EXHIBIT 10.1

                          AGREEMENT AND PLAN OF MERGER

                          DATED AS OF JANUARY 31, 2005

                                  BY AND AMONG

                         CADENCE RESOURCES CORPORATION,

                            AURORA ACQUISITION CORP.,

                                       AND

                               AURORA ENERGY, LTD.

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                                Table of Contents

1.    The Merger and Consideration; Certain Definitions......................1

      1.1   The Merger.......................................................1
      (a)   Structure........................................................1
      (b)   The Closing......................................................1
      (c)   Actions at the Closing...........................................2
      (d)   Effect of Merger.................................................2
      1.2   Merger Consideration.............................................3
      (a)   Purchase Price...................................................3
      (b)   Cancellation of Aurora Common Stock; Issuance of Aurora
                Common Stock to Cadence......................................3
      (c)   Exchange of Certificates.........................................3
      1.3   Certain Definitions..............................................5
      1.4   Other Definitions...............................................11

2.    Representations and Warranties of Aurora..............................13

      2.1   Organization....................................................13
      2.2   Capitalization..................................................13
      2.3   Authorization; Validity of Agreement............................14
      2.4   No Violations; Consents and Approvals...........................14
      2.5   Financial Statements............................................14
      2.6   Operation of Business...........................................15
      2.7   Non-Oil and Gas Real Property...................................16
      2.8   Non-Oil and Gas Fixtures and Equipment..........................16
      2.9   Oil and Gas Interests...........................................17
      2.10  No Undisclosed Liabilities......................................20
      2.11  Litigation; Compliance with Law; Licenses and Permits...........21
      2.12  Employee Benefit Plans; ERISA...................................21
      2.13  Intellectual Property...........................................24
      2.14  Material Contracts..............................................24
      2.15  Taxes...........................................................25
      2.16  Affiliated Party Transactions...................................28
      2.17  Environmental Matters...........................................28
      2.18  No Brokers......................................................29
      2.19  Receivables.....................................................29
      2.20  Assets Utilized in the Business.................................29
      2.21  Insurance.......................................................29
      2.22  Delivery of Documents; Corporate Records........................29
      2.23  Labor and Employment Matters....................................29
      2.24  Restrictive Covenants...........................................31
      2.25  Bank Accounts...................................................31
      2.26  Directors, Officers and Certain Employees.......................31

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      2.27  No Misstatements or Omissions...................................31

3.    Representations and Warranties Cadence and Acquisition Sub............31

      3.1   Organization and Good Standing..................................31
      3.2   Authorization and Validity......................................32
      3.3   No Conflicts or Violation.......................................32
      3.4   The Shares......................................................32
      3.5   SEC Filings; Disclosure.........................................33
      3.6   Litigation; Compliance with Law; Licenses and Permits...........33
      3.7   Accuracy of Information Furnished and Representations...........33
      3.8   Information Supplied............................................34
      3.9   Acquisition Sub.................................................34
      3.10  Capitalization..................................................34
      3.11  Financial Statements............................................35
      3.12  Operation of Business...........................................35
      3.13  Non-Oil And Gas Real Property...................................36
      3.14  Non-Oil and Gas Cadence Fixtures and Equipment..................36
      3.15  Oil and Gas Interests...........................................37
      3.16  No Undisclosed Liabilities......................................40
      3.17  Cadence Employee Benefit Plans; ERISA...........................41
      3.18  Intellectual Property...........................................43
      3.19  Material Contracts..............................................44
      3.20  Taxes...........................................................45
      3.21  Affiliated Party Transactions...................................47
      3.22  Environmental Matters...........................................48
      3.23  No Brokers......................................................48
      3.24  Receivables.....................................................48
      3.25  Assets Utilized in the Business.................................48
      3.26  Insurance.......................................................48
      3.27  Delivery of Documents; Corporate Records........................49
      3.28  Labor and Employment Matters....................................49
      3.29  Restrictive Covenants...........................................50
      3.30  Bank Accounts...................................................50
      3.31  Directors, Officers and Certain Employees.......................51

4.    Conditions to Obligations of Aurora to Close..........................51

      4.1   Correctness of Representations and Warranties...................51
      4.2   Performance of Covenants and Agreements.........................51
      4.3   Effectiveness of Registration Statement.........................51
      4.4   Lock up Agreements..............................................51
      4.5   Opinion of Counsel for Cadence..................................52
      4.6   No New Proceedings..............................................52
      4.7   Board of Directors Approvals....................................52
      4.8   Cadence Warrants................................................53

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      4.9   Proxy...........................................................53
      4.10  Voting Agreement................................................54

5.    Conditions to Obligations of Cadence and Acquisition Sub to Close.....54

      5.1   Correctness of Representations and Warranties...................54
      5.2   Performance of Covenants and Agreements.........................54
      5.3   Opinion of Counsel for Aurora...................................54
      5.4   Shareholder Approval of Merger..................................54
      5.5   Lock up Agreements..............................................54
      5.6   No New Proceedings..............................................55
      5.7   Consents Satisfied..............................................55

6.    Conditions to the Obligations of All Parties to Close.................55

      6.1   No Legal Bar....................................................55
      6.2   Investment of Rubicon in Cadence and Aurora.....................55

7.    Post Closing Covenant.................................................55

8.    Pre-Closing Covenants.................................................55

      8.1   General.........................................................55
      8.2   Full Access.....................................................55
      8.3   Notice of Developments..........................................56
      8.4   Preparation of Registration Statement and Proxy Statement.......56
      8.5   Regulatory and Other Approvals..................................56
      8.6   Observer Rights.................................................56

9.    Indemnification.......................................................57

      9.1   Indemnification by Aurora.......................................57
      9.2   Indemnification by Cadence......................................57
      9.3   Limitations Period..............................................57
      9.4   Procedures for Resolution and Payment of Claims for
                Indemnification.............................................58

10.   Confidential Information..............................................60

11.   Termination...........................................................60

12.   Miscellaneous Provisions..............................................60

      12.1  Construction....................................................60
      12.2  Notices.........................................................60
      12.3  Assignment......................................................62
      12.4  Amendments and Waivers..........................................62
      12.5  Attorneys' Fees.................................................62
      12.6  Binding Nature of Agreement.....................................62
      12.7  Expenses........................................................63
      12.8  Entire Agreement................................................63

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      12.9  Severability....................................................63
      12.10 Counterparts; Signatures; Section Headings......................63
      12.11 Public Announcements............................................63
      12.12 No Third-Party Beneficiaries....................................63
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                          AGREEMENT AND PLAN OF MERGER

      THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of January
31,  2005,  by and  among  Cadence  Resources  Corporation,  a Utah  corporation
("Cadence"),  Aurora  Acquisition  Corp., a Nevada  corporation and wholly-owned
subsidiary of Cadence  ("Acquisition  Sub"),  and Aurora Energy,  Ltd., a Nevada
corporation ("Aurora"),  Cadence,  Acquisition Sub, and Aurora are each referred
to herein as a "Party" or collectively as the "Parties".

                                 R E C I T A L S

      This  Agreement  contemplates  a transaction in which Cadence will acquire
one hundred percent (100%) of the  outstanding  common stock of Aurora through a
reverse merger (the "Merger") of Acquisition Sub with and into Aurora.

      As a result of the Merger, Aurora will become a wholly-owned subsidiary of
Cadence and the stockholders of Aurora will become stockholders of Cadence.

      NOW,  THEREFORE,  in consideration of the premises and the mutual promises
herein made,  intending to be legally bound hereby,  and in consideration of the
representations,  warranties,  and covenants herein contained, the Parties agree
as follows.

                                    AGREEMENT

      1. THE MERGER AND CONSIDERATION; CERTAIN DEFINITIONS.

            1.1 THE MERGER.

                  (a)  STRUCTURE.  Subject to the terms and  provisions  of this
Agreement,  and in  accordance  with  Chapter  92A  (Mergers  and  Exchanges  of
Interest) of the Nevada  Revised  Statutes (the "NMEL") at the  Effective  Time,
Acquisition  Sub  shall  be  merged  with and into  Aurora.  Aurora  will be the
surviving corporation of the Merger (sometimes hereinafter called the "Surviving
Corporation")  and will continue its corporate  existence  under the laws of the
State of Nevada as a subsidiary of Cadence.  At the Effective Time, the separate
corporate  existence of the Acquisition Sub shall cease.  For federal income tax
purposes,  the  parties  intend  that the  Merger  shall  qualify  as a tax-free
reorganization under Section 351 and Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").

                  (b) THE CLOSING. The closing of the transactions  contemplated
by this Agreement (the  "Closing")  shall take place at the offices of Jenkens &
Gilchrist  Parker Chapin LLP, 405 Lexington  Avenue,  New York,  New York 10174,
commencing  at  10:00  a.m.  local  time on the  later  to  occur of (a) the day
following the date on which all the  conditions set forth in SECTIONS 4, 5 and 6
have been satisfied or waived (other than conditions with respect to actions the
respective  Parties will take at the Closing itself);  or (b) such other date as
the parties may mutually determine (the "Closing Date").


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                  (c) ACTIONS AT THE CLOSING.  At the  Closing,  (i) Cadence and
Acquisition  Sub will deliver to Aurora the various  certificates,  instruments,
and  documents  referred  to in SECTION 4 below,  (ii)  Aurora  will  deliver to
Cadence the various  certificates,  instruments,  and  documents  referred to in
SECTION  5 below,  and  (iii)  the  Surviving  Corporation  shall  file with the
Secretary  of State of the  State of  Nevada a  properly  executed  Articles  of
Merger.

                  (d) EFFECT OF MERGER.

                        (i) General.  The Merger  shall become  effective at the
                  time (the "Effective  Time") the Surviving  Corporation  files
                  the  Articles  of Merger  with the  Secretary  of State of the
                  State of Nevada. The Merger shall have the effect set forth in
                  the NMEL.

                        (ii)   Articles  of   Incorporation.   The  Articles  of
                  Incorporation  of  the  Surviving   Corporation  will  be  the
                  Articles  of   Incorporation  of  Acquisition  Sub  in  effect
                  immediately prior to the Merger.

                        (iii) Bylaws.  The Bylaws of the  Surviving  Corporation
                  will be the Bylaws of  Acquisition  Sub in effect  immediately
                  prior to the Merger.

                        (iv) As of the Effective  Time,  the Boards of Directors
                  of Cadence and Surviving Corporation shall be reconstituted to
                  be  comprised  of the  following  seven  members:  William  W.
                  Deneau, Earl Young, Gary Myles, John P. Ryan, a representative
                  of Rubicon Master Fund  ("Rubicon") yet to be designated,  and
                  two persons to be designated by William  Deneau,  at least one
                  of  whom  was a  member  of the  Cadence  Board  of  Directors
                  immediately prior to the Closing,  and neither of whom has yet
                  been designated.  All other directors of Cadence and Surviving
                  Corporation shall resign, effective as of the Effective Time.

                        (v) The Boards of  Directors  of Cadence  and  Surviving
                  Corporation   shall  each  appoint  the  following   corporate
                  officers, to be effective as of the Effective Time:

                  President:                              William W. Deneau
                  Vice President of Exploration
                     and Production                       John V. Miller, Jr.
                  Vice President of Land
                     and Development                      Thomas W. Tucker
                  Treasurer                               Lorraine King
                  Secretary                               Barbara J. Johnson

                        (vi) Conversion of Capital Stock of Acquisition  Sub. At
                  and as of the  Effective  Time,  each  issued and  outstanding
                  share of capital  stock of  Acquisition  Sub shall be canceled
                  and  neither   shares  of  capital   stock  of  the  Surviving
                  Corporation nor any cash,  property,  rights, other securities
                  or  obligations of the Surviving  Corporation  shall be issued
                  therefor, except as provided in SECTION 1.2 below.


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            1.2 MERGER CONSIDERATION.

                  (a)  PURCHASE   PRICE.   At  the  Closing,   each  issued  and
outstanding  share of  Aurora's  common  stock,  $.001 par value per share  (the
"Aurora  Common  Stock") shall be converted into the right to receive two shares
of  Cadence's  common  stock,  $.01 par  value per share  (the  "Cadence  Common
Stock").  All shares of Aurora Common Stock  converted in  accordance  with this
paragraph will no longer be outstanding and will  automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate  representing
any such shares shall cease to have any rights with respect thereto,  except the
right  to  receive  the  shares  of  Cadence   Common  Stock  to  be  issued  in
consideration therefor upon the surrender of such certificate in accordance with
SECTION 1.2(C), without interest. Any securities convertible into or exercisable
for  shares  of  Aurora  Common  Stock  (the  "Aurora  Convertible  Securities")
immediately  prior to the Effective  Time will become,  at the  Effective  Time,
securities  convertible into or exercisable for such number of shares of Cadence
Common  Stock as the  holder of such  securities  would have  received  had such
holder converted such securities into Aurora Common Stock  immediately  prior to
the  Effective  Time.  Appropriate  adjustment  will be made to any  exercise or
conversion price of such securities.

                  (b)  CANCELLATION  OF AURORA COMMON STOCK;  ISSUANCE OF AURORA
COMMON STOCK TO Cadence. At and as of the Effective Time, each outstanding share
of Aurora Common Stock,  conversion rights, warrants and options to purchase any
share of Aurora Common Stock,  and other equity  interest issued and outstanding
or held in Aurora's  treasury shall  automatically  be canceled and extinguished
and no  payment  shall  be made  in  respect  thereof  except  according  to the
provisions of this Agreement.  No share of Aurora Common Stock outstanding prior
to the Effective  Time shall be deemed to be  outstanding  or to have any rights
after the Effective Time.  After the Effective  Time,  there shall be no further
registration of transfers of Aurora Common Stock  outstanding  immediately prior
to the Effective Time on Aurora's stock transfer  books.  At the Effective Time,
Aurora  shall  issue a stock  certificate  to and in the name of Cadence for ten
shares of Aurora Common Stock.

                  (c) EXCHANGE OF CERTIFICATES.

                        (i) As of the Effective  Time,  Cadence shall enter into
                  an  agreement   (the  terms  of  which  shall  be   reasonably
                  satisfactory to Aurora) with such bank or trust company as may
                  be designated by Cadence (the  "Exchange  Agent"),  which will
                  provide that Cadence shall deposit with the Exchange  Agent as
                  of the  Effective  Time,  for the  benefit  of the  holders of
                  shares of Aurora Common Stock, for exchange in accordance with
                  this  Section 1,  through  the  Exchange  Agent,  certificates
                  representing  the number of duly  authorized  whole  shares of
                  Cadence  Common Stock  issuable in connection  with the Merger
                  (such shares of Cadence  Common Stock being referred to herein
                  as the "Exchange Fund").


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                        (ii)  As  soon  as  reasonably   practicable  after  the
                  Effective  Time,  and in any event  within ten  business  days
                  after the  Effective  Time,  Cadence  shall cause the Exchange
                  Agent to mail to each  holder of record  of a  certificate  or
                  certificates  which  immediately  prior to the Effective  Time
                  represented  outstanding  shares of Aurora  Common  Stock (the
                  "Certificates") whose shares are converted pursuant to SECTION
                  1.2(A) a letter of  transmittal  in customary  form,  and (ii)
                  instructions  for  use  in  effecting  the  surrender  of  the
                  Certificates in exchange for certificates  representing  whole
                  shares  of  Cadence   Common  Stock.   Upon   surrender  of  a
                  Certificate for  cancellation to the Exchange Agent,  together
                  with such letter of transmittal duly executed and completed in
                  accordance  with its  terms,  the  holder of such  Certificate
                  shall  be  entitled   to  receive  in   exchange   therefor  a
                  certificate  representing  90% of that  number  of  shares  of
                  Cadence  Common  Stock,  which  such  holder  has the right to
                  receive  pursuant to the  provisions of this Agreement and the
                  Certificate so surrendered  shall forthwith be cancelled.  The
                  remaining 10% of the certificates for shares of Cadence Common
                  Stock  issuable in the exchange  shall be held in the Exchange
                  Fund by the Exchange  Agent  described  at SECTION  1.2(C)(IV)
                  below.  The Exchange Agent shall have  discretion to determine
                  and apply  reasonable  rules and  procedures  relating  to the
                  surrender  for  exchange  of a  Certificate  that  is  lost or
                  destroyed.  In no event shall the holder of any Certificate be
                  entitled to receive any  fractional  shares or interest on any
                  funds to be received in the Merger.

                        (iii) Until  surrendered as contemplated by this Section
                  1.2(C)(II),  and  subject  to the rights of  appraisal  of any
                  stockholder,  each  Certificate  shall be  deemed  at any time
                  after the Effective Time to represent  ownership of the number
                  of shares of Cadence  Common Stock (and any rights  derivative
                  thereof)  into  which the  number  of shares of Aurora  Common
                  Stock represented  thereby have been converted as contemplated
                  by this Agreement.

                        (iv)  Upon  expiration  of the  Indemnification  Period,
                  provided  that no  indemnification  claim is  outstanding  and
                  unresolved, Exchange Agent shall distribute the balance of the
                  certificates of Cadence Common Stock held in the Exchange Fund
                  to the holders of the  Certificates.  If at the  expiration of
                  the  Indemnification  Period a claim  for  indemnification  is
                  outstanding and  unresolved,  Exchange Agent shall continue to
                  hold in escrow  the  balance  of the  certificates  of Cadence
                  Common  Stock  until  the   indemnification   claims  are  all
                  resolved,  at which time the Exchange  Agent shall  distribute
                  the shares held in escrow as  instructed  by the Cadence Board
                  of Directors.

                        (v) No  certificate  or  scrip  representing  fractional
                  shares of  Cadence  Common  Stock will be issued in the Merger
                  upon the surrender for exchange of Certificates,  and any such
                  fractional  share interests will not entitle the owner thereof
                  to any rights of a  shareholder  of  Cadence.  Each  holder of
                  Certificates  who  would  otherwise  have been  entitled  to a
                  fraction  equal  to  one-half  or more of a share  of  Cadence
                  Common  Stock  will  receive a full  share of  Cadence  Common
                  Stock,  and  fractional  interests of less than  one-half of a
                  share of Cadence Common Stock will be canceled.


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            1.3 CERTAIN DEFINITIONS. As used in this Agreement:

                  (a) "Affiliate"  means, with respect to any Person,  any other
Person that controls, is controlled by, or is under common control with the such
Person.

                  (b)   "Appurtenant   Rights"   means,   with  respect  to  the
Properties, in each case, insofar as they may relate to the Properties, Aurora's
or Cadence's,  as applicable,  interest in (a) all presently  existing and valid
unitization and pooling declarations,  agreements,  and/or orders relating to or
affecting the Properties  and all rights in the Properties  covered by the Units
created  thereby;  (b) all  wells,  well  and  leasehold  equipment,  pipelines,
platforms,  facilities,  improvements, goods and other personal property located
on or used in connection with the Properties,  including but not limited to such
properties  identified  in SCHEDULE 2.9 and  SCHEDULE  3.15;  (c) all  presently
existing production sales contracts,  operating,  pooling, unitization and other
contracts or  agreements  which relate to the  Properties;  and (d) all permits,
licenses,  easements,  rights-of-way,  rights  of use,  and  similar  agreements
pertaining to the Properties.

                  (c) "Basic Documents" means all of the following documents and
instruments,  including  those  that are  recorded  and  unrecorded,  which  are
identified on SCHEDULE 2.9 with respect to Aurora and SCHEDULE 3.15 with respect
to Cadence  (but  including  all such  documents  and  instruments,  even if not
specifically  included on SCHEDULE 2.9 or SCHEDULE 3.15, as  applicable,  unless
specifically  excluded in  SCHEDULE  2.9,  SCHEDULE  3.15 or  elsewhere  in this
Agreement):

                        (i) All material contracts and agreements comprising any
                  part  of,  or  relating  or  pertaining   to,  the  Interests,
                  including  but not  limited  to farm-in  agreements,  farm-out
                  agreements,  joint operating  agreements,  Unit agreements and
                  contracts by which the Interests were acquired;

                        (ii)  All  agreements  or  arrangements  for  the  sale,
                  gathering,  transportation,  compression, treating, processing
                  or other marketing of a material volume of production from the
                  Interests  (including  calls on, or other  rights to purchase,
                  production,  whether  or not  the  same  are  currently  being
                  exercised),  comprising  any part of or otherwise  relating or
                  pertaining to the Interests; and

                        (iii)  All  documents  and  instruments  evidencing  the
                  Interests.

                  (d)  "Confidential  Information"  means (whether  disclosed in
writing or orally) any and all non-public  and/or  proprietary  information with
respect to the business,  services,  operations,  assets, properties,  financial
condition,  plans and prospects of a Party and its  subsidiaries  and Affiliates
including, without limitation, Intellectual Property and information relating to
acquisition  targets  and  acquisition  strategies,  pricing  for  acquisitions,
financial   information  or  projections   and  other   information   concerning
acquisition  targets  and  potential  acquisition  targets,  proposed  financing
arrangements,  customers and vendors, business strategies,  plans and prospects,
agreements,  business records,  information  relating to intellectual  property,
marketing and sales  strategies,  pricing  strategies,  programs,  source codes,
object codes,  algorithms and the related  documentation,  software  designs (in
each  case  regardless  of the  medium  in which it is  maintained  or  stored),
internet  strategies,  URL designations and any other  information which a Party
designates  that it has received  pursuant to a  confidentiality  obligation  to
another person or entity,  together with all derivative works, copies,  reports,
summaries,  studies,  compilations  and other  documentation  which  contain  or
otherwise reflect or are generated from any of the foregoing.


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                  (e)  "Contract"  means any note,  bond,  mortgage,  indenture,
guarantee,  other evidence of indebtedness,  license, lease, option,  employment
agreement, contract,  undertaking,  understanding,  covenant, agreement or other
instrument (collectively, the "Contracts").

                  (f) "Employee  Benefit  Plan" means (a) any "employee  pension
benefit  plan" (as defined in Section  3(2) of the  Employee  Retirement  Income
Security Act of 1974, as amended  ("ERISA"));  (b) any "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA);  and (c) any other  written or oral
plan, agreement,  program, policy, practice, contract,  understanding,  or other
arrangement  or  commitment  of any  kind  providing  for,  either  directly  or
indirectly,   compensation,  bonuses,  vacation,  termination  pay,  performance
awards,  fringe benefits,  insurance coverage,  severance  benefits,  disability
benefits,  deferred compensation,  stock options, stock purchase, phantom stock,
stock  appreciation  or any  type  of  stock-related  awards,  early  retirement
benefits,  welfare benefits, one or more Severance Plans (as defined below), any
other form of incentive  compensation  or  post-retirement  compensation  or any
other  employee  benefit  of any kind,  whether  formal or  informal,  funded or
unfunded,  and whether or not legally  binding,  which  currently is or has been
sponsored,  maintained,  contributed  to, or required to be contributed to, by a
Party, any Subsidiary of a Party, or any ERISA Affiliate (as defined below),  or
for which a Party,  any Subsidiary of a Party, or any ERISA Affiliate has or has
had any obligation or any liability of any nature,  contingent or otherwise,  or
for which there is a reasonable expectation of such obligation or liability,  on
or before  the  Closing  for the  benefit of any  present  or former  employees,
retirees,   directors  or  independent   contractors  (or  their  beneficiaries,
dependents  or  spouses) of a Party,  any  Subsidiary  of a Party,  or any ERISA
Affiliate.

                  (g) "Encumbrance" means a claim, lien, mortgage,  encumbrance,
pledge or other security interest of any kind.

                  (h) "Environmental Laws" means any federal, state or local law
or ordinance or regulation  pertaining to the  protection of human health or the
environment,  including,  without  limitation,  the Comprehensive  Environmental
Response,  Compensation  and  Liability  Act,  42 USC  ss.ss.9601  et  seq,  the
Emergency Planning and Community  Right-to-Know Act, 42 USC ss.ss. 11001 et seq,
and the Resource Conservation and Recovery Act, 42 USC ss.ss. 6901 et seq.


