreements.

           

          SECTION
            4. AMENDMENT
            TO CREDIT AGREEMENT.

           

          4.1  Amendment
            to Section 1.02.
            Section
            1.02 is hereby amended as follows:

           

          (a) The
            definition of “Applicable Margin” is hereby amended by replacing “2.000%” with
“3.000%”in the Borrowing Base Utilization Grid for Eurodollar Loans for a
            Borrowing Base Utilization Percentage greater than or equal to 75%.


           

          4.2  Reaffirmation
            of Obligations.
            The
            Borrower and the Guarantor each hereby acknowledges that the Credit Agreement,
            the Notes and all of the Loan Documents constitute the valid and binding
            obligations of the Borrower and the Guarantor enforceable against such
            Person in
            accordance with their respective terms, and the Borrower and the Guarantor
            each
            hereby reaffirms their respective obligations under the Loan Documents
            and the
            Swap Agreements. None of (a) the entry by the Administrative Agent or
            any of the
            Secured Swap Providers or any of the Lenders into this Agreement, (b)
            the
            acceptance of any payment from the Borrower or the Guarantor, (c) any
            other
            action or failure to act on the part of the Administrative Agent, any
            of the
            Secured Swap Providers or any of the Lenders, in any case, shall constitute
            or
            has constituted a modification or extension of the Credit Agreement,
            the Notes
            or any other Loan Documents or Swap Agreements or (d) any other action
            or
            failure to act on the part of the Administrative Agent, any of the Secured
            Swap
            Providers or any of the Lenders during the Standstill Period shall, in
            any case,
            constitute a waiver of any Defaults, Events of Default or Termination
            Events
            under the Loan Documents or the Swap Agreements, except as expressly
            set forth
            in this Agreement.

           

          SECTION
            5.  REPRESENTATIONS
            AND WARRANTIES. 

           

          The
            Borrower and the Guarantor represent and warrant to the Administrative
            Agent,
            the Secured Swap Providers and the Lenders that:

           

          
            
              
              

            

            
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          5.1  This
            Agreement.
            This
            Agreement has been duly executed and delivered by the Borrower and the
            Guarantor
            and constitutes the legal, valid and binding obligation of the Borrower
            and the
            Guarantor, enforceable in accordance with its terms, subject to applicable
            bankruptcy, insolvency, reorganization, moratorium or other laws affecting
            creditors’ rights generally, and subject to general principles of equity,
            regardless of whether considered in a proceeding in equity or at
            law.

           

          5.2  Credit
            Agreement.
            The
            Credit Agreement and each of the Loan Documents, as they may be modified
            by this
            Agreement, remain in full force and effect and remain the valid and binding
            obligation of the Borrower and the Guarantor enforceable against the
            Borrower
            and the Guarantor in accordance with their terms. The Borrower and the
            Guarantor
            each hereby ratifies and confirms the Credit Agreement and each of the
            Loan
            Documents to which it is a party, as they may have been previously amended
            and
            as they may be further amended by this Agreement.

           

          5.3  Loan
            Documents.
            All
            representations and warranties set forth in the Loan Documents are true
            and
            correct in all material respects as of the date hereof, except to the
            extent any
            such representations and warranties are expressly limited to an earlier
            date, in
            which case, such representations and warranties are true and correct
            as of such
            specified earlier date.

           

          5.4  Nonwaiver.
            Except
            as set forth herein, the execution, delivery, performance and effectiveness
            of
            this Agreement shall not operate nor be deemed to be nor construed as
            a waiver
            (i) of any right, power or remedy of the Administrative Agent, any of
            the
            Secured Swap Providers or any of the Lenders under the Credit Agreement
            or any
            of the other Loan Documents or Swap Agreements, (ii) of any other term,
            provision, representation, warranty or covenant contained in the Credit
            Agreement, any other Loan Documents or Swap Agreements or any other instruments
            or documents executed in connection therewith. Further, except as set
            forth
            herein, none of the provisions of this Agreement shall constitute, be
            deemed to
            be or construed as, a waiver of any Defaults or Events of Default under
            the
            Credit Agreement, as amended by this Agreement, or any Defaults, Events
            of
            Default or Termination Events (as defined in the Swap Agreements) under
            the Swap
            Agreements other than the Waived Defaults. Except as set forth herein,
            any
            Defaults, Events of Default (including, without limitation, the Designated
            Defaults (other than the Waived Defaults)) and/or Termination Events,
            if any,
            shall continue and shall not be deemed waived or cured in any way by
            the
            execution of this Agreement.

