FINAL








**FIRST
      AMENDED AND RESTATED**


**NOTE
      PURCHASE AGREEMENT**






by
      and
      between






**AURORA
      ANTRIM NORTH, LLC,**




as
      Issuer,




**AURORA
      ENERGY, LTD.**




and




**TCW
      ASSET MANAGEMENT COMPANY,**


in
      the
      capacities described herein,





**TCW
      ENERGY FUND X - NL, L.P.,**





**TCW
      ENERGY FUND XB - NL, L.P.,**





**TCW
      ENERGY FUND XC - NL, L.P.,**





and





**TCW
      ENERGY FUND XD - NL, L.P.**





as
      Purchasers





and





**TCW
      ASSET MANAGEMENT COMPANY** ,


as
      Administrative Agent and Collateral Agent




Dated
      as
      of December 8, 2005









TABLE
      OF CONTENTS




Page


SECTION
                      1 DEFINITIONS AND ACCOUNTING MATTERS
                  2Section
                      1.1   Defined Terms
                  2Section
                      1.2   Accounting Terms and Determinations
                  21Section
                      1.3   Interpretation
                  21SECTION
                      2 PURCHASE AND SALE OF SECURITIES
                  22Section
                      2.1   Note Purchase
                  22Section
                      2.2   The Notes
                  22Section
                      2.3   Request for Advances
                  23Section
                      2.4   Commitment Fee.
                  23Section
                      2.5   Use of Proceeds.
                  23Section
                      2.6   Collateral Account
                  23Section
                      2.7   Overriding Royalty Interest.
                  25SECTION
                      3 TERMS OF THE NOTES
                  25Section
                      3.1   Rate of Interest; Payment of Interest.
                  25Section
                      3.2   Computation of Interest
                  26Section
                      3.3   Payment of Principal
                  26Section
                      3.4   Required Prepayments of the Notes
                  26Section
                      3.5   Optional Prepayments of the Notes
                  26Section
                      3.6   Prepayment
                  27Section
                      3.7   General Payment Provision
                  28Section
                      3.8   Ranking
                  29Section
                      3.9   Taxes, Duties and Fees
                  29SECTION
                      4 REPRESENTATIONS AND WARRANTIES
                  30Section
                      4.1   Representations and Warranties of the
                      Issuer
                  30Section
                      4.2   Representations and Warranties of the
                      Purchasers
                  37SECTION
                      5 COVENANTS OF ISSUER
                  38Section
                      5.1   Affirmative Covenants to Purchasers
                  38Section
                      5.2   Negative Covenants to Purchasers
                  48Section
                      5.3   Coverage Ratios
                  52SECTION
                      6 CONDITIONS TO ADVANCES
                  53Section
                      6.1   Conditions to Initial Advance.
                  53Section
                      6.2   Conditions Precedent to Any Advance
                  55Section
                      6.3   Special Conditions Precedent for an Additional
                      Advance
                  56Section
                      6.4   Conditions to Issuer’s Obligations at
                      Closing
                  56SECTION
                      7 SECURITY
                  56Section
                      7.1   The Security
                  56Section
                      7.2   Agreement to Deliver Collateral Documents
                  57Section
                      7.3   Perfection and Protection of Security Interests
                      and
                      Liens
                  57Section
                      7.4   Appointment of Agent and Collateral Agent
                  57SECTION
                      8 TRANSFERABILITY OF SECURITIES
                  60Section
                      8.1   Restrictive Legend
                  60
  i
  SECTION
                      9 EVENTS OF DEFAULT and REMEDIES
                  61Section
                      9.1   Events of Default
                  61Section
                      9.2   Remedies
                  63Section
                      9.3   Indemnity
                  64SECTION
                      10 MISCELLANEOUS
                  64Section
                      10.1   Waivers and Amendments; Acknowledgment
                  64Section
                      10.2   Survival of Agreements; Cumulative
                      Nature.
                  67Section
                      10.3   Notices.
                  67Section
                      10.4   Governing Law; Submission to Process
                  68Section
                      10.5   Limitation on Interest.
                  69Section
                      10.6   Termination; Limited Survival.
                  70Section
                      10.7   Registration, Transfer, Exchange, Substitution
                      of
                      Notes
                  70Section
                      10.8   Waiver of Jury Trial, Punitive Damages,
                      Etc.
                  71Section
                      10.9   Exhibits and Schedules; Additional
                      Definitions.
                  72Section
                      10.10   Confidentiality of Holders.
                  72Section
                      10.11   Reproduction of Documents.
                  73Section
                      10.12   Successors and Assigns.
                  73Section
                      10.13   Counterparts.
                  74Section
                      10.14   Severability.
                  74Section
                      10.15   Expenses.
                  74Section
                      10.16   Specific Performance.
                  74Section
                      10.17   Joinder by Aurora.
                  74




ii




**FIRST
      AMENDED AND RESTATED**


**NOTE
      PURCHASE AGREEMENT**




THIS
      FIRST AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (this “ **Agreement** ”)
      is
      dated as of December 8, 2005, and is being entered into by and among Aurora
      Antrim North, LLC, a Michigan limited liability company (the **“Issuer”** );
      Aurora
      Energy, Ltd., a Nevada corporation (“ **Aurora** ”);
      TCW
      Energy Fund X - NL, L.P., a California limited partnership (“ **Fund
      X - NL** ”);
      TCW
      Energy Fund XB - NL, L.P., a California limited partnership (“ **Fund
      XB - NL** ”);
      TCW
      Energy Fund XC - NL, L.P., a California limited partnership (“ **Fund
      XC - NL** ”);
      TCW
      Energy Fund XD - NL, L.P., a California limited partnership (“ **Fund
      XD - NL** ”);
      TCW
      Asset Management Company (“ **Tamco** ”),
      a
      California corporation, as Investment Manager under the Amended and Restated
      Investment Management and Custody Agreement dated as of December 3, 2003 among
      Ensign Peak Advisors, Inc. and others; Tamco as Investment Manager under the
      Amended and Restated Investment Management and Custody Agreement dated as of
      March 18, 2004 among ING Life Insurance and Annuity Company and others; Tamco
      as
      Investment Manager under the Amended and Restated Investment Management and
      Custody Agreement dated as of December 11, 2003, among Harry L. Bradley, Jr.
      Partition Trust and others; Tamco, as Investment Manager under the Investment
      Management Agreement dated June 13, 2005 among The Ford Foundation and others
      (Tamco in the capacities designated above, Fund X - NL, Fund XB - NL, Fund
      XC -
      NL and Fund XD - NL are hereinafter collectively referred to as the
“ **Purchasers** ,”
      each a
“ **Purchaser** ”);
      Tamco
      as Administrative Agent (together with its successors in such capacity, the
      “ **Administrative
      Agent** ”);
      and
      Tamco as Collateral Agent (together with its successors in such capacity, the
      “ **Collateral
      Agent** ”).




RECITALS:




A.  As
      of
      August 12, 2004, the Issuer, certain Purchasers, Administrative Agent and
      Collateral Agent entered into the Note Purchase Agreement (the “ Original
      Note Purchase Agreement ”)
      pursuant to which the Issuer requested that certain Purchasers purchase Notes
      in
      an aggregate principal amount of Thirty Million Dollars
      ($30,000,000).




B.  Certain
      Purchasers have purchased Notes from the Issuer in an aggregate principal amount
      equal to Thirty Million Dollars ($30,000,000) upon the terms and conditions
      of
      the Original Note Purchase Agreement.




C.  The
      Issuer, Purchasers, Administrative Agent and Collateral Agent desire to amend
      and restate the Original Note Purchase Agreement in its entirety to become
      effective as of the date hereof, in order to, among other things, increase
      the
      Aggregate Commitment Amount to Fifty Million Dollars ($50,000,000).




NOW
      THEREFORE, in consideration of the mutual promises, representations, warranties,
      covenants, conditions and agreements contained herein, and other good and
      valuable consideration the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto, intending to be legally bound by the terms
      hereof, hereby agree as follows:









**SECTION
      1**


**DEFINITIONS
      AND ACCOUNTING MATTERS**






**Section
      1.1****Defined
      Terms.**As used in this Agreement, each capitalized term has the
      meaning ascribed to it in this Section
      1.1 :




“ **Account
      Receivable** ”
      means,
      with respect to any Person, any and all rights of such Person to payment for
      goods sold and/or services rendered, including accounts, general intangibles
      and
      any and all such rights evidenced by chattel paper, instruments or documents,
      whether due or to become due and whether or not earned by performance, and
      whether now or hereafter acquired or arising in the future, and any proceeds
      arising therefrom or relating thereto.




“ **Additional
      Amounts** ”
      has the
      meaning ascribed to such term in Section
      3.9(b) hereof.




“ **Administrative
      Agent** ”
      means
      the Administrative Agent for the Purchasers and Holders approved pursuant to Section
      7.4(a) hereof,
      together with its successors, if any, in such capacity.




“ **Adjusted
      Net Cash Flow** ”
      (or
“ **ANCF** ”)
      means
      the positive difference of:




(i)  Gross
      Cash Revenues determined on a Consolidated basis during any ANCF Quarter (or
      other period of calculation, if applicable)




less




(ii)  actual
      payments by Issuer during such ANCF Quarter (or other period of calculation,
      if
      applicable) of:




(A)  The
      Overriding Royalty Interest and other existing royalties and burdens on the
      Qualified Properties, if any, that constitute Permitted Encumbrances (to the
      extent and only to the extent production receipts relating to the same are
      included in Gross Cash Revenues);




(B)  Direct
      Taxes on the Qualified Properties;




(C)  Approved
      LOE;




(D)  Interest
      payments on the Notes and accrued Commitment Fees;




(E)  Approved
      Capital Expenditures, not including Capital Expenditures to be paid with the
      proceeds of Advances under this Agreement, to the extent the same are
      specifically permitted by Administrative Agent to be deducted from Gross Cash
      Revenues by means of an Approval Letter; and




(F)  Approved
      G&A.




2




“ **ANCF
      Quarter** ”
      means,
      with respect to a Quarterly Payment Date and the calculation of ANCF, the three
      Calendar Month period ending on the last day of the most recent of February,
      May, August or November immediately preceding the Quarterly Payment
      Date.




“ **Additional
      Advance** ”
      has the
      meaning ascribed to such term in Section 2.1(b).




“ **Advance** ”
      means
      an Initial Advance, Additional Advance or Subsequent Advance.




“ **AEL
      Security Agreement** ”
      means
      the AEL Security Agreement, dated as of August 12, 2004, among Aurora and the
      Collateral Agent.




“ **Affiliate** ”
      means,
      with respect to a specified Person, another Person that directly, or indirectly
      through one or more intermediaries, Controls or is Controlled by or is under
      common Control with the Person specified and, in the case of a Person who is
      an
      individual, shall include (i) members of such specified Person’s immediate
      family (as defined in Instruction 2 of Item 404(a) of Regulation S-K under
      the
      Securities Act) and (ii) trusts, the trustee and all beneficiaries of which
      are
      such specified Person or members of such Person’s immediate family as determined
      in accordance with the foregoing clause (i). For clarity, Hudson Pipeline shall
      be considered an Affiliate of Issuer for all purposes of the Note
      Documents.




