Exhibit
      10.3

     

    NOTE
      AND SECURITY AGREEMENT

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
      REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND THEREFORE
      THESE SECURITIES MAY NOT BE TRANSFERRED WITHOUT REGISTRATION THEREUNDER OR
      PURSUANT TO AN EXEMPTION FROM REGISTRATION

    


    This
      Note
      is secured by a pledge of all of the limited liability membership interests
      of
      Osage Energy, L.L.C., an Oklahoma limited liability company (“Osage”) by the
      Borrower (as defined below), the sole owner of all of the membership interests
      of Osage. Osage is the assignee of certain producing oil and natural gas leases
      located in Osage County, Oklahoma (the “Osage Property”), which property
      consists of twenty three wells (ten currently producing) on 480 acres. The
      note
      is to secure for Holder such sums as shall be necessary to preserve and protect
      the collateral which is the subject of this Note and the collection of the
      sums
      due under the Note secured hereby. 

    


    SECURED CONVERTIBLE
      NOTE

    


    FOR
      VALUE RECEIVED,
      Osage
      Energy Corporation, a Nevada corporation (hereinafter called the "Borrower"),
      hereby promises to pay to Vision Opportunity Master Fund, Ltd., a Cayman Islands
      corporation (the "Holder"
      or
“Secured
      Party”)
      the
      sum of Two
      Hundred Fifty Thousand Dollars ($250,000) with
      compound interest accruing at the annual rate of ten
      percent (10%),
      on July
      31, 2007 (the "Maturity Date"). All payments shall be in lawful currency of
      the
      United States of America.

    


    The
      following terms shall apply to this Note:

    


    ARTICLE
      I

    PAYMENT
      DEMAND AND DEFAULT RELATED PROVISIONS

    


    1.1 Payment:
      Default Rate and Grace Period.
      All
      interest shall be due and payable at the Maturity Date. On the Maturity Date,
      all unpaid interest and principal due under this Note shall be payable. If
      any
      amount, whether of principal or interest on this Note, is not paid when due
      (after giving effect to any applicable grace period), then from and after such
      date the entire outstanding balance of the Note shall bear interest at the
      Default Rate. The Borrower shall have a five
      (5) day grace period
      to pay
      any monetary amounts due under this Note after its due date, after which grace
      period a default interest rate of eighteen
      percent (18%)
      per
      annum shall apply to the amounts owed hereunder. In the event of an Event of
      Default, defined below, such default interest shall accrue against all
      previously accrued but unpaid interest and outstanding principal at the Default
      Rate, and all such principal and interest shall be immediately due and payable
      upon demand by the Holder to Borrower. All payments to be made under this Note
      shall be made to Holder at its office stated on the first page of this Note,
      or
      at such other address or, if by wire, such other bank account, as may be
      designated in writing by Holder from time to time. 

    


    1.2 Conversion
      Privileges.
      The
      Conversion Privileges set forth in Article II shall remain in full force and
      effect immediately from the date hereof and until the Note is paid in
      full.

    


    1.3 Interest
      Rate.
      Interest payable on this Note shall accrue from and after the first advance
      hereunder, and only on the amount so advanced plus any accrued but unpaid
      interest, at the annual rate of
      ten percent (10%)
      and be
      payable on the Maturity Date, accelerated or otherwise, when the principal
      and
      all accrued but unpaid interest shall be due and payable, or sooner as described
      below. Interest shall accrue from the date hereof, on the full amount of
      principal advanced hereunder and any accrued but unpaid interest, until this
      Note is paid in full. Interest and any fees and charges payable under this
      Note
      shall be calculated on the basis of a 360-day year for the actual days
      elapsed.

     

    
      
        
        

      

      
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    1.4 Minimum
      Interest.
      The
      Holder shall be entitled to a minimum interest of $25,000, regardless of when
      the Note is converted pursuant to the Conversion Privileges set forth in Article
      II or when the Note is redeemed by the Borrower. 