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                  (i) "ERISA Affiliate" means any entity which with respect to a
Party or Subsidiary  of a Party is or was a member of (i) a controlled  group of
corporations (as defined in Section 414(b) of the Code);  (ii) a group of trades
or businesses  under common  control (as defined in Section 414(c) of the Code);
or (iii) an affiliated  service  group (as defined  under Section  414(m) of the
Code or the regulations under Section 414(o) of the Code), any of which includes
or included a Party or any Subsidiary of a Party.

                  (j)  "Fixtures  and  Equipment"  means the  tangible  personal
property,  equipment,  improvements,  fixtures,  and other personal property and
appurtenances that are used by a Party or a Party's Subsidiary.

                  (k) "GAAP" means United States generally  accepted  accounting
principles, consistently applied.

                  (l) "Good and Defensible  Title" means,  as to the Interest in
question, (i) title to such Interest by virtue of which a Party can successfully
defend  against  a claim  to the  contrary  made by a third  party,  based  upon
industry  standards in the  acquisition  of oil and gas  properties,  and in the
exercise of reasonable  judgment and in good faith; and, (ii) in the case of the
Wells,  title that  entitles  the Party to receive not less than the Net Revenue
Interest  for each of the Wells as set forth in SCHEDULE  2.9 or SCHEDULE  3.15,
and obligates  the Party to bear not more than the Working  Interest for each of
the  Wells  set  forth on  SCHEDULE  2.9 or  SCHEDULE  3.15  (unless  there is a
corresponding  increase in the Net Revenue Interest for a respective  Well); and
(iii)  such  Interest  is  subject  to no liens,  encumbrances,  obligations  or
defects.

                  (m) "Governmental Authorizations" means any approval, consent,
license,  permit,  waiver, or other  authorization  issued,  granted,  given, or
otherwise made available by or under the authority of any Governmental Entity or
pursuant to any Legal Requirement.

                  (n) "Governmental Entity" means any:

                        (i)  nation,   state,   county,   city,  town,  village,
                  district, or other political jurisdiction of any nature;

                        (ii) federal, state, local, municipal, foreign, or other
                  government;

                        (iii)  governmental or  quasi-governmental  authority of
                  any  nature  (including  any  governmental   agency,   branch,
                  department,  official,  or  entity  and  any  court  or  other
                  tribunal);

                        (iv) multi-national organization or body; or

                        (v)  body  exercising,  or  entitled  to  exercise,  any
                  administrative,   executive,  judicial,  legislative,  police,
                  regulatory, or taxing authority or power of any nature.


                                       7
<PAGE>

                  (o)  "Hazardous  Substance"  means  asbestos,  polychlorinated
biphenyls,  ureaformaldehyde, and any other materials classified as hazardous or
toxic under any Environmental Laws.

                  (p)  "Intellectual  Property"  means with respect to any Party
and its Subsidiaries,  collectively (a) all rights to service customer accounts;
(b) trademarks, trade names, service marks, service names, domain names, uniform
resource  locators  (URLs),  keywords,  designs,  logos and assumed  names;  (c)
copyrights  and other rights in original  works of  authorship,  (d) patents and
industrial design  registrations or applications  (including any  continuations,
divisionals, continuations-in-part, renewals, reissues, and applications for any
of the  foregoing);  (e) computer  software  programs or  applications  (in both
source and object code versions), including any related technical documentation;
(f) trade secrets and invention  disclosures,  that are owned by such Party, its
Subsidiaries or any other Person and that have been or are used by such Party or
its  Subsidiaries in the operation of their respective  businesses,  or that are
used in or necessary for the conduct of the respective  businesses of such Party
or its Subsidiaries as currently conducted or contemplated to be conducted;  and
(g) know-how and general intangibles of like nature, together with all goodwill,
registrations  and applications  related to any of the foregoing  whether or not
protectable as a matter of law.

                  (q)  "Interests"  means  the  Properties  and the  Appurtenant
Rights of a Party.

                  (r)  "Legal  Requirement"  means any  federal,  state,  local,
municipal, foreign, international, multinational, or other administrative order,
constitution,  law, ordinance, principle of common law, regulation,  statute, or
treaty.

                  (s)  "License"   means  a  license,   permit,   certification,
qualification, or franchise issued by any Governmental Entity.

                  (t) "Material  Adverse Effect" means a material adverse effect
(financial  or  otherwise)  on  the  business,  assets,  liabilities,  financial
condition, property, prospects, or results of operations of a Party.

                  (u)  "Net  Revenue  Interest"  means a share,  expressed  as a
decimal,  of the oil, gas and other  minerals (or the proceeds of sale  thereof)
produced and saved from or otherwise  attributable to an Interest and the zones,
horizons  and  reservoirs  produced  therefrom,   after  the  deduction  of  all
royalties, overriding royalties and other burdens on production.

                  (v) "OFCCP"  means the Office of Federal  Contract  Compliance
Programs.

                  (w)  "Over-produced"  means to have taken more production from
an Interest  (or the Units in which the  Interest  participates)  or any product
thereof,  than the  ownership of the Party and the Party's  predecessors  in the
Interest  would  entitle the Party and/or the Party's  predecessors  (absent any
balancing agreement or arrangement) to receive.


                                       8
<PAGE>

                  (x) "Person" means any individual,  corporation (including any
non-profit  corporation),  general or  limited  partnership,  limited  liability
company, joint venture, estate, trust, association,  organization,  labor union,
or other entity or Governmental Entity.

                  (y)  "Preferential  Right"  means  any  preferential  right or
option to purchase or otherwise to acquire an Interest or any interest  therein,
held by  another  party to a Basic  Document,  which  arises  as a result of the
transactions contemplated by this Agreement.

                  (z) "Proceeding" means a claim, suit, action, investigation or
proceeding.

                  (aa)  "Properties"  means all of a Party's rights,  titles and
interests  in and to the  following  oil  and  gas  and/or  mineral  properties,
including those identified on SCHEDULE 2.9 with respect to Aurora,  and SCHEDULE
3.15 with respect to Cadence,  but  excluding  those  properties  identified  as
excluded on SCHEDULE 2.9 or SCHEDULE 3.15:

                        (i) All oil, gas and/or mineral leases and other mineral
                  interests,  including,  but not limited to, all of the Party's
                  operating rights,  record title interests,  working interests,
                  and  overriding  royalty  interests,  without  depth  or other
                  restrictions or exclusions unless set forth in SCHEDULE 2.9 or
                  SCHEDULE 3.15;

                        (ii)  All  surface  leases,  rights-of-way,   easements,
                  servitudes   and   other   rights-of-use   (whether   surface,
                  subsurface or subsea); and

                        (iii) All licenses and servitudes.

                  (bb)  "Required  Consents"  means  the  consents,   approvals,
orders, authorizations, notifications, notices, estoppel certificates, releases,
registrations,  ratifications,  declarations,  filings,  waivers,  exemptions or
variances (each a "Consent") with respect to any License or Legal Requirement or
otherwise as are set forth on SCHEDULE  2.4 hereof with  respect to Aurora,  and
SCHEDULE 3.3 with respect to Cadence.

                  (cc)  "Routine  Governmental   Approvals"  means  Governmental
Authorizations  required to be obtained  from any  Governmental  Entity that are
customarily obtained after consummation of a transaction.

                  (dd) "SEC" means the United  States  Securities  and  Exchange
Commission.

                  (ee)  "Severance  Plans"  means  (i) each  agreement  with any
present or former  employee,  retiree,  director or  independent  contractor (or
their  beneficiaries,  dependents  or spouses) of a Party or a  Subsidiary  of a
Party (A) the benefits of which are  contingent,  or terms of which are altered,
upon the  occurrence of a transaction  involving the Party,  any Subsidiary of a
Party, or an ERISA Affiliate of a Party of the nature of any of the transactions
contemplated  by  this  Agreement,  (B)  providing  any  term of  employment  or
compensation  guarantee,  or (C) providing  severance benefits or other benefits
after the termination of employment of such person; (ii) each agreement, plan or
arrangement  under  which any  person may  receive  payments  from a Party,  any
Subsidiary of a Party,  or any ERISA  Affiliate of a Party that has subjected or
could subject the Party or any  Subsidiary  of a Party,  to the Taxes imposed by
Section  4999 of the Code or  included  in the  determination  of such  person's
parachute payment under Section 280G of the Code; and (iii) each agreement, plan
or  arrangement,  including  without  limitation  any stock option  plan,  stock
appreciation right plan, restricted stock plan, stock purchase plan or severance
benefit plan which has subjected or could subject a Party or any Subsidiary of a
Party, to any liability or obligation.


                                       9
<PAGE>

                  (ff) "Subsidiary"  means, with respect to Aurora,  each entity
listed on SCHEDULE  2.1 of this  Agreement  and with  respect to  Cadence,  each
entity listed on SCHEDULE 3.1 of this Agreement.  Such entities may collectively
be  referred  to  as  the  Aurora   Subsidiaries   or  "Cadence   Subsidiaries",
respectively.

                  (gg) "Tax" means any tax  (including  any income tax,  capital
gains tax,  value-added  tax, sales tax,  property tax, gift tax, or estate tax,
but  excluding  any tax based on or measured by ownership  or  operation  of, or
production from, the Interests),  levy, assessment,  tariff, duty (including any
customs  duty),  deficiency,  or other  fee,  and any  related  charge or amount
(including any fine, penalty,  interest, or addition to tax), imposed, assessed,
or collected by or under the  authority  of any  Governmental  Entity or payable
pursuant to any tax-sharing agreement.

                  (hh) "Tax Return" means any return  (including any information
return),  report,  statement,  schedule,  notice,  form,  or other  document  or
information  filed  with or  submitted  to,  or  required  to be  filed  with or
submitted  to, any  Governmental  Entity in connection  with the  determination,
assessment,  collection,  or  payment  of any  Tax  or in  connection  with  the
administration,  implementation,  or enforcement of or compliance with any Legal
Requirement relating to any Tax.

                  (ii)  "Transaction  Documents"  means this  Agreement and each
other  agreement,  instrument,  document,  and  certificate  to be executed  and
delivered by the Parties pursuant to this Agreement.

                  (jj) "Under-produced" means to have taken less production from
an Interest  (or the Units in which the  Interest  participates)  or any product
thereof,  than the  ownership of the Party and the Party's  predecessors  in the
Interest  would  entitle the Party and/or the Party's  predecessors  (absent any
balancing agreement or arrangement) to receive.

                  (kk)  "Units"  means oil,  gas and other  mineral  production,
proration, or other types of units, and any ownership interests therein.

                  (ll)  "WARN"  means  the  Worker   Adjustment  and  Retraining
Notification Act of 1988.

                  (mm) "Well" or "Wells" means all of a Party's (and the Party's
Subsidiaries') oil, gas and condensate wells, (whether producing,  not producing
or abandoned or temporarily  abandoned),  including but not limited to the wells
described in SCHEDULE 2.9 with respect to Aurora, and SCHEDULE 3.15 with respect
to Cadence.


                                       10
<PAGE>

                  (nn) "Working Interest" means a share, expressed as a decimal,
of the costs of exploring,  drilling,  developing  and operating an Interest and
producing  oil, gas and other  minerals from the zones,  horizons and reservoirs
therein and thereunder.

            1.4 OTHER  DEFINITIONS.  The definitions of other terms used in this
Agreement may be found as follows:

                  (a)   "Acquisition   Sub"  is  defined  in  the   introductory
paragraph.

                  (b) "Agreed Claims" is defined at Section 9.4(c).

                  (c) "Agreement" is defined in the introductory paragraph.

                  (d) "Aurora" is defined in the introductory paragraph.

                  (e) "Aurora Common Stock" is defined at Section 1.2(a).

                  (f)  "Aurora  Convertible  Securities"  is  defined at Section
1.2(a).

                  (g) "Aurora Fixtures and Equipment" is defined at Section 2.8.

                  (h) "Aurora Material Contracts" is defined at Section 2.14(a).

                  (i) "Cadence" is defined in the introductory paragraph.

                  (j) "Cadence Common Stock" is defined at Section 1.2(a).

                  (k) "Cadence Disclosure Documents" is defined in Section 3.5.

                  (l)  "Cadence  Fixtures  and  Equipment  is defined at Section
3.14.

                  (m)  "Cadence  Material   Contracts"  is  defined  at  Section
3.19(a).

                  (n) "Certificates" is defined at Section 1.2(c)(ii).

                  (o) "Closing" is defined at Section 1.1(b).

                  (p) "Closing Date" is defined at Section 1.1(b).

                  (q) "COBRA" is defined at Section 2.12(l).

                  (r) "Code" is defined at Section 1.1(a).

                  (s) "Consent" is defined at Section 1.3(bb).


                                       11
<PAGE>

                  (t) "Costs" is defined at Section 9.1.

                  (u) "Effective Time" is defined at Section 1.1(d)(i).

                  (v) "ERISA" is defined at Section 1.3(f).

                  (w) "Exchange Agent" is defined at Section 1.2(c)(i).

                  (x) "Exchange Fund" is defined at Section 1.2(c)(i).

                  (y) "Indemnification Cap" is defined at Section 9.4(f).

                  (z) "Indemnification Period" is defined at Section 9.3.

                  (aa) "Indemnitee" is defined at Section 9.4(a).

                  (bb) "Indemnitor" is defined at Section 9.4(a).

                  (cc) "Indemnity Certificate" is defined at Section 9.4(a).

                  (dd)  "Interim  Aurora  Financial  Statements"  is  defined at
Section 2.5(a).

                  (ee) "IRS" is defined at Section 2.12(e).

                  (ff)  "Latest  Aurora  Balance  Sheet" is  defined  at Section
2.5(a).

                  (gg) "Merger" is defined in the Recitals.

                  (hh) "NMEL" is defined at Section 1.1(a).

                  (ii)  "Party" or  "Parties"  is  defined  in the  introductory
paragraph.

                  (jj) "Registration Statement" is defined at Section 3.8.

                  (kk)  "Regular  Aurora  Financial  Statements"  is  defined at
Section 2.5(a).

                  (ll)  "Regular  Cadence  Financial  Statements"  is defined at
Section 3.11(a).

                  (mm)  "Representative"  or  "Representatives"  is  defined  at
Section 10.

                  (nn) "Rubicon" is defined at Section 1.1(d)(iv).

                  (oo) "Schedule 2.7 Property" is defined at Section 2.7.


                                       12
<PAGE>

                  (pp) "Schedule 3.13 Property" is defined at Section 3.13.

                  (qq) "Surviving Corporation" is defined at Section 1.1(a).

                  (rr) "1933 Act" is defined at Section 3.5.

                  (ss) "1934 Act" is defined at Section 3.5.

      2.  REPRESENTATIONS  AND  WARRANTIES  OF  AURORA . Aurora  represents  and
warrants to Cadence and Acquisition Sub that each of the following statements is
true and correct as of the date hereof:

            2.1  ORGANIZATION.  SCHEDULE  2.1 lists  each  direct  and  indirect
Subsidiary of Aurora.  Aurora and each Aurora  Subsidiary is a corporation  duly
organized,  validly existing and in good standing under the laws of its state of
incorporation and has the requisite  corporate power and authority to own, lease
and  operate  its  properties  and to carry on its  business  as it is now being
conducted. Aurora and each Aurora Subsidiary is duly qualified or licensed to do
business as a foreign  corporation and is in good standing in each  jurisdiction
in which the nature of the business  conducted by it makes such qualification or
licensing necessary.  Aurora has delivered to Cadence true, correct and complete
copies of the  Articles  of  Incorporation  and Bylaws and other  organizational
documents, as currently in effect, of Aurora and each Aurora Subsidiary.

            2.2 CAPITALIZATION.

                  (a) The authorized  capital stock of Aurora and each corporate
Aurora Subsidiary,  the issued and outstanding  capital stock of Aurora and each
corporate  Aurora  Subsidiary  and the record and  beneficial  ownership  of the
capital  stock of Aurora and each  corporate  Aurora  Subsidiary is set forth on
SCHEDULE 2.2. With respect to each Aurora subsidiary that is a limited liability
company,  a list of the members and their  respective  percentage  interests  or
sharing  ratios is set forth on SCHEDULE  2.2. The shares of Aurora Common Stock
are duly authorized,  validly issued,  fully paid and non-assessable.  Except as
contemplated  by this  Agreement or set forth on SCHEDULE 2.2,  there are no (i)
options,  warrants,  calls,  preemptive  rights,  subscriptions or other rights,
convertible  securities,  agreements or commitments of any character obligating,
now or in the future, Aurora or any Aurora Subsidiary to issue, transfer or sell
any shares of capital stock, options,  warrants,  calls or other equity interest
of any  kind  whatsoever  in  Aurora  or any  Aurora  Subsidiary  or  securities
convertible  into or  exchangeable  for such  shares or equity  interests,  (ii)
contractual obligations of Aurora to repurchase, redeem or otherwise acquire any
capital  stock or equity  interest of Aurora or any Aurora  Subsidiary  or (iii)
voting  trusts,  proxies  or  similar  agreements  to which  Aurora or an Aurora
Subsidiary  is a party with respect to the voting of the capital stock or voting
memberships of Aurora or any Aurora Subsidiary.

                  (b) Except for the common stock or membership interests of the
Aurora Subsidiaries and temporary investments of cash in marketable  securities,
Aurora does not own any  outstanding  shares of capital  stock (or other  equity
interests  of  entities  other  than  corporations)  of any  partnership,  joint
venture, trust, corporation, limited liability company or other entity.


                                       13
<PAGE>

            2.3 AUTHORIZATION;  VALIDITY OF AGREEMENT.  Aurora has the requisite
power and authority to execute,  deliver and perform this  Agreement and each of
the other Transaction  Documents to be executed and delivered by Aurora pursuant
to this  Agreement,  and to assume and perform  any  obligations  hereunder  and
thereunder,  and to consummate the transactions contemplated hereby and thereby.
Each of this  Agreement and the other  Transaction  Documents to be executed and
delivered  by Aurora  pursuant  to this  Agreement  have  been duly  authorized,
executed  and  delivered  by Aurora  and are valid and  binding  obligations  of
Aurora, enforceable against it in accordance with their respective terms.

            2.4 NO VIOLATIONS; CONSENTS AND APPROVALS.

                  (a)  Except  as set  forth on  SCHEDULE  2.4,  the  execution,
delivery and  performance  of each of this  Agreement and the other  Transaction
Documents  by  Aurora do not,  and the  consummation  by it of the  transactions
contemplated  hereby and thereby  will not:  (i) violate  any  provision  of the
Articles of Incorporation, Bylaws or other organizational documents of Aurora or
any Aurora  Subsidiary,  (ii) result in a violation or breach of, or  constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination,  amendment, cancellation or acceleration) under any of
the terms,  conditions or  provisions  of any  Contract,  to which Aurora or any
Aurora  Subsidiary is a party or by which any of its properties or assets may be
bound or otherwise subject,  except for any Required Consents,  or (iii) violate
any Legal Requirement  applicable to Aurora or the Aurora Subsidiaries or any of
their respective properties or assets.

                  (b) No  filing  or  registration  with,  notification  to,  or
authorization,  consent or approval of, any  legislative or executive  agency or
department  or other  regulatory  service,  authority  or agency  or any  court,
arbitration  panel or other tribunal or judicial  authority of any  Governmental
Entity or Person,  is required in connection  with the  execution,  delivery and
performance  of this  Agreement  or any of the other  Transaction  Documents  by
Aurora or the consummation by Aurora of the transactions contemplated hereby and
thereby, except the Required Consents set forth on SCHEDULE 2.4 hereof.

            2.5 FINANCIAL STATEMENTS.

                  (a)  Attached as SCHEDULE  2.5 is the  unaudited  consolidated
balance  sheet of Aurora as of September  30, 2004 (the "Latest  Aurora  Balance
Sheet"),  together with the related unaudited consolidated  statements of income
for the  quarter  ending  on  September  30,  2004  ("Interim  Aurora  Financial
Statements") and the audited consolidated balance sheet of Aurora as of December
31, 2003,  together with the related  audited  consolidated  statement of income
(including  the related notes and reports of independent  auditors,  if any) for
the fiscal year then ended  (together,  with the Latest Aurora Balance Sheet and
the  Interim  Aurora  Financial   Statements,   the  "Regular  Aurora  Financial
Statements").

                  (b) The Regular Aurora Financial Statements have been prepared
by Aurora and have been derived from,  and agree with,  the books and records of
Aurora and fairly present the financial  position of Aurora as of the respective
dates thereof and the results of operations of Aurora for the respective periods
set forth therein. The Regular Aurora Financial Statements have been prepared in
accordance  with GAAP as of the dates and for the periods  involved,  subject to
the absence of notes and, in the case of the Latest Aurora Balance Sheet and the
related  statements  of  operations  for the interim  period,  to normal  fiscal
year-end  adjustments in the ordinary course (none of which,  individually or in
the aggregate, will be material to the business or the operations of Aurora).


                                       14
<PAGE>

                  (c) Aurora maintains a system of internal  accounting controls
sufficient to provide  reasonable  assurances that (i) transactions are executed
in  accordance  with  management's  general  or  specific  authorizations,  (ii)
transactions  are  recorded as  necessary  to permit  preparation  of  financial
statements in accordance  with GAAP and to maintain assets  accountability,  and
(iii) access to assets is permitted only in accordance with management's general
or specific  authorization,  except for any  controls the absence of which would
not result in a Material Adverse Effect.

            2.6 OPERATION OF BUSINESS.

                  (a) Since the date of the Latest Aurora Balance Sheet,  Aurora
and each Aurora Subsidiary has continued to operate its business in a manner and
system of operation employed  immediately prior to the date of the Latest Aurora
Balance Sheet, and Aurora has used its best efforts to prevent harm or damage to
the  reputation  of Aurora or the Aurora  Subsidiaries  or reduction of existing
customer accounts.

                  (b) Except as  specifically  contemplated by this Agreement or
as set forth on SCHEDULE 2.6,  since the date of the Latest Aurora Balance Sheet
neither  Aurora nor any Aurora  Subsidiary  has (i)  incurred  any  liabilities,
except in the ordinary course of business  consistent  with past practice;  (ii)
paid any  obligation  or liability,  or discharged or satisfied any  Encumbrance
other than those  securing  current  liabilities,  in each case in the  ordinary
course of business; (iii) mortgaged, pledged or subjected to any Encumbrance any
of its  assets,  tangible  or  intangible,  except  in the  ordinary  course  of
business;  (iv) sold, transferred or leased any of its assets except the sale of
inventory in the ordinary course of business; (v) suffered any material physical
damage,  destruction or loss (whether or not covered by insurance) affecting its
properties,  business or prospects; (vi) entered into any transaction other than
in the ordinary course of business;  (vii) encountered any labor difficulties or
labor union organizing  activities;  (viii) issued or sold any shares of capital
stock or other  securities or granted any options,  warrants,  or other purchase
rights with respect thereto other than pursuant to this Agreement; (ix) made any
acquisition  or  disposition  of any  assets  or  become  involved  in any other
material  transaction,   including,   without  any  limitation,  any  merger  or
consolidation  with, purchase of all or part of the assets of, or acquisition of
any business of any  proprietorship,  firm,  association,  corporation  or other
business  organization  or division  thereof;  (x)  increased  the  compensation
payable, or to become payable, to any of its directors or employees or increased
the  scope or  nature of any  fringe  benefits  provided  for its  employees  or
directors,  other than as Aurora has separately informed Cadence;  (xi) made any
capital  investment  in, any loan to or any  acquisition  of the  securities  or
assets of any other Person; (xii) canceled,  compromised, waived or released any
material right or claim;  (xiii) made any change in employment  terms for any of
its  officers  or  employees;  (xiv)  made or  pledged  to make  any  charitable
contribution  or other  capital  contribution  outside  the  ordinary  course of
business;  (xv) violated any Legal  Requirement,  if such  violation  could have
resulted in a Material  Adverse  Effect on Aurora or any Aurora  Subsidiary,  or
failed to maintain all governmental  licenses and approvals  required to operate
its business as it is currently being  conducted;  or (xvi) agreed or committed,
whether in writing or otherwise,  to do any of the foregoing other than pursuant
to the  Transaction  Documents  and the  transactions  contemplated  hereby  and
thereby. In addition,  since the date of the Latest Aurora Balance Sheet neither
Aurora  nor any Aurora  Subsidiary  has  accelerated,  terminated,  modified  or
canceled any  material  agreement,  contract,  lease or license to which it is a
party or by which it or its assets are bound.