           

          5.5  Defaults.
            After
            giving effect to the terms of this Agreement, except for the Designated
            Defaults, no event has occurred or is continuing which, with the giving
            of
            notice or the passage of time, or both, would constitute Defaults or
            Events of
            Default under any of the Loan Documents.

           

          5.6  Third-Party
            Actions.
            No
            attachments, executions, assignments for the benefit of creditors,
            receiverships, conservatorships or voluntary or involuntary proceedings
            in
            bankruptcy or actions pursuant to any other debtor relief laws are pending
            against the Borrower or the Guarantor.

           

          
            
              
              

            

            
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          5.7  Mutual
            Agreement; Legal Consultation.
            This
            Agreement has been entered into without force or duress, of the free
            will of the
            Borrower, the Guarantor, the Administrative Agent, each of the Lenders
            and the
            Secured Swap Providers. The Borrower, the Guarantor, the Administrative
            Agent,
            each of the Lenders and each of the Secured Swap Providers have read
            and
            understand this Agreement, have consulted with and been represented by
            legal
            counsel in connection herewith, and have been advised by their counsel
            of their
            rights and obligations hereunder. The decision by each signatory to enter
            into
            this Agreement is a fully informed decision, and each such signatory
            is aware of
            all legal and other ramifications of such decision. 

           

          SECTION
            6.  CONDITIONS
            PRECEDENT. 

           

          In
            addition to all of the other conditions and agreements set forth herein,
            the
            effectiveness of this Agreement is subject to the following conditions
            precedent:

           

          6.1  Execution
            of this Agreement.
            The
            Administrative Agent shall have received counterparts of this Agreement
            duly
            executed by the Borrower, the Guarantor, the Administrative Agent, each
            of the
            Secured Swap Providers and each of the Lenders.

           

          6.2  Acknowledgment
            of Guarantor.
            The
            Administrative Agent shall have received, from the Guarantor, a duly
            executed
            counterpart of the Guarantor Acknowledgment and Release in substantially
            the
            form of Exhibit
            A.

           

          6.3  Amendment
            to the Second Lien Term Loan Agreement.
            The
            Administrative Agent shall have received a fully executed copy of the
            Forbearance Agreement and Amendment No.1 to Second Lien Term Loan Agreement
            in
            substantially the form of Exhibit
            B.

           

          6.4  Fees
            and Expenses.
            The
            Administrative Agent and/or the Lenders, as appropriate, shall have received
            payment of all reasonable, necessary and documented out-of-pocket fees,
            costs
            and expenses incurred by the Administrative Agent and the Lenders in
            connection
            with this Agreement, including, but not limited to, such attorney’s fees, costs
            and expenses incurred in connection with the evaluation, negotiation,
            drafting,
            implementation, administration and enforcement of this Agreement, and
            any other
            agreements, documents or instruments referred to herein or contemplated
            hereby
            to the extent invoiced. 

           

          SECTION
            7.  MISCELLANEOUS

           

          7.1  Reference
            to and Effect on the Credit Agreement.
            Upon
            the effectiveness of this Agreement, each reference in the Credit Agreement
            to
“this Agreement”, “hereunder”, “hereof’, “herein”, or words of like import shall
            mean and be a reference to the Credit Agreement, as it may be amended
            hereby,
            and each reference to the Credit Agreement in any other document, instrument
            or
            agreement executed and/or delivered in connection with the Credit Agreement
            shall mean and be a reference to the Credit Agreement, as it may be amended
            hereby.