    


    1.5 Upfront
      Fee.
      At
      closing, the Holder shall be entitled to 300,000 shares of Common Stock of
      the
      Borrower. The Holder shall be entitled to customary “piggy-back” registration
      rights with respect to Borrower’s Common Stock.

    


    1.6 No
      Setoff or Counterclaim.
      All
      payments (including prepayments) by the undersigned on account of principal
      and
      interest and fees, if any, shall be made to Holder without set-off, recoupment
      or counterclaim. If any payment becomes due and payable on a day other than
      a
      Business Day, the due date of such payment shall be extended to the next
      succeeding Business Day and, with respect to payments of principal, interest
      thereon shall be payable at the then applicable rate during such extension.
      

    


    1.7 Waiver
      of Presentment and Enforcement.
      All
      parties now or subsequently liable with respect to this Note, whether maker,
      principal, surety, guarantor, endorser or otherwise, hereby waive presentation
      for payment, demand, notice of nonpayment or dishonor, protest and notice of
      protest and any and all lack of diligence or delay in collection or enforcement
      hereof.

    


    ARTICLE
      II

    CONVERSION
      RIGHTS

    


    At
      any
      time during the term of this Note and continuing until this Note is paid in
      full, the Holder may deliver a written notification (the “Notice
      of Conversion”)
      to the
      Borrower setting forth the portion of the principal amount of the Note and/or
      interest due and payable (the “Investment
      Amount”)
      that
      the Holder exercises its conversion rights with respect thereto, subject to
      the
      terms and provisions set forth below. 

    


    2.1. Conversion
      into the Borrower's Common Stock.

    


    (a) The
      Holder shall have the right, but not the obligation, from and after the
      Borrower’s receipt of a Notice of Conversion or the occurrence of any Event of
      Default, as the case may be, and then at any time and from time to time until
      this Note is fully paid, to convert all or any portion of the principal of
      this
      Note and/or interest due and payable set forth in each such Notice of Conversion
      or the entire amount or a portion of the principal portion of this Note and/or
      interest due and payable following the occurrence of an Event of Default, as
      the
      case may be, into fully paid and nonassessable shares of common stock of the
      Borrower as such stock exists on the date of issuance of this Note, or any
      shares of capital stock of the Borrower into which such stock shall hereafter
      be
      changed or reclassified or exchanged for (the "Common
      Stock")
      at the
      conversion price as defined in Section 2.1(b) hereof (the "Conversion
      Price"),
      determined as provided herein. Upon delivery to the Borrower of the Holder’s
      written request for conversion (a “Notice of Conversion”, the date of giving
      such notice of conversion being a Conversion
      Date),
      the
      Borrower shall issue and deliver to the Holder within ten business days from
      the
      Conversion Date that number of shares of Common Stock for the portion of the
      Note converted in accordance with the foregoing. The number of shares of Common
      Stock to be issued upon each conversion of this Note shall be determined by
      dividing that portion of the principal of the Note to be converted and accrued
      interest, if any, by the Conversion Price.

     

    
      
        
        

      

      
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    (b) Subject
      to adjustment as set forth in section 2.1, the
      Note
      (including for all purposes herein accrued interest thereon) is convertible
      in
      whole or in part at any time prior to receipt by Holder of payment in full,
      into
      common stock of the Borrower at the conversion rate equal to $0.25 (twenty-five
      cents) (the “Fixed
      Conversion Price”)
      per
      share of Common Stock. It is understood that the shares be to issued to Holder
      shall be restricted, and that there is little to no liquidity or resale market
      in the shares. The Holder shall be entitled to customary “piggy-back”
registration rights with respect to Borrower’s Common Stock.

    


    A. Merger,
      Sale of Assets, etc.
      If the
      Borrower at any time shall consolidate with or merge into or sell or convey
      all
      or substantially all its assets to any other person or entity, this Note, as
      to
      the unpaid principal portion thereof and accrued interest thereon, shall
      thereafter be deemed to evidence the right to purchase such number and kind
      of
      shares or other securities and property as would have been issuable or
      distributable on account of such consolidation, merger, sale or conveyance,
      upon
      or with respect to the securities subject to the conversion or purchase right
      immediately prior to such consolidation, merger, sale or conveyance. The
      foregoing provision shall similarly apply to successive transactions of a
      similar nature by any such successor or purchaser. Without limiting the
      generality of the foregoing, the anti-dilution provisions of this Section shall
      apply to such securities of such successor or purchaser after any such
      consolidation, merger, sale or conveyance. 