“ **Aggregate
      Commitment Amount** ”
      means
      $50,000,000.




“ **Agreement** ”
      has the
      meaning ascribed to such term in the preamble hereto.




**“Amendment
      Closing”** has the
      meaning ascribed to such term in Section
      2.1(c) hereof.




**“Amendment
      Closing Date”** means
      the date on which the closing of this Agreement occurs and the conditions set
      forth in Section
      6.2 shall be
      satisfied or waived by the Administrative Agent.




“ **Approved
      Capital Expenditures** ”
      means
      Capital Expenditures made or to be made by Issuer the aggregate amount of which
      expenditures shall not exceed the total amount set forth on Schedule 1.1(a),
      including the costs and expenses set forth on Schedule 1.1(a) for the drilling
      and completion of the wells described in the Development Plan or any costs
      or
      expenses for capital improvements in addition to or in substitution for the
      Capital Expenditures set forth in Schedule 1.1(a), to the extent such costs
      and
      expenses for such additional or substitute capital improvements have been
      approved by Administrative Agent or Collateral Agent at the time in question
      by
      means of an Approval Letter.




“ **Approved
      G&A** ”
      means
      (a) $0 (zero) at all times the Dedication Rate is equal to 75% and (b) if the
      Dedication Rate is equal to 100%, such amount of G&A costs as determined by
      the Requisite Holders in their sole discretion.




“ **Approved
      LOE** ”
      means
      leasehold operating expenses and other field level or lease level charges for
      operations on the Qualified Properties, to the extent that such expenses (i)
      are
      attributable to such properties; (ii) are not capitalizable under the provisions
      of Rule 4-10 of Regulation S-X, 17 C.F.R. § 210.4-10, of the Commission (as such
      Rule exists as of the date hereof) by a reporting entity that follows the
      successful-efforts method of accounting for oil and gas producing activities
      (as
      such activities are defined in paragraph (a) of said Rule); (iii) do not
      represent any amortization of Capital Expenditures or any write-offs or
      impairment of capitalized costs; (iv) are not property acquisition costs,
      exploration costs or development costs (as defined in paragraph (a) of said
      Rule); (v) are production costs (as defined in paragraph (a) of the Rule),
      other
      than depreciation, general and administrative costs and overhead costs (but
      including Permitted Fixed Rate Overhead) of Borrower related to production;
      and
      (vi) do not exceed the amounts set forth in Schedule 1.1(b) during and after
      2004, as the same may be amended from time with Administrative Agent’s express
      written approval in its sole and absolute discretion.




3




“ **Area
      of Mutual Interest** ”
      means
      the counties in the Project Area, as well as the counties of Benzie, Manistee,
      Leelanau, Grand Traverse, Kalkaska, Antrim, Crawford and Oscoda in the state
      of
      Michigan.




“ **Aurora** ”
      means
      Aurora Energy, Ltd., a Nevada corporation, and the sole member of
      Issuer.




**“Availability** ”
      means
      the Initial Availability or such greater amount up to the Aggregate Commitment
      Amount determined by the Administrative Agent in its sole and absolute
      discretion from time to time, notice of which is given to Issuer pursuant to Section
      10.3 .




“ **Board** ”
      has the
      meaning ascribed to such term in Section
      5.1(a) hereof.




“ **Business
      Day** ” **** means
      any
      day that is not a Saturday, Sunday or other day on which commercial banks in
      Traverse City, Michigan or New York, New York are authorized or required by
      law
      to remain closed.




“ **Capital
      Expenditures** ”
      means,
      for any period, all expenditures (whether paid in cash or accrued as a
      liability, including the portion of Capital Lease Obligations originally
      incurred during such period that are capitalized on the consolidated balance
      sheet of the Issuer) by the Issuer and its Subsidiaries during such period
      that,
      in conformity with GAAP, are included in “capital expenditures,”“additions to
      property, plant or equipment” or comparable items in the consolidated financial
      statements of the Issuer, but excluding expenditures for the restoration, repair
      or replacement of any fixed or capital asset that was destroyed or damaged,
      in
      whole or in part, in an amount equal to any insurance proceeds received in
      connection with such damage or destruction.




“ **Capital
      Lease Obligations** ”
      of any
      Person means the obligations of such Person to pay rent or other amounts under
      any lease of (or other arrangement conveying the right to use) real or personal
      property, or a combination thereof, which obligations are required to be
      classified and accounted for as capital leases on a balance sheet of such Person
      under GAAP, and the amount of such obligations shall be the capitalized amount
      thereof determined in accordance with GAAP.




“ **Capital
      Stock** ”
      means
      (i) with respect to any Person that is a corporation, any and all shares,
      interests, participations or other equivalents (however designated and whether
      or not voting) of corporate stock, and (ii) with respect to any Person that
      is
      not a corporation, any and all partnership, membership or other equity interests
      of such Person.




4




“ **Closing
      Date”** means
      the Initial Closing Date or the Amendment Closing Date, as
      appropriate.




“ **Closing
      Documents** ”
      means
      the Note Documents and all other material documents, instruments and agreements
      executed or delivered by the Issuer, or any of its Affiliates in connection
      with, or otherwise pertaining to, the Closing Transactions.




“ **Closing
      Transactions** ”
      means
      the transactions to occur on the Initial Closing Date and the Amendment Closing
      Date, including, without limitation, the payment of all fees and expenses of
      the
      Purchasers in connection with the transactions provided herein.




“ **Code** ”
      means
      the Internal Revenue Code of 1986, as amended from time to time.




“ **Collateral** ”
      has the
      meaning ascribed to such term in Section
      7.1 hereof.




“ **Collateral
      Account** ”
      has the
      meaning ascribed to such term in Section
      2.6 hereof.




“ **Collateral
      Agent** ”
      means
      the Collateral Agent for the Holders appointed pursuant to Section
      7.4(b) hereof,
      together with its successors, if any, in such capacity.




“ **Collateral
      Coverage Ratio** ” means the
      quotient of (i) the sum of (a) Issuer’s Total Modified NPV10 and
      (b) Issuer’s Working Capital (which, if negative, shall be deducted from
      Total Modified NPV10) divided
      by (ii) the
      Total Indebtedness.




“ **Collateral
      Documents** ”
      means
      the Mortgages, the Security Agreement, the AEL Security Agreement and all
      mortgages, security agreements, guarantees, financing statements, instruments
      and other documents now or hereafter executed by Issuer, any Affiliate of Issuer
      or any other Person pursuant to this Agreement or any other Note Document to
      secure the payment or performance of the Note Obligations.




“ **Commission** ”
      means
      the Securities and Exchange Commission of the United States, or any Governmental
      Authority succeeding to any or all of the functions of such
      Commission.




“ **Commitment
      Expiry Date** ”
      means
      the earliest to occur of:




(i)  the
      date
      on which an Event of Default occurs;




(ii)  if
      elected by Requisite Holders, the date on which a Coverage Deficiency occurs;
      and




(iii)  August
      12, 2007.




“ **Commitment
      Fee** ”
      has the
      meaning ascribed to such term in Section
      2.4 .




5




“ **Commitment
      Period** ”
      means
      the period from and including the date hereof until the Commitment Expiry
      Date.




“ **Companies** ”
      means
      the Issuer and all of its Affiliates.




“ **Compliance
      Certificate** ”
      has the
      meaning ascribed to such term in Section
      6.1(a)(vi) .




“ **Confidential
      Information** ”
      has the
      meaning ascribed to such term in Section  10.10(a) hereof.




“ **Consolidated** ”
      refers
      to the consolidation of any Person, in accordance with GAAP, with its properly
      consolidated subsidiaries. References herein to a Person’s Consolidated
      financial statements, financial position, financial condition, liabilities,
      etc.
      refer to the consolidated financial statements, financial position, financial
      condition, liabilities, etc. of such Person and its properly consolidated
      subsidiaries.




“ **Control** ”
      means
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of a Person, whether through the ability
      to exercise voting power, by contract or otherwise. “ **Controlling** ”
      and
“ **Controlled** ”
      have
      meanings correlative thereto.




“ **Coupon
      Rate** ”
      has the
      meaning ascribed to such term in Section
      3.1(a) .




“ **Coverage
      Default** ”
      means
      the Collateral Coverage Ratio is less than 1.20 at any time after February
      1,
      2005.




“ **Coverage
      Deficiency** ”
      means,
      either (i) the Collateral Coverage Ratio is less than 1.50 but equal to or
      greater than 1.20 or (ii) the PDP Coverage Ratio is less than 1.0.




“ **Current
      Ratio** ”
      means
      the ratio of Issuer’s Consolidated current Assets to Issuer’s Consolidated
      current liabilities as of the end of each calendar quarter.




“ **Dedication
      Rate** ”
      means
      75%, provided that such rate will increase to 100% whenever (a) an Event of
      Default occurs or is continuing or (b) a Coverage Deficiency occurs and such
      Coverage Deficiency is not cured within thirty (30) days.




“ **Default** ”
      means
      any event or condition which constitutes an Event of Default or which upon
      notice, lapse of time or both would, unless cured or waived, become an Event
      of
      Default.




“ **Default
      Interest** ”
      has the
      meaning ascribed to such term in Section
      3.1(b) hereof.




“ **Deposit
      Account Control Agreement** ”
      means
      that certain Deposit Account Control Agreement, dated as of August 12, 2004,
      by
      and among Collateral Agent, for the benefit of the Purchasers, Issuer, and
      Northwestern Bank (“Bank”), as it may be amended, modified or supplemented from
      time to time.




6




“ **Development
      Plan** ”
      means
      the Development Plan attached as Schedule
      2.5 .




“ **Direct
      Taxes** ”
      means
      production, severance, ad valorem, excise or other taxes or governmental charges
      or assessments on (i) the Qualified Properties, (ii) the production therefrom
      or
      (iii) the proceeds of such production, but excluding any federal, state or
      local
      income or franchise taxes.




“ **Disclosed
      Matters** ”
      means
      the actions, suits and proceedings and the environmental matters disclosed
      in Schedule
      4.1(f)(i) .




“ **dollars** ”
      or “$”
      refers to lawful money of the United States of America.




“ **Engineering
      Report** ”
      means
      (i) the Initial Engineering Report and (ii) each engineering report to be
      delivered to Administrative Agent pursuant to Section 5.1(c)(vii).




“ **Environmental
      Actions** ”
      means
      any complaint, summons, citation, notice, directive, order, claim, litigation,
      investigation, judicial or administrative proceeding, judgment, letter or other
      communication from any Person or Governmental Authority involving violations
      of
      Environmental Laws or Releases of Hazardous Materials (i) from any assets,
      properties or businesses owned or operated by Aurora or any of its Subsidiaries
      or any predecessor in interest; (ii) from adjoining properties or businesses;
      or
      (iii) onto any facilities which received Hazardous Materials generated by the
      Issuer or any of its Subsidiaries or any predecessor or successor in interest.