                                       15
<PAGE>

                  (c) Since the date of the  Latest  Aurora  Balance  Sheet,  no
event, condition or circumstance  (including an event, condition or circumstance
that has a general  adverse  effect on the economy as a whole) has occurred that
could,  or could be  reasonably  likely to,  have a Material  Adverse  Effect on
Aurora or any Aurora Subsidiary.

            2.7 NON-OIL AND GAS REAL PROPERTY.  SCHEDULE 2.7 contains a complete
and  accurate  list of all real  property,  leases  in real  property,  or other
interests in real  property  owned or held by Aurora or any Aurora  Subsidiary (
the  "Schedule  2.7  Property"),  except that the SCHEDULE 2.7 Property does not
include any property included in the Aurora Interests (as enumerated in SCHEDULE
2.9).  Aurora has delivered or made available to Cadence copies of the deeds and
other  instruments  (as  recorded)  by which  Aurora  or any  Aurora  Subsidiary
acquired  the  SCHEDULE  2.7  Property  which it owns,  and  copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of Aurora
or any Aurora  Subsidiary  and relating to the  SCHEDULE  2.7 Property  which it
owns.  Aurora and each Aurora  Subsidiary  holds good title to all  SCHEDULE 2.7
Property owned by Aurora or an Aurora  Subsidiary,  as applicable.  The SCHEDULE
2.7 Property is, or effective  simultaneously with the Closing will be, free and
clear of all Encumbrances and is not subject to any rights of way,  building use
restrictions,  exceptions, variances, reservations, or limitations of any nature
except for (a) matters  disclosed in SCHEDULE  2.7, (b) liens for current  taxes
not yet due,  and (c) zoning  laws and other land use  restrictions  that do not
impair the present or anticipated use of the property subject thereto.

            2.8 NON-OIL AND GAS AURORA  FIXTURES  AND  EQUIPMENT.  Except as set
forth on SCHEDULE 2.8,  Aurora and each Aurora  Subsidiary,  as applicable,  has
good title to, or a valid leasehold interest in, the Fixtures and Equipment that
are used by Aurora or any Aurora  Subsidiary in  connection  with the conduct of
its business  (the  "Aurora  Fixtures  and  Equipment"),  except that the Aurora
Fixtures  and  Equipment  do not  include  any  property  included in the Aurora
Interests. The Aurora Fixtures and Equipment are structurally sound, are in good
operating  condition  and repair,  are  adequate  for the uses to which they are
being  put,  are not in need of  maintenance  or repairs  except  for  ordinary,
routine  maintenance  and repairs and are sufficient for the conduct of Aurora's
businesses  in the manner as  conducted  prior to the Closing.  Aurora owns,  or
effective  simultaneously  with the Closing will own, all of the Aurora Fixtures
and  Equipment  free  and  clear  of all  Encumbrances  except  for (a)  matters
disclosed  in SCHEDULE  2.8,  (b) liens for current  taxes not yet due,  and (c)
zoning  laws and other land use  restrictions  that do not impair the present or
anticipated use of the property subject thereto.


                                       16
<PAGE>

            2.9 OIL AND GAS INTERESTS.

                  (a) Except as set forth in SCHEDULE 2.9, Aurora holds Good and
Defensible Title to the Aurora Interests.

                  (b) SCHEDULE 2.9 sets forth all platforms and  pipelines,  and
the equipment,  facilities and personal  property  related to such platforms and
pipelines, comprising part of the Aurora Appurtenant Rights.

                  (c) SCHEDULE 2.9 sets forth Aurora's  Working Interest and Net
Revenue Interest in each Aurora Well.

                  (d) The Aurora  Basic  Documents  are in full force and effect
and constitute valid and binding obligations of the parties thereto, and

                        (i) Aurora is not in material  breach or default (and no
                  situation  exists  which with the passing of time or giving of
                  notice  would  give rise to such a breach or  default)  of its
                  obligations  under any of the Aurora Basic  Documents,  and no
                  breach  or  default  by any  other  party to an  Aurora  Basic
                  Document  (or  situation  which  with the  passage  of time or
                  giving of notice  would give rise to such a breach or default)
                  exists,  to the  extent  such  breach or default  (whether  by
                  Aurora or another  party to an Aurora  Basic  Document)  could
                  adversely affect any of the Aurora Interests.

                        (ii) Except as set forth in SCHEDULE  2.9,  all payments
                  (including,  without limitation, all delay rentals, royalties,
                  excess  royalties,   minimum  royalties,   overriding  royalty
                  interests,  shut-in  royalties  and valid calls for payment or
                  prepayment under operating  agreements) owing under the Aurora
                  Basic  Documents  have  been and are  being  made  timely  and
                  properly,  and before the same  became  delinquent  (by Aurora
                  where the  non-payment  of same by another  party to an Aurora
                  Basic  Document  could  adversely  affect  any of  the  Aurora
                  Interests) have been and are being made by such other party in
                  all material respects.

                        (iii) All  conditions  necessary  to maintain the Aurora
                  Basic Documents in force have been duly performed.

                        (iv) No non-consent operations exist with respect to any
                  of the Aurora Interests that have resulted or will result in a
                  temporary or permanent increase or decrease in either Aurora's
                  Net  Revenue  Interest  or  Working  Interest  in such  Aurora
                  Interest.

                        (v) Except as disclosed on SCHEDULE  2.9,  Aurora is not
                  obligated to incur any expenses,  and has not made commitments
                  to make  expenditures  (capital  or  otherwise),  or to  apply
                  revenues  from a  Well's  production  in  connection  with any
                  Aurora   Interests  (and  no  other  similar   obligations  or
                  liabilities  have been incurred) with respect to the ownership
                  or  operation  of  Aurora  Interests.  Except as  provided  in
                  SCHEDULE  2.9,  Aurora  will not  incur or  commit to any such
                  expense  in  excess of  $250,000  except  to the  extent  that
                  Cadence has been given seven days prior written notice and has
                  consented thereto in writing.  Except as disclosed in SCHEDULE
                  2.9, all expenses  payable under the terms of the Aurora Basic
                  Documents  have been  properly and timely paid except for such
                  expenses as are being  currently paid or will be paid prior to
                  delinquency.  Except for budgeted capital  expenditures as set
                  forth in SCHEDULE 2.9, no proposals  calling for  expenditures
                  in  excess  of  $250,000  for any one  project  are  currently
                  outstanding (whether made by Aurora, an Aurora Subsidiary,  or
                  by any other party) to drill  additional  wells, or to deepen,
                  plug back, sidetrack, abandon, or rework existing Wells, or to
                  conduct other  operations  for which consent is required under
                  the applicable  operating  agreement,  or to conduct any other
                  operations,  other than normal  operation of existing Wells on
                  Aurora Interests.


                                       17
<PAGE>

                        (vi) No agreements or  arrangements  exist for the sale,
                  gathering,  transportation,  compression, treating, processing
                  or other marketing of a material volume of production from the
                  Aurora Interests  (including without limitation,  calls on, or
                  other rights to purchase,  production, whether or not the same
                  are currently being  exercised)  other than the agreements set
                  forth in SCHEDULE 2.9.

                        (vii)  Except as set forth in SCHEDULE  2.9,  Aurora has
                  not  received  prepayments  (including,  but not  limited  to,
                  payments for oil and gas not taken  pursuant to  "take-or-pay"
                  arrangements)  for any oil or gas  produced  from  the  Aurora
                  Interests  as a result of which the  obligation  does (or may)
                  exist  (i) to  deliver  oil or gas  produced  from the  Aurora
                  Interests   beginning  on  the  Effective  Date  without  then
                  receiving  payment  therefor,  or (ii) to make  repayments  in
                  cash.  For each Aurora  Interest  listed in SCHEDULE 2.9, such
                  Schedule  also sets forth as to each such Aurora  Interest (i)
                  the total amount of prepayment received prior to the Effective
                  Date,  and (ii)  whether or not a cash payment can be required
                  in  the  event  recoupment  out  of  production  proves  to be
                  inadequate.  Except as set forth in SCHEDULE 2.9,  there is no
                  Aurora  Interest  with  respect  to which  Aurora has taken an
                  Over-Produced  or  Under-Produced  position to the extent such
                  Over-produced  or  Under-produced  position has not, as of the
                  day  immediately  preceding the Effective Date been fully made
                  up or otherwise extinguished.  For each Aurora Interest listed
                  in  SCHEDULE  2.9,  such  Schedule  also  sets  forth,   on  a
                  Well-by-Well  or any  other  basis as may be  dictated  by any
                  applicable  balancing  agreement,  (i) whether Aurora is in an
                  Over-produced or Under-produced  position,  (ii) the amount of
                  such Over-production or Under-production,  (iii) a description
                  of the written balancing agreement (if any) pertaining to such
                  Aurora Interest (or a statement that no such agreement exists)
                  and  (iv) a  statement  as to  whether  royalties,  overriding
                  royalties  or other  burdens  against the Aurora's Net Revenue
                  Interest in the affected  Aurora  Interests  were,  during the
                  period the subject imbalance accrued, paid based upon receipts
                  or  entitlements.  Except as set  forth in  SCHEDULE  2.9,  no
                  pipeline  imbalances have arisen and remain outstanding due to
                  the  failure  of  nominations  made by Aurora to match  actual
                  deliveries  of   production   from  any  one  or  more  Aurora
                  Interests.  Except as set forth in SCHEDULE  2.9,  none of the
                  purchasers under any production sales contracts relating to an
                  Aurora  Interest has (i) exercised any economic out provision;
                  (ii)  curtailed  its takes of natural gas in violation of such
                  contracts;  or (iii) given notice that it desires to amend the
                  production  sales  contracts with respect to price or quantity
                  of deliveries under take-or-pay provisions or otherwise.


                                       18
<PAGE>

                        (viii) To Aurora's knowledge, no delinquent unpaid bills
                  or past due charges exist for any labor and materials incurred
                  by  or  on  behalf  of  Aurora  related  to  the  exploration,
                  development or operation of the Aurora Interests.

                        (ix)  Except as set forth in  SCHEDULE  2.9 or as may be
                  provided for by an Aurora Basic  Document,  neither Aurora nor
                  any  Aurora  Interest  is  subject  to (i) any area of  mutual
                  interest  agreements,  (ii) any farm-out or farm-in  agreement
                  under   which  any  party   thereto  is  entitled  to  receive
                  assignments of any Aurora Interest or any interest therein not
                  yet made, or could earn  additional  assignments of any Aurora
                  Interest or any interest therein after the date hereof,  (iii)
                  any  tax  partnership  or  (iv)  any  agreement,  contract  or
                  commitment  relating to the  disposition or acquisition of the
                  assets of, or any interest in, any other entity.

                        (x) All  severance,  production,  ad  valorem  and other
                  similar  taxes based on or measured by  ownership or operation
                  of, or production  from,  the Aurora  Interests have been, and
                  are being,  paid  (properly  and  timely,  and before the same
                  become delinquent) by Aurora in all respects.

                        (xi)  Except  as set  forth  in  SCHEDULE  2.9,  the (i)
                  ownership  and operation of the Aurora  Interests  has, to the
                  extent that non-conformance  could adversely affect the Aurora
                  Interests,  been  conducted in conformity  with all applicable
                  material  Legal  Requirements  of  all  Governmental  Entities
                  having  jurisdiction over the Aurora Interests or Aurora,  and
                  (ii) Aurora has not received any notice of noncompliance  with
                  regard to any material Legal  Requirement of any  Governmental
                  Entity  having  jurisdiction  over  the  Aurora  Interests  or
                  Aurora.

                        (xii) Except as set forth in SCHEDULE 2.9,  there are no
                  Preferential   Rights  or   Consents,   other   than   Routine
                  Governmental  Approvals  that affect any Aurora  Interests and
                  that will be triggered by the transactions contemplated by the
                  Transaction  Documents.  SCHEDULE 2.9 sets forth the allocated
                  value  of  each   Aurora   Interest   that  is  subject  to  a
                  Preferential Right.


                                       19
<PAGE>

                        (xiii) Except as set forth in SCHEDULE 2.9,  there exist
                  no  agreements  or  other   arrangements  under  which  Aurora
                  undertakes to perform gathering, transportation, processing or
                  other  marketing  services  for any  other  party for a fee or
                  other   consideration  that  is  now,  or  may  hereafter  be,
                  unrepresentative  of commercial  rates being received by other
                  parties in comparable, arm's length transactions.

                        (xiv) Except as disclosed in SCHEDULE 2.9,  there are no
                  Wells  located  on the  Aurora  Interests  that (i)  Aurora is
                  currently  obligated by law or contract to currently  plug and
                  abandon,  (ii) Aurora will be  obligated by law or contract to
                  plug and  abandon  with the  lapse of time or  notice  or both
                  because the Well is not currently capable of producing severed
                  crude oil, natural gas, casinghead gas, drip gasoline, natural
                  gasoline,   petroleum,   natural  gas   liquids,   condensate,
                  products,  liquids,  other  hydrocarbons  or other minerals or
                  materials in paying  quantities or otherwise  currently  being
                  used in normal operations,  (iii) are subject to exceptions to
                  a  requirement  to plug and abandon  issued by a  Governmental
                  Entity, or (iv) to Aurora's  knowledge,  have been plugged and
                  abandoned,  but have not been  plugged  in  accordance  in all
                  material  respects  with all  applicable  requirements  of any
                  Governmental Entity.

                        (xv) No suit, action or proceeding  (including,  without
                  limitation,  tax  or  environmental  demands  proceedings)  is
                  pending  or   threatened,   which  might  result  in  material
                  impairment or loss of title to any of the Aurora  Interests or
                  the material value thereof.

                        (xvi) Except as set forth in SCHEDULE  2.9, all proceeds
                  from  the  sale  of   hydrocarbons   produced   from  Aurora's
                  proportionate  share of the  Aurora  Interests  are  currently
                  being paid to Aurora in all material respects,  and no portion
                  of such  proceeds is  currently  being held in suspense by any
                  purchaser thereof or any other party by whom proceeds are paid
                  except for immaterial amounts.

            2.10 NO UNDISCLOSED LIABILITIES.

                  (a) Except as set forth on SCHEDULE  2.10,  neither Aurora nor
any Aurora Subsidiary has any liabilities (whether accrued,  contingent,  known,
or otherwise) other than those that (i) are set forth or reserved against on the
Latest Aurora  Balance  Sheet;  or (ii) were incurred in the ordinary  course of
business.

                  (b) The  accounts  payable  of each of Aurora  and the  Aurora
Subsidiaries  are set forth on SCHEDULE 2.10. All such accounts  payable are the
result of bona fide transactions in the ordinary course of business.


                                       20
<PAGE>

            2.11 LITIGATION; COMPLIANCE WITH LAW; LICENSES AND PERMITS.

                  (a)  Except  as  set  forth  on  SCHEDULE  2.11,  There  is no
Proceeding  pending,  nor is there any Proceeding  threatened,  that involves or
affects either of Aurora or any Aurora Subsidiary, by or before any Governmental
Entity, court, arbitration panel or any other Person.

                  (b) Since January 1, 2000,  Aurora and each Aurora  Subsidiary
has complied with all applicable Legal  Requirements,  including but not limited
to Legal  Requirements  relating to Taxes,  zoning,  building codes,  antitrust,
occupational safety and health,  industrial hygiene,  environmental  protection,
water, ground or air pollution, the generation,  handling, treatment, storage or
disposal of Hazardous  Substances,  consumer product safety,  product liability,
hiring, wages, hours, employee benefit plans and programs, collective bargaining
and the payment of withholding and social security Taxes. Except as set forth on
SCHEDULE 2.11, since January 1, 2000,  neither Aurora nor any Aurora  Subsidiary
has  received  any notice of any  violation  or alleged  violation  of any Legal
Requirement from a Governmental Entity or others.

                  (c)  Except as set forth on  SCHEDULE  2.11,  Aurora  and each
Aurora  Subsidiary  has every  License and every  Consent by or on behalf of any
person  required for them to conduct  their  respective  businesses as presently
conducted.  All such  Licenses  and  Consents  are in full  force and effect and
neither  Aurora nor any Aurora  Subsidiary  has  received  notice of any pending
cancellation or suspension of any thereof nor is any  cancellation or suspension
thereof  threatened.  The  applicability  and  validity of each such License and
Consent will not be adversely  affected by the  consummation of the transactions
contemplated by this Agreement or any other Transaction Document.

            2.12 EMPLOYEE BENEFIT PLANS; ERISA.

                  (a) SCHEDULE 2.12 contains a complete and accurate list of all
Employee  Benefit  Plans of Aurora,  Aurora's  Subsidiaries  and Aurora's  ERISA
Affiliates ("Aurora Employee Benefit Plan").

                  (b) Each and all  Aurora  Employee  Benefit  Plans  have  been
administered  in all respects in accordance with their  respective  terms and in
compliance  with  all  applicable   Legal   Requirements,   including,   without
limitation,  ERISA and the Code, and each of Aurora, the Aurora Subsidiaries and
any ERISA Affiliate of Aurora (as the case may be) has met its obligations under
applicable provisions of ERISA and the Code and the regulations thereunder,  and
other applicable Legal Requirements with respect to such Employee Benefit Plans.

                  (c) Complete and accurate  copies of the  following  documents
for each  Aurora  Employee  Benefit  Plan  listed  on  SCHEDULE  2.12  have been
delivered to Cadence:  (i) the plan texts or other agreements adopted or entered
into in connection with any Aurora Employee  Benefit Plan which has been reduced
to writing, and any related amendments;  (ii) a written summary of any unwritten
Aurora  Employee  Benefit  Plan;  (iii) any related trust  agreement,  insurance
contract,  annuity contract or other funding agreement (including all amendments
thereto) and any summary plan  description  required under ERISA,  including any
modification  communicated to or required to be communicated to any participant;
and (iv) any  communication  to any participant  relating to any Aurora Employee
Benefit  Plan in  connection  with any  amendment,  termination,  establishment,
increase or decrease in  benefits,  acceleration  or  deceleration  of payments,
vesting  schedules or other events which would result in any  liability by or to
Aurora,  any Aurora Subsidiary or any ERISA Affiliate of Aurora.  Since the date
such documents described in this SECTION 2.12(C) were supplied, no amendments or
changes to the documents  described in this SECTION  2.12(C) have been made, and
no such  amendments  or changes  shall be  adopted or made prior to the  Closing
Date.


                                       21
<PAGE>

                  (d) There are no termination  proceedings  with respect to any
of the Aurora Employee Benefit Plans.

                  (e) None of the Aurora Employee Benefit Plans is currently, or
has ever been, under investigation,  audit or review by the Department of Labor,
the  Internal  Revenue  Service  (the  "IRS")  or any  other  federal  or  state
Governmental  Entity, and no such  investigation,  audit or review is pending or
anticipated.  None of the Aurora Employee  Benefit Plans is liable,  or ever has
been liable, for any federal, state, local or foreign Taxes except as may be due
in the ordinary course of  administration  of such Aurora Employee Benefit Plan,
and no such Tax is  anticipated  and no basis for such Tax  exists.  There is no
transaction  nor has  there  ever  been  any  transaction,  act or  omission  in
connection with Aurora, the Aurora  Subsidiaries,  any ERISA Affiliate of Aurora
or any fiduciary of any Aurora Employee  Benefit Plan which could subject Aurora
or an Aurora Subsidiary to a fine, civil penalty Tax or other liability.

                  (f) There are no pending or threatened claims, actions, suits,
grievances, audits, investigations, or other proceedings, involving, directly or
indirectly,  any Aurora  Employee  Benefit Plan, any fiduciary  thereof,  or any
rights or benefits  thereunder (except claims for benefits payable in the normal
operation of the Aurora Employee  Benefit Plan and  proceedings  with respect to
qualified  domestic  relations  orders),  and no basis  for any such  proceeding
exists.

                  (g) No written or oral  representations  have been made to any
employee, former employee, retiree, director or independent contractor (or their
beneficiaries,  dependents  or  spouses)  of Aurora or the  Aurora  Subsidiaries
promising or guaranteeing  any employer  payment or funding for the continuation
of medical,  dental or disability  coverage  after  termination of employment or
services, as applicable, beyond that legally required.

                  (h) No action or  omission of Aurora,  any Aurora  Subsidiary,
any ERISA  Affiliate  of Aurora or any  director,  officer,  employee,  or agent
thereof,  and no plan  documentation  or agreement,  summary plan description or
other  written  communication  distributed  generally to  employees,  in any way
restricts,  impairs or prohibits  (whether  legally binding or not) Aurora,  the
Aurora Subsidiaries,  any ERISA Affiliate of Aurora,  Cadence or Acquisition Sub
or any  successor  thereof  from  amending,  merging,  terminating  or otherwise
discontinuing  any Aurora  Employee  Benefit Plan in accordance with the express
terms of any such plan and applicable Legal Requirement at or after Closing, and
any such amendment,  merger, termination or discontinuance may occur without any
liability  to any of Aurora,  the Aurora  Subsidiaries,  any ERISA  Affiliate of
Aurora,  Cadence or  Acquisition  Sub. No  agreement,  arrangement,  commitment,
understanding or plan documentation or other written  communication  distributed
generally to employees  exists to create any additional  Aurora Employee Benefit
Plan not listed on SCHEDULE 2.12.


                                       22
<PAGE>

                  (i) SCHEDULE 2.12 sets forth a reasonable  estimate of each of
Aurora's and the Aurora Subsidiaries'  accrued liability for vacation,  sickness
and  disability  expenses  through and  including  the Closing  Date.  No Aurora
Employee Benefit Plans are or have ever been subject to COBRA.

                  (j) On and after the Closing Date,  neither Aurora, the Aurora
Subsidiaries, Cadence nor the Cadence Subsidiaries will have any liability or be
under any obligation with respect to any Aurora  Employee  Benefit Plan which is
not disclosed.

                  (k) Full payment has or will have, prior to the Closing,  been
made of all amounts which Aurora, the Aurora Subsidiaries or any ERISA Affiliate
of  Aurora  is  directly  or  indirectly   required,   under   applicable  Legal
Requirements,  the terms of any Aurora  Employee  Benefit Plan or any  agreement
relating to any Aurora  Employee  Benefit  Plan to have paid as a  contribution,
premium or other remittance  thereto or benefit thereunder if such payment has a
deadline on or before the Closing Date. There will be no change on or before the
Closing  Date  in the  operation  of any  Aurora  Employee  Benefit  Plan or any
documents  with respect  thereto which will result in an increase in any benefit
under any such Aurora Employee Benefit Plan,  except as may be required by Legal
Requirement.  Each Aurora Employee Benefit Plan can be terminated  within thirty
(30) days of the Closing Date, without payment of any additional contribution or
amount  other than for  benefits  accrued  thereunder  and without  creating any
unfunded or unaccrued  liability or the vesting or  acceleration of any benefits
promised by such plan.

                  (l) All Aurora  Employee  Benefit Plans that are welfare plans
comply  with and have been  administered  in material  compliance  to the extent
applicable  with  the  requirements  of the:  (i)  Consolidated  Omnibus  Budget
Reconciliation  Act  of  1985,  as  amended  ("COBRA");   (ii)  Heath  Insurance
Portability  and  Accountability  Act of 1996,  as amended;  (iii) Mental Health
Parity Act of 1996; (iv) Newborns' and Mothers'  Health  Protection Act; and (v)
Women's Health and Cancer Rights Act.