    


    B. Reclassification,
      etc.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note, as to the unpaid principal portion thereof and accrued interest
      thereon, shall thereafter be deemed to evidence the right to purchase an
      adjusted number of such securities and kind of securities as would have been
      issuable as the result of such change with respect to the Common Stock
      immediately prior to such reclassification or other change.

    


    C. Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater number of
      shares of Common Stock, or if a dividend is paid on the Common Stock in shares
      of Common Stock, the Conversion Price shall be proportionately reduced in case
      of subdivision of shares or stock dividend or proportionately increased in
      the
      case of combination of shares, in each such case by the ratio which the total
      number of shares of Common Stock outstanding immediately after such event bears
      to the total number of shares of Common Stock outstanding immediately prior
      to
      such event. In the event that the number of shares is reduced to a smaller
      number of shares as in a stock reverse, the conversion price shall remain the
      same pursuant to the provisions of 2.1(b).

    


    (c) During
      the period the conversion right exists, the Borrower will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Common Stock upon the full conversion of this Note. The
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully paid and non-assessable. The Borrower agrees that its issuance
      of
      this Note shall constitute full authority to its officers, agents, and transfer
      agents who are charged with the duty of executing and issuing stock certificates
      to execute and issue the necessary certificates for shares of Common Stock
      upon
      the conversion of this Note.

    


    2.2 Method
      of Conversion.
      This
      Note may be converted by the Holder in whole or in part as described in Section
      2.1(a). Upon partial conversion of this Note, in which case the remaining
      balance of the note will remain in full force and effect for the principal
      balance of this Note and interest which shall not have been converted or
      paid.

     

    
      
        
        

      

      
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    ARTICLE
      III

    EVENT
      OF DEFAULT

    


    The
      occurrence of any of the following events of default ("Event
      of Default")
      shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, all without demand, presentment or notice, or grace period, all
      of
      which hereby are expressly waived, except as set forth below:

    


    3.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay ANY portion of the principal or interest due under this
      Note when due and such failure continues for a period of five (5) calendar
      days
      after the due date. 

    


    3.2 Breach
      of Covenant.
      The
      Borrower breaches any covenant or other term or condition of this Note in any
      material respect and such breach, if subject to cure, continues for a period
      of
      five (5) calendar days after written notice to the Borrower from the
      Holder.

    


    3.3 Breach
      of Representations and Warranties.
      Any
      representation or warranty of the Borrower made herein, or in any agreement,
      statement or certificate given in writing pursuant hereto or in connection
      therewith shall be false or misleading. It is agreed that Borrower will not
      issue more than ten percent of the issued and outstanding shares of the company
      unless the Note has been paid in full. 

    


    3.4 Receiver
      or Trustee.
      The
      Borrower shall make an assignment for the benefit of creditors, or apply for
      or
      consent to the appointment of a receiver or trustee for it or for a substantial
      part of its property or business; or such a receiver or trustee shall otherwise
      be appointed.

     

    3.5 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower.

    


    3.6 Failure
      to Deliver Common Stock or Replacement Note.
      The
      Borrower's failure to timely deliver Common Stock to the Holder pursuant to
      and
      in the form required by this Note or if required a replacement
      Note.

    


    3.7 Remedies
      of Holder are Cumulative.
      The
      remedies of Holder as provided herein, and any one or more of them, whether
      in
      law or in equity, shall be cumulative and concurrent, and may be pursued
      singularly, successively or together at Holder’s sole discretion, and may be
      exercised as often as Holder may decide in its sole and absolute
      discretion.