           

          7.2  Status
            of Loan Documents; No Novation.
            Except
            as otherwise expressly provided in this Agreement, and both during, and
            following the expiration of, the Standstill Period, the Loan Documents
            and the
            Indebtedness shall remain in full force and effect, and shall not be
            waived,
            modified, superseded or otherwise affected by this Agreement, except
            as
            expressly set forth herein. This Agreement is not a novation nor is it
            to be
            construed as a release, waiver or modification of any of the terms, conditions,
            representations, warranties, covenants, rights or remedies set forth
            in the Loan
            Documents or the Swap Agreements, except as expressly set forth herein.
            The
            Administrative Agent, each of the Secured Swap Providers and each of
            the Lenders
            reserve all rights, claims and remedies that they have or may have against
            the
            Borrower or the Guarantor (or any other Person), except as expressly
            set forth
            in this Agreement.

           

          
            
              
              

            

            
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          7.3  Release
            of Lenders. IN
            CONSIDERATION OF THIS AGREEMENT AND, SUBJECT TO THE CONDITIONS STATED
            HEREIN,
            THE BORROWER AND THE GUARANTOR EACH HEREBY RELEASES, ACQUITS, FOREVER
            DISCHARGES, AND COVENANTS NOT TO SUE, THE ADMINISTRATIVE AGENT, EACH
            OF THE
            SECURED SWAP PROVIDERS AND EACH OF THE LENDERS, ALONG WITH ALL OF THEIR
            BENEFICIARIES, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SERVANTS, ATTORNEYS
            AND
            REPRESENTATIVES, AS WELL AS THEIR RESPECTIVE HEIRS, EXECUTORS, LEGAL
            REPRESENTATIVES, ADMINISTRATORS, PREDECESSORS IN INTEREST, SUCCESSORS
            AND
            ASSIGNS (EACH INDIVIDUALLY, A “RELEASED
            PARTY”
            AND COLLECTIVELY, THE “RELEASED
            PARTIES”)
            FROM ANY AND ALL CLAIMS, DEMANDS, DEBTS, LIABILITIES, SUITS, OFFSETS
            AGAINST THE
            INDEBTEDNESS EVIDENCED BY THE LOAN DOCUMENTS AND ACTIONS, CAUSES OF ACTION
            OR
            CLAIMS FOR RELIEF OF WHATEVER KIND OR NATURE, WHETHER KNOWN OR UNKNOWN,
            SUSPECTED OR UNSUSPECTED BY BORROWER OR THE GUARANTOR, WHICH BORROWER,
            THE
            GUARANTOR OR ANY SUBSIDIARY MAY HAVE OR WHICH MAY HEREAFTER ACCRUE RELATED
            TO
            ANY ACTIONS OR FACTS OCCURRING PRIOR TO THE DATE OF THIS AGREEMENT AGAINST
            ANY
            RELEASED PARTY, FOR OR BY REASON OF ANY MATTER, CAUSE OR THING WHATSOEVER
            OCCURRING ON OR PRIOR TO THE DATE OF THIS AGREEMENT, WHICH RELATE TO,
            IN WHOLE
            OR IN PART, DIRECTLY OR INDIRECTLY THE CREDIT AGREEMENT, ANY SWAP AGREEMENT,
            ANY
            NOTE, ANY SECURITY INSTRUMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
            EVIDENCED THEREBY, INCLUDING, WITHOUT LIMITATION, ANY DISBURSEMENTS UNDER
            THE
            CREDIT AGREEMENT, ANY SWAP AGREEMENT, ANY NOTES, THE NEGOTIATION OF ANY
            OF THE
            CREDIT AGREEMENT, THE SWAP AGREEMENTS, THE NOTES, THE MORTGAGES OR THE
            OTHER
            LOAN DOCUMENTS, THE TERMS THEREOF, OR THE APPROVAL, ADMINISTRATION, ENFORCEMENT
            OR SERVICING THEREOF.

           

          7.4  Modification.
            Any
            amendments or modifications of this Agreement or any provision of this
            Agreement
            shall be effectuated in accordance with Section 12.02 .

           

          7.5  Limitation
            on Relationship.
            This
            Agreement and the Loan Documents do not and shall not be deemed or construed
            to
            create, a partnership, tenancy in common, joint tenancy, joint venture,
            co-ownership or any other relationship aside from a debtor-creditor relationship
            among, the Borrower, the Administrative Agent, the Secured Swap Providers
            and
            the Lenders.