                  (m) The execution of this  Agreement and the  consummation  of
the transactions  contemplated hereby and thereby will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event under
any Aurora Employee Benefit Plan, employee agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness  of  indebtedness,  vesting,  distribution,  increase in benefits or
obligation to fund benefits with respect to any Employee.  None of the Severance
Plans of Aurora or any  Subsidiary  of Aurora  provide  that any of the benefits
under  such  Severance  Plans of Aurora  or any  Subsidiary  of  Aurora  will be
increased,  nor will the vesting of the benefits under such  Severance  Plans be
accelerated,  by the occurrence of any of the transactions  contemplated by this
Agreement nor will the value of any of the benefits under such  Severance  Plans
of Aurora or any  Subsidiary  of Aurora be calculated on the basis of any of the
transactions  contemplated  by this  Agreement  and no  payments  under any such
Severance Plans of Aurora or any Subsidiary of Aurora or other agreement will be
parachute  payments  under Section 280G of the Code that are  non-deductible  to
Aurora, Aurora Subsidiaries, Cadence or Cadence Subsidiaries or subject to Taxes
under Section 4999 of the Code.


                                       23
<PAGE>

                  (n) No Aurora Employee  Benefit Plan is or has been subject to
Section  302 of ERISA,  Section  412 of the Code or Title IV of  ERISA.  None of
Aurora,  any  Subsidiary  of Aurora or any ERISA  Affiliate of Aurora has or has
ever had any liability or obligation under Section 302 of ERISA,  Section 412 of
the Code or Title IV of  ERISA.  No  contributions  have  ever been made or been
owing to an Aurora  Employee  Benefit  Plan  pursuant  to or under a  collective
bargaining agreement between employee representatives and Aurora, any Subsidiary
of Aurora or any ERISA Affiliate of Aurora.

            2.13 INTELLECTUAL PROPERTY.

                  (a) SCHEDULE 2.13 lists all  Intellectual  Property of each of
Aurora and the Aurora Subsidiaries,  including all United States and foreign (i)
patents and patent applications;  (ii) trademark  registrations and applications
therefor and material,  unregistered  trademarks;  (iii) copyright registrations
and  applications  therefor;  and (iv) other filings and formal  actions made or
taken pursuant to federal, state, local and foreign Legal Requirements by Aurora
or the Aurora  Subsidiaries  to protect its or their  interests in  Intellectual
Property.

                  (b) To Aurora's best knowledge,  the conduct of the respective
businesses  of Aurora and the Aurora  Subsidiaries  as conducted in the past did
not infringe (when  conducted) and as currently  conducted or contemplated to be
conducted  does not infringe  (either  directly or  indirectly,  such as through
contributory  infringement) any Intellectual  Property right owned or controlled
by any third  party.  There is no pending or  threatened  Proceeding  before any
court, agency, arbitral tribunal, or registration authority in any jurisdiction,
whether against Aurora or any Aurora Subsidiary or any third party (i) involving
any  Intellectual  Property  owned by  Aurora  or any  Aurora  Subsidiary;  (ii)
alleging  that the  activities  or the conduct of the  business of Aurora or any
Aurora  Subsidiary,  or the use of any Intellectual  Property by any customer or
other licensee of Aurora or any Aurora  Subsidiary,  does or will infringe upon,
violate or constitute the unauthorized  use of the Intellectual  Property rights
of  any  third  party;  or  (iii)  challenging  the  ownership,  use,  validity,
enforceability or registrability of any Intellectual  Property, nor is there any
reasonable basis for any such Proceeding.

                  (c) There are no royalties,  fees, honoraria or other payments
payable  by  Aurora  or any  Aurora  Subsidiary  to any  Person by reason of the
ownership,  development,  use, license,  sale or disposition of any Intellectual
Property,  other than salaries and sales commissions paid to employees and sales
agents in the ordinary course of business.

            2.14 MATERIAL CONTRACTS.

                  (A) SCHEDULE 2.14 sets forth a true, complete and correct list
of every Contract  currently in effect to which Aurora or any Aurora  Subsidiary
is a party that:  (i)  provides or provided  for  aggregate  future  payments by
Aurora or any Aurora  Subsidiary  or to Aurora or any Aurora  Subsidiary of more
than $25,000;  (ii) was entered into by Aurora or any Aurora  Subsidiary with an
officer, director, key employee or Affiliate of Aurora or any Aurora Subsidiary;
(iii)  guarantees  or  indemnifies  or otherwise  causes or caused Aurora or any
Aurora  Subsidiary to be liable or otherwise  responsible for the obligations or
liabilities of another or provides or provided for a charitable  contribution by
Aurora or any Subsidiary;  (iv) involves or involved an agreement with any bank,
finance company or similar  organization;  (v) restricts or restricted Aurora or
any Aurora  Subsidiary from engaging in any business or activity anywhere in the
world; (vi) is or was an employment agreement, consulting agreement, independent
sales representative agreement or similar arrangement;  (vii) is or was a lease;
or  (viii) is or was  otherwise  material  to the  rights,  properties,  assets,
business  or  operations  of Aurora or any  Aurora  Subsidiary  (the  foregoing,
collectively, "Aurora Material Contracts"). Aurora has heretofore made available
true, complete and correct copies of all Aurora Material Contracts to Cadence.


                                       24
<PAGE>

                  (b) Each of the Aurora Material Contracts is in full force and
effect  and there is not now and there has not been  claimed  or  alleged by any
Person with respect to any Aurora Material  Contract,  any existing default,  or
event that with  notice or lapse of time or both would  constitute  a default or
event of default,  on the part of Aurora or any Aurora Subsidiary or on the part
of any other party  thereto;  no Consent  from,  or notice to, any  Governmental
Entity or other Person is required in order to maintain in full force and effect
any of the Aurora  Material  Contracts,  other than such Consents that have been
obtained  and are in full force and effect and such  notices that have been duly
given and, in each case copies of such Consents and notices have been  delivered
to Cadence and Acquisition Sub.

            2.15 TAXES.

                  (a) Except as set forth in SCHEDULE 2.15:

                        (i) Aurora and each Aurora  Subsidiary  has (A) duly and
                  timely  filed or caused to be filed  each Tax  Return  that is
                  required  to be filed by or on behalf of Aurora or such Aurora
                  Subsidiary  or that  includes  or  relates  to Aurora and such
                  Aurora Subsidiary,  their respective income,  sales, assets or
                  businesses,  and  such  Tax  Returns  are  true,  correct  and
                  complete;  (B) duly and timely  paid in full,  or caused to be
                  paid in full,  all  Taxes due and  payable  on or prior to the
                  Closing Date, and (C) properly  accrued all Taxes on the books
                  and  records  of  Aurora  and  such  Aurora   Subsidiary,   as
                  applicable,  in accordance  with GAAP and with a provision for
                  the payment of all Taxes due or claimed to be due or for which
                  Aurora and such Aurora Subsidiary, as applicable, otherwise is
                  liable,  in each case with  respect to Aurora's or such Aurora
                  Subsidiary's respective income, sales, assets or businesses;

                        (ii)  Neither  Aurora  nor  any  Aurora  Subsidiary  has
                  requested or is the beneficiary of an extension of time within
                  which to file any Tax Return in respect of any Tax period that
                  has not since been filed;

                        (iii) Aurora and each Aurora  Subsidiary has complied in
                  all respects with all applicable Legal  Requirements  relating
                  to the payment,  collection or withholding of any Tax, and the
                  remittance  thereof,  including,  but  not  limited  to,  Code
                  Section 3402;


                                       25
<PAGE>

                        (iv) There is no Encumbrance for Taxes upon any asset or
                  property  of Aurora or any Aurora  Subsidiary  (except for any
                  statutory Encumbrance for any Tax not yet due);

                        (v) All Taxes assessed or for which Aurora or any Aurora
                  Subsidiary  is liable with  respect to Aurora's or such Aurora
                  Subsidiary's  respective income,  sales,  assets or businesses
                  have been paid or accrued;

                        (vi) Any assessment, deficiency or adjustment related to
                  or in  connection  with any Tax for which Aurora or any Aurora
                  Subsidiary  is  liable or with  respect  to  Aurora's  or such
                  Aurora Subsidiaries',  as applicable, income, sales, assets or
                  business  that  is or  was  required  to be  reported  to  any
                  Governmental  Entity has been so reported,  and any additional
                  Taxes owed with respect thereto have been paid;

                        (vii) There is no  outstanding  subpoena or summons from
                  any  Governmental  Entity  with  respect  to any Tax for which
                  Aurora or any  Aurora  Subsidiary  is or may be liable or with
                  respect  to   Aurora's  or  such   Aurora   Subsidiary's,   as
                  applicable, income, sales, assets or business;

                        (viii)  Neither  Aurora nor any Aurora  Subsidiary  is a
                  party  to  any   agreement   with  any   Governmental   Entity
                  (including,  but not limited to, any closing  agreement within
                  the  meaning  of  Code  Section  7121 or any  analogous  Legal
                  Requirement)  or has requested or received a private letter or
                  other ruling from any Governmental  Entity relating to any Tax
                  for which Aurora or such Aurora Subsidiary is or may be liable
                  or with  respect to Aurora's or such Aurora  Subsidiary's,  as
                  applicable, income, sales, assets or business;

                        (ix) Neither  Aurora nor any Aurora  Subsidiary  has any
                  "tax-exempt use property,"  within the meaning of Code Section
                  168(h) or any similar provision of applicable law with respect
                  to Aurora, each Aurora Subsidiary, or their respective income,
                  sales, assets or businesses;

                        (x) No asset  of  Aurora  or any  Aurora  Subsidiary  is
                  required  to be  treated  as being  owned by any other  Person
                  pursuant to any provision of applicable  law,  including,  but
                  not limited to, the "safe harbor"  leasing  provisions of Code
                  Section  168(f)(8)  as in effect  prior to the repeal of those
                  "safe harbor" leasing provisions;

                        (xi) Neither  Aurora nor any Aurora  Subsidiary  is, nor
                  has any of them ever  been,  a "United  States  real  property
                  holding  corporation"  within  the  meaning  of  Code  Section
                  897(c)(2) at any time during the applicable period referred to
                  in Code Section 897(c)(l)(A)(ii);


                                       26
<PAGE>

                        (xii)  No  jurisdiction   where  Aurora  or  any  Aurora
                  Subsidiary  does not file a Tax Return has made or  threatened
                  to make a claim  that  Aurora  or such  Aurora  Subsidiary  is
                  required  to file a Tax  Return  for such  jurisdiction  or is
                  subject to Tax in such jurisdiction;

                        (xiii)  Neither  Aurora  nor any Aurora  Subsidiary  has
                  distributed  stock  of  another  Person  or has had its  stock
                  distributed  by  another  Person  in a  transaction  that  was
                  purported  or intended  to be governed by Code  Section 355 or
                  Code Section 361;

                        (xiv) Neither Aurora nor any Aurora  Subsidiary  will be
                  required to include any item of income in, or exclude any item
                  of deduction  from,  taxable income for any taxable period (or
                  portion   thereof)   ending  after  Aurora's   acquisition  of
                  Acquisition  Sub as a result  of (1) a  change  in  method  of
                  accounting;  (2) any intercompany transaction (as described in
                  Treasury  Regulation  Section  1.1502-13)  or any excess  loss
                  account  (as   described   in  Treasury   Regulation   Section
                  1.1502-19)  (or any  corresponding  or  similar  provision  of
                  state,  local or foreign Tax law); (3) any installment sale or
                  open  transaction made on or prior to the date Acquisition Sub
                  was  acquired  by  Aurora;  or (4) as a result of any  prepaid
                  amount  received  on or  prior  to the  date  Aurora  acquires
                  Acquisition Sub;

                        (xv) The statute of  limitations  for any Tax proceeding
                  or the assessment or collection of any Tax for which Aurora or
                  any Aurora  Subsidiary  is or may be liable or with respect to
                  its income,  sales, assets or business has never been extended
                  or waived;

                        (xvi) Neither  Aurora nor any Aurora  Subsidiary (1) has
                  been a member of an  affiliated  group  filing a  consolidated
                  federal  income  Tax Return or (2) has any  liability  for the
                  Taxes  of  any  Person   (other  than  Aurora  or  any  Aurora
                  Subsidiary) under Treasury Regulation Section 1.1502-6 (or any
                  similar   provision   of  state,   local  or   foreign   Legal
                  Requirement),  as a transferee  or  successor,  by contract or
                  otherwise.

                  (b)  SCHEDULE  2.15  sets  forth a list  of all  jurisdictions
(foreign and  domestic) in which any Tax Returns have been filed by or on behalf
of Aurora or any Aurora  Subsidiary,  or with  respect to Aurora's or the Aurora
Subsidiary's  respective  income,  assets or  businesses  within the  three-year
period ending on the Closing Date and a description  of each such Tax Return and
the period for which it was filed.

                  (c)  SCHEDULE  2.15  sets  forth a list  of all  jurisdictions
(foreign  and  domestic)  in which  income,  franchise  and other Tax Returns of
Aurora or an Aurora  Subsidiary  have been the subject of Tax  proceedings and a
description of each such Tax Return and the period for which it was filed.

                  (d) Aurora has  provided  to Cadence and  Acquisition  Sub all
audit reports, closing agreements, letter rulings, or technical advice memoranda
relating  to any Taxes for which  Aurora or any Aurora  Subsidiary  is or may be
liable with respect to Aurora's or such Aurora  Subsidiary's  respective income,
sales, assets or businesses.


                                       27
<PAGE>

            2.16 AFFILIATED PARTY TRANSACTIONS.

                  (a)  Except as listed  on  SCHEDULE  2.16(A)  and  except  for
obligations arising under the Transaction Documents,  neither Aurora, the Aurora
Subsidiaries,   nor  any  of  their  respective   Affiliates  has,  directly  or
indirectly,  any obligation to or cause of action or claim against Aurora or any
Aurora Subsidiary.

                  (b) Except as listed on SCHEDULE  2.16(B)  neither  Aurora nor
any Aurora Subsidiary has any loan or advance in excess of $1,000 outstanding to
any  stockholder,  officer,  director  or  employee  thereof  and no  officer or
director of Aurora or any Aurora  Subsidiary  or any  Affiliate of Aurora or any
Aurora Subsidiary has, either directly or indirectly:

                        (i) an equity  interest of five  percent (5%) or more in
                  any Person that purchases from or sells or furnishes to Aurora
                  or any Aurora  Subsidiary any goods or otherwise does business
                  with Aurora or any Aurora Subsidiary; or

                        (ii) a beneficial  interest in any contract,  commitment
                  or  agreement to which  Aurora or any Aurora  Subsidiary  is a
                  party or under  which  Aurora  or such  Aurora  Subsidiary  is
                  obligated  or bound or to which the property of Aurora or such
                  Aurora  Subsidiary  may  be  subject,  other  than  contracts,
                  commitments  or  agreements  between  Aurora  or  such  Aurora
                  Subsidiary and such Persons in their  capacities as employees,
                  officers  or  directors  of  Aurora  or a  Aurora  Subsidiary;
                  provided, however, that such representation and warranty shall
                  not apply to the ownership,  as a passive  investment,  by any
                  such  officer or  Affiliate of less than one percent (1%) of a
                  class  of   securities   listed  for  trading  on  a  national
                  securities exchange or publicly traded in the over-the-counter
                  market.

            2.17  ENVIRONMENTAL  MATTERS.  Aurora has not caused or allowed,  or
contracted with any party for, the generation,  use, transportation,  treatment,
storage or disposal of any Hazardous Substances in connection with the operation
of its business or otherwise.  Except as set forth in SCHEDULE 2.17, Aurora, the
operation of its business,  and the Aurora  Interests are in compliance with all
applicable  Environmental  Laws and  orders or  directives  of any  Governmental
Entity having  jurisdiction under such Environmental  Laws,  including,  without
limitation,  any Environmental  Laws or orders or directives with respect to any
cleanup  or  remediation  of any  release  or threat  of  release  of  Hazardous
Substances,  and no  actions  are  presently  required  to comply  with any such
applicable Environmental Laws. Aurora has not received any citation,  directive,
letter or other communication, written or oral, or any notice of any proceeding,
claim or lawsuit arising out of or relating to any Environmental  Laws, from any
Person  arising out of the  ownership of the Aurora  Interests or the conduct of
its  operations,  and  Aurora  is not aware of any basis  therefor.  Aurora  has
obtained and is maintaining  in full force and effect all permits,  licenses and
approvals  required by all Environmental Laws applicable to the Aurora Interests
and the business operations conducted thereon and is in compliance with all such
permits, licenses and approvals.  Aurora has not caused or allowed a release, or
a threat of release,  of any  Hazardous  Substance  onto,  at or near the Aurora
Interests.


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<PAGE>

            2.18 NO  BROKERS.  Neither  Aurora nor any  Affiliate  of Aurora has
employed,  or otherwise engaged,  any broker or finder or incurred any liability
for any brokerage or  investment  banking  fees,  commissions,  finders' fees or
other  similar fees in connection  with the  transactions  contemplated  by this
Agreement.

            2.19 RECEIVABLES.  All of the accounts  receivable of Aurora and the
Aurora  Subsidiaries  have arisen from bona fide  transactions  in the  ordinary
course of Aurora's or the Aurora Subsidiaries' respective businesses, consistent
with past  practice and are fully  collectible  within one hundred  twenty (120)
days of the Closing Date.

            2.20 ASSETS  UTILIZED IN THE BUSINESS.  The assets,  properties  and
rights owned,  leased or licensed by Aurora and the Aurora Subsidiaries and used
in connection with their  respective  businesses and all the agreements to which
Aurora  or  any  Aurora  Subsidiary  is a  party  relating  to  the  businesses,
constitute  all of the assets,  properties,  rights and  agreements  required in
connection with the operation and conduct by Aurora and the Aurora  Subsidiaries
of their respective businesses as presently conducted.

            2.21  INSURANCE.  Set  forth  in  SCHEDULE  2.21  is a  list  of all
insurance  policies  of any kind  covering  Aurora and the Aurora  Subsidiaries.
Cadence and Acquisition Sub have been provided copies of all such policies. Each
of  these  insurance  policies  (a)  are  with  insurance   companies  that  are
financially  sound  and  reputable  and are in full  force and  effect;  (b) are
sufficient  for  compliance  with all  material  Legal  Requirements  and of all
applicable  Aurora  Material  Contracts;  and (c)  are  valid,  outstanding  and
enforceable  policies.  Since  January  1, 2000,  neither  Aurora nor any Aurora
Subsidiary has been denied any insurance coverage which it has requested.

            2.22  DELIVERY  OF  DOCUMENTS;   CORPORATE   RECORDS.   Cadence  and
Acquisition  Sub have heretofore  received true,  correct and complete copies of
all documents,  instruments,  agreements and records referred to in SECTION 2 of
this  Agreement  and copies of the minute and stock  record  books of Aurora and
each Aurora Subsidiary.  The minute and stock record books of each of Aurora and
the Aurora Subsidiaries contain true, correct and complete copies of the records
of all  meetings  and  consents  in lieu of  meetings  of Aurora's or the Aurora
Subsidiaries',  as applicable,  boards of directors (and all committees thereof)
and the shareholders and members of Aurora and the Aurora Subsidiaries since the
respective dates of their incorporation or organization.

            2.23 LABOR AND EMPLOYMENT MATTERS.

                  (a) Set forth on SCHEDULE  2.23 is a list of all  employees of
Aurora and the Aurora  Subsidiaries  as of the date hereof and their  respective
positions and hire dates.

                  (b) (i) Neither  Aurora nor any Aurora  Subsidiary is party to
or bound by any collective  bargaining  agreement or similar  agreement with any
labor  organization,  or work  rules  or  practices  agreed  to with  any  labor
organization  or employee  association  applicable to employees of Aurora or the
Aurora  Subsidiaries;  (ii)  none  of the  employees  of  Aurora  or any  Aurora
Subsidiary  are  represented  by  any  labor   organization  and  there  are  no
organizational   campaigns,   demands,   petitions  or  proceedings  pending  or
threatened by any labor  organization or group of employees seeking  recognition
or  certification  as  collective  bargaining  representative  of any  group  of
employees of Aurora or the Aurora Subsidiaries;  (iii) there are no union claims
to represent  the employees of Aurora or any Aurora  Subsidiary;  and (iv) there
are no strikes,  controversies,  slowdowns,  work  stoppages,  lockouts or labor
disputes  pending  or  threatened  against  or  affecting  Aurora or any  Aurora
Subsidiary,  and there have not been any such  actions  during the past five (5)
years.


                                       29
<PAGE>

                  (c) Aurora and each Aurora Subsidiary is, and has at all times
during at least the last three (3) years been, in compliance with all applicable
Legal Requirements respecting immigration,  employment and employment practices,
and the terms and  conditions  of  employment,  including,  without  limitation,
employment standards,  equal employment  opportunity,  family and medical leave,
wages,  hours of work and occupational  health and safety, and is not engaged in
any unfair labor practices as defined in the National Labor Relations Act or any
other applicable Legal Requirement. There are no employment contracts, severance
agreements  or  retention  agreements,  oral or written,  with any  employees of
Aurora or any Aurora  Subsidiary  and no written  personnel  policies,  rules or
procedures  applicable  to employees of Aurora or any Aurora  Subsidiary,  other
than  those  listed in  SCHEDULE  2.23,  true and  correct  copies of which have
heretofore  been made available to Cadence and  Acquisition  Sub.  Except as set
forth in SCHEDULE 2.23,  (i) there are no  Proceedings  related to Aurora or any
Aurora  Subsidiary  pending,  or  threatened,  in any  court or with any  agency
responsible  for the  enforcement of federal,  state,  local or foreign labor or
employment  laws  regarding  breach  of  any  express  or  implied  contract  of
employment,  any Legal  Requirement  or regulation  governing  employment or the
termination  thereof or other  illegal,  discriminatory,  wrongful  or  tortious
conduct in connection with the employment relationship, the terms and conditions
of  employment,  or  applications  for  employment  with  Aurora  or any  Aurora
Subsidiary;  and (ii) to Aurora's knowledge, no federal, state, local or foreign
Governmental Entity responsible for the enforcement of immigration, labor, equal
employment  opportunity,  family  and  medical  leave,  wages,  hours  of  work,
occupational  health and safety or any other  employment laws intends to conduct
or is conducting an  investigation  with respect to or relating to Aurora or any
Aurora Subsidiary.

                  (d) Since  January  1,  2000,  neither  Aurora  nor any Aurora
Subsidiary has  effectuated  (i) a "plant  closing" as defined in WARN affecting
any site of employment or one or more  facilities or operating  units within any
site of employment or facility of Aurora or the Aurora  Subsidiaries;  or (ii) a
"mass layoff" as defined in WARN affecting any site of employment or facility of
Aurora or any Aurora  Subsidiary;  nor has Aurora or any Aurora  Subsidiary been
affected by any  transaction  or engaged in layoffs or  employment  terminations
sufficient in number to trigger  application  of any similar state or local law.
None of the  employees  of Aurora  or any  Aurora  Subsidiary  has  suffered  an
"employment  loss," as defined in WARN,  since  January 1, 2001.  Aurora and the
Aurora  Subsidiaries shall be solely and exclusively liable to provide such WARN
or other plant closing or mass layoff  notices as may be necessary in connection
with any loss of employment by any employee of Aurora or the Aurora Subsidiaries
through and including the Closing Date.


                                       30
<PAGE>

                  (e)  SCHEDULE  2.23 sets forth a complete  list of all foreign
national employees on whose behalf Aurora or any Aurora Subsidiary has submitted
applications and petitions to the U.S. Department of Labor, U.S. Immigration and
Naturalization  Service, or U.S. Department of State for immigration  employment
and visa benefits;  and Aurora and each Aurora  Subsidiary has provided  Cadence
and Acquisition Sub with copies of all such  applications  and petitions and all
government  notices  regarding  adjudication of such applications and petitions.
SCHEDULE 2.23 identifies and describes any pending or threatened actions against
Aurora or the Aurora  Subsidiaries for violations  under the Immigration  Reform
and  Control Act of 1986  respecting  such  employees  of Aurora and such Aurora
Subsidiary.

                  (f) SCHEDULE  2.23 sets forth a complete  list of all business
and/or assets of Aurora and the Aurora Subsidiaries  involving federal contracts
giving rise to any  reporting  or filing  obligations  with OFCCP and Aurora and
each Aurora Subsidiary has complied in all material respects with all hiring and
employment obligations applicable under OFCCP rules and regulations.