    


    ARTICLE
      IV

    GRANT
      OF SECURITY INTEREST

    


    4.1 Grant
      of Security.
      As
      security for the Obligations (as defined below), Borrower hereby delivers,
      assigns, pledges, sets over and grants to Secured Party a first priority
      security interest in, all of its right, title and interest, whether now existing
      or hereafter arising or acquired, in Borrower’s entire membership interest in
      Osage Energy, L.L.C. ( “Osage”),
      together with all and any proceeds thereof (the “Collateral”).

     

    
      
        
        

      

      
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    4.2 Security
      for Obligation.
      This
      Note and Security Agreement secures the payment of all now existing or hereafter
      arising obligations of Borrower to Secured Party under this Note, whether for
      principal, interest, fees, expenses or otherwise, together with all costs of
      collection or enforcement, including, without limitation, reasonable attorneys’
fees incurred in any collection efforts or in any action or proceeding (all
      such
      obligations being the “Obligations”).

    


    4.3 Grantor
      Remains Liable.
      This
      Note and Security Agreement shall not affect Borrower’s liability to perform all
      of its duties and obligations with respect to the transaction giving rise to
      the
      Obligations. The exercise by Secured Party of its rights hereunder shall not
      release Borrower from any of its duties or obligations under the transaction
      giving rise to the Obligations, which shall remain unchanged as if this Note
      and
      Security Agreement had not been executed. Secured Party shall not have any
      obligation or liability with respect to the transaction giving rise to the
      Obligations by reason of this Note and Security Agreement.

    


    4.4 Continuing
      Agreement.
      This
      Note and Security Agreement shall create a continuing security interest in
      the
      Collateral and shall remain in full force and effect until payment in full
      of
      the Obligations.

    


    ARTICLE
      V

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS

    


    5.1 Title;
      Liens and Encumbrances.
      Borrower
      represents and warrants that it is the sole record and beneficial owner of
      good
      and marketable title to the Collateral pledged by it hereunder, free of any
      and
      all Liens, or options in favor of, or claims of, any other person, except the
      liens created by this Note and Security Agreement. Borrower will promptly notify
      Secured Party of any such other lien or claim made or asserted against the
      Collateral and will defend the Collateral against any such lien or other
      claim.

    


    5.2 Validity
      of Oil and Natural Gas Leases.
      Osage
      has the full right and authority to operate the producing oil and natural gas
      leases located in Osage County, Oklahoma and as more fully described in Exhibit
      A annexed hereto (the “Leases”)
      and to
      extract oil and natural gas from wells subject to such Leases. The Leases and
      the Assignment and Bill of Sale between Osage and Conquest Exploration Company,
      L.L.C. are in full force and effect.

    


    5.3 Perfection
      of Security Interest.
      Borrower
      authorizes Secured Party to file all such financing statements and amendments
      thereto pursuant to the Uniform Commercial Code or other notices appropriate
      under applicable law, as Secured Party may require, each in form satisfactory
      to
      Secured Party. Borrower authorizes Secured Party to take all other actions
      which
      Secured Party may deem necessary or desirable to perfect or otherwise protect
      the lien created hereunder and to obtain the benefits of this Note and Security
      Agreement.

    


    ARTICLE
      VI

    MISCELLANEOUS

    


    6.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    
      
        
        

      

      
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    6.2 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) three days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. All communications shall be sent to the Borrower and Holder at the
      addresses on the first page of this Note or at such other address as the
      Borrower or the Holder may designate by ten days advance written notice to
      the
      other parties hereto. A Notice of Conversion shall be deemed given when made
      to
      the Borrower.

    


    6.3 Amendment
      Provision.
      The
      term "Note" and all reference thereto, as used throughout this instrument,
      shall
      mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented.

    


    6.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and assigns, and
      may
      be assigned by the Holder.

    


    6.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay the Holder
      hereof reasonable costs of collection, including reasonable attorneys'
      fees.

    


    6.6 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of California, without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      or
      in the federal courts located in the State of California, city of San Diego.
      Both parties and the individual signing this Note on behalf of the Borrower
      agree to submit to the jurisdiction of such courts. The prevailing party shall
      be entitled to recover from the other party its reasonable attorney's fees
      and
      costs. In the event that any provision of this Note is invalid or unenforceable
      under any applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or unenforceability of any other provision of this Note. 