           

          
            
              
              

            

            
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          7.6  Notices.
            Any
            notice required or desired to be served, given or delivered hereunder
            shall be
            given in the manner provided in Section 12.01, mutatis
            mutandis.

           

          7.7  Severability.
            Any
            provision of this Agreement held to be invalid, illegal or unenforceable
            in any
            jurisdiction shall, as to such jurisdiction, be ineffective to the extent
            of
            such invalidity, illegality or unenforceability without affecting the
            validity,
            legality and enforceability of the remaining provisions hereof; and the
            invalidity of a particular provision in a particular jurisdiction shall
            not
            invalidate such provision in any other jurisdiction. 

           

          7.8  Counterparts.
            This
            Agreement may be executed in any number of counterparts, including by
            facsimile
            signature or other electronic means (i.e., PDF or similar transmission)
            with
            hard copy to follow, each of which shall be deemed an original, but all
            of which
            together shall constitute one and the same agreement.

           

          7.9  Headings.
            The
            various headings used in this Agreement are inserted for convenience
            only and
            shall not affect the meaning or interpretation of this Agreement or any
            provision hereof.

           

          7.10  GOVERNING
            LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC. THE
            PROVISIONS OF SECTION 12.09 SHALL APPLY TO THIS AGREEMENT.

           

          7.11  Signing
            by Lenders.
            This
            Agreement shall be effective, as provided in Section 6 above, upon execution
            and
            delivery hereof by the Borrower, the Guarantor, the Administrative Agent,
            each
            of the Secured Swap Providers and each of the Lenders. 

           

          7.12  Construction;
            Integration.
            This
            Agreement has been freely negotiated by the parties and the principle
            of
            construction against draftsmen shall have no application in the interpretation
            of this Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
            THE
            FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
            OF
            PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
            THERE ARE
            NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

           

          7.13  Approval
            of Amendment to Second Lien Documents.
            The
            Lenders hereby approve the Amendment to the Second Lien Term Loan Agreement
            substantially in the form attached as Exhibit
            B.

          


          


          [THE
            REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

           

          
            
              
              

            

            
              9

              
                

              

            

            
              
              

            

          

           

          IN
            WITNESS WHEREOF, this Agreement is executed as of June 2, 2008.

          
            	 	 	 
	 	 
	 	AURORA
                    OIL &
                    GAS CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ William
                    W. Deneau
	 	
                    Name:
                      William W. Deneau

                    Title:
                      Chief Executive Officer

                  
	 	 


          

          
            	 	 	 
	 	
                    HUDSON
                      PIPELINE & PROCESSING CO., LLC

                    By:
                      AURORA
                      Oil & Gas Corporation, its sole manager

                  
	 
 	 
 	 
 
	 	By:  	/s/ William
                    W. Deneau
	 	
                    Name:
                      William W. Deneau

                    Title:
                      Chief Executive Officer

                  
	 	 




          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          

            
              	 	
                      BNP
                        PARIBAS, as Administrative Agent, a Lender and Secured Swap
                        Provider
                        

                    
	 	 
	 	 
	 	
                      By:/s/
                        Douglas R. Liftman

                    
	 	
                      Name:Douglas
                        R. Liftman

                    
	 	
                      Title:Managing
                        Director

                    
	 	 
	 	 
	 	
                      By:/s/
                        Betsy Jocher

                    
	 	
                      Name:Betsy
                        Jocher

                    
	 	
                      Title:Director

                    
	 	 
	 	 
	 	
                      COMERICA
                        BANK, as a Lender

                    
	 	 
	 	 
	 	
                      By:/s/
                        Peter L. Sefzik

                    
	 	
                      Name:Peter
                        L. Sefzik

                    
	 	
                      Title:Vice
                        President

                    
	 	 
	 	 
	 	
                      KEYBANK
                        NATIONAL ASSOCIATION, as a Lender

                    
	 	 
	 	 
	 	
                      By:
                        /s/
                        Lawrence A. Mark

                    
	 	