            2.24  RESTRICTIVE  COVENANTS.  Except as set forth on SCHEDULE 2.24,
neither  Aurora nor any Aurora  Subsidiary is subject to any covenant that would
restrict  Aurora or the Aurora  Subsidiaries  from engaging in their  respective
businesses.

            2.25 BANK ACCOUNTS. SCHEDULE 2.25 sets forth the names and locations
of all banks,  depositories and other financial  institutions in which Aurora or
any Aurora  Subsidiary  has an account or safe  deposit box and the names of all
Persons authorized to draw thereon or to have access thereto.

            2.26 DIRECTORS,  OFFICERS AND CERTAIN EMPLOYEES.  SCHEDULE 2.26 sets
forth a complete and correct list of the names and title,  for each director and
officer of Aurora and each Aurora Subsidiary,  who received  compensation during
Aurora's and such Aurora Subsidiary's, as applicable, most recently ended fiscal
year.  Cadence has been provided current annual salary and bonus information for
all  Aurora  employees,  officers  and  directors.  Aurora  is not  aware of any
employee who intends to terminate his or her employment relationship with Aurora
or any Aurora Subsidiary, as a result of the transactions contemplated hereby or
otherwise.

            2.27 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty by
Aurora  contained  in this  Agreement  or in any  certificate,  list,  Schedule,
Exhibit or other instrument specified or referred to in this Agreement,  whether
heretofore  furnished to Cadence or  Acquisition  Sub or hereafter  furnished to
Cadence or  Acquisition  Sub  pursuant to this  Agreement on the part of Aurora,
contains or will  contain any untrue  statement  of a material  fact or omits or
will omit any material fact necessary to make the statements  contained therein,
in light of the circumstances under which they were made, not misleading.

      3. REPRESENTATIONS AND WARRANTIES CADENCE AND ACQUISITION SUB. Cadence and
Acquisition  Sub  represent  and  warrant to Aurora  that each of the  following
statements is true and correct as of the date hereof:

            3.1 ORGANIZATION  AND GOOD STANDING.  SCHEDULE 3.1 lists each direct
and indirect  Subsidiary of Cadence.  Each of Acquisition  Sub,  Cadence and any
other Cadence  Subsidiary is a corporation duly organized,  validly existing and
in good  standing  under  the  laws of its  state of  incorporation  and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being  conducted.  Except as set forth
in  SCHEDULE  3.1,  each of  Acquisition  Sub,  Cadence  and any  other  Cadence
Subsidiary is duly qualified or licensed to do business as a foreign corporation
and is in good standing in each jurisdiction in which the nature of the business
conducted by it makes such  qualification  or licensing  necessary.  Cadence has
delivered  to Aurora  true,  correct  and  complete  copies of the  Articles  of
Incorporation  and Bylaws and other  organizational  documents,  as currently in
effect of Cadence and each Cadence Subsidiary.


                                       31
<PAGE>

            3.2 AUTHORIZATION AND VALIDITY.  Each of Acquisition Sub and Cadence
has the  requisite  power and  authority  to execute,  deliver and perform  this
Agreement  and  each of the  other  Transaction  Documents  to be  executed  and
delivered  by  Acquisition  Sub or  Cadence,  as  appropriate,  pursuant to this
Agreement,  and to assume and perform any obligations  hereunder and thereunder,
and to consummate the transactions contemplated hereby and thereby. Each of this
Agreement  and the other  Transaction  Documents to be executed and delivered by
Acquisition Sub or Cadence pursuant to this Agreement have been duly authorized,
executed and delivered by Acquisition Sub or Cadence,  as  appropriate,  and are
valid and binding  obligations of Acquisition  Sub or Cadence,  as  appropriate,
enforceable against each such entity in accordance with their respective terms.

            3.3 NO CONFLICTS OR VIOLATION.

                  (a) The  execution,  delivery and  performance of each of this
Agreement and the other Transaction  Documents by Acquisition Sub and Cadence do
not, and the  consummation  by it of the  transactions  contemplated  hereby and
thereby  will not: (i) violate any  provision of the Articles of  Incorporation,
Bylaws or other  organizational  documents of either Acquisition Sub or Cadence,
(ii)  result in a  violation  or breach of, or  constitute  (with or without due
notice  or lapse  of time or  both) a  default  (or  give  rise to any  right of
termination,  amendment,  cancellation or acceleration)  under any of the terms,
conditions or provisions of any Contract to which  Acquisition Sub or Cadence is
a party or by which any of their respective properties or assets may be bound or
otherwise subject,  except for any Required Consents, or (iii) violate any Legal
Requirement  applicable to Acquisition Sub or Cadence or any of their respective
properties or assets.

                  (b) No  filing  or  registration  with,  notification  to,  or
authorization,  consent or approval of, any  legislative or executive  agency or
department  or other  regulatory  service,  authority  or agency  or any  court,
arbitration  panel or other tribunal or judicial  authority of any  Governmental
Entity or Person,  is required in connection  with the  execution,  delivery and
performance  of this  Agreement  or any of the other  Transaction  Documents  by
Acquisition Sub or Cadence or the  consummation by Acquisition Sub or Cadence of
the  transactions  contemplated  hereby and  thereby,  except  for the  Required
Consents set forth on SCHEDULE 3.3 hereof.

            3.4 THE SHARES.  The shares of Cadence  Common Stock to be issued to
Aurora's stockholders pursuant to this Agreement, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully paid
and  non-assessable.  The issuance of the Cadence  Common stock pursuant to this
Agreement  will  transfer to Aurora's  stockholders  valid title to such shares,
free and clear of all liens, encumbrances and claims of every kind.


                                       32
<PAGE>

            3.5 SEC  FILINGS;  DISCLOSURE.  Cadence  has filed  with the SEC all
forms,  statements,  reports  and  documents  required to be filed by it for the
fiscal year ended  September 30, 2004 under each of the  Securities Act of 1933,
as amended (the "1933 Act"),  the  Securities  Exchange Act of 1934,  as amended
(the "1934 Act"),  and the respective  rules and  regulations  thereunder,  (the
"Cadence  Disclosure  Documents")  all of  which,  as  amended,  if  applicable,
complied when filed in all material respects with the applicable requirements of
the appropriate Act and the rules and regulations  thereunder.  As of the filing
date of each,  the  Cadence  Disclosure  Documents  did not  contain  any untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances under which they were made, not misleading.

            3.6 LITIGATION; COMPLIANCE WITH LAW; LICENSES AND PERMITS.

                  (a)  There  is  no  Proceeding  pending,   nor  is  there  any
Proceeding threatened,  that involves or affects either of Cadence,  Acquisition
Sub, or any Cadence  Subsidiary  by or before any  Governmental  Entity,  court,
arbitration panel or any other Person.

                  (b) Since January 1, 2000, Cadence and each Cadence Subsidiary
has, and since its formation  Acquisition Sub has,  complied with all applicable
Legal Requirements,  including but not limited to Legal Requirements relating to
Taxes,  zoning,  building  codes,  antitrust,  occupational  safety and  health,
industrial hygiene,  environmental  protection,  water, ground or air pollution,
the  generation,   handling,   treatment,   storage  or  disposal  of  Hazardous
Substances,  consumer product safety,  product liability,  hiring, wages, hours,
employee  benefit plans and programs,  collective  bargaining and the payment of
withholding  and social  security  Taxes.  Except as set forth on SCHEDULE  3.6,
since January 1, 2000,  neither Cadence,  any Cadence Subsidiary nor Acquisition
Sub has received any notice of any  violation  of any Legal  Requirement  from a
Governmental Entity or others.

                  (c) Except as set forth on SCHEDULE 3.6, Cadence,  Acquisition
Sub and each Cadence  Subsidiary  have every License issued by any  Governmental
Entity,  and every  Consent by or on behalf of any person  required  for them to
conduct their respective  businesses as presently  conducted.  All such Licenses
and Consents are in full force and effect and neither  Cadence,  Acquisition Sub
nor any other Cadence Subsidiary has received notice of any pending cancellation
or  suspension  of any thereof nor is any  cancellation  or  suspension  thereof
threatened. The applicability and validity of each such License and Consent will
not be adversely  affected by the consummation of the transactions  contemplated
by this Agreement or any other Transaction Document.

            3.7  ACCURACY OF  INFORMATION  FURNISHED  AND  REPRESENTATIONS.  All
information  furnished to Aurora by Acquisition  Sub or Cadence herein or in any
Schedule or Exhibit  hereto,  or in any  certificate,  list or other  instrument
specified or referred to in this  Agreement  is, and as  supplemented  after the
date of this  Agreement  by any and  all  filings  with  the SEC and any and all
publicly disclosed  information,  including but not limited to any and all press
releases,  as of the Closing  Date will be,  true,  correct and  complete in all
material respects, and such information states all material facts required to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances  under which such statements were made, true, correct and complete
in all material respects.


                                       33
<PAGE>

            3.8 INFORMATION SUPPLIED.  The registration statement on Form S-4 to
be filed with the SEC by Cadence in  connection  with the  issuance of shares of
Cadence  Common Stock  (including  shares of Cadence  Common Stock issuable upon
exercise or conversion of the Aurora  Convertible  Securities) in the Merger, as
amended or supplemented from time to time (as so amended and  supplemented,  the
"Registration  Statement"),  and any other documents to be filed by Cadence with
the SEC or any other  Governmental  Entity in  connection  with the  Transaction
Documents  and the  transactions  contemplated  thereby will (in the case of the
Registration Statement and any such other documents filed with the SEC under the
1933 Act or the 1934 Act) comply as to form in all  material  respects  with the
requirements  of the 1933 Act and the 1934 Act, and will not, on the date of its
filing  or, in the case of the  Registration  Statement,  at the time it becomes
effective under the 1933 Act contain any untrue  statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they are made, not misleading,  except that no representation is made by Cadence
with  respect  to  information  supplied  in  writing  by or on behalf of Aurora
expressly for inclusion therein.

            3.9 ACQUISITION SUB. Acquisition Sub is a newly-formed  wholly-owned
subsidiary of Cadence that has not engaged in any operations through the Closing
Date.

            3.10 CAPITALIZATION.

                  (a) The  authorized  capital stock of Cadence and each Cadence
Subsidiary, the issued and outstanding capital stock of Cadence and each Cadence
Subsidiary  and the record and  beneficial  ownership  of the  capital  stock of
Cadence and each  Cadence  Subsidiary  is set forth on  SCHEDULE  3.10 or in the
Cadence  Disclosure  Documents.  The  shares of  Cadence  Common  Stock are duly
authorized,   validly  issued,   fully  paid  and   non-assessable.   Except  as
contemplated  by this Agreement or as set forth on SCHEDULE  3.10,  there are no
(i) options, warrants, calls, preemptive rights,  subscriptions or other rights,
convertible  securities,  agreements or commitments of any character obligating,
now or in the future,  Cadence or any Cadence  Subsidiary to issue,  transfer or
sell any shares of  capital  stock,  options,  warrants,  calls or other  equity
interest  of any  kind  whatsoever  in  Cadence  or any  Cadence  Subsidiary  or
securities convertible into or exchangeable for such shares or equity interests,
(ii)  contractual  obligations  of Cadence to  repurchase,  redeem or  otherwise
acquire  any  capital  stock  or  equity  interest  of  Cadence  or any  Cadence
Subsidiary  or (iii)  voting  trusts,  proxies  or similar  agreements  to which
Cadence or a Cadence  Subsidiary  is a party  with  respect to the voting of the
capital stock of Cadence or any Cadence Subsidiary.

                  (b)  Except as set forth on  Schedule  3.10 and except for the
common stock of the Cadence  Subsidiaries  and temporary  investments of cash in
marketable  securities,  Cadence does not own any outstanding  shares of capital
stock (or other equity  interests of entities  other than  corporations)  of any
partnership,  joint venture,  trust,  corporation,  limited liability company or
other entity.


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<PAGE>

            3.11 FINANCIAL STATEMENTS.

                  (a)  Attached  as SCHEDULE  3.11 is the  audited  consolidated
balance  sheet of Cadence as of  September  30, 2004  together  with the related
audited  consolidated  statement  of income  (including  the  related  notes and
reports  of  independent  auditors,  if any)  for the  fiscal  year  then  ended
(together,  with the  Latest  Cadence  Balance  Sheet  and the  Interim  Cadence
Financial Statements, the "Regular Cadence Financial Statements").

                  (b)  The  Regular  Cadence  Financial   Statements  have  been
prepared by Cadence and have been derived  from,  and agree with,  the books and
records of Cadence and fairly  present the  financial  position of Cadence as of
the  respective  dates  thereof and the results of operations of Cadence for the
respective periods set forth therein.  The Regular Cadence Financial  Statements
have been prepared in  accordance  with GAAP as of the dates and for the periods
involved, subject to the absence of notes and, in the case of the Latest Cadence
Balance Sheet and the related  statements of operations for the interim  period,
to normal fiscal  year-end  adjustments  in the ordinary  course (none of which,
individually  or in the  aggregate,  will be  material  to the  business  or the
operations of Cadence).

                  (c) Cadence maintains a system of internal accounting controls
sufficient to provide  reasonable  assurances that (i) transactions are executed
in  accordance  with  management's  general  or  specific  authorizations,  (ii)
transactions  are  recorded as  necessary  to permit  preparation  of  financial
statements in accordance  with GAAP and to maintain assets  accountability,  and
(iii) access to assets is permitted only in accordance with management's general
or specific  authorization,  except for any  controls the absence of which would
not result in a Material Adverse Effect.

            3.12 OPERATION OF BUSINESS.

                  (a)  Since  the  date  of  the   Regular   Cadence   Financial
Statements,  Cadence and each Cadence  Subsidiary  has  continued to operate its
business in a manner and system of operation  employed  immediately prior to the
date of the Regular Cadence Financial Statements,  and Cadence has used its best
efforts to prevent  harm or damage to the  reputation  of Cadence or the Cadence
Subsidiaries or reduction of existing customer accounts.

                  (b) Except as  specifically  contemplated by this Agreement or
as set forth on SCHEDULE 3.12,  since the date of the Regular Cadence  Financial
Statements  neither  Cadence nor any Cadence  Subsidiary  has (i)  incurred  any
liabilities,  except in the  ordinary  course of business  consistent  with past
practice;  (ii) paid any obligation or liability, or discharged or satisfied any
Encumbrance other than those securing current  liabilities,  in each case in the
ordinary  course of  business;  (iii)  mortgaged,  pledged or  subjected  to any
Encumbrance  any of its assets,  tangible or intangible,  except in the ordinary
course of business;  (iv) sold,  transferred  or leased any of its assets except
the sale of  inventory  in the  ordinary  course of  business;  (v) suffered any
material  physical  damage,  destruction  or loss  (whether  or not  covered  by
insurance)  affecting its properties,  business or prospects;  (vi) entered into
any transaction other than in the ordinary course of business; (vii) encountered
any labor  difficulties or labor union organizing  activities;  (viii) issued or
sold any shares of capital  stock or other  securities  or granted any  options,
warrants,  or other purchase  rights with respect thereto other than pursuant to
this Agreement; (ix) made any acquisition or disposition of any assets or become
involved in any other material transaction,  including,  without any limitation,
any merger or consolidation  with,  purchase of all or part of the assets of, or
acquisition  of  any  business  of  any   proprietorship,   firm,   association,
corporation or other business  organization or division  thereof;  (x) increased
the  compensation  payable,  or to become  payable,  to any of its  directors or
employees,  or increased the scope or nature of any fringe benefits provided for
its  employees  or  directors,  other than as Cadence  has  separately  informed
Aurora;  (xi) made any capital  investment in, any loan to or any acquisition of
the  securities  or assets of any other  Person;  (xii)  canceled,  compromised,
waived or  released  any  material  right or claim;  (xiii)  made any  change in
employment terms for any of its officers or employees;  (xiv) made or pledged to
make any  charitable  contribution  or other  capital  contribution  outside the
ordinary  course of  business;  (xv)  violated  any Legal  Requirement,  if such
violation  could have  resulted in a Material  Adverse  Effect on Cadence or any
Cadence  Subsidiary,  or  failed  to  maintain  all  governmental  licenses  and
approvals  required to operate its business as it is currently being  conducted;
or (xvi) agreed or committed,  whether in writing or otherwise, to do any of the
foregoing other than pursuant to the Transaction  Documents and the transactions
contemplated  hereby and  thereby.  In  addition,  since the date of the Regular
Cadence  Financial  Statements  neither  Cadence nor any Cadence  Subsidiary has
accelerated,  terminated, modified or canceled any material agreement, contract,
lease or license to which it is a party or by which it or its assets are bound.


                                       35
<PAGE>

                  (c)  Since  the  date  of  the   Regular   Cadence   Financial
Statements,  no event, condition or circumstance  (including an event, condition
or circumstance that has a general adverse effect on the economy as a whole) has
occurred that could, or could be reasonably  likely to, have a Material  Adverse
Effect on Cadence or any Cadence Subsidiary.

            3.13  NON-OIL  AND GAS  REAL  PROPERTY.  SCHEDULE  3.13  contains  a
complete and accurate list of all real  property,  leases in real  property,  or
other  interests  in real  property  owned  or held by  Cadence  or any  Cadence
Subsidiary  ( the  "Schedule  3.13  Property"),  except that the  SCHEDULE  3.13
Property  does not include any property  included in the Cadence  Interests  (as
enumerated in SCHEDULE 3.15).  Cadence has delivered or made available to Aurora
copies of the deeds and other  instruments (as recorded) by which Cadence or any
Cadence Subsidiary acquired the SCHEDULE 3.13 Property which it owns, and copies
of all  title  insurance  policies,  opinions,  abstracts,  and  surveys  in the
possession  of Cadence or any Cadence  Subsidiary  and  relating to the SCHEDULE
3.13  Property  which it owns.  Cadence and each Cadence  Subsidiary  holds good
title to all SCHEDULE 3.13 Property owned by Cadence or a Cadence Subsidiary, as
applicable.  The SCHEDULE 3.13 Property is, or effective simultaneously with the
Closing  will be, free and clear of all  Encumbrances  and is not subject to any
rights of way, building use restrictions,  exceptions, variances,  reservations,
or limitations of any nature except for (a) matters  disclosed in SCHEDULE 3.13,
(b) liens for current  taxes not yet due, and (c) zoning laws and other land use
restrictions  that do not impair the present or anticipated  use of the property
subject thereto.

            3.14 NON-OIL AND GAS CADENCE  FIXTURES AND EQUIPMENT.  Except as set
forth on SCHEDULE 3.14, Cadence and each Cadence Subsidiary, as applicable,  has
good title to, or a valid leasehold interest in, the Fixtures and Equipment that
are used by Cadence or any Cadence  Subsidiary in connection with the conduct of
its business (the  "Cadence  Fixtures and  Equipment"),  except that the Cadence
Fixtures  and  Equipment  do not  include any  property  included in the Cadence
Interests.  The Cadence  Fixtures and Equipment are  structurally  sound, are in
good operating condition and repair, are adequate for the uses to which they are
being  put,  are not in need of  maintenance  or repairs  except  for  ordinary,
routine  maintenance and repairs and are sufficient for the conduct of Cadence's
businesses  in the manner as conducted  prior to the Closing.  Cadence  owns, or
effective  simultaneously with the Closing will own, all of the Cadence Fixtures
and  Equipment  free  and  clear  of all  Encumbrances  except  for (a)  matters
disclosed  in SCHEDULE  3.14,  (b) liens for current  taxes not yet due, and (c)
zoning  laws and other land use  restrictions  that do not impair the present or
anticipated use of the property subject thereto.


                                       36
<PAGE>

            3.15 OIL AND GAS INTERESTS.

                  (a) Except as set forth on SCHEDULE  3.15,  Cadence holds Good
and Defensible Title to the Cadence Interests.

                  (b) SCHEDULE 3.15 sets forth all platforms and pipelines,  and
the equipment,  facilities and personal  property  related to such platforms and
pipelines, comprising part of the Cadence Appurtenant Rights.

                  (c) SCHEDULE 3.15 sets forth  Cadence's  Working  Interest and
Net Revenue Interest in each Cadence Well.

                  (d) The Cadence  Basic  Documents are in full force and effect
and constitute valid and binding obligations of the parties thereto, and

                        (i) Cadence is not in material breach or default (and no
                  situation  exists  which with the passing of time or giving of
                  notice  would  give rise to such a breach or  default)  of its
                  obligations  under any of the Cadence Basic Documents,  and no
                  breach  or  default  by any  other  party to a  Cadence  Basic
                  Document  (or  situation  which  with the  passage  of time or
                  giving of notice  would give rise to such a breach or default)
                  exists,  to the  extent  such  breach or default  (whether  by
                  Cadence or another  party to a Cadence Basic  Document)  could
                  adversely affect any of the Cadence Interests.

                        (ii) Except as set forth in SCHEDULE  3.15, all payments
                  (including,  without limitation, all delay rentals, royalties,
                  excess  royalties,   minimum  royalties,   overriding  royalty
                  interests,  shut-in  royalties  and valid calls for payment or
                  prepayment under operating agreements) owing under the Cadence
                  Basic  Documents  have  been and are  being  made  timely  and
                  properly,  and before the same became  delinquent  (by Cadence
                  where the  non-payment  of same by another  party to a Cadence
                  Basic  Document  could  adversely  affect  any of the  Cadence
                  Interests) have been and are being made by such other party in
                  all material respects.

                        (iii) All  conditions  necessary to maintain the Cadence
                  Basic Documents in force have been duly performed.


                                       37
<PAGE>

                        (iv) No non-consent operations exist with respect to any
                  of the Cadence  Interests that have resulted or will result in
                  a  temporary  or  permanent  increase  or  decrease  in either
                  Cadence's  Net Revenue  Interest  or Working  Interest in such
                  Cadence Interest.

                        (v) Except as disclosed on SCHEDULE 3.15, Cadence is not
                  obligated to incur any expenses,  and has not made commitments
                  to make  expenditures  (capital  or  otherwise),  or to  apply
                  revenues  from a  Well's  production  in  connection  with any
                  Cadence  Interests  (and  no  other  similar   obligations  or
                  liabilities  have been incurred) with respect to the ownership
                  or  operation  of Cadence  Interests.  Except as  provided  in
                  SCHEDULE  3.15,  Cadence  will not incur or commit to any such
                  expense in excess of $250,000 except to the extent that Aurora
                  has  been  given  seven  days  prior  written  notice  and has
                  consented thereto in writing.  Except as disclosed in SCHEDULE
                  3.15,  all  expenses  payable  under the terms of the  Cadence
                  Basic  Documents have been properly and timely paid except for
                  such  expenses  as are  being  currently  paid or will be paid
                  prior to delinquency. Except for budgeted capital expenditures
                  as set  forth in  SCHEDULE  3.15,  no  proposals  calling  for
                  expenditures  in excess of  $250,000  for any one  project are
                  currently  outstanding  (whether  made by  Cadence,  a Cadence
                  Subsidiary, or by any other party) to drill additional Cadence
                  wells, or to deepen, plug back, sidetrack,  abandon, or rework
                  existing  Wells,  or to  conduct  other  operations  for which
                  consent is required under the applicable  operating agreement,
                  or  to  conduct  any  other  operations,   other  than  normal
                  operation of existing Wells on Cadence Interests.

                        (vi) No agreements or  arrangements  exist for the sale,
                  gathering,  transportation,  compression, treating, processing
                  or other marketing of a material volume of production from the
                  Cadence Interests (including without limitation,  calls on, or
                  other rights to purchase,  production, whether or not the same
                  are currently being  exercised)  other than the agreements set
                  forth in SCHEDULE 3.15.