    


    6.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower. 

    


    6.8 Prepayment.
      This
      Note may be paid (in whole or in part) prior to the Maturity Date without the
      consent of the Holder subject to Holder’s conversion rights (section
      2.1).

    


    6.9 Time. Where
      this Note authorizes or requires the payment of money or the performance of
      a
      condition or obligation on a Saturday or Sunday or a public holiday, or
      authorizes or requires the payment of money or the performance of a condition
      or
      obligation within, before or after a period of time computed from a certain
      date, and such period of time ends on a Saturday or a Sunday or a public
      holiday, such payment may be made or condition or obligation performed on the
      next succeeding business day, and if the period ends at a specified hour, such
      payment may be made or condition performed, at or before the same hour of such
      next succeeding business day, with the same force and effect as if made or
      performed in accordance with the terms of this Note. A “business day” shall mean
      a day on which the banks in New York are not required or allowed to be closed.
      Time is of the essence as to all matters in and related to this Note and
      Security Agreement.

     

    
      
        
        

      

      
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    6.10 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the
      other.

    


    IN
      WITNESS WHEREOF,
      the
      Borrower has caused this Note to be signed in its name by its Chief Executive
      Officer on this ___ day of February 2007.

    


    
      	 	 	 
	 	OSAGE
              ENERGY CORPORATION
	 
 	 
 	 
 
	
            	By:  	 
	 	
              

              Name:
                Kim Bradford

              Title:
                President and Chief Executive Officer

            
	 	
            


    

     

    
      
        
        

      

      
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    NOTICE
      OF CONVERSION

    


    (To
      be
      executed by the Holder in order to convert the Note)

     

    The
      undersigned hereby irrevocably elects, as of the Date of Conversion stated
      below, to convert $_______ of the principal and interest due on the $250,000
      Note issued by OSAGE
      ENERGY CORPORATION on
      February __, 2007 into Shares of Common Stock of OSAGE
      ENERGY CORPORATION
      (the
      "Company") according to the conditions set forth in such Note, as of the date
      written below.

    


     

    Date
      of
      Conversion: _______________

     

    Conversion
      Price: $0.25 (Twenty-five cents) per share

     

    Number
      of
      Shares To Be Delivered: ________

    


    


    Signature:______________________________________

    


    Print
      Name:_____________________________________

    


    Print
      Title:______________________________________

    


    Print
      Name of Current Note Holder:__________________

    


    Address:______________________________________________________________

    ____________________________________________________________________

    
 

    
      
        
        

      

      
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    Exhibit
      A

    


    The
      following is a list of certain producing oil and natural gas leases located
      in
      Osage County, Oklahoma (the “Osage Property”), which property consists of twenty
      three wells (ten currently producing) on 480 acres: 

    


    Osage
      Lease: SE/4 Section 30-21N-10E, BIA Contract Number 17700, dated 7/21/99.


    Hopper
      Lease: NE/4 Section 31-21N-10E, BIA Contract Number 17701, dated 7/21/99.


    Hopper
      Lease: NW/4 Section 31-2IN-10E, BIA Contract Number 17702, dated 7/21/99.


    


    All
      of
      the above said Oil and Gas Leases shall be delivered to Assignee at a 81.25%
      Net
      Revenue Interest Lease. 

    


    Wells
      and
      Associated: Sub-Surface Pipe and Equipment and Surface Equipment: 

    


    Osage
      #1,
      2, 3, 4, 5, 6, 7, 8 and 10 located in SE/4 of Section 30-21N-1OE. 

    


    Hopper
      #1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 19 located
      in
      N/2 of Section 31-21N-10E. 

    


    Any
      and
      all other wel1s, property and equipment located and associated with any wells
      located in the SE/4 of Section 30 and the N/2 of Section 31, all in Township
      21N, Range 10E, Osage County, Oklahoma and not specifically described
      hereinabove.”

    


    
      
        
        

      

      
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