“ **Environmental
      Laws** ”
      means
      all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
      injunctions, notices or binding agreements issued, promulgated or entered into
      by any Governmental Authority, relating in any way to the environment,
      preservation or reclamation of natural resources, the management, release or
      threatened release of any Hazardous Material or to health and safety
      matters.




“ **Environmental
      Liability** ”
      means
      any liability, contingent or otherwise, monetary obligations, Remedial Actions,
      losses, damages, punitive damages, consequential damages, treble damages, costs
      and expenses (including all reasonable fees, disbursements and expenses of
      counsel, experts and consultants and costs of investigations and feasibility
      studies), fines, penalties, sanctions or interest incurred as a result of any
      claim or demand by any Governmental Authority or any third party, of the Issuer
      or any Subsidiary directly or indirectly resulting from or based upon (a)
      violation of any Environmental Law, (b) the generation, use, handling,
      transportation, storage, treatment or disposal of any Hazardous Materials,
      (c)
      exposure to any Hazardous Materials, (d) the release or threatened release
      of
      any Hazardous Materials into the environment, onto any property presently or
      formerly owned by the Issuer or any of its Subsidiaries or any facility which
      received Hazardous Materials generated, owned, handled, possessed or otherwise
      connected in any way with the Issuer or any of its Subsidiaries or (e) any
      written contract, agreement or other written consensual arrangement to which
      the
      Issuer or any Subsidiary is a party and pursuant to which liability is assumed
      or imposed on the Issuer or any Subsidiary with respect to any of the
      foregoing.




“ **Environmental
      Lien** ”
      means
      any Lien in favor of any Governmental Authority for Environmental
      Liability.




7




“ **Equity** ”
      means
      shares of Capital Stock or partnership, profits, capital or member interest,
      or
      options, warrants or any other right to substitute for or otherwise acquire
      the
      Capital Stock or a partnership, profits, capital or member interest of the
      Issuer or any Subsidiary of the Issuer.




“ **ERISA** ”
      means
      the Employee Retirement Income Security Act of 1974, as amended from time to
      time.




“ **ERISA
      Affiliate** ”
      means
      any trade or business (whether or not incorporated) that, together with the
      Issuer, is treated as a single employer under Section 414(b) or (c) of the
      Code
      or, solely for purposes of Section 302 of ERISA and Section 412 of the Code,
      is
      treated as a single employer under Section 414 of the Code.




“ **ERISA
      Event** ”
      means
      (a) any “reportable event”, as defined in Section 4043 of ERISA or the
      regulations issued thereunder with respect to a Plan (other than an event for
      which the 30-day notice period is waived); (b) the existence with respect to
      any
      Plan of an “accumulated funding deficiency” (as defined in Section 412 of the
      Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant
      to
      Section 412(d) of the Code or Section 303(d) of ERISA of an application for
      a
      waiver of the minimum funding standard with respect to any Plan; (d) the
      incurrence by the Issuer or any of its ERISA Affiliates of any liability under
      Title IV of ERISA with respect to the termination of any Plan; (e) the receipt
      by the Issuer or any ERISA Affiliate from the PBGC or a plan administrator
      of
      any notice relating to an intention to terminate any Plan or Plans or to appoint
      a trustee to administer any Plan; (f) the incurrence by the Issuer or any of
      its
      ERISA Affiliates of any liability with respect to the withdrawal or partial
      withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Issuer
      or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
      from the Issuer or any ERISA Affiliate of any notice, concerning the imposition
      of Withdrawal Liability or a determination that a Multiemployer Plan is, or
      is
      expected to be, insolvent or in reorganization, within the meaning of Title
      IV
      of ERISA.




“ **Event
      of Default** ”
      has the
      meaning ascribed to such term in Section
      9.1 .




“ **FERC** ”
      means
      the Federal Energy Regulatory Commission, and any successor agency
      thereto.




**“Fiscal
      Quarter** ”
      means a
      fiscal quarter of the Issuer, ending on the last day of March, June, September
      or December of each year.




“ **Fiscal
      Year** ”
      means
      the fiscal year of the Issuer ending on December 31 of each year.




“ **Ford
      Disqualified Persons** ”
      means
      those Persons listed on Schedule
      4.1(s) .




“ **Funded
      Indebtedness** ”
      means,
      as to any Person, without duplication, all Indebtedness for borrowed money,
      all
      obligations evidenced by bonds, debentures, notes or similar instruments, all
      Capital Lease Obligations, and all Guarantees of Funded Indebtedness of other
      Persons.




8




“ **G&A
      Costs** ”
      means
      all overhead and administration costs incurred or to be incurred by
      Issuer.




“ **GAAP** ”
      means
      generally accepted accounting principles in the United States of
      America.




“ **Governmental
      Authority** ”
      means
      the government of the United States of America, any other nation or any
      political subdivision thereof, whether state or local, and any agency,
      authority, instrumentality, regulatory body, court, central bank or other entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative powers or functions of or pertaining to government.




“ **Governmental
      Requirement** ”
      shall
      mean any law, statute, code, ordinance, order, determination, rule, regulation,
      judgment, decree, injunction, franchise, permit, certificate, license,
      authorization or other directive or requirement (whether or not having the
      force
      of law), including, without limitation, Environmental Laws, energy regulations
      and occupational, safety and health standards or controls, of any Governmental
      Authority.




“ **Gross
      Cash Revenues** ”
      means
      all cash revenues and receipts received by or on behalf of Issuer or any of
      its
      Affiliates from or in any way relating to the Collateral or by or on behalf
      of
      Issuer or any Subsidiary thereof from any other source, (i) including without
      limitation receipts generated by the sale of Hydrocarbon production from the
      Collateral, but (ii) excluding revenues from (A) a sale approved by Requisite
      Holders of any portion of the Qualified Properties or (B) a refinancing of
      the
      Notes.




“ **Guarantee** ”
      of or
      by any Person (the “guarantor”) means any obligation, contingent or otherwise,
      of the guarantor guaranteeing or having the economic effect of guaranteeing
      any
      Indebtedness or other obligation of any other Person (the “primary obligor”) in
      any manner, whether directly or indirectly, and including any obligation of
      the
      guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
      funds for the purchase or payment of) such Indebtedness or other obligation
      or
      to purchase (or to advance or supply funds for the purchase of) any security
      for
      the payment thereof, (b) to purchase or lease property, securities or services
      for the purpose of assuring the owner of such Indebtedness or other obligation
      of the payment thereof, (c) to maintain working capital, equity capital or
      any
      other financial statement condition or liquidity of the primary obligor so
      as to
      enable the primary obligor to pay such Indebtedness or other obligation or
      (d)
      as an account party in respect of any letter of credit, or letter of guaranty
      issued to support such Indebtedness or obligation; provided ,
      that
      the term Guarantee shall not include endorsements for collection or deposit
      in
      the ordinary course of business.




“ **Hazardous
      Materials** ”
      means
      (a) any element, compound or chemical that is defined, listed or otherwise
      classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous
      substance, extremely hazardous substance or chemical, hazardous waste, special
      waste, or solid waste under Environmental Laws or that is likely to cause
      immediately, or at some future time, harm to or have an adverse effect on,
      the
      environment or risk to human health or safety, including, without limitation,
      any pollutant, contaminant, waste, hazardous waste, toxic substance or dangerous
      good which is defined or identified in any Environmental Law and which is
      present in the environment in such quantity or state that it contravenes any
      Environmental Law; (b) petroleum and its refined products;
      (c) polychlorinated biphenyls; (d) any substance exhibiting a
      hazardous waste characteristic, including, without limitation, corrosiveness,
      ignitability, toxicity or reactivity as well as any radioactive or explosive
      materials; and (e) any raw materials, building components (including,
      without limitation, asbestos-containing materials) and manufactured products
      containing hazardous substances listed or classified as such under Environmental
      Laws.




9




“ **Highest
      Lawful Rate** ”
      means
      the maximum non-usurious rate of interest that the Holders are permitted under
      applicable law to contract for, take, charge, or receive with respect to the
      Note Obligation in question.




“ **Holders** ”
      means
      the holders of the Notes from time to time.




“ **Hudson
      Pipeline** ”
      means
      Hudson Pipeline & Processing, LLC, a joint venture between Issuer and
      Oilfield Investments Ltd., whereby Issuer and Oilfield Investments, Ltd. each
      own a 50% interest in all equity and debt of Hudson Pipeline & Processing,
      LLC.




**“Hydrocarbons”** means
      and includes any and all crude oil, petroleum, natural gas, condensate,
      casinghead gas, natural gas liquids and all similar or gaseous hydrocar-bons
      and
      other substances produced in association therewith, including helium, hydrogen
      sulphide, sulphur and other products produced in association therewith or
      therefrom.




“ **Indebtedness** ”
      of any
      Person means, without duplication, (a) all obligations of such Person for
      borrowed money, (b) all obligations of such Person evidenced by bonds,
      debentures, notes or similar instruments, (c) all obligations of such Person
      upon which interest charges are customarily paid, (d) all obligations of such
      Person under conditional sale or other title retention agreements relating
      to
      property acquired by such Person, (e) all obligations of such Person in respect
      of the deferred purchase price of property or services (excluding current
      accounts payable and accrued expenses incurred in the ordinary course of
      business), (f) all Indebtedness of others secured by (or for which the holder
      of
      such Indebtedness has an existing right, contingent or otherwise, to be secured
      by) any Lien on property owned or acquired by such Person, whether or not the
      Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
      of Indebtedness of others, (h) all Capital Lease Obligations of such Person,
      (i)
      all obligations, contingent or otherwise, of such Person as an account party
      in
      respect of letters of credit and letters of guaranty, (j) all obligations,
      contingent or otherwise, of such Person in respect of bankers’ acceptances, (k)
      all obligations under leases commonly known as synthetic leases or leases that
      require such Person or its Affiliate to make payments over the term of such
      lease based on the purchase price or appraised value of the asset subject to
      such lease plus a marginal interest rate, and used primarily as a financing
      vehicle for, or to monetize, such asset, and (l) any Capital Stock of such
      Person in which such Person has a mandatory obligation to redeem such stock
      to
      the extent such stock is redeemable prior to the Maturity Date. The Indebtedness
      of any Person shall include the Indebtedness of any other entity (including
      any
      partnership in which such Person holds a partnership interest) to the extent
      such Person is liable therefor as a result of such Person’s ownership interest
      in or other relationship with such entity, except to the extent the terms of
      such Indebtedness provide that such Person is not liable therefor.




10




“ **Indemnified
      Party** ”
      has the
      meaning ascribed to such term in Section
      9.3 hereto.




“ **Independent
      Engineer** ”
      means
      Schlumberger Data and Consulting Services or another nationally or regionally
      recognized independent petroleum engineering company, which may be chosen by
      Issuer if acceptable to the Requisite Holders in their sole
      discretion.




“ **Initial
      Advance** ”
      has the
      meaning ascribed to such term in Section
      2.1(a) .