                        (vii) Except as set forth in SCHEDULE 3.15,  Cadence has
                  not  received  prepayments  (including,  but not  limited  to,
                  payments for oil and gas not taken  pursuant to  "take-or-pay"
                  arrangements)  for any oil or gas  produced  from the  Cadence
                  Interests  as a result of which the  obligation  does (or may)
                  exist (i) to  deliver  oil or gas  produced  from the  Cadence
                  Interests   beginning  on  the  Effective  Date  without  then
                  receiving  payment  therefor,  or (ii) to make  repayments  in
                  cash. For each Cadence  Interest listed in SCHEDULE 3.15, such
                  Schedule also sets forth as to each such Cadence  Interest (i)
                  the total amount of prepayment received prior to the Effective
                  Date,  and (ii)  whether or not a cash payment can be required
                  in  the  event  recoupment  out  of  production  proves  to be
                  inadequate.  Except as set forth in SCHEDULE 3.15, there is no
                  Cadence  Interest  with respect to which  Cadence has taken an
                  Over-Produced  or  Under-produced  position to the extent such
                  Over-produced  or  Under-produced  position has not, as of the
                  day immediately  preceding the Effective Date, been fully made
                  up or otherwise extinguished. For each Cadence Interest listed
                  in  SCHEDULE  3.15,  such  Schedule  also  sets  forth,  on  a
                  Well-by-Well  or any  other  basis as may be  dictated  by any
                  applicable balancing  agreement,  (i) whether Cadence is in an
                  Over-produced or Under-produced  position,  (ii) the amount of
                  such Over-production or Under-production,  (iii) a description
                  of the written balancing agreement (if any) pertaining to such
                  Cadence  Interest  (or a  statement  that  no  such  agreement
                  exists)  and  (iv)  a  statement  as  to  whether   royalties,
                  overriding  royalties or other  burdens  against the Cadence's
                  Net Revenue Interest in the affected  Cadence  Interests were,
                  during the period the subject  imbalance  accrued,  paid based
                  upon receipts or entitlements. Except as set forth in SCHEDULE
                  3.15,   no   pipeline   imbalances   have  arisen  and  remain
                  outstanding due to the failure of nominations  made by Cadence
                  to match actual  deliveries of production from any one or more
                  Cadence Interests.  Except as set forth in SCHEDULE 3.15, none
                  of  the  purchasers   under  any  production  sales  contracts
                  relating to a Cadence  Interest has (i) exercised any economic
                  out  provision;  (ii)  curtailed  its takes of natural  gas in
                  violation  of such  contracts;  or (iii) given  notice that it
                  desires to amend the production  sales  contracts with respect
                  to  price  or  quantity  of   deliveries   under   take-or-pay
                  provisions or otherwise.


                                       38
<PAGE>

                        (viii) To  Cadence's  knowledge,  no  delinquent  unpaid
                  bills or past due  charges  exist for any labor and  materials
                  incurred   by  or  on  behalf  of   Cadence   related  to  the
                  exploration,   development   or   operation   of  the  Cadence
                  Interests.

                        (ix) Except as set forth in  SCHEDULE  3.15 or as may be
                  provided  for by a Basic  Document,  neither  Cadence  nor any
                  Cadence Interest is subject to (i) any area of mutual interest
                  agreements, (ii) any farm-out or farm-in agreement under which
                  any party  thereto is entitled to receive  assignments  of any
                  Cadence  Interest or any  interest  therein  not yet made,  or
                  could earn additional  assignments of any Cadence  Interest or
                  any  interest  therein  after the date  hereof,  (iii) any tax
                  partnership  or (iv) any  agreement,  contract  or  commitment
                  relating to the  disposition  or acquisition of the assets of,
                  or any interest in, any other entity.

                        (x) All  severance,  production,  ad  valorem  and other
                  similar  taxes based on or measured by  ownership or operation
                  of, or production  from, the Cadence  Interests have been, and
                  are being,  paid  (properly  and  timely,  and before the same
                  become delinquent) by Cadence in all respects.

                        (xi)  Except  as set  forth in  SCHEDULE  3.15,  the (i)
                  ownership and operation of the Cadence  Interests  has, to the
                  extent that non-conformance could adversely affect the Cadence
                  Interests,  been  conducted in conformity  with all applicable
                  material  Legal  Requirements  of  all  Governmental  Entities
                  having jurisdiction over the Cadence Interests or Cadence, and
                  (ii) Cadence has not received any notice of noncompliance with
                  regard to any material Legal  Requirement of any  Governmental
                  Entity  having  jurisdiction  over the  Cadence  Interests  or
                  Cadence.


                                       39
<PAGE>

                        (xii) Except as set forth in SCHEDULE 3.15, there are no
                  Preferential   Rights  or   Consents,   other   than   Routine
                  Governmental  Approvals that affect any Cadence  Interests and
                  that will be triggered by the transactions contemplated by the
                  Transaction Documents.  SCHEDULE 3.15 sets forth the allocated
                  value  of  each  Cadence   Interest   that  is  subject  to  a
                  Preferential Right.

                        (xiii) Except as set forth in SCHEDULE 3.15, there exist
                  no  agreements  or  other  arrangements  under  which  Cadence
                  undertakes to perform gathering, transportation, processing or
                  other  marketing  services  for any  other  party for a fee or
                  other   consideration  that  is  now,  or  may  hereafter  be,
                  unrepresentative  of commercial  rates being received by other
                  parties in comparable, arm's length transactions.

                        (xiv) Except as disclosed in SCHEDULE 3.15, there are no
                  Wells  located on the  Cadence  Interests  that (i) Cadence is
                  currently  obligated by law or contract to currently  plug and
                  abandon,  (ii) Cadence will be obligated by law or contract to
                  plug and  abandon  with the  lapse of time or  notice  or both
                  because the Well is not currently capable of producing severed
                  crude oil, natural gas, casinghead gas, drip gasoline, natural
                  gasoline,   petroleum,   natural  gas   liquids,   condensate,
                  products,  liquids,  other  hydrocarbons  or other minerals or
                  materials in paying  quantities or otherwise  currently  being
                  used in normal operations,  (iii) are subject to exceptions to
                  a  requirement  to plug and abandon  issued by a  Governmental
                  Entity, or (iv) to Cadence's knowledge,  have been plugged and
                  abandoned,  but have not been  plugged  in  accordance  in all
                  material  respects  with all  applicable  requirements  of any
                  Governmental Entity.

                        (xv) No suit, action or proceeding  (including,  without
                  limitation,  tax  or  environmental  demands  proceedings)  is
                  pending  or   threatened,   which  might  result  in  material
                  impairment or loss of title to any of the Cadence Interests or
                  the material value thereof.

                        (xvi) Except as set forth in SCHEDULE 3.15, all proceeds
                  from  the  sale  of   hydrocarbons   produced  from  Cadence's
                  proportionate  share of the Cadence  Interests  are  currently
                  being paid to Cadence in all material respects, and no portion
                  of such  proceeds is  currently  being held in suspense by any
                  purchaser thereof or any other party by whom proceeds are paid
                  except for immaterial amounts.

            3.16 NO UNDISCLOSED LIABILITIES.


                                       40
<PAGE>

                  (a) Except as set forth on SCHEDULE 3.16,  neither Cadence nor
any Cadence Subsidiary has any liabilities (whether accrued, contingent,  known,
or otherwise) other than those that (i) are set forth or reserved against on the
Latest Cadence  Balance Sheet;  or (ii) were incurred in the ordinary  course of
business.

                  (b) The  accounts  payable of each of Cadence  and the Cadence
Subsidiaries  are set forth on SCHEDULE 3.16. All such accounts  payable are the
result of bona fide transactions in the ordinary course of business.

            3.17 CADENCE EMPLOYEE BENEFIT PLANS; ERISA.

                  (a) SCHEDULE 3.17 contains a complete and accurate list of all
Employee  Benefit Plans of Cadence,  Cadence's  Subsidiaries and Cadence's ERISA
Affiliates ("Cadence Employee Benefit Plans").

                  (b) Each and all  Cadence  Employee  Benefit  Plans  have been
administered  in all respects in accordance with their  respective  terms and in
compliance  with  all  applicable   Legal   Requirements,   including,   without
limitation,  ERISA and the Code, and each of Cadence,  the Cadence  Subsidiaries
and any ERISA  Affiliate of Cadence (as the case may be) has met its obligations
under  applicable   provisions  of  ERISA  and  the  Code  and  the  regulations
thereunder, and other applicable Legal Requirements with respect to such Cadence
Employee Benefit Plans.

                  (c) Complete and accurate  copies of the  following  documents
for each  Cadence  Employee  Benefit  Plan  listed  on  SCHEDULE  3.17 have been
delivered to Cadence:  (i) the plan texts or other agreements adopted or entered
into in connection with any Cadence Employee Benefit Plan which has been reduced
to writing, and any related amendments;  (ii) a written summary of any unwritten
Cadence  Employee  Benefit Plan;  (iii) any related trust  agreement,  insurance
contract,  annuity contract or other funding agreement (including all amendments
thereto) and any summary plan  description  required under ERISA,  including any
modification  communicated to or required to be communicated to any participant;
and (iv) any  communication to any participant  relating to any Cadence Employee
Benefit  Plan in  connection  with any  amendment,  termination,  establishment,
increase or decrease in  benefits,  acceleration  or  deceleration  of payments,
vesting  schedules or other events which would result in any  liability by or to
Cadence,  any Cadence  Subsidiary or any ERISA  Affiliate of Cadence.  Since the
date  such  documents  described  in this  SECTION  3.17(C)  were  supplied,  no
amendments  or changes to the documents  described in this SECTION  3.17(C) have
been made,  and no such  amendments or changes shall be adopted or made prior to
the Closing Date.

                  (d) There are no termination  proceedings  with respect to any
of the Cadence Employee Benefit Plans.

                  (e) None of the Cadence  Employee  Benefit Plans is currently,
or has ever been,  under  investigation,  audit or review by the  Department  of
Labor, the IRS or any other federal or state  Governmental  Entity,  and no such
investigation,  audit or review is pending or  anticipated.  None of the Cadence
Employee  Benefit  Plans is liable,  or ever has been  liable,  for any federal,
state,  local or foreign  Taxes except as may be due in the  ordinary  course of
administration  of such  Cadence  Employee  Benefit  Plan,  and no  such  Tax is
anticipated and no basis for such Tax exists.  There is no  transaction,  act or
omission,  nor  has  there  ever  been  any  transaction,  act or  omission,  in
connection  with  Cadence,  the Cadence  Subsidiaries,  any ERISA  Affiliate  of
Cadence,  or any  fiduciary  of any Cadence  Employee  Benefit  Plan which could
subject  Cadence or a Cadence  Subsidiary to a fine,  civil penalty Tax or other
liability.


                                       41
<PAGE>

                  (f) There are no pending or threatened claims, actions, suits,
grievances, audits, investigations, or other proceedings, involving, directly or
indirectly,  any Cadence  Employee Benefit Plan, any fiduciary  thereof,  or any
rights or benefits  thereunder (except claims for benefits payable in the normal
operation of the Cadence  Employee  Benefit Plan and proceedings with respect to
qualified  domestic  relations  orders),  and no basis  for any such  proceeding
exists.

                  (g) No written or oral  representations  have been made to any
employee, former employee, retiree, director or independent contractor (or their
beneficiaries,  dependents  or spouses)  of Cadence or the Cadence  Subsidiaries
promising or guaranteeing  any employer  payment or funding for the continuation
of medical,  dental or disability  coverage  after  termination of employment or
services, as applicable, beyond that legally required.

                  (h) No action or omission of Cadence,  any Cadence Subsidiary,
any ERISA  Affiliate of Cadence or any  director,  officer,  employee,  or agent
thereof,  and no plan  documentation  or agreement,  summary plan description or
other  written  communication  distributed  generally to  employees,  in any way
restricts,  impairs or prohibits  (whether legally binding or not) Cadence,  the
Cadence  Subsidiaries,  any ERISA Affiliate of Cadence, or any successor thereof
from  amending,  merging,  terminating  or otherwise  discontinuing  any Cadence
Employee  Benefit Plan in accordance with the express terms of any such plan and
applicable  Legal  Requirement  at or after  Closing,  and any  such  amendment,
merger,  termination or discontinuance may occur without any liability to any of
Aurora,  the Aurora  Subsidiaries,  any ERISA  Affiliate  of Aurora,  Cadence or
Acquisition Sub. No agreement,  arrangement,  commitment,  understanding or plan
documentation or other written communication  distributed generally to employees
exists to create any  additional  Cadence  Employee  Benefit  Plan not listed on
SCHEDULE 3.17.

                  (i) SCHEDULE 3.17 sets forth a reasonable  estimate of each of
Cadence's and the Cadence Subsidiaries' accrued liability for vacation, sickness
and disability expenses through and including the Closing Date.

                  (j) On and  after  the  Closing  Date,  neither  Cadence,  the
Cadence  Subsidiaries,  Aurora,  nor  the  Aurora  Subsidiaries  will  have  any
liability  or be under any  obligation  with  respect  to any  Cadence  Employee
Benefit Plan which is not disclosed.

                  (k) Full payment has or will have, prior to the Closing,  been
made of all  amounts  which  Cadence,  the  Cadence  Subsidiaries  or any  ERISA
Affiliate of Cadence is directly or indirectly required,  under applicable Legal
Requirements,  the terms of any Cadence  Employee  Benefit Plan or any agreement
relating to any Cadence  Employee  Benefit Plan to have paid as a  contribution,
premium or other remittance  thereto or benefit thereunder if such payment has a
deadline on or before the Closing Date. There will be no change on or before the
Closing  Date in the  operation  of any  Cadence  Employee  Benefit  Plan or any
documents  with respect  thereto which will result in an increase in any benefit
under any such Cadence Employee Benefit Plan, except as may be required by Legal
Requirement.  Each Cadence Employee Benefit Plan can be terminated within thirty
(30) days of the Closing Date, without payment of any additional contribution or
amount  other than for  benefits  accrued  thereunder  and without  creating any
unfunded or unaccrued  liability or the vesting or  acceleration of any benefits
promised by such plan. No


                                       42
<PAGE>

                  (l) All Cadence  Employee Benefit Plans that are welfare plans
comply  with and have been  administered  in material  compliance  to the extent
applicable  with the  requirements  of the:  (i)  COBRA;  (ii)  Heath  Insurance
Portability  and  Accountability  Act of 1996,  as amended;  (iii) Mental Health
Parity Act of 1996; (iv) Newborns' and Mothers'  Health  Protection Act; and (v)
Women's Health and Cancer Rights Act, to the extent applicable. Cadence Employee
Benefit Plans are or have been subject to COBRA.

                  (m) The execution of this  Agreement and the  consummation  of
the transactions  contemplated hereby and thereby will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event under
any Cadence Employee Benefit Plan, employee  agreement,  trust or loan that will
or  may  result  in  any  payment  (whether  of  severance  pay  or  otherwise),
acceleration,  forgiveness of indebtedness,  vesting, distribution,  increase in
benefits or obligation  to fund  benefits with respect to any Employee.  None of
the Severance  Plans of Cadence or any Subsidiary of Cadence provide that any of
the benefits under such Severance  Plans of Cadence or any Subsidiary of Cadence
will be  increased,  nor will the vesting of the benefits  under such  Severance
Plans of Cadence or any Subsidiary of Cadence be accelerated,  by the occurrence
of any of the transactions  contemplated by this Agreement nor will the value of
any of the benefits under such  Severance  Plans of Cadence or any Subsidiary of
Cadence be calculated on the basis of any of the  transactions  contemplated  by
this Agreement and no payments under any such Severance  Plans of Cadence or any
Subsidiary  of Cadence  or other  agreement  will be  parachute  payments  under
Section 280G of the Code that are non-deductible to Aurora, Aurora Subsidiaries,
Cadence or Cadence  Subsidiaries  or subject to Taxes under  Section 4999 of the
Code.

                  (n) No Cadence Employee Benefit Plan is or has been subject to
Section  302 of ERISA,  Section  412 of the Code or Title IV of  ERISA.  None of
Cadence,  any Subsidiary of Cadence or any ERISA Affiliate of Cadence has or has
ever had any liability or obligation under Section 302 of ERISA,  Section 412 of
the Code or Title IV of  ERISA.  No  contributions  have  ever been made or been
owing to an Cadence  Employee  Benefit  Plan  pursuant to or under a  collective
bargaining   agreement  between  employee   representatives  and  Cadence,   any
Subsidiary of Cadence or any ERISA Affiliate of Cadence.

            3.18 INTELLECTUAL PROPERTY.

                  (a) SCHEDULE 3.18 lists all  Intellectual  Property of each of
Cadence and the Cadence  Subsidiaries,  including  all United States and foreign
(i)  patents  and  patent   applications;   (ii)  trademark   registrations  and
applications  therefor and material,  unregistered  trademarks;  (iii) copyright
registrations  and  applications  therefor;  and (iv) other  filings  and formal
actions  made or taken  pursuant to  federal,  state,  local and  foreign  Legal
Requirements  by Cadence or the  Cadence  Subsidiaries  to protect  its or their
interests in the Intellectual Property.


                                       43
<PAGE>

                  (b) To Cadence's best knowledge, the conduct of the respective
businesses of Cadence and the Cadence  Subsidiaries as conducted in the past did
not infringe (when  conducted) and as currently  conducted or contemplated to be
conducted  does not infringe  (either  directly or  indirectly,  such as through
contributory  infringement) any Intellectual  Property right owned or controlled
by any third party.  There is no Proceeding before any court,  agency,  arbitral
tribunal, or registration authority in any jurisdiction, whether against Cadence
or any Cadence  Subsidiary  or any third party (i)  involving  any  Intellectual
Property  owned by Cadence or any Cadence  Subsidiary;  (ii)  alleging  that the
activities or the conduct of the business of Cadence or any Cadence  Subsidiary,
or the use of any  Intellectual  Property by any  customer or other  licensee of
Cadence  or any  Cadence  Subsidiary,  does or will  infringe  upon,  violate or
constitute the unauthorized use of the Intellectual Property rights of any third
party; or (iii)  challenging the ownership,  use,  validity,  enforceability  or
registrability of any Intellectual  Property,  nor is there any reasonable basis
for any such proceeding.

                  (c) There are no royalties,  fees, honoraria or other payments
payable  by  Cadence or any  Cadence  Subsidiary  to any Person by reason of the
ownership,  development,  use, license,  sale or disposition of any Intellectual
Property,  other than salaries and sales commissions paid to employees and sales
agents in the ordinary course of business.

            3.19 MATERIAL CONTRACTS.

                  (a)  Other  than  those   documents  filed  with  the  SEC  in
connection  with the Cadence  Disclosure  Documents,  SCHEDULE 3.19 sets forth a
true,  complete and correct list of every Contract  currently in effect to which
Cadence or any Cadence  Subsidiary is a party that: (i) provides or provided for
aggregate future payments by Cadence or any Cadence  Subsidiary or to Cadence or
any  Subsidiary  of more than  $25,000;  (ii) was entered into by Cadence or any
Cadence  Subsidiary  with an officer,  director,  key  employee or  Affiliate of
Cadence or any Cadence Subsidiary;  (iii) guarantees or indemnifies or otherwise
causes or caused  Cadence or any Cadence  Subsidiary  to be liable or  otherwise
responsible  for the  obligations  or  liabilities  of  another or  provides  or
provided for a  charitable  contribution  by Cadence or any Cadence  Subsidiary;
(iv) involves or involved an agreement with any bank, finance company or similar
organization; (v) restricts or restricted Cadence or any Cadence Subsidiary from
engaging in any  business or activity  anywhere in the world;  (vi) is or was an
employment  agreement,  consulting  agreement,  independent sales representative
agreement or similar  arrangement;  (vii) is or was a lease; or (viii) is or was
otherwise material to the rights, properties,  assets, business or operations of
Cadence  or  any  Cadence  Subsidiary  (the  foregoing,  collectively,  "Cadence
Material  Contracts").  Cadence has heretofore made available true, complete and
correct copies of all Cadence Material Contracts to Aurora.

                  (b) Each of the Cadence  Material  Contracts  is in full force
and effect and there is not now and there has not been claimed or alleged by any
Person with respect to the Cadence Material Contracts,  any existing default, or
event that with  notice or lapse of time or both would  constitute  a default or
event of  default,  on the part of Cadence or any Cadence  Subsidiary  or on the
part of any other party thereto; no Consent from, or notice to, any Governmental
Entity or other Person is required in order to maintain in full force and effect
any of the current  Cadence  Material  Contracts,  other than such Consents that
have been  obtained  and are in full force and effect and such notices that have
been duly given and, in each case copies of such  Consents and notices have been
delivered to Aurora.


                                       44
<PAGE>

            3.20 TAXES.

                  (a) Except as set forth in SCHEDULE 3.20:

                        (i) Cadence and each Cadence Subsidiary has (A) duly and
                  timely  filed or caused to be filed  each Tax  Return  that is
                  required  to be  filed  by or on  behalf  of  Cadence  or such
                  Cadence  Subsidiary or that includes or relates to Cadence and
                  such  Cadence  Subsidiary,  their  respective  income,  sales,
                  assets or businesses,  and such Tax Returns are true,  correct
                  and  complete;  (B) duly and timely paid in full, or caused to
                  be paid in full,  all Taxes due and payable on or prior to the
                  Closing Date, and (C) properly  accrued all Taxes on the books
                  and  records  of  Cadence  and  such  Cadence  Subsidiary,  as
                  applicable,  in accordance  with GAAP and with a provision for
                  the payment of all Taxes due or claimed to be due or for which
                  Cadence and such Cadence Subsidiary, as applicable,  otherwise
                  is  liable,  in each case with  respect to  Cadence's  or such
                  Cadence  Subsidiary's  respective  income,  sales,  assets  or
                  businesses;

                        (ii)  Neither  Cadence  nor any Cadence  Subsidiary  has
                  requested or is the beneficiary of an extension of time within
                  which to file any Tax Return in respect of any Tax period that
                  has not since been filed;

                        (iii) Cadence and each Cadence  Subsidiary  has complied
                  in  all  respects  with  all  applicable  Legal   Requirements
                  relating to the payment, collection or withholding of any Tax,
                  and the remittance thereof including, but not limited to, Code
                  Section 3402;

                        (iv) There is no Encumbrance for Taxes upon any asset or
                  property of Cadence or any Cadence  Subsidiary (except for any
                  statutory Encumbrance for any Tax not yet due);

                        (v) All  Taxes  assessed  or for  which  Cadence  or any
                  Cadence Subsidiary is liable with respect to Cadence's or such
                  Cadence  Subsidiary's  respective  income,  sales,  assets  or
                  businesses have been paid or accrued;

                        (vi) Any assessment, deficiency or adjustment related to
                  or in connection with any Tax for which Cadence or any Cadence
                  Subsidiary  is liable or with  respect  to  Cadence's  or such
                  Cadence Subsidiary's, as applicable,  income, sales, assets or
                  business  that  is or  was  required  to be  reported  to  any
                  Governmental  Entity has been so reported,  and any additional
                  Taxes owed with respect thereto have been paid;


                                       45
<PAGE>

                        (vii) There is no  outstanding  subpoena or summons from
                  any  Governmental  Entity  with  respect  to any Tax for which
                  Cadence or any Cadence  Subsidiary is or may be liable or with
                  respect  to  Cadence's  or  such  Cadence   Subsidiary's,   as
                  applicable, income, sales, assets or business;

                        (viii) Neither  Cadence nor any Cadence  Subsidiary is a
                  party  to  any   agreement   with  any   Governmental   Entity
                  (including,  but not limited to, any closing  agreement within
                  the  meaning  of  Code  Section  7121 or any  analogous  Legal
                  Requirement)  or has requested or received a private letter or
                  other ruling from any Governmental  Entity relating to any Tax
                  for which  Cadence  or such  Cadence  Subsidiary  is or may be
                  liable  or  with   respect  to   Cadence's   or  such  Cadence
                  Subsidiary's,   as  applicable,   income,   sales,  assets  or
                  business;

                        (ix) Neither Cadence nor any Cadence  Subsidiary has any
                  "tax-exempt use property,"  within the meaning of Code Section
                  168(h) or any similar provision of applicable law with respect
                  to  Cadence,  each  Cadence  Subsidiary,  or their  respective
                  income, sales, assets or businesses;

                        (x) No asset of Cadence  or any  Cadence  Subsidiary  is
                  required  to be  treated  as being  owned by any other  Person
                  pursuant to any provision of applicable  law,  including,  but
                  not limited to, the "safe harbor"  leasing  provisions of Code
                  Section  168(f)(8)  as in effect  prior to the repeal of those
                  "safe harbor" leasing provisions;

                        (xi) Neither Cadence nor any Cadence  Subsidiary is, nor
                  has any of them ever  been,  a "United  States  real  property
                  holding  corporation"  within  the  meaning  of  Code  Section
                  897(c)(2) at any time during the applicable period referred to
                  in Code Section 897(c)(l)(A)(ii);

                        (xii)  No  jurisdiction  where  Cadence  or any  Cadence
                  Subsidiary  does not file a Tax Return has made or  threatened
                  to make a claim that  Cadence or such  Cadence  Subsidiary  is
                  required  to file a Tax  Return  for such  jurisdiction  or is
                  subject to Tax in such jurisdiction;

                        (xiii)  Neither  Cadence nor any Cadence  Subsidiary has
                  distributed  stock  of  another  Person  or has had its  stock
                  distributed  by  another  Person  in a  transaction  that  was
                  purported  or intended  to be governed by Code  Section 355 or
                  Code Section 361;

                        (xiv) The statute of limitations  for any Tax proceeding
                  or the  assessment  or collection of any Tax for which Cadence
                  or any Cadence  Subsidiary is or may be liable or with respect
                  to its  income,  sales,  assets or  business  has  never  been
                  extended or waived; and


                                       46
<PAGE>

                        (xv) Neither Cadence nor any Cadence  Subsidiary (1) has
                  been a member of an  affiliated  group  filing a  consolidated
                  federal  income  Tax Return or (2) has any  liability  for the
                  Taxes  of any  Person  (other  than  Cadence  or  any  Cadence
                  Subsidiary) under Treasury Regulation Section 1.1502-6 (or any
                  similar   provision   of  state,   local  or   foreign   Legal
                  Requirement),  as a transferee  or  successor,  by contract or
                  otherwise.