                      Name:
                        Lawrence
                        A. Mark

                    
	 	
                      Title:
                        EVP

                    
	 	 
	 	 
	 	
                      CIT
                        CAPITAL USA INC., as a Lender

                    
	 	 
	 	 
	 	
                      By:
                        /s/
                        George E. McKean

                    
	 	
                      Name:
                        George
                        E. McKean

                    
	 	
                      Title:
                        Vice
                        President

                    


            

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          EXHIBIT
            A

           

          [FORM
            OF] GUARANTOR
            ACKNOWLEDGMENT AND RELEASE

           

          The
            undersigned, Hudson Pipeline & Processing Co., LLC,
            a
            Michigan limited liability company (the “Guarantor”),
            hereby acknowledges and agrees to the terms of the foregoing Forbearance
            Agreement and Amendment No. 1 to Credit Agreement, dated as of June 2,
            2008 (the
“Forbearance
            Agreement”).
            Unless
            expressly defined herein, all defined terms used herein shall have the
            same
            meanings as set forth in the Forbearance Agreement.

           

          The
            Guarantor hereby represents and warrants that the Amended and Restated
            Guaranty
            and Collateral Agreement (the “Guarantee”)
            executed and delivered by the undersigned to the Administrative Agent,
            dated as
            of August 20, 2007, remains the valid and binding obligation of the Guarantor,
            enforceable against the Guarantor in accordance with the terms of, and
            the
            Guarantor hereby
            reaffirms its obligations under, such
            Guarantee. 

           

          In
            consideration of the Forbearance Agreement and, subject to the conditions
            stated
            therein, the Guarantor hereby releases, acquits and forever discharges
            the
            Administrative Agent, each of the Secured Swap Providers and each of
            the Lenders
            that executes and delivers a counterpart of the Forbearance Agreement
            to the
            Administrative Agent, along with all of their beneficiaries, officers,
            directors, agents, employees, servants, attorneys and representatives,
            as well
            as their respective heirs, executors, legal representatives, administrators,
            predecessors in interest, successors and assigns (each individually,
            a
“Released
            Party”,
            collectively, the “Released
            Parties”)
            from
            any and all claims, demands, debts, liabilities, suits, offsets against
            the
            indebtedness evidenced by the Loan Documents and actions, causes of action
            or
            claims for relief of whatever kind or nature, whether known or unknown,
            suspected or unsuspected by the Borrower or the Guarantor, which the
            Borrower or
            the Guarantor may have or which may hereafter accrue against any Released
            Party,
            for or by reason of any matter, cause or thing whatsoever occurring on
            or prior
            to the date of this Agreement related to any actions or facts occurring
            prior to
            the date of the Forbearance Agreement, which relate to, in whole or in
            part,
            directly or indirectly the Credit Agreement, any Swap Agreement, any
            Note, any
            Mortgage, any other Loan Document or the transactions evidenced thereby,
            including, without limitation, any disbursements under the Credit Agreement,
            any
            Notes, the negotiation of any of the Credit Agreement, the Swap Agreements,
            the
            Notes, the Mortgages or the other Loan Documents, the terms thereof,
            or the
            approval, administration, enforcement or servicing thereof.

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          HUDSON
            PIPELINE & PROCESSING CO., LLC

          


          By:
            Aurora Oil & Gas Corporation, its sole manager

          


          By:
            /s/
            William W. Deneau

          Name:
            William W. Deneau

          Dated:
            Chief
            Executive Officer

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          EXHIBIT
            B

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          SCHEDULE
            I

           

          DESIGNATED
            DEFAULTS

           

          Any
            Defaults or Event of Defaults under Section 10.01(d) and (e) resulting
            from the
            non-compliance with Sections 8.18 or 9.01(a) or (b) that occurred or
            may occur
            prior to and including June 30, 2008, even if reported after June 30,
            2008.

           

          Any
            cross
            defaults to Sections 8.18 or 9.01(a) or (b) of the Second Lien Term Loan
            Agreement under Section 10.01(g) related to any period prior to and including
            June 30, 2008.

          


          For
            the
            avoidance of doubt, Designated Defaults do not include any Waived
            Defaults.