“ **Initial
      Advance Date** ”
      means
      the date on which the Purchasers funded the Initial Advance pursuant to the
      provisions of Section 2.1(a).




**“Initial
      Availability** ”
      means
      that portion of the Aggregate Commitment Amount equal to $40,000,000.




“ **Initial
      Closing** ”
      means
      the closing of the Original Note Purchase Agreement on August 12,
      2004.




“ **Initial
      Closing Date** ”
      means
      August 12, 2004.




“ **Initial
      Engineering Report** ”
      means
      the engineering report prepared by the Independent Engineer and effective as
      of
      January 1, 2004.




“ **Initial
      Environmental Report** ”means
      the environmental report relating to the Project Area prepared by Pilko &
      Associates, Inc., dated as of June 2004.




“ **Insolvency
      Proceeding** ”
      means
      any voluntary or involuntary liquidation, dissolution, sale of all or
      substantially all assets, marshalling of assets or liabilities, receivership.
      conservatorship, assignment for the benefit of creditors, insolvency,
      bankruptcy, reorganization, arrangement or composition of Issuer or any
      Subsidiary of Issuer; provided , that ,
      any
      merger, consolidation, or liquidation or sale of all or substantially all assets
      of Issuer or any Subsidiary of Issuer which is permitted under this Agreement
      shall not constitute an “Insolvency Proceeding.”




“ **Insurance
      Advisor** ”
      means
      Aon Risk Services or such other reputable insurance advisor reasonably
      acceptable to the Requisite Holders.




“ **Issuer** ”
      has the
      meaning ascribed to such term in the preamble hereto.




“ **Lands** ”
      means
      collectively, all properties, licenses, leases, wells and other interests
      (determined in as broad a manner as practicable with reference to lands covered
      by any of the foregoing and not just with respect to wells, spacing units or
      well bores).




“ **Lien** ”
      means,
      with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
      hypothecation, encumbrance, charge or security interest in, on or of such asset
      and (b) the interest of a vendor or a lessor under any conditional sale
      agreement, capital lease or title retention agreement (or any financing lease
      having substantially the same economic effect as any of the foregoing) relating
      to such asset.




11




“ **Material
      Adverse Change** ”
      means
      any circumstance or event that has had a Material Adverse Effect.




“ **Material
      Adverse Effect** ”
      means
      any event, change or development, or combination of events, changes or
      developments, individually or in the aggregate, that has or would reasonably
      be
      expected to have a significant material adverse effect on (a) the business,
      operations, property, prospects or financial condition of the Issuer, or the
      Issuer and its Subsidiaries as it relates to the Project, (b) the right or
      ability of the Issuer or its Subsidiaries to fully, completely and timely
      perform any of their obligations under this Agreement and the other Closing
      Documents, (c) the validity or enforceability of any Closing Document against
      the Issuer or any Subsidiary which is a party thereto, (d) the validity,
      perfection or priority of any Lien intended to be created under or pursuant
      to
      any Closing Document to secure the Note Obligations, or (e) the rights of,
      or
      benefits available to, the Holders under this Agreement and the other Closing
      Documents.




“ **Material
      Contracts** ”
      shall
      have the meaning ascribed to such term in Section 4.1(m) .




“ **Maturity
      Date** ”
      means
      the penultimate Business Day in the Fiscal Quarter ending September 30,
      2009.




“ **Modified
      NPV10** ”
      means:




(i)  with
      respect to any Proved Developed Producing Reserves attributable to the Qualified
      Properties, NPV10 of 95% of such Reserves;




(ii)  with
      respect to any Proved Developed Non-Producing Reserves attributable to the
      Qualified Properties, NPV10 of 85% of such Reserves; or




(iii)  with
      respect to any Proved Undeveloped Reserves attributable to the Qualified
      Properties, NPV10 of 75% of such Reserves;




in
      each
      case as determined by the Administrative Agent from the applicable Engineering
      Report, provided, however, that the Modified NPV10 for any particular Proved
      Developed Non-Producing Reserves or Proved Undeveloped Reserves shall be zero
      (0) unless capital expenditures for the development of such Reserves, in at
      least the amounts required pursuant to the most recent Engineering Report,
      have
      been scheduled and such capital is reasonably expected to be available from
      Advances or as a deduction from ANCF as Approved Capital Expenditures.




“ **Moody’s** ”
      means
      Moody’s Investors Service, Inc., or a successor rating agency.




“ **Mortgage** ”
      means a
      mortgage, deed of trust or deed to secure debt, in form and substance reasonably
      satisfactory to the Requisite Holders, made by the Issuer or its Subsidiaries
      in
      favor of the Collateral Agent for the benefit of the Holders, securing the
      Note
      Obligations and delivered to each Holder pursuant to the terms
      hereof.




12




“ **Multiemployer
      Plan** ”
      means a
      multiemployer plan as defined in Section 4001(a)(3) of ERISA.




“ **Note
      Documents** ”
      means
      this Agreement, the Original Note Purchase Agreement, the Notes, the ORRI
      Conveyance, the Collateral Documents, and all other agreements, certificates,
      documents, instruments and writings at any time delivered by Issuer in
      connection with the purchase and sale of the Notes (exclusive of the term
      sheets, commitment letters, correspondence and similar documents used in the
      negotiation thereof).




“ **Note
      Interest Rate** ”
      means
      the rate of interest payable on the Notes from time to time, determined in
      accordance with Section
      3.1(a) and Section
      3.1(b) .




“ **Note
      Obligations** ”
      means
      the sum of all Indebtedness from time to time owing by the Issuer to the Holders
      under or pursuant to any of the Note Documents.




“ **Notes** ”
      has the
      meaning ascribed to such term in Section
      2.2 hereof.




“ **NPV10** ”
      means
      with respect to any Proved Reserves expected to be produced from the Qualified
      Properties, the net present value of the future net revenues expected to accrue
      to Issuer’s interests in such Reserves during the remaining expected economic
      lives of such Reserves, discounted at 10% per annum. Each calculation of such
      expected future net revenues shall be made as of the date when requested in
      accordance with the then existing standards of the Society of Petroleum
      Engineers and Society of Petroleum Evaluation Engineers, provided that in any
      event:




(i)  appropriate
      deductions shall be made for (A) Direct Taxes and existing burdens that are
      Permitted Encumbrances (excluding, however, the Overriding Royalty Interest),
      (B) LOE, (C) transportation, gathering and marketing burdens, (D) Capital
      Expenditures (including plugging and abandonment costs), and (E) COPAS or other
      overhead costs, all consistent with the most recent Engineering Report;
      and




(ii)  the
      pricing assumptions and escalations used in determining NPV10 for any particular
      Proved Reserves shall be:




(A)  the
      contract price, if any, during the term of any written oil and gas sales
      contract between Issuer and unrelated Persons who are “investment grade”
      purchasers (it being agreed that any such contract with a duration of more
      than
      six (6) months shall be subject to the written approval of Requisite Holders);
      or




(B)  if
      no
      sales contract exits:




(I)  for
      volumes of oil and gas swapped or hedged with investment grade counter parties,
      the hedged price net of any costs, expenses or deductions relating thereto;
      and




(II)  for
      “naked” or long unhedged volumes, the monthly average NYMEX oil and gas prices
      for each of the four years immediately following the date of determination
      and
      for all years thereafter, the unescalated monthly average NYMEX oil and gas
      prices for the fourth year after the date of determination, all with adjustment
      for basis (quality and geographical) differentials.




13




“ **Observer** ”
      has the
      meaning assigned to such term in Section
      5.1(a) .




“ **Operating
      Agreement** ”
      means
      that certain Operating Agreement of Issuer, dated as of January 18, 2001
      attached hereto as Schedule
      1.1(c) .




“ **Order** ”
      means
      any order, writ, injunction, decree, judgment, award, determination, direction
      or demand.




“ **ORRI
      Conveyance** ”
      means
      the Conveyance of Overriding Royalty Interest substantially in the form of Exhibit
      C ,
      and all
      amendments, supplements, modifications or memoranda thereof.




“ **Overriding
      Royalty Interest** ”
      has the
      meaning given in Section
      2.7 .




**“ORRI
      Assignee”** means
      TCW Energy Funds X Holdings, L.P., a California limited
      partnership.




“ **ORRI
      Documents** ”
      means
      the ORRI Conveyance and all other documents required or necessary to transfer
      the Overriding Royalty Interest to the ORRI Assignee.




“ **Payment
      Date** ”
      means:
      (1) any date on which the maturity of any or all of the Notes is accelerated
      in
      accordance with Section
      9.1(b) ;
      (2) any
      date on which any interest on or principal of or premium on the Notes or any
      Commitment Fee is required to be prepaid in accordance with Section 2.4 , 3.1 , 3.3 or 3.4 ;
      and (3)
      the Maturity Date.




“ **PBGC** ”
      means
      the Pension Benefit Guaranty Corporation referred to and defined in ERISA and
      any successor entity performing similar functions.




“ **PDP
      Coverage Ratio** ”
      is
      equal to (i) the sum of (a) the Modified NPV10 of Issuer’s PDP Reserves and
      (b) Issuer’s Working Capital (which, if negative, shall be deducted from
      such Modified NPV10) divided
      by (ii)
      Total Indebtedness.




“ **Permitted
      Distributions** ”
      means
      distributions from Issuer to Aurora permitted to be made pursuant to Section 5.2(a) .




“ **Permitted
      Encumbrances** ”
      means:




(a)  Liens
      imposed by law for taxes, assessments or other governmental charges or levies
      that are not at the time delinquent or are being contested in compliance with Section 5.1(i) ;




(b)  carriers’,
      warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
      imposed by law, arising in the ordinary course of business and securing
      obligations that are not overdue or are being contested in compliance with Section
      5.1(i) ;




14




(c)  pledges
      and deposits made in the ordinary course of business in compliance with workers’
      compensation, unemployment insurance and other social security laws or
      regulations;




(d)  deposits
      to secure the performance of tenders, bids, trade contracts, leases, statutory
      obligations, surety and appeal bonds, performance bonds and other obligations
      of
      a like nature, in each case in the ordinary course of business;




(e)  irregularities
      in title, boundaries, or other survey defects, easements, leases, restrictions,
      servitudes, permits, zoning restrictions, rights-of-way, conditions, covenants,
      and rights of others in any property of the Issuer and its Subsidiaries for
      streets, roads, bridges, pipes, pipelines, railroads, electric transmission
      and
      distribution lines, telegraph and telephone lines, flood control, water rights,
      rights of others with respect to navigable waters, sewage and drainage rights
      existing as of the Closing Date or granted by the Issuer or its Subsidiaries
      in
      the ordinary course of business and other similar charges or encumbrances which
      do not secure the payment of money and otherwise do not materially interfere
      with the occupation, use and enjoyment by the Issuer or its Subsidiaries of
      any
      of the Property in the normal course of business or materially impair the value
      thereof;




(f)  licenses
      granted in the ordinary course of business and leases of Property of the Issuer
      and its Subsidiaries that is not material to the business and operations of
      the
      Issuer and its Subsidiaries;




(g)  security
      interests arising by operation of law solely under Article 2 of the UCC to
      the
      extent and so long as the “debtor” with respect to such security interests does
      not have or does not lawfully obtain possession of the goods subject
      thereto;




(h)  any
      Lien
      or privilege vested in any lessor, licensor or permittor for rent to become
      due
      or for other obligations or acts to be performed, the payment of which rent
      or
      the performance of which other obligations or acts is required under leases,
      subleases, licenses or permits; and




(i)  any
      obligations or duties affecting any of the Property to any municipality or
      public authority with respect to any franchise, grant, license or permit which
      do not materially impair the use of such Property for the purposes for which
      it
      is held;




provided  that the term
“Permitted Encumbrances” shall not include any Lien securing Funded
      Indebtedness.