                  (b)  SCHEDULE  3.20  sets  forth a list  of all  jurisdictions
(foreign and  domestic) in which any Tax Returns have been filed by or on behalf
of Cadence or any  Cadence  Subsidiary,  or with  respect  to  Cadence's  or the
Cadence  Subsidiaries'  respective  income,  assets  or  businesses  within  the
three-year  period ending on the Closing Date and a description of each such Tax
Return and the period for which it was filed.

                  (c)  SCHEDULE  3.20  sets  forth a list  of all  jurisdictions
(foreign  and  domestic)  in which  income,  franchise  and other Tax Returns of
Cadence or a Cadence  Subsidiary  have been the subject of Tax proceedings and a
description of each such Tax Return and the period for which it was filed.

                  (d) Cadence has provided to Aurora all audit reports,  closing
agreements,  letter rulings, or technical advice memoranda relating to any Taxes
for which Cadence or any Cadence  Subsidiary is or may be liable with respect to
Cadence's or such  Cadence  Subsidiary's  respective  income,  sales,  assets or
businesses.

            3.21 AFFILIATED PARTY TRANSACTIONS.

                  (a)  Except as listed  on  SCHEDULE  3.21(A)  and  except  for
obligations arising under the Transaction  Documents,  neither Cadence,  nor the
Cadence  Subsidiaries  nor any of their respective  Affiliates has,  directly or
indirectly, any obligation to or cause of action or claim against Cadence or any
Cadence Subsidiary.

                  (b) Except as listed on SCHEDULE  3.21(B)  neither Cadence nor
any Cadence  Subsidiary has any loan or advance in excess of $1,000  outstanding
to any  stockholder,  officer,  director or  employee  thereof and no officer or
director of Cadence or any Cadence Subsidiary or any Affiliate of Cadence or any
Cadence Subsidiary has, either directly or indirectly:

                        (i) an equity  interest of five  percent (5%) or more in
                  any  Person  that  purchases  from or  sells or  furnishes  to
                  Cadence or any Cadence  Subsidiary any goods or otherwise does
                  business with Cadence or any Cadence Subsidiary; or

                        (ii) a beneficial  interest in any contract,  commitment
                  or agreement to which  Cadence or any Cadence  Subsidiary is a
                  party or under which  Cadence or such  Cadence  Subsidiary  is
                  obligated or bound or to which the property of Cadence or such
                  Cadence  Subsidiary  may be  subject,  other  than  contracts,
                  commitments  or  agreements  between  Cadence or such  Cadence
                  Subsidiary and such Persons in their  capacities as employees,
                  officers  or  directors  of Cadence  or a Cadence  Subsidiary;
                  provided, however, that such representation and warranty shall
                  not apply to the ownership,  as a passive  investment,  by any
                  such  officer or  Affiliate of less than one percent (1%) of a
                  class  of   securities   listed  for  trading  on  a  national
                  securities exchange or publicly traded in the over-the-counter
                  market.


                                       47
<PAGE>

            3.22 ENVIRONMENTAL  MATTERS.  Cadence has not caused or allowed,  or
contracted with any party for, the generation,  use, transportation,  treatment,
storage or disposal of any Hazardous Substances in connection with the operation
of its business or otherwise. Except as set forth in SCHEDULE 3.22, Cadence, the
operation of its business,  and the Cadence Interests are in compliance with all
applicable  Environmental  Laws and  orders or  directives  of any  Governmental
Entity having  jurisdiction under such Environmental  Laws,  including,  without
limitation,  any Environmental  Laws or orders or directives with respect to any
cleanup  or  remediation  of any  release  or threat  of  release  of  Hazardous
Substances,  and no  actions  are  presently  required  to comply  with any such
applicable Environmental Laws. Cadence has not received any citation, directive,
letter or other communication, written or oral, or any notice of any proceeding,
claim or lawsuit arising out of or relating to any Environmental  Laws, from any
Person  arising out of the ownership of the Cadence  Interests or the conduct of
its  operations,  and  Cadence is not aware of any basis  therefor.  Cadence has
obtained and is maintaining  in full force and effect all permits,  licenses and
approvals required by all Environmental Laws applicable to the Cadence Interests
and the business operations conducted thereon and is in compliance with all such
permits, licenses and approvals. Cadence has not caused or allowed a release, or
a threat of release,  of any  Hazardous  Substance  onto, at or near the Cadence
Interests.

            3.23 NO  BROKERS.  Except as set  forth on  Schedule  3.23,  neither
Cadence nor any  Affiliate of Cadence has  employed,  or  otherwise  engaged any
broker or finder or incurred  any  liability  for any  brokerage  or  investment
banking  fees,  commissions,  finders'  fees or other similar fees in connection
with the transactions contemplated by this Agreement.

            3.24 RECEIVABLES.  All of the accounts receivable of Cadence and the
Cadence  Subsidiaries  have arisen from bona fide  transactions  in the ordinary
course  of  Cadence's  or  the  Cadence  Subsidiaries'   respective  businesses,
consistent  with past  practice  and are fully  collectible  within one  hundred
twenty (120) days of the Closing Date.

            3.25 ASSETS  UTILIZED IN THE BUSINESS.  The assets,  properties  and
rights  owned,  leased or licensed by Cadence and the Cadence  Subsidiaries  and
used in connection  with their  respective  businesses and all the agreements to
which Cadence or any Cadence  Subsidiary is a party relating to the  businesses,
constitute  all of the assets,  properties,  rights and  agreements  required in
connection   with  the   operation  and  conduct  by  Cadence  and  the  Cadence
Subsidiaries of their respective businesses as presently conducted.

            3.26  INSURANCE.  Set  forth  in  SCHEDULE  3.26  is a  list  of all
insurance  policies of any kind covering  Cadence and the Cadence  Subsidiaries.
Each of these  insurance  policies  (a) are with  insurance  companies  that are
financially  sound  and  reputable  and are in full  force and  effect;  (b) are
sufficient  for  compliance  with all  material  Legal  Requirements  and of all
applicable  Cadence  Material  Contracts;  and (c) are  valid,  outstanding  and
enforceable  policies.  Since January 1, 2000,  neither  Cadence nor any Cadence
Subsidiary has been denied any insurance coverage which it has requested. Aurora
has been provided copies of all such policies.


                                       48
<PAGE>

            3.27 DELIVERY OF DOCUMENTS; CORPORATE RECORDS. Aurora has heretofore
received  true,  correct  and  complete  copies of all  documents,  instruments,
agreements and records  referred to in Section 3 of this Agreement and copies of
the minute and stock record books of Cadence and each  Cadence  Subsidiary.  The
minute and stock  record  books of each of Cadence and the Cadence  Subsidiaries
contain  true,  correct and  complete  copies of the records of all meetings and
consents in lieu of  meetings of  Cadence's  or the  Cadence  Subsidiaries',  as
applicable,   boards  of  directors  (and  all   committees   thereof)  and  the
shareholders of Cadence and the Cadence  Subsidiaries since the respective dates
of their incorporation.

            3.28 LABOR AND EMPLOYMENT MATTERS.

                  (a) Set forth on SCHEDULE  3.28 is a list of all  employees of
Cadence and the Cadence  Subsidiaries as of the date hereof and their respective
positions and hire dates.

                  (b) (i) Neither Cadence nor any Cadence Subsidiary is party to
or bound by any collective  bargaining  agreement or similar  agreement with any
labor  organization,  or work  rules  or  practices  agreed  to with  any  labor
organization or employee  association  applicable to employees of Cadence or the
Cadence  Subsidiaries;  (ii) none of the  employees  of Cadence  or any  Cadence
Subsidiary  are  represented  by  any  labor   organization  and  there  are  no
organizational   campaigns,   demands,   petitions  or  proceedings  pending  or
threatened by any labor  organization or group of employees seeking  recognition
or  certification  as  collective  bargaining  representative  of any  group  of
employees  of  Cadence or the  Cadence  Subsidiaries;  (iii)  there are no union
claims to represent the employees of Cadence or any Cadence Subsidiary; and (iv)
there are no strikes,  controversies,  slowdowns,  work  stoppages,  lockouts or
labor disputes pending or threatened against or affecting Cadence or any Cadence
Subsidiary,  and there have not been any such  actions  during the past five (5)
years.

                  (c) Cadence  and each  Cadence  Subsidiary  is, and has at all
times  during at least the last three (3) years  been,  in  compliance  with all
applicable Legal Requirements respecting immigration,  employment and employment
practices,  and the terms  and  conditions  of  employment,  including,  without
limitation,  employment  standards,  equal  employment  opportunity,  family and
medical leave,  wages, hours of work and occupational  health and safety, and is
not  engaged in any unfair  labor  practices  as defined in the  National  Labor
Relations Act or any other applicable Legal Requirement. There are no employment
contracts,  severance agreements or retention agreements,  oral or written, with
any  employees  of Cadence or any Cadence  Subsidiary  and no written  personnel
policies,  rules or procedures applicable to employees of Cadence or any Cadence
Subsidiary, other than those listed in SCHEDULE 3.28, true and correct copies of
which have  heretofore  been made  available  to Aurora.  Except as set forth in
SCHEDULE 3.28,  (i) there are no  Proceedings  related to Cadence or any Cadence
Subsidiary pending,  or threatened,  in any court or with any agency responsible
for the enforcement of federal, state, local or foreign labor or employment laws
regarding  breach of any express or implied  contract of  employment,  any Legal
Requirement or regulation  governing  employment or the  termination  thereof or
other illegal,  discriminatory,  wrongful or tortious conduct in connection with
the  employment  relationship,  the  terms  and  conditions  of  employment,  or
applications for employment with Cadence or any Cadence Subsidiary;  and (ii) to
Cadence's  knowledge,  no federal,  state, local or foreign  Governmental Entity
responsible  for  the  enforcement  of  immigration,   labor,  equal  employment
opportunity, family and medical leave, wages, hours of work, occupational health
and safety or any other  employment  laws intends to conduct or is conducting an
investigation with respect to or relating to Cadence or any Cadence Subsidiary.


                                       49
<PAGE>

                  (d) Since  January 1, 2000,  neither  Cadence  nor any Cadence
Subsidiary has  effectuated  (i) a "plant  closing" as defined in WARN affecting
any site of employment or one or more  facilities or operating  units within any
site of employment or facility of Cadence or the Cadence Subsidiaries; or (ii) a
"mass layoff" as defined in WARN affecting any site of employment or facility of
Cadence or any Cadence  Subsidiary;  nor has  Cadence or any Cadence  Subsidiary
been  affected  by  any   transaction   or  engaged  in  layoffs  or  employment
terminations sufficient in number to trigger application of any similar state or
local  law.  None of the  employees  of Cadence or any  Cadence  Subsidiary  has
suffered  an  "employment  loss," as  defined  in WARN,  since  January 1, 2001.
Cadence and the Cadence  Subsidiaries  shall be solely and exclusively liable to
provide  such WARN or other  plant  closing  or mass  layoff  notices  as may be
necessary in  connection  with any loss of employment by any employee of Cadence
or the Cadence Subsidiaries through and including the Closing Date.

                  (e)  SCHEDULE  3.28 sets forth a complete  list of all foreign
national  employees  on whose  behalf  Cadence  or any  Cadence  Subsidiary  has
submitted  applications  and  petitions to the U.S.  Department  of Labor,  U.S.
Immigration  and  Naturalization  Service,  or  U.S.  Department  of  State  for
immigration   employment  and  visa  benefits;  and  Cadence  and  each  Cadence
Subsidiary  has  provided  Aurora  with  copies  of all  such  applications  and
petitions and all government notices regarding adjudication of such applications
and petitions.  SCHEDULE 3.28 identifies and describes any pending or threatened
actions against  Cadence or the Cadence  Subsidiaries  for violations  under the
Immigration  Reform and Control Act of 1986 respecting such employees of Cadence
and such Cadence Subsidiary.

                  (f) SCHEDULE  3.28 sets forth a complete  list of all business
and/or  assets  of  Cadence  and  the  Cadence  Subsidiaries  involving  federal
contracts  giving rise to any reporting or filing  obligations  with OFCCP,  and
Cadence and each Cadence  Subsidiary has complied in all material  respects with
all  hiring  and  employment   obligations  applicable  under  OFCCP  rules  and
regulations.

            3.29  RESTRICTIVE  COVENANTS.  Except as set forth on SCHEDULE 3.29,
neither Cadence nor any Cadence Subsidiary is subject to any covenant that would
restrict Cadence or the Cadence  Subsidiaries  from engaging in their respective
businesses.

            3.30 BANK ACCOUNTS. SCHEDULE 3.30 sets forth the names and locations
of all banks,  depositories and other financial institutions in which Cadence or
any Cadence  Subsidiary  has an account or safe deposit box and the names of all
Persons authorized to draw thereon or to have access thereto.


                                       50
<PAGE>

            3.31 DIRECTORS,  OFFICERS AND CERTAIN EMPLOYEES.  SCHEDULE 3.31 sets
forth a complete and correct list of the names and title,  for each director and
officer of Cadence and each Cadence Subsidiary, who received compensation during
Cadence's and such Cadence  Subsidiary's,  as  applicable,  most recently  ended
fiscal  year.   Aurora  has  been  provided  current  annual  salary  and  bonus
information  for all  Cadence  employees,  officers  and  directors.  Except  as
disclosed on SCHEDULE 3.31,  Cadence is not aware of any employee who intends to
terminate  his  or her  employment  relationship  with  Cadence  or any  Cadence
Subsidiary, as a result of the transactions contemplated hereby or otherwise.

      4. CONDITIONS TO OBLIGATIONS OF AURORA TO CLOSE. The obligations of Aurora
to consummate the  transactions  contemplated  hereby and to make the deliveries
contemplated  at the Closing  shall,  in addition  to the  conditions  set forth
elsewhere  herein,  be subject  to  satisfactory  completion  on or prior to the
Closing Date of each of the following conditions,  any of which may be waived by
Aurora:

            4.1  CORRECTNESS  OF  REPRESENTATIONS  AND  WARRANTIES.  Each of the
representations  and warranties of Cadence and Acquisition Sub contained in this
Agreement  shall have been true and correct on the date hereof and shall be true
and correct on the  Closing  Date with the same effect as if made on the Closing
Date,  and Cadence  shall have  executed  and  delivered  to Aurora at Closing a
certificate of an officer of Cadence to that effect.

            4.2  PERFORMANCE OF COVENANTS AND  AGREEMENTS.  All of the covenants
and  agreements of Cadence and  Acquisition  Sub contained in this Agreement and
required to be performed by Cadence or  Acquisition  Sub before the Closing Date
shall have been performed in all respects, and Cadence and Acquisition Sub shall
each have  executed  and  delivered to Aurora at Closing a  certificate  to that
effect.

            4.3  EFFECTIVENESS  OF  REGISTRATION  STATEMENT.   The  Registration
Statement shall have been declared effective by the staff of the SEC.

            4.4 LOCK UP AGREEMENTS.  Each of the following Cadence  Shareholders
shall have executed a lock-up agreement,  reasonably satisfactory to Aurora that
will  prohibit  each such person from selling more than 10% of their  respective
holdings of Cadence Common Stock,  measured  immediately  prior to the Effective
Time, for a period of thirty-six (36) months. The parties intend that any shares
of Cadence  Common Stock received by the  shareholders  listed below in exchange
for  Aurora  shares  as  part  of the  Merger  are not  subject  to the  lock-up
agreement.

                  (a) Howard Crosby;

                  (b) Crosby Enterprises, Inc.;

                  (c) Dotson Exploration Company;

                  (d) John Ryan;


                                       51
<PAGE>

                  (e) Nancy Martin Ryan;

                  (f) Nancy Martin Ryan as custodian for Karen Ryan;

                  (g) Nancy Martin Ryan as custodian for Patrick Ryan;

                  (h) J.P. Ryan Company, Inc.;

                  (i) Andover Capital Corporation;

                  (j) Nathan A. Low Roth IRA;

                  (k) Nathan A. Low;

                  (l) Nathan A. Low Family Trust;

                  (m) Shares  owned by Nathan A.  Low's wife for the  benefit of
their minor children;

                  (n) Thomas Kaplan;

                  (o) Electrum Resources, LLC;

                  (p) Electrum Capital, LLC; and

                  (q) CGT Management, Ltd.

            4.5 OPINION OF COUNSEL FOR CADENCE.  Aurora  shall have  received an
opinion of counsel  from  Jenkins & Gilchrist  Parker  Chapin  LLP,  counsel for
Cadence, in form and substance reasonably satisfactory to Aurora and dated as of
the Closing Date. In rendering such opinion,  counsel may rely upon certificates
of public  officials and upon  certificates of officers of Cadence as to factual
matters.

            4.6 NO NEW PROCEEDINGS. Cadence shall not be named as a defendant or
respondent in any new Proceeding during the period between the execution of this
Agreement and the Closing alleging damages in excess of $100,000.

            4.7 BOARD OF DIRECTORS APPROVALS.  The Board of Directors of Cadence
shall have approved:

                  (a) A change in Cadence's fiscal year-end from September 30 to
December 31, to be effective as of the Effective Time; and

                  (b) An  amendment to Cadence's  Bylaws to: (i)  eliminate  the
reference to cumulative voting in Article II, Section 8; and (ii) modify Article
III, Section 1 to provide for a minimum of three and a maximum of ten directors.


                                       52
<PAGE>

            4.8 CADENCE  WARRANTS.  Holders of the warrants issued by Cadence in
April 2004 in connection with a debt financing, shall have agreed to waive their
price protection  provided for in Section 2 of the Warrants such that the number
of shares subject to the warrants will remain  unchanged from that stated on the
face of the warrant,  in consideration  for a reduction in the exercise price to
$1.25 per share from the initial $4.00 per share exercise price.

            4.9 PROXY.  Each of the following  Cadence  shareholders  shall have
signed a proxy,  reasonably  satisfactory to Aurora,  which grants to William W.
Deneau and Lorraine King,  with power of  substitution,  the ability to vote all
shares owned by such  shareholder on behalf of such  shareholder with respect to
any matter on which holders of Cadence  Common Stock are entitled to vote, for a
period of thirty-six (36) months after the Closing Date:

                  (a) Howard Crosby;

                  (b) Crosby Enterprises, Inc.;

                  (c) Dotson Exploration Company;

                  (d) John Ryan;

                  (e) Nancy Martin Ryan;

                  (f) Nancy Martin Ryan as custodian for Karen Ryan;

                  (g) Nancy Martin Ryan as custodian for Patrick Ryan;

                  (h) J.P. Ryan Company, Inc.;

                  (i) Andover Capital Corporation;

                  (j) Nathan A. Low Roth IRA;

                  (k) Nathan A. Low;

                  (l) Nathan A. Low Family Trust;

                  (m) Shares  owned by Nathan A.  Low's wife for the  benefit of
their minor children;

                  (n) Thomas Kaplan;

                  (o) Electrum Resources, LLC;

                  (p) Electrum Capital, LLC; and

                  (q) CGT Management, Ltd.


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<PAGE>

            4.10  VOTING  AGREEMENT.  A Voting  Agreement  in a form  reasonably
acceptable  to all the parties  hereto,  relating to the election of the Cadence
directors, shall have been executed.

      5. CONDITIONS TO OBLIGATIONS OF CADENCE AND ACQUISITION SUB TO CLOSE.  The
obligations  of Cadence  and  Acquisition  Sub to  consummate  the  transactions
contemplated  hereby  and to make the  deliveries  contemplated  at the  Closing
shall, in addition to conditions set forth elsewhere  herein,  be subject to the
satisfactory completion on or prior to the Closing Date of each of the following
conditions, any of which may be waived by Cadence and Acquisition Sub:

            5.1  CORRECTNESS  OF  REPRESENTATIONS  AND  WARRANTIES.  Each of the
representations  and warranties of Aurora contained in this Agreement shall have
been true and  correct on the date  hereof and shall be true and  correct in all
respects  on the  Closing  Date with the same  effect as if made on the  Closing
Date,  and Aurora shall have executed and  delivered to Cadence and  Acquisition
Sub at Closing a certificate of an officer of Aurora to that effect.

            5.2  PERFORMANCE OF COVENANTS AND  AGREEMENTS.  All of the covenants
and  agreements  of  Aurora  contained  in this  Agreement  and  required  to be
performed  on or before  the  Closing  Date  shall  have been  performed  in all
respects,  and Aurora  shall have  delivered to Cadence and  Acquisition  Sub at
Closing a certificate of Aurora to that effect.

            5.3 OPINION OF COUNSEL FOR AURORA.  Cadence  shall have  received an
opinion of counsel  from Fraser  Trebilcock  Davis & Dunlap,  P.C.,  counsel for
Aurora, in form and substance reasonably satisfactory to Cadence and dated as of
the Closing Date. In rendering such opinion,  counsel may rely upon certificates
of public  officials and upon  certificates  of officers of Aurora as to factual
matters.

            5.4 SHAREHOLDER APPROVAL OF MERGER. The shareholders of Aurora shall
have taken all corporate action required to approve the Merger, and Aurora shall
have  delivered  to Cadence  and  Acquisition  Sub at Closing a  certificate  of
Aurora's corporate secretary to that effect.

            5.5 LOCK UP AGREEMENTS. Each of the following individuals (including
any  Affiliate  of such  person that owns Aurora  stock)  shall have  executed a
lock-up agreement,  reasonably  satisfactory to Cadence, that will prohibit each
such person from selling more than 10% of their  respective  holdings of Cadence
Common  Stock  received  as a part of the Merger,  measured as of the  Effective
Time, for a period of thirty-six (36) months:

                  (a) William W. Deneau,

                  (b) John V. Miller, and

                  (c) Thomas W. Tucker.


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<PAGE>

            5.6 NO NEW PROCEEDINGS.  Aurora shall not be named as a defendant or
respondent  in any new  Proceedings  during the period  between the execution of
this Agreement and the Closing alleging damages in excess of $100,000.

            5.7  CONSENTS  SATISFIED.  Aurora  shall have  obtained all required
consents, including, but not limited to, those listed on SCHEDULE 2.4 hereto.