“ **Permitted
      Fixed Rate Overhead** ”
      means
      overhead charges based on a fixed amount per month per well incurred at the
      field or lease level pursuant to existing joint operating agreements in the
      nature of overhead charges made pursuant to Section III of the COPAS Accounting
      Exhibit to AAPL JOA Form No. 610, excluding however any such overhead
      charges payable to Aurora or any Affiliate thereof.




15




“ **Permitted
      Investments** ”
      means:




(a)  direct
      obligations of, or obligations the principal of and interest on which are
      unconditionally guaranteed by, the United States of America (or by any agency
      thereof to the extent such obligations are backed by the full faith and credit
      of the United States of America), in each case maturing within one year from
      the
      date of acquisition thereof;




(b)  investments
      in commercial paper maturing within 270 days from the date of acquisition
      thereof and having, at such date of acquisition, a rating of at least A2 from
      S&P or P2 from Moody’s;




(c)  investments
      in certificates of deposit, banker’s acceptances and time deposits maturing
      within 180 days from the date of acquisition thereof issued or guaranteed by
      or
      placed with, and money market deposit accounts issued or offered by, any
      domestic office of any commercial bank organized under the laws of the United
      States of America or any State thereof which has a combined capital and surplus
      and undivided profits of not less than $500,000,000, or any domestic office
      of a
      foreign commercial bank which has a combined capital and surplus and undivided
      profits in an amount equivalent to not less than $500,000,000;




(d)  fully
      collateralized repurchase agreements with a term of not more than 30 days for
      securities described in clause (a) above and entered into with a financial
      institution satisfying the criteria described in clause (c) above; and




(e)  shares
      of
      money market or similar funds not less than 95% of the assets of which are
      comprised of investments of the type specified in clauses (a) through (d) above
      and as to which withdrawals are permitted at least every 30 days.




“ **Person** ”
      means
      any natural person, corporation, limited liability company, trust, joint
      venture, association, company, partnership, Governmental Authority or other
      entity.




“ **Plan** ”
      means
      any employee pension benefit plan (other than a Multiemployer Plan) subject
      to
      the provisions of Title IV of ERISA or Section 412 of the Code or Section 302
      of
      ERISA, and in respect of which the Issuer or any ERISA Affiliate is (or, if
      such
      plan were terminated, would under Section 4069 of ERISA be deemed to be) an
      “employer” as defined in Section 3(5) of ERISA.




“ **Prepayment** ”
      has the
      meaning ascribed to such term in Section
      3.6 hereof.




“ **Prepayment
      Notice** ”
      has the
      meaning ascribed to such term in Section
      3.6 hereof.




“ **Prohibited
      Lien** ”
      means
      any Lien not expressly allowed under Section
      5.2(g) .




“ **Project
      Area** ”
      means
      the counties of Alcona, Alpena, Charlevoix, Cheboygan, Montmorency and Otsego
      in
      the State of Michigan.




“ **Project”** means
      all
      drilling, completion and reserve acquisition activities in or relating to the
      Project Area.




16




“ **Property** ”
      means
      any interest in any kind of property or asset, whether real, personal or
      mixed.




“ **Pro
      Rata Portion** ”
      shall
      be determined, as of any period, by dividing (i) the aggregate principal amount
      of the outstanding Notes held by a Holder by (ii) the aggregate original
      principal amount of the outstanding Notes held by all Holders. The initial
      Pro
      Rata Portions of the Holders as of the Closing Date are set forth on Exhibit
      B-2 hereto.




**“Proved
      Developed Non-Producing Reserves”** (or
“ **PDNP
      Reserves** ”)
      are
      Proved Reserves that include Shut-in and Behind-pipe Reserves. **“Shut-in
      Reserves”** are
      those expected to be recovered from completion intervals open at the time of
      the
      estimate, but which had not started producing, or were shut in for market
      conditions or pipeline connections, or were not capable of production for
      mechanical reasons (including the requirement for installation or restaging
      of
      compression), and the time when sales will start is uncertain. **“Behind-pipe
      Reserves”** are
      those expected to be recovered from zones behind casing in existing wells,
      which
      will require additional completion work or a future completion prior to the
      start of production.




**“Proved
      Developed Producing Reserves”** ( or
“ **PDP
      Reserves** ”)
      means
      Proved Reserves that are expected to be recovered from completion intervals
      open
      and producing at the time of the estimate.




**“Proved
      Reserves”** means
      those Reserves which are “proved oil and gas reserves” within the meaning of
      Rule 4-10 of Regulation S-X, 17 C.F.R. § 210.4-10 of the Commission where the
      commercial producibility of the reservoir is supported by actual production
      or
      formation tests based on the estimated volume of reserves and not just the
      productivity of the well or reservoir. In certain instances, Proved Reserves
      may
      be assigned on the basis of electrical and other well logs or core analysis
      that
      indicates the subject reservoir is Hydrocarbon bearing and is analogous to
      reservoirs in the same area which are producing, or have demonstrated the
      ability to produce on a formation test. The area of a reservoir considered
      proved includes (a) the area delineated by drilling and defined by fluid
      contacts, if any, and (b) the undrilled areas that can be reasonably judged
      as
      commercially productive on the basis of available geologic and engineering
      data.
      In the absence of data on fluid contacts, the lowest known structural occurrence
      of Hydrocarbons controls the proved limit unless otherwise indicated by
      definitive engineering or performance data. In addition, Proved Reserves must
      have facilities to process and transport those reserves to market which are
      operational at the time of the estimate, or there is a commitment or reasonable
      expectation to install such facilities in the future.




**“Proved
      Undeveloped Reserves”** means
      Proved Reserves that are assigned to undrilled locations which satisfy the
      following conditions: (i) the locations are direct offsets to wells which have
      indicated commercial production in the objective formation, (ii) it is
      reasonably certain that the locations are within the known proved productive
      limits of the objective formation, (iii) the locations conform to existing
      well
      spacing regulations, if any, and (iv) it is reasonably certain that the
      locations will be developed. Reserves for other undrilled locations are
      classified as Proved Undeveloped Reserves only in those cases where
      interpretations of data from wells indicate that the objective formation is
      laterally continuous and contains commercially recoverable hydro-carbons at
      locations beyond direct offsets.




17




“ **Purchaser(s)** ”
      has the
      meaning ascribed to such term in the preamble hereto.




“ **Purchaser’s
      Initial Commitment Amount** ”
      means,
      with respect to each Purchaser, the amount set forth in column titled
“Commitment Amount” opposite such Purchaser’s name in Exhibit
      B-1 hereto.




“ **Purchaser’s
      Subsequent Commitment Amount** ”
      means,
      with respect to each Purchaser, the amount set forth in column titled
“Commitment Amount” opposite such Purchaser’s name in Exhibit
      B-2 hereto.




“ **Quarterly
      Payment Date** ”
      means
      the penultimate Business Day of each March, June, September and December,
      commencing on September 29, 2004.




“ **Qualified
      Property** ”
      means
      an oil and gas property which at the particular time in question: (i) is owned
      by Issuer or, if specifically approved in writing by Administrative Agent,
      by
      Aurora; (ii) is subject to a recorded ORRI Conveyance and a recorded Mortgage;
      (iii) is not subject to any Prohibited Liens; (iv) if a Michigan State lease,
      is
      the subject of an approval of the assignment to Issuer of such lease, and all
      related state permissions relating thereto and (v) is the subject of favorable
      title opinions to Collateral Agent from legal counsel acceptable to Collateral
      Agent, (A) based upon abstract or record examinations to dates acceptable to
      Collateral Agent, (B) stating that Issuer has good and marketable title to
      such
      property and that it is subject to no Prohibited Liens, and (C) covering such
      other matters as Administrative Agent may reasonably request.




“ **Register** ”
      has the
      meaning ascribed to such term in Section
      10.7(a) hereof.




“ **Related
      Parties** ”
      means,
      with respect to any specified Person, such Person’s Affiliates and the
      respective directors, officers, employees, agents and advisors of such Person
      and such Person’s Affiliates.




“ **Release** ”
      means
      any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
      injecting, escaping, leaching, seeping, migrating, dumping or disposing of
      any
      Hazardous Material (including the abandonment or discarding of barrels,
      containers and other closed receptacles containing any Hazardous Material)
      into
      the indoor or outdoor environment, including, without limitation, the movement
      of Hazardous Materials through or in the ambient air, soil, surface or ground
      water, or property.




“ **Remedial
      Action** ”
      means
      all actions taken to (i) clean up, remove, remediate, contain, treat, monitor,
      assess, evaluate or in any other way address Hazardous Materials in the indoor
      or outdoor environment; (ii) prevent or minimize a Release or threatened Release
      of Hazardous Materials so they do not migrate or endanger or threaten to
      endanger public health or welfare or the indoor or outdoor environment; (iii)
      perform pre-remedial studies and investigations and post-remedial operation
      and
      maintenance activities; or (iv) perform any other actions authorized
      by
      42 U.S.C. § 9601.




“ **Requisite
      Holders** ”
      means
      the Holders who hold at least fifty-one percent (51%) of the aggregate principal
      amount outstanding under the Notes at any time (excluding any Notes held by
      the
      Issuer or any Affiliates).




18




“ **Reserves** ”
      means
      estimated volumes of crude oil, condensate, natural gas, natural gas liquids,
      and associated substances anticipated to be commercially recoverable from known
      accumulations from a given date forward, under then existing economic
      conditions, by established operating practices, and under current government
      regulations. Reserve estimates are based on interpretation of geologic or
      engineering data available at the time of the estimate. Reserves do not include
      volumes of crude oil, condensate, natural gas (including storage gas), or
      natural gas liquids being held in inventory. If required for financial
      reporting, reserve estimates or other purposes, Reserves may be reduced for
      on-site or processing losses.




“ **Responsible
      Officer** ”
      means
      the president, chief executive officer, chief financial officer, principal
      accounting officer, treasurer or controller of the Issuer.




“ **Restricted
      Payments** ”
      means
      (a) any dividend or other distribution (whether in cash, securities or other
      property) with respect to any shares or interests of any class of Capital Stock
      or Equity of the Issuer or any Subsidiary, (b) any payment (whether in cash,
      securities or other property), including any sinking fund or similar deposit,
      on
      account of the purchase, redemption, retirement, acquisition, cancellation
      or
      termination of any such shares or interests of Capital Stock or Equity of the
      Issuer or any option, warrant or other right to acquire any such shares or
      interests of Capital Stock or Equity of the Issuer, and (c) any payments of
      any
      compensation, management fee, consulting fee or similar amount to an Affiliate
      of the Issuer or any Subsidiary.




“ **Restricted
      Notes** ”
      has the
      meaning set forth under Rule 144 promulgated under the Securities
      Act.




“ **S&P** ”
      means
      Standard & Poor’s, or a successor entity performing rating
      services.




“ **Securities
      Act** ”
      means
      the Securities Act of 1933, as amended.




“ **Security
      Agreement** ”
      means
      that certain Security Agreement, dated as of August 12, 2004, by Issuer in
      favor
      of Collateral Agent.




“ **Solvent** ”
      as
      applied to any Person at any date shall mean that on and as of such date (a)
      the
      fair value of the property of such Person is greater than the total amount
      of
      liabilities, including, without limitation, contingent liabilities, of such
      Person, (b) the present fair salable value of the assets of such Person is
      not
      less than the amount that will be required to pay the probable liability of
      such
      Person on its debts as they become absolute and matured, (c) such Person does
      not intend to, and does not believe that it will, incur debts or liabilities
      beyond such Person’s ability to pay as such debts and liabilities mature and (d)
      such Person is not engaged in business or a transaction, and is not about to
      engage in business or a transaction, for which such Person’s property would
      constitute an unreasonably small capital. The amount of contingent liabilities
      on and as of any date shall be computed as the amount that, in the light of
      all
      the facts and circumstances existing on and as of such date, represents the
      amount that can reasonably be expected to become an actual or matured liability.
      For purposes of this definition, “Person” shall mean, where so required by the
      context in which the term “Solvent” appears, such Person and its Affiliates
      taken as a whole.




19




“ **Stated
      Maturity** ”
      means
      (i) with respect to any debt security, the date specified in such debt security
      as the fixed date on which the final installment of principal of such debt
      security is due and payable and (ii) with respect to any scheduled installment
      of principal of or interest on any debt security, the date specified in such
      debt security as the fixed date on which such installment is due and
      payable.




“ **Subsequent
      Advance** ”
      has the
      meaning ascribed to such term in Section 2.1(c).




“ **Subsequent
      Advance Notes** ”
      has the
      meaning ascribed to such term in Section 2.1(c).




“ **subsidiary** ”
      means,
      with respect to any Person (the “ **parent** ”)
      at any
      date, any corporation, limited liability company, partnership, association
      or
      other entity the accounts of which would be consolidated with those of the
      parent in the parent’s consolidated financial statements if such financial
      statements were prepared in accordance with GAAP as of such date, as well as
      any
      other corporation, limited liability company, partnership, association or other
      entity (a) of which securities or other ownership interests representing more
      than 50% of the equity or more than 50% of the ordinary voting power or, in
      the
      case of a partnership, more than 50% of the general partnership interests are,
      as of such date, owned, controlled or held, or (b) that is, as of such date,
      otherwise Controlled, by the parent or one or more subsidiaries of the parent
      or
      by the parent and one or more subsidiaries of the parent.




“ **Subsidiary** ”
      means
      any subsidiary of the Issuer.




“ **Subsidiary
      Guarantee** ”
      means
      an unconditional and irrevocable guarantee of payment, and not of
      collectibility, of the Note Obligations, executed by a Subsidiary pursuant
      to Section
      7.2 ,
      in form
      and substance satisfactory to Holders.




“ **Supplements
      to ORRI Conveyance** ”
      has the
      meaning ascribed to such term in Section
      5.1(m) .




**“Tamco
      Origination Fee** ”
      has the
      meaning ascribed to such term in Section
      6.2(a) hereof.




“ **Taxes** ”
      means
      any and all present or future taxes, levies, imposts, duties, deductions,
      charges or withholdings imposed by any Governmental Authority.




“ **TCW
      Governing Documents** ”
      has the
      meaning ascribed to such term in Section
      7.4(d)(iii) .




“ **Total
      Modified NPV10** ”
      means
      the sum of the Modified NPV10’s for all Proved Developed Producing Reserves,
      Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves as
      determined by Administrative Agent from the Engineering Report most recently
      prepared as of such time.




“ **Trustco** ”
      means
      Trust Company of the West, a California trust company.




20




“ **UCC** ”
      means
      the Uniform Commercial Code as adopted in the States of New York and Michigan,
      as from time to time amended.




“ **Unassigned
      Interests** ”
      means
      collectively, (a) the working and other interests in oil, gas and mineral leases
      issued by the State of Michigan held by Aurora or any Affiliate thereof on
      Lands
      in the Project Area with respect to which the necessary consent to the
      assignment thereof to Issuer has not been obtained and (b) working and other
      interests in oil, gas and mineral leases and fee mineral interests on Lands
      in
      the Project Area which are acquired by Aurora pending assignment to Issuer
      and
      Samson Resources.




“ **Unused
      Availability** ”
      has the
      meaning ascribed to such term in Section
      2.4 .




“ **Wholly
      Owned Subsidiary** ”
      means,
      as to any Person, any other Person all of the Equity of which (other than
      directors’ qualifying shares required by law) is owned by such Person directly
      and/or through other Wholly Owned Subsidiaries.




“ **Withdrawal
      Liability** ”
      means
      liability to a Multiemployer Plan as a result of a complete or partial
      withdrawal from such Multiemployer Plan, as such terms are defined in Part
      1 of
      Subtitle E of Title IV of ERISA.




“ **Working
      Capital** ”
      means
      Issuer’s Consolidated current assets minus Issuer’s Consolidated current
      liabilities. For purposes of this definition:







(i)  current
      assets will be calculated without including inventory and any accounts
      receivable or other Debts owed to Issuer or its Subsidiaries by their Related
      Parties;




(ii)  accounts
      receivable more than 90 days delinquent will be deleted; and




(iii)  so
      long
      as no Event of Default or Default has occurred, current liabilities will be
      calculated without including any payments of current maturities of principal
      on
      the Notes.




**Section
      1.2****Accounting
      Terms and Determinations**. Except as otherwise expressly provided
      for in this Agreement, all accounting terms used in this Agreement shall be
      interpreted, all determinations with respect to accounting matters hereunder
      shall be made and all financial statements and certificates and reports as
      to
      financial matters required to be delivered to the Holders under this Agreement
      shall be prepared in accordance with GAAP applied on a basis consistent with
      those used in the preparation of the latest financial statements furnished
      to
      the Purchasers under this Agreement. Issuer will not change the last day of
      its
      fiscal year from December 31 of each year.




**Section
      1.3****Interpretation**.
      In this Agreement, unless otherwise indicated, the singular includes the plural
      and conversely; words importing one gender include the others; references to
      statutes or regulations are to be construed as including all statutory or
      regulatory provisions consolidating, amending or replacing the statute or
      regulation referred to; references to “writing” include printing, typing,
      lithography and other means of reproducing words in a tangible visible form;
      the
      word “or” shall not be exclusive (i.e., shall be deemed to include “and/or”);
      the words “including,”“includes” and “include” shall be deemed to be followed by
      the words “without limitation”; references to articles, sections (or
      subdivisions of sections), exhibits, annexes or schedules are to such parts
      of
      this Agreement; references to agreements and other contractual instruments
      shall
      be deemed to include all subsequent amendments, extensions and other
      modifications to such instruments (without, however, limiting any prohibition
      on
      any such amendments, extensions and other modifications by the terms of this
      Agreement); and references to Persons include their respective permitted
      successors and assigns and, in the case of any Governmental Authority, Persons
      succeeding to their respective functions and capacities.




21




**SECTION
      2**


**PURCHASE
      AND SALE OF SECURITIES**




**Section
      2.1**  **Note
      Purchase**


.




(a)  At
      the
      Initial Closing, Issuer issued to certain Purchasers, and each of such
      Purchasers purchased from Issuer, a Note or Notes in an aggregate principal
      amount equal to the such Purchaser’s Initial Commitment Amount on the Initial
      Advance Date at which time such Purchasers made an initial advance on the Notes
      in the amount of $5,000,000, with an additional $5,000,000 advanced no later
      than ten (10) Business Days after the Initial Closing (collectively, the
“ **Initial
      Advance** ”).




(b)  Such
      Purchasers have made additional advances to Issuer on the Notes (the
“ **Additional
      Advances** ”)
      from
      time to time during the Commitment Period in a total aggregate amount, including
      the Initial Advance, of $30,000,000;





(c)        
      Subject to the terms and conditions hereof, including Sections 6.1 and 6.2,
      at
      the closing of the transactions described herein (the “ **Amendment
      Closing** ”),
      the
      Issuer shall issue to the Purchasers, and each of the Purchasers shall purchase
      from Issuer, a Note or Notes in an aggregate principal amount equal to the
      such
      Purchaser’s Subsequent Commitment Amount (collectively, the “ **Subsequent
      Advance Notes** ”)
      and
      Purchasers agree to make additional advances to the Issuer (so long as all
      conditions precedent required hereby shall have been satisfied) on the
      Subsequent Advance Notes (the “ **Subsequent
      Advances** ”)
      from
      time to time during the Commitment Period in an aggregate principal amount
      equal
      to the such Purchaser’s Subsequent Commitment Amount; provided, the aggregate
      amount of all Advances shall not exceed the Aggregate Commitment Amount.




**Section
      2.2****The
      Notes**. Issuer’s
      obligation to repay to the Holders the aggregate amount of Advances made thereto
      in accordance with Section 3.3 and 3.4, together with interest accruing in
      connection therewith, shall be evidenced by senior secured amortizing promissory
      notes (the “ **Notes** ”)
      made
      by Issuer in the form of Exhibit
      A with
      appropriate insertions, each payable to the order of the Note Holders in the
      stated principal amounts of the Notes set forth on Exhibit
      B-2 hereof
      as the same may be updated as amended from time to time. Interest on the Notes
      shall accrue and be due and payable as provided herein and therein. Amounts
      borrowed and repaid on the Notes may not be re-borrowed hereunder.




22




**Section
      2.3****Request
      for Advances**. Issuer must give the Purchasers at least ten (10)
      Business Days’ prior written notice of any requested Subsequent Advance, unless
      otherwise waived by Administrative Agent. Each such written notice must be
      made
      in the form and substance of the “ **Request
      for Subsequent Advance** ”
      attached as Exhibit
      G (duly
      completed).




(a)  All
      Advances shall be made before the Commitment Expiry Date and shall each be
      in a
      minimum amount (with respect to all, as opposed to any, Purchasers) of
      $2,000,000 and integral multiples of $500,000 in excess of that
      amount.




(b)  If
      all
      conditions precedent to such Advance have been met as provided in
      Sections 6.1, 6.2 and 6.3, as appropriate, the Purchasers will, on the
      funding date specified in Issuer’s Request for Subsequent Advance or on the date
      such conditions precedent have been met, make the proceeds of such Advance
      available to Issuer in immediately available funds.