      6. CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES TO CLOSE.  The obligations
of all Parties to consummate the  transactions  contemplated  hereby and to make
the deliveries  contemplated at the Closing shall, in addition to conditions set
forth elsewhere herein, be subject to the satisfactory completion on or prior to
the Closing Date of each of the following conditions, any of which may be waived
by all the Parties hereto:

            6.1 NO LEGAL BAR.

                  (a) There shall not have been  instituted  or  threatened  any
legal  Proceeding  seeking to  prohibit  the  consummation  of the  transactions
contemplated  by this  Agreement or to obtain  substantial  damages with respect
thereto.

                  (b) None of the Parties hereto shall be prohibited by any law,
order,  writ,  injunction  or decree  of any  Governmental  Entity of  competent
jurisdiction from consummating the transactions  contemplated by this Agreement,
and no  Proceeding  shall then be pending  that  questions  the validity of this
Agreement,  any of the transactions  contemplated  hereby or any action that has
been  taken  by any of  the  parties  or any  corporate  entity,  in  connection
herewith, or in connection with any of the transactions contemplated hereby.

            6.2  INVESTMENT  OF RUBICON IN CADENCE AND AURORA.  . Rubicon  shall
have  completed  its  contemplated  investments  in  Cadence  and  Aurora to the
reasonable satisfaction of both Cadence and Aurora.

      7. POST CLOSING COVENANT.  Cadence covenants and agrees that no later than
90 days after the Closing,  Cadence shall have a meeting of its  shareholders to
vote on a proposal  to change  Cadence's  corporate  name to "Aurora Oil and Gas
Corporation".

      8. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.

            8.1  GENERAL.   Each  of  the  Parties  will  use  its  commercially
reasonable efforts to take all action and to do all things necessary, proper, or
advisable  in  order  to  consummate   and  make   effective  the   transactions
contemplated by this Agreement (including  satisfaction,  but not waiver, of the
closing conditions set forth in SECTION 4, SECTION 5 and SECTION 6).

            8.2 FULL  ACCESS.  Each Party shall permit  representatives  of each
other Party to have full access to all premises,  properties,  personnel, books,
records  (including Tax records),  contracts,  and documents of or pertaining to
such Party.


                                       55
<PAGE>

            8.3 NOTICE OF  DEVELOPMENTS.  Aurora will give prompt written notice
to Cadence of any material  adverse  development  causing a breach of any of the
representations  and warranties of Aurora herein.  Cadence and  Acquisition  Sub
will give prompt  written notice to Aurora of any material  adverse  development
causing a breach of any of their respective  representations and warranties.  No
disclosure by any Party  pursuant to this section,  however,  shall be deemed to
amend or  supplement  any Schedule or to prevent or cure any  misrepresentation,
breach of warranty, or breach of covenant.

            8.4  PREPARATION  OF  REGISTRATION  STATEMENT  AND PROXY  STATEMENT.
Cadence shall  prepare and file with the SEC, as soon as reasonably  practicable
after the date hereof, the Registration Statement.  Cadence and Aurora shall use
their best efforts to have the Registration  Statement declared effective by the
SEC as promptly as practicable  after such filing and Aurora will cooperate with
Cadence in the preparation of such  Registration  Statement.  Cadence shall also
take any action (other than  qualifying as a foreign  corporation  or taking any
action  which  would  subject  it to  taxation  or  service  of  process  in any
jurisdiction  where  Cadence is not now so qualified or subject)  required to be
taken under applicable  state blue sky or provincial or federal  securities laws
in connection  with the issuance of Cadence Common Stock in connection  with the
Merger.  If at any time prior to the  Effective  Time any event shall occur that
should be set  forth in an  amendment  of or a  supplement  to the  Registration
Statement,  Cadence  shall  prepare  and file  with the SEC  such  amendment  or
supplement as soon thereafter as is reasonably practicable.  Cadence, Aurora and
Acquisition  Sub shall  cooperate  with  each  other in the  preparation  of the
Registration  Statement and any amendment or supplement thereto,  and each shall
notify the other of the receipt of any  comments of the SEC with  respect to the
Registration  Statement  and of any  requests  by the SEC for any  amendment  or
supplement thereto or for additional information, and shall provide to the other
promptly copies of all correspondence between Cadence or Aurora, as the case may
be, or any of their respective  Representatives  and the SEC with respect to the
Registration   Statement.   Cadence  shall  give  Aurora  and  its  counsel  the
opportunity to review the  Registration  Statement and all responses to requests
for  additional  information  by and replies to comments of the SEC before their
being filed with, or sent to, the SEC. Each of Aurora,  Cadence and  Acquisition
Sub agrees to use its best efforts,  after  consultation with the other Parties,
to respond promptly to all such comments of and requests by the SEC and to cause
the Registration  Statement to be declared  effective by the SEC at the earliest
practicable  time and to be kept effective as long as is necessary to consummate
the Merger.

            8.5  REGULATORY  AND  OTHER  APPROVALS.  Subject  to the  terms  and
conditions of this  Agreement,  each Party will proceed  diligently  and in good
faith to, as promptly as  practicable,  (a) obtain all  consents,  approvals  or
actions of, make all filings with and give all notices to Governmental  Entities
or any other public or private third parties required of a Party or any of their
subsidiaries to consummate the Merger and the other matters contemplated hereby,
and (b) provide such other  information and  communications to such Governmental
Entity or other  public or  private  third  parties  as the other  party or such
Governmental  Entity or other  public or private  third  parties may  reasonably
request in connection therewith.

            8.6 OBSERVER RIGHTS.


                                       56
<PAGE>

                  (a) Cadence shall invite William W. Deneau or his designee, as
a  representative  of Aurora,  to attend all  meetings of the  Cadence  Board of
Directors,  in  person  or by  conference  telephone  or other  means of  remote
communication,  in a nonvoting  observer  capacity.  Cadence  shall  provide Mr.
Deneau  copies of all notices,  minutes,  consents and other  materials  that it
provides to the Cadence  directors.  Notice of the meetings shall be provided to
Mr.  Deneau at the same time and in the same  manner  as notice is  provided  to
Cadence's directors. Mr. Deneau or his designee may be excluded from any meeting
or  portion of a meeting  of the  Cadence  Board of  Directors  or  Cadence  may
withhold  information  from Mr.  Deneau  provided to the Cadence  directors,  if
attendance at the meeting or access to the information  could  adversely  affect
the  attorney-client  privilege  between  Cadence and its counsel,  or involve a
conflict of interest between Cadence and Aurora.

                  (b) Aurora shall invite Howard  Crosby or his  designee,  as a
representative  of  Cadence,  to attend  all  meetings  of the  Aurora  Board of
Directors,  in  person  or by  conference  telephone  or other  means of  remote
communication, in a nonvoting observer capacity. Aurora shall provide Mr. Crosby
copies of all notices, minutes, consents and other materials that it provides to
the Aurora directors.  Notice of the meetings shall be provided to Mr. Crosby at
the same  time  and in the  same  manner  as  notice  is  provided  to  Aurora's
directors.  Mr.  Crosby or his  designee  may be  excluded  from any  meeting or
portion of a meeting of the Aurora  Board of  Directors  or Aurora may  withhold
information from Mr. Crosby provided to the Aurora  directors,  if attendance at
the  meeting  or  access  to  the  information   could   adversely   affect  the
attorney-client  privilege between Aurora and its counsel, or involve a conflict
of interest between Aurora and Cadence.

      9. INDEMNIFICATION.

            9.1  INDEMNIFICATION  BY AURORA.  Aurora  shall  indemnify  and hold
harmless  Cadence and Acquisition  Sub, their  respective  officers,  directors,
employees,  attorneys  and agents and  controlling  persons from any  liability,
damage,  deficiency,  loss,  penalty,  cost  or  expense,  including  reasonable
attorneys  fees and  costs of  investigating  and  defending  against  lawsuits,
complaints,  actions or other pending or threatened  litigation (being hereafter
referred to in this SECTION 9 as "Costs"),  arising from or  attributable to any
breach of any representation,  warranty or agreement made by Aurora herein or in
any  certificate   delivered  by  Aurora  in  connection  with  the  transaction
contemplated  herein,  subject to the  Indemnification  Cap described in SECTION
9.4(F).

            9.2  INDEMNIFICATION  BY CADENCE.  Cadence shall  indemnify and hold
harmless Aurora and its officers,  directors,  employees,  attorneys, agents and
controlling persons from Costs arising from or attributable to any breach of any
representation,  warranty or agreement made by Cadence or Acquisition Sub herein
or in any certificate delivered by Cadence or Acquisition Sub in connection with
the  transaction   contemplated  herein,  subject  to  the  Indemnification  Cap
described in SECTION 9.4(F).

            9.3  LIMITATIONS  PERIOD.  The  indemnification  rights  provided in
SECTIONS  9.1 and 9.2 apply  only with  respect  to claims  asserted  by written
notice provided to the Party from whom  indemnification is sought, no later than
six (6) months after the Effective  Date (the  "Indemnification  Period").  This
limitations period is not intended to restrict the right of a director, officer,
employee,  attorney or agent of a Party to seek indemnification from that Party,
consistent with the Party's bylaws or corporate policies.


                                       57
<PAGE>

            9.4   PROCEDURES   FOR   RESOLUTION   AND   PAYMENT  OF  CLAIMS  FOR
INDEMNIFICATION.

                  (a) If a Person entitled to be indemnified  under this SECTION
9 (the  "Indemnitee")  shall incur any Costs or  determine  that it is likely to
incur any Costs,  including  without  limitation  claims by third  parties,  and
believes  that it is entitled to be  indemnified  against  such Costs by a Party
hereunder (the "Indemnitor"),  such Indemnitee shall deliver to the Indemnitor a
certificate  (an  "Indemnity   Certificate")  signed  by  the  Indemnitee  which
Indemnitee Certificate shall:

                        (i)  state  that the  Indemnitee  has  paid or  properly
                  accrued Costs, or anticipates that it will incur liability for
                  Costs for which such Indemnitee is entitled to indemnification
                  pursuant to this Agreement; and

                        (ii) specify in reasonable  detail each  individual item
                  of Cost  included in the amount so stated,  the date such item
                  was paid or properly  accrued,  the basis for any  anticipated
                  liability and the nature of the  misrepresentation,  breach of
                  warranty  or breach  of  covenant  to which  each such item is
                  related  and the  computation  of the  amount  to  which  such
                  Indemnitee claims to be entitled hereunder.

                  (b) In case the Indemnitor shall object to the indemnification
of an  Indemnitee  in respect of any claim or claims  specified in any Indemnity
Certificate, the Indemnitor shall within 30 days after receipt by the Indemnitor
of such Indemnity Certificate deliver to the Indemnitee a written notice to such
effect and the  Indemnitor and the  Indemnitee  shall,  within the 30-day period
beginning on the date of receipt by the  Indemnitee  of such written  objection,
attempt in good faith to agree upon the rights of the  respective  parties  with
respect to each of such claims to which the  Indemnitor  shall have so objected.
If the  Indemnitee  and the  Indemnitor  shall succeed in reaching  agreement on
their respective  rights with respect to any of such claims,  the Indemnitee and
the  Indemnitor  shall  promptly  prepare and sign a writing  setting forth such
agreement.

                  (c) Claims for Costs specified in any Indemnity Certificate to
which an Indemnitor  shall not object in writing,  claims for Costs covered by a
written agreement of the nature described in SECTION 9.3(B) and claims for Costs
the validity and amount of which shall have been the subject of a final judicial
determination are hereinafter referred to, collectively, as "Agreed Claims".

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<PAGE>

                  (d)  Promptly  after the  assertion  by any third party of any
claim  against any  Indemnitee  that,  in the judgment of such  Indemnitee,  may
result in the incurrence by such  Indemnitee of Costs for which such  Indemnitee
would be entitled to indemnification pursuant to this Agreement, such Indemnitee
shall deliver to the Indemnitor a written notice describing in reasonable detail
such claim and such  Indemnitor  may, at its  option,  assume the defense of the
Indemnitee against such claim (including the employment of counsel, who shall be
satisfactory to such Indemnitee,  and the payment of expenses), which assumption
shall  not  be  deemed  an  admission  of  liability  for  indemnification.  Any
Indemnitee shall have the right to employ separate counsel in any such action or
claim and to  participate in the defense  thereto,  but the fees and expenses of
such  counsel  shall not be at the  expense  of the  Indemnitor  unless  (i) the
Indemnitor  shall  have  failed,  within a  reasonable  time after  having  been
notified by the  Indemnitee  of the  existence  of such claim as provided in the
preceding sentence,  to assume the defense of such claim, (ii) the employment of
such counsel has been  specifically  authorized by the Indemnitor,  or (iii) the
named parties to any such action (including any impleaded  parties) include both
such Indemnitee and the Indemnitor and such  Indemnitee  shall have been advised
in  writing  by  such  counsel  that  there  may be one or more  legal  defenses
available to it which are different  from or  additional  to those  available to
Indemnitor.  No Indemnitor  shall be liable to indemnify any  Indemnitee for any
settlement  of any such  action or claim  effected  without  the  consent of the
Indemnitor  but if settled  with the written  consent of the  Indemnitor,  or if
there be a final  judgment for the plaintiff in any such action,  the Indemnitor
shall jointly and severally indemnify and hold harmless each Indemnitee from and
against any loss or liability by reason of such  settlement  or judgment.  If an
Indemnitor  assumes  the  defense  of an  Indemnitee  against  a claim  asserted
hereunder,  the  Indemnitee  shall give the  Indemnitor  access to the company's
books and records as necessary  to conduct  such  defense and  cooperate in such
defense.

                  (e) If a Party is  required to provide an  indemnification  to
the other Party  (Aurora to Cadence  and/or  Acquisition  Sub or Cadence  and/or
Acquisition Sub to Aurora), the indemnification shall be paid not with cash, but
solely by changing  the  exchange  ratio in the Merger as follows.  If the Costs
arising  from or  attributable  to a breach of any  representation,  warranty or
agreement made by the  Indemnitor are less than $3 million in the aggregate,  no
adjustment  to the exchange  ratio shall be made.  If the Costs  arising from or
attributable to a breach of any representation,  warranty,  or agreement made by
the  Indemnitor is equal to or more than $3 million in the  aggregate,  then for
each $3 million in aggregate Costs, the exchange ratio shall be modified by 0.15
share. By way of  illustration,  if Aurora is entitled to  indemnification  from
Cadence in the amount of $3 million,  each Aurora  shareholder shall receive the
equivalent  of 2.15  shares of  Cadence  Common  Stock for each  share of Aurora
Common Stock; and if Cadence is entitled to  indemnification  from Aurora in the
amount of $3 million,  each Aurora  shareholder  will be required to surrender a
..15  share of  Cadence  Common  Stock  for each  share of  Aurora  Common  Stock
exchanged,  resulting in an effective conversion ratio of 1.85 shares of Cadence
Common Stock for each share of Aurora Common Stock. If Aurora  shareholders  are
required to surrender any shares,  these shares to be surrendered will come from
the shares held by the Exchange Agent in the Exchange Fund for this purpose, and
the  Exchange  Agent  shall  surrender  the  required  number of shares  back to
Cadence.

                  (f) The  parties  agree  that the  maximum  number  of  shares
subject to  adjustment  in payment of the  parties'  respective  indemnification
obligations shall be 10% (the "Indemnification Cap").  Accordingly,  in no event
shall  Aurora's  shareholders  be required to surrender more than a 0.2 share of
Cadence  Common  Stock for each  share of Aurora  stock  tendered  for  exchange
pursuant to this Section 9.4.  Similarly,  in no event shall Cadence be required
to issue more than 0.2 shares of Cadence  Common  Stock for each share of Aurora
stock tendered for exchange pursuant to this Section 9.4.


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<PAGE>

      10.  CONFIDENTIAL  INFORMATION.  Each  Party  agrees  that it will use the
Confidential  Information  that it receives solely for the purpose of evaluating
and implementing the transactions  contemplated hereby and for no other purpose.
Each Party shall keep the Confidential  Information strictly  confidential,  and
shall not disclose any of the  Confidential  Information to any person or entity
or use any of the Confidential Information for any other purpose;  provided that
each Party may disclose the  Confidential  Information  to its  accountants  and
attorneys (each a "Representative" and collectively the  "Representatives")  who
need to know such Confidential Information solely for purposes of assisting such
Party  in  evaluating  the  transactions  contemplated  hereby.  As a  condition
precedent to disclosing any Confidential Information to any such Representative,
the Party will  inform such  Representative  of the  confidential  nature of the
Confidential  Information and such  Representative will agree to be bound to the
terms and provisions hereof, as if such Representative was a party hereto.

      11. TERMINATION.

            11.1 This Agreement shall terminate at any time prior to the Closing
as follows:

                  (a) By the mutual written consent of the Parties.

                  (b) By Cadence or  Acquisition  Sub,  upon  written  notice to
Aurora that any of the conditions in SECTIONS 5 and 6 have not been fulfilled or
waived on or prior to August 1, 2005, or Aurora shall have failed to comply with
any material term or condition of this Agreement.

                  (c) By Aurora,  upon written notice to Cadence that any of the
conditions in SECTIONS 4 and 6 have not been  fulfilled or waived on or prior to
August 1, 2005, or Cadence or  Acquisition  Sub shall have failed to comply with
any material term or condition of this Agreement.

      12. MISCELLANEOUS PROVISIONS.

            12.1 CONSTRUCTION. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEVADA  WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.

            12.2  NOTICES.  All  notices,   consents,   directions,   approvals,
instructions,  requests  and other  communications  required or permitted by the
terms of this Agreement shall be in writing, and shall be sent to the applicable
Party at the following addresses or facsimile numbers, as applicable:


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                           If to Cadence:

                                    Cadence Resources Corporation
                                    6 East Rose Street
                                    Walla Walla, Washington 99362
                                    Attention:  Howard Crosby
                                    Fax:  (509) 516-3491

                           With a copy to:

                                    Jenkens & Gilchrist Parker Chapin LLP
                                    The Chrysler Building
                                    405 Lexington Avenue
                                    New York, New York 10174
                                    Attention: Henry I. Rothman
                                    Fax: 212-704-6288

                           If to Acquisition Sub:

                                    Aurora Acquisition Corp.
                                    c/o Cadence Resources Corporation
                                    6 East Rose Street
                                    Walla Walla, Washington 99362
                                    Attention:  Howard Crosby
                                    Fax:  (509) 516-3491

                           With a copy to:

                                    Jenkens & Gilchrist Parker Chapin LLP
                                    The Chrysler Building
                                    405 Lexington Avenue
                                    New York, New York 10174
                                    Attention: Henry I. Rothman
                                    Fax: 212-704-6288

                           If to Aurora:

                                    Aurora Energy, Ltd.
                                    3760 North US 31 South
                                    P. O. Box 961
                                    Traverse City, Michigan 49685-0961
                                    Attention:  William W. Deneau
                                    Fax:  231-933-0757


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                           With a copy to:

                                    Fraser Trebilcock Davis & Dunlap, P.C.
                                    124 West Allegan, Suite 1000
                                    Lansing, Michigan 48933
                                    Attention: Iris K. Linder
                                    Fax: 517-482-0887

or to such other address or facsimile  number as any Party may have furnished to
each other  Party in writing in  accordance  herewith.  All  notices,  consents,
directions, approvals, instructions, requests and other communications hereunder
shall be sent and effective as follows: (i) on the business day delivered,  when
delivered  personally;  (ii) five (5) business  days after  mailing if mailed by
registered or certified mail, return receipt requested (postage prepaid);  (iii)
on the next business day if sent by a nationally  recognized  overnight  express
courier  service  with all costs  prepaid and  provided  evidence of delivery is
available;  or (iv) on the business day of a facsimile  transmission if received
on a business day before 5:00 p.m.,  local time,  or on the next business day if
received  after that  time,  in each case  provided  that an  automatic  machine
confirmation indicating the time of receipt is generated.

            12.3  ASSIGNMENT.  Neither  this  Agreement  nor any right,  remedy,
obligation  or liability  arising  hereunder or by reason  hereof nor any of the
documents  executed in connection  herewith may be assigned by any Party without
the consent of the other Parties.  Nothing contained herein, express or implied,
is intended to confer  upon any person or entity  other than the Parties  hereto
and their successors in interest and permitted  assignees any rights or remedies
under or by reason of this Agreement unless so stated herein to the contrary.

            12.4 AMENDMENTS AND WAIVERS.  No breach of any covenant,  agreement,
warranty or  representation  shall be deemed waived unless  expressly  waived in
writing by the Party who is  entitled to assert  such  breach.  No waiver of any
right hereunder shall operate as a waiver of any other right or of the same or a
similar right on another occasion. This Agreement and the Exhibits and Schedules
hereto may be modified only by a written instrument duly executed by the Parties
hereto.

            12.5  ATTORNEYS'  FEES. In the event that any action or  proceeding,
including  arbitration,  is  commenced  by any Party  hereto for the  purpose of
enforcing  any  provision  of  this  Agreement,  the  Parties  to  such  action,
proceeding or arbitration may receive as part of any award,  judgment,  decision
or other  resolution of such action,  proceeding or arbitration  their costs and
reasonable  attorneys'  fees as  determined  by the Person or body  making  such
award, judgment,  decision or resolution.  Should any claim hereunder be settled
short  of  the  commencement  of  any  such  action  or  proceeding,   including
arbitration, the Parties in such settlement shall be entitled to include as part
of the damages  alleged to have been incurred  reasonable  costs of attorneys or
other professionals in investigation or counseling on such claim.

            12.6 BINDING NATURE OF AGREEMENT.  This  Agreement  includes each of
the Schedules and Exhibits that are referred to herein or attached  hereto,  all
of which are incorporated by reference  herein.  All the terms and provisions of
this  Agreement  shall be binding  upon and inure to the  benefit of the Parties
hereto and their respective executors, heirs, legal representatives,  successors
and assigns.


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            12.7 EXPENSES.  The costs and expenses and the professional fees and
disbursements  incurred  by  Aurora  in  connection  herewith  shall be borne by
Aurora.  The costs and expenses of Cadence and Acquisition Sub shall be borne by
Cadence and Acquisition Sub, respectively.

            12.8  ENTIRE   AGREEMENT.   This   Agreement   contains  the  entire
understanding  of the parties with  respect to the subject  matter  hereof,  and
supersedes all prior representations,  agreements and understandings relating to
the subject matter hereof.

            12.9 SEVERABILITY.  Any provision of this Agreement that is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction,  be
ineffective to the extent of such  invalidity,  illegality or  unenforceability,
without   affecting  in  any  way  the  remaining   provisions  hereof  in  such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.

            12.10 COUNTERPARTS; SIGNATURES; SECTION HEADINGS. This Agreement may
be  executed  by the  parties in  separate  counterparts,  each of which when so
executed and delivered  shall be an original,  but all such  counterparts  shall
together constitute but one and the same instrument. A facsimile signature shall
bind the  signatory  in the same way that an original  signature  would bind the
signatory. The headings of each section, subsection or other subdivision of this
Agreement  are for  reference  only and shall not limit or control  the  meaning
thereof.

            12.11 PUBLIC ANNOUNCEMENTS. The Parties will consult with each other
before  the  issuance  of any press  release  or  otherwise  making  any  public
statements  with  respect  to this  Agreement  and no press  release  or  public
statement  shall be made by any Party  hereto  prior to an  agreement  among the
Parties as to the content of any such release, except as may be required by law.

            12.12 NO THIRD-PARTY BENEFICIARIES.  This Agreement shall not confer
any rights or  remedies  upon any Person or entity  other than the  Parties  and
their respective successors and permitted assigns.

                  [Remainder of page intentionally left blank.]


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      IN WITNESS  WHEREOF,  this Agreement has been duly executed by the Parties
hereto as of the date first written above.


                                CADENCE RESOURCES CORPORATION

                                By: __________________________________________
                                Name:_________________________________________
                                Title:________________________________________


                                AURORA ACQUISITION CORP.

                                By: __________________________________________
                                Name:_________________________________________
                                Title:________________________________________


                                AURORA ENERGY, LTD.

                                By: __________________________________________
                                Name:_________________________________________
                                Title:________________________________________