**Section
      2.4****Commitment
      Fee**.Issuer agrees to pay a commitment fee (the “ **Commitment
      Fee** ”)
      on
      Unused Availability (as defined below) from time to time. As used herein
“ **Unused
      Availability”** means
      the
      difference between (a) the amount of Availability applicable from time to time
      minus (b) the aggregate amount of all Advances theretofore made. The Commitment
      Fee will be payable to Administrative Agent quarterly in arrears on each
      Quarterly Payment Date and will be calculated at 0.5% per annum on the basis
      of
      a 360-day year and the actual number of days elapsed and the amount of the
      Unused Availability as of 5:00 p.m. local Los Angeles time on each day.




**Section
      2.5****Use
      of Proceeds**.The proceeds from the issuance of the Notes
      will be used by the Issuer solely (a) to pay Approved Capital Expenditures
      as
      described in the Development Plan attached hereto as Schedule
      2.5 and (b)
      to pay the Tamco Origination Fee and all expenses of the Purchasers, the
      Administrative Agent and the Collateral Agent, including, without limitation,
      the fees and expenses of their counsel, consultants and other advisors.




**Section
      2.6**  **Collateral
      Account**


.


(a)  **Establishment
      of Collateral Accounts; Rules.**




(i)  Issuer
      shall establish and maintain at its expense a collateral account (the
“ **Collateral
      Account** ”)
      pursuant to the Deposit Account Control Agreement.




(ii)  Issuer
      shall deposit or cause to be deposited into the Collateral Account all Gross
      Cash Revenues from and after the Initial Advance through the Maturity Date
      from
      the Project.




(iii)  On
      the
      last Business Day of each month, all amounts in the Collateral Account shall
      be
      applied in the following order or priority:




(A)  Direct
      Taxes and the Overriding Royalty Interest;




23




(B)  Approved
      LOE;




(C)  Fees
      and
      expenses under the Note Documents;




(D)  Accrued
      and unpaid interest on the Notes and accrued unpaid Commitment Fee;




(E)  Approved
      Capital Expenditures;




(F)  Payments
      of principal on the Notes; and




(G)  Permitted
      Distributions.




(iv)  Collateral
      Agent may instruct the administrator of the Collateral Account to transfer
      or
      disburse amounts from it to Administrative Agent only to the extent such amounts
      are due and payable under the Notes, this Agreement or any other Note
      Document.




(v)  After
      the
      occurrence of an Event of Default under any Note Document or Issuer’s failure to
      comply with the terms of this Section 2.6, Collateral Agent may, at its option,
      apply all sums in the Collateral Account to the reduction of outstanding
      principal, interest and other sums owed by Issuer on, the Notes or other Note
      Documents.




(vi)  Upon
      the
      satisfaction in full of all amounts owed by Issuer under the Note Documents,
      Collateral Agent shall have all amounts remaining in the Collateral Account
      disbursed to Issuer.




(b)  **Notice.** Not
      later than five (5) business days after a request by the Administrative Agent,
      Issuer shall send a notice, substantially in the form of Exhibit
      J ,
      to all
      existing and/or new purchasers of Hydrocarbon produced from the Material,
      directing them to forward all amounts payable to Issuer directly to the
      Collateral Account at the mailing address of the depositary bank for deposit
      into the Collateral Account. The failure of such Hydrocarbon purchasers to
      comply with any such notice shall not constitute a Default hereunder by any
      Related Party, provided that (i) such Hydrocarbon purchasers’ failure to comply
      with such notice is not done at the request of Issuer and (ii) Issuer
      shall
      forward all amounts received from such Hydrocarbon purchasers to the Collateral
      Account within one (1) Business Day of Issuer’s or Issuer’s Affiliate’s receipt
      thereof.




(c)  **Acknowledgments.** Issuer
      hereby acknowledges that:




(i)  It
      has
      granted and assigned to Collateral Agent a first priority, perfected security
      interest in the Collateral Account, all funds therein and all proceeds thereof
      pursuant to the Deposit Account Control Agreement; and




(ii)  Issuer
      shall not be permitted to withdraw, transfer or disburse any funds from the
      Collateral Account except in accordance with the terms hereof, the Deposit
      Account Control Agreement and each other Note Document.




24




(d)  **Attorney-in-fact.** Issuer
      hereby appoints Collateral Agent its attorney-in-fact, with full power of
      substitution, to execute and file on behalf of Issuer, any financing statement,
      continuation statement or instrument of further assurance to more effectively
      perfect, continue or confirm (i) the provisions of this Section 2.6 and of
      any
      agreement entered into by Issuer, Collateral Agent and the depositary bank
      administering the Collateral Account and (ii) the security interest granted
      in
      the Collateral Accounts. This power, being coupled with an interest, shall
      be
      irrevocable until all amounts due in connection with the Notes have been paid
      in
      full.




**Section
      2.7**  **Overriding
      Royalty Interest.**




As
      additional consideration for the Notes, Issuer and Aurora shall, pursuant to
      an
      ORRI Conveyance executed, delivered and recorded concurrently with **** the
      later
      of the Closing or Issuer’s or Aurora’s acquisition of title, assign to ORRI
      Assignee an overriding royalty interest (the “ **Overriding
      Royalty Interest** ”)
      in the
      Lands covered or included in the Initial Engineering Report or any subsequent
      Engineering Report and all other properties in the Project Area drilled or
      otherwise developed by Issuer or Aurora on or before the later of the Maturity
      Date or the repayment in full of the Notes and the Note Obligations (excluding
      those Note Obligations arising under the Overriding Royalty Interest). The
      Overriding Royalty Interest will have a royalty share of four percent (4%)
      proportionally reduced to Issuer’s or Aurora’s (i) working interest if the
      burdened interest of Issuer or Aurora shall be a working interest or (ii)
      overriding royalty or fee interest if the burdened interest of Issuer or Aurora
      is an overriding royalty or fee interest (as such burdened interest may be
      adjusted upwards but not downwards by reason of any “back-in,” reversionary,
“after-payout” or similar interest or event). The Overriding Royalty Interest
      shall be senior and superior to the Liens of the Collateral Documents and any
      other Liens other than Permitted Liens (except as otherwise expressly provided
      herein).




**SECTION
      3**


**TERMS
      OF THE NOTES**




**Section
      3.1**  **Rate
      of Interest; Payment of Interest.** ****




(a)  During
      the period from the Initial Closing Date to and including the date of their
      repayment in full, the Notes shall bear and accrue interest on the unpaid
      principal amount from time to time outstanding at the rate of eleven and one
      half percent (11 1⁄2%) per annum (the “ **Coupon
      Rate** ”)
      compounded quarterly on each Quarterly Payment Date to the extent not paid.
      Interest on the Notes shall be payable in arrears on each Quarterly Payment
      Date.




(b)  Without
      limiting the remedies available to the Holders under this Agreement, the other
      Note Documents or otherwise, to the maximum extent permitted by applicable
      law,
      upon the occurrence and during the continuance of an Event of Default under
      this
      Agreement, the Administrative Agent or the Requisite Holders may, at their
      option (except in the case of an Event of Default arising by reason of the
      commencement of a bankruptcy petition by or against Issuer pursuant to Section
      9(a)(vii )
      or
      ( viii )
      of this
      Agreement in which event such imposition shall be automatic), declare the entire
      outstanding principal amount of the Notes shall accrue interest at the rate
      of
      two percent (2%) per annum in addition to the Note Interest rate in effect
      from
      time to time (“ **Default
      Interest** ”)
      until
      the date of actual payment (after as well as before judgment. In addition and
      without limiting the foregoing or other remedies available) to Holders,
      Administrative Agent or Collateral Agent under this Agreement the other Note
      Documents or otherwise, to the maximum extent permitted by applicable law,
      without need for any action by Administrative Agent or Requisite Holders, if
      Issuer fails to make:




25




(i)  any
      payment in respect of the principal or interest due on the Notes on any Payment
      Date; or




(ii)  any
      other
      payment provided for in this Agreement or in any other Note Document, on or
      before its due date as specified in this Agreement or the other Note Documents
      (whether at Stated Maturity or otherwise) or, if not so specified, as notified
      by the Holder to the Issuer,




the
      Issuer shall pay Default Interest in respect of the amount of such payment
      due
      and unpaid from the date any such payment became due until the date of actual
      payment (as well after as before judgment). Default Interest shall be payable
      on
      demand, or if not demanded, on each Quarterly Payment Date after such failure.




**Section
      3.2****Computation
      of Interest**. Interest shall be computed on the Notes on the
      basis of a 360-day year and the actual number of days elapsed. Interest on
      the
      Notes shall be computed as the sum of the daily interest for the period prior
      to
      each Payment Date, taking into account the outstanding principal balance of
      the
      Notes on each day of the period (where such balance on any given day shall
      reflect any payment of principal credited on such date pursuant to Section
      3.4 and 3.6 hereof).




**Section
      3.3****Payment
      of Principal**. The outstanding principal balance of the Notes
      shall be due and payable in full on the Maturity Date to the extent not prepaid
      pursuant to Section
      3.4 , 3.5 or 8.1(b) prior
      thereto.




**Section
      3.4****Required
      Prepayments of the Notes.**




(a)  On
      each
      Quarterly Payment Date beginning with September 28, 2006 and on each Quarterly
      Payment Date thereafter, to and including the Quarterly Payment Date immediately
      preceding the Maturity Date, the Issuer shall make a principal payment in
      respect of the Notes in an aggregate amount equal to (x) the Dedication Rate
      multiplied by (y) the Adjusted Net Cash Flow of the ANCF Quarter applicable
      thereto, in immediately available funds for the account of Holders. If
      any
      principal or interest amount payable under the Notes remains outstanding at
      the
      Maturity Date, such amount must be paid in full by the Issuer to the Holders
      in
      immediately available funds on such Maturity Date .




(b)  If
      the
      Requisite Holders shall, in their sole discretion approve the sale of any
      Collateral, Issuer shall make a principal payment in respect of the Notes in
      an
      aggregate amount equal to the sales proceeds received by Issuer net only of
      reasonable out-of-pocket costs of such sale paid to non-Affiliates of
      Issuer.




26




**Section
      3.5****Optional
      Prepayments of the Notes.**




(a)  Except
      as
      required under Section 3.4 or as
      permitted under Section 3.5(b) ,
      the
      Issuer may not prepay (a) any principal on the Notes prior to August 15, 2006
      and (b) principal on the Notes in excess of $30,000,000 prior to the second
      anniversary of the Amendment Closing Date. Thereafter, the Issuer may prepay
      the
      Notes, at its option, in accordance with the procedures set forth in Section 3.6 ,
      in
      whole or in part so long as such prepayment is accompanied by the payment of,
      and there shall be due and payable upon any prepayment in full of principal
      during such period whether by optional prepayment or mandatory prepayment
      pursuant to Section
      3.4(b) ,
      a
      prepayment premium (the “ **Prepayment
      Premium** ”)
      equal
      to the product of the applicable “ **Prepayment
      Premium Percentage** ”
      set
      forth below opposite the time period in which the date of prepayment occurs
      multiplied by the principal amount prepaid:




**Date
                of Prepayment of First $30 million of Principal**
            **Prepayment**
              **Premium
                Percentage**Prior
                to August 15, 2007
            5%August
                15, 2007 to August 14, 2008
            2.5%On
                and after August 15, 2008
            0%







**Date
                of Prepayment of any Principal in excess of $30 million**
            **Prepayment**
              **Premium
                Percentage**Prior
                to December 9, 2008
            5%December
                9, 2008 to December 9, 2009
            2.5%On
                and after December 10, 2009
            0%




Notwithstanding
      the foregoing and for the avoidance of doubt, any scheduled principal payment
      under Section
      3.4(a) hereof
      or principal prepayment made with Collateral insurance proceeds pursuant to
      any
      mandatory prepayment provision of any Collateral Document (but excluding any
      mandatory prepayment under Section
      3.4(b) or after
      the occurrence of an Event of Default) shall be at par without payment of a
      Prepayment Premium.




(b)  In
      addition to the prepayments required under Section
      3.4 or
      permitted under Section
      3.5(a) above,
      the Issuer may prepay the Notes in part in accordance with the procedures set
      forth in Section
      3.6 in order
      to and to the extent necessary to cure a Coverage Deficiency without payment
      of
      a Prepayment Premium.




**Section
      3.6****Prepayment.**




(a)  The
      Issuer shall have the right, subject to Section 3.5 ,
      but not
      the obligation, to prepay all or any portion of the Notes pursuant to Section
      3.5 (the
“ **Prepayment** ”), provided that:




(i)  the
      Issuer shall deliver to the Holders a prepayment notice in writing (the
“ **Prepayment
      Notice** ”)
      substantially in the form of Exhibit
      H to this
      Agreement not less than thirty (30) Business Days prior to the date of the
      proposed Prepayment, setting forth the date and amount of such proposed
      Prepayment;




27




(ii)  the
      Prepayment shall be effective as of the subsequent Quarterly Payment
      Date;




(iii)  any
      Prepayment Notice delivered shall be irrevocable;




(iv)  the
      Issuer shall, at the time of such Prepayment, pay all accrued and unpaid
      interest with respect to the portion of the Notes being prepaid;




(v)  the
      Issuer shall deliver to the Holders, prior to the date of Prepayment, evidence
      satisfactory to the Holders that all approvals necessary in respect of the
      Prepayment have been obtained from all Governmental Authorities and all other
      Persons;




(vi)  such
      Prepayment shall be in an amount not less than Five Million Dollars ($5,000,000)
      in the aggregate with respect to all Notes, except if the principal amount
      outstanding under the Notes is less than $5,000,000, in which case the
      Prepayment shall be equal to such remaining principal amount; and




(vii)  in
      the
      case of a Prepayment of less than the entire principal amount of the Notes
      then
      outstanding, the amount of any Prepayment shall be made ratably as to all
      outstanding Notes based on the Pro Rata Portion of the aggregate amount of
      such
      Prepayment and shall be applied to scheduled principal payments due on the
      Notes
      under Section
      3.4(a) in
      reverse order of maturity.




(b)  Any
      principal prepaid pursuant to Section
      3.5 hereof
      shall be in addition to, and not in lieu of, all payments otherwise required
      to
      be paid under the Note Documents at the time of such prepayment. Any prepayments
      pursuant to Section
      3.5 hereof
      shall be applied first ,
      to any
      prepayment premium payable under Section
      3.5 hereof, second ,
      to
      accrued but unpaid interest on the Notes and third ,
      to
      outstanding principal on the Notes until paid in full.




**Section
      3.7**  **General
      Payment Provision.**




(a)  Except
      as
      may be agreed by Holders, Issuer shall make each payment which Issuer owes
      under
      this Agreement and any of the other Note Documents not later than 10:00 a.m.,
      New York, New York time, on the date such payment becomes due and payable,
      without set-off, deduction or counterclaim, in lawful money of the United States
      of America, in immediately available funds sent by wire transfer to the bank
      accounts specified with respect to each Holder on Exhibit
      D attached
      hereto (or to such other bank and accounts and pursuant to such other directions
      as the Holders may from time to time specify). Any payment received by the
      Holders after such time shall be deemed to have been made on the next following
      Business Day. Should any such payment become due and payable on a day other
      than
      a Business Day, the maturity of such payment shall be the succeeding Business
      Day. Each payment under a Note Document shall be due and payable at the place
      provided therein and, if no specific place of payment is provided, shall be
      due
      and payable at the place of payment of the Notes. When the Holders collect
      or
      receive money on account of the Note Obligations which is insufficient to pay
      all Note Obligations then due and payable, the Holders shall apply such money
      pursuant to Subsection
      3.7(b) below.




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(b)  Payments
      or prepayments of principal on the Notes shall be applied ratably to such Notes
      based on their respective Pro Rata Portions. Payments of interest or premium
      on
      the Notes shall be applied ratably to such Notes based on the respective amounts
      then owed on the respective Notes. Except for prepayments pursuant to Section
      3.4 or Section
      3.5 (which
      shall be applied as provided in Section
      3.6(b) ),
      any
      amount received by any Holder, whether as an interest payment or principal
      payment from or on behalf of Issuer, shall be applied as follows in descending
      order of priority:




(i)  to
      all
      costs and expenses (including reasonable attorneys’ fees) payable pursuant to Section
      10.15 hereof
      or in enforcing any Note Obligations of, or in collecting any payments from,
      any
      obligor hereunder or under the other Note Documents;




(ii)  to
      Note
      Obligations (other than principal or interest) then due and owing to Holders
      under any of the Note Documents;




(iii)  to
      interest which has accrued on any amounts hereunder, including, without
      limitation, on the Notes pursuant to Section 3.1 ;




(iv)  to
      payment of principal on the Notes until paid in full; and




(v)  if
      all
      Note Obligations under the Note Documents have been paid in full, to the
      Issuer.




**Section
      3.8****Ranking**.
      The Notes are senior secured obligations of the Issuer. The Notes shall be
      senior in all respects to any other Indebtedness of Issuer, other than
      Indebtedness permitted under Section
      5.2(f) (which
      may rank pari passu to the Notes in right of payment, but shall be structurally
      subordinated to the Notes).




**Section
      3.9**  **Taxes,
      Duties and Fees**


.




(a)  Except
      where Issuer is contesting in good faith and has established adequate reserves,
      Issuer shall pay or cause to be paid all present and future Taxes, duties,
      fees
      and other charges of whatsoever nature, if any, now or at any time hereafter
      levied or imposed by any Governmental Authority, by any department, agency,
      political subdivision or taxing or other authority thereof or therein, or by
      any
      jurisdiction through which Issuer makes payments hereunder, on or in connection
      with the payment of any and all amounts due under this Agreement and the other
      Closing Documents, and all payments of principal, interest and other amounts
      due
      under this Agreement and the other Closing Documents shall be made without
      deduction for or on account of any such Taxes, duties, fees and other
      charges.




(b)  In
      the
      event Issuer is required to withhold any such amount or is prevented by
      operation of law or otherwise from paying or causing to be paid such Taxes,
      duties, fees or other charges as aforesaid, the principal, interest or other
      amounts due under this Agreement and the other Closing Documents (as the case
      may be) shall be increased to such amount as shall be necessary to yield and
      remit to the payees the full amount such payees would have received (taking
      into
      account any such Taxes, duties, fees or other charges payable on amounts payable
      by the Issuer under this Section
      3.9(b) had such
      payment been made without deduction of such Taxes, duties, fees or other charges
      (all and any of such additional amounts, herein referred to as the “ **Additional
      Amounts** ”).




29




(c)  If Section
      3.9(b) above
      applies and any Holder so requires, Issuer shall deliver to such Holder official
      tax receipts evidencing payment (or certified copies of them) of such Additional
      Amounts within thirty (30) days of the date of payment.




(d)  Issuer
      shall pay all Taxes (including, without limitation, stamp taxes), duties, fees
      or other charges payable on or in connection with the execution, issue,
      delivery, registration, notarization or enforcement of this Agreement (including
      translation costs) and the other Closing Documents and shall, upon notice from
      any Holder, reimburse such Holder for any such Taxes, duties, fees or other
      charges paid by the Holder thereon.




**SECTION
      4**


**REPRESENTATIONS
      AND WARRANTIES**




**Section
      4.1****Representations
      and Warranties of the Issuer**. The Issuer hereby represents,
      warrants and covenants to the Purchasers that, as of the date hereof and as
      of
      the Closing Date, each of the following representations and warranties set
      forth
      below in this Section
      4.1 is true
      and correct:




(a)  Organization;
      Powers .
      Each of
      the Issuer, Aurora and its Subsidiaries is duly organized, validly existing
      and
      in good standing under the laws of the jurisdiction of its organization, has
      all
      requisite power and authority to carry on its business as now conducted and,
      except where the failure to do so, individually or in the aggregate, could
      not
      reasonably be expected to result in a Material Adverse Change, is qualified
      to
      do business in, and is in good standing in, every jurisdiction where such
      qualification is required.




(b)  Authorization;
      Enforceability .
      The
      Closing Transactions are within the Issuer’s and Aurora’s corporate powers and
      have been duly authorized by all necessary corporate and, if required,
      stockholder action. This Agreement has been duly executed and delivered by
      the
      Issuer and constitutes a legal, valid and binding obligation of the Issuer,
      enforceable in accordance with its terms, subject to applicable bankruptcy,
      insolvency, reorganization, moratorium or other laws affecting creditors’ rights
      generally and subject to general principles of equity, regardless of whether
      considered in a proceeding in equity or at law.




(c)  Consents
      and Approvals; No Conflicts .
      The
      Closing Transactions (i) do not require any consent or approval of, registration
      or filing with, or any other action by, any Governmental Authority or any other
      Person, except (x) such as have been obtained or made and are in full force
      and
      effect or where failure to obtain such consent or approval will not have a
      Material Adverse Effect and (y) filings and recordings required to perfect
      and
      assign the Liens created under the Collateral Documents and the Overriding
      Royalty Interest under the ORRI Conveyance, (ii) will not violate any applicable
      law or regulation or the charter, by-laws or other organizational documents
      of
      the Issuer, Aurora or any of its Subsidiaries or any order of any Governmental
      Authority, (iii) will not violate or result in a default under any material
      indenture, agreement or other instrument binding upon the Issuer, Aurora or
      any
      of its Affiliates or its assets, or give rise to a right thereunder to require
      any payment to be made by the Issuer, Aurora or any of its Affiliates, and
      (iv)
      will not result in the creation or imposition of any Lien on any asset of the
      Issuer, Aurora or any of its Subsidiaries except as contemplated as part of
      the
      Closing Transactions.




30




(d)  Financial
      Condition; No Material Adverse Change .




(i)  Each
      of
      Aurora and the Issuer has heretofore furnished to the Purchasers the financial
      statements (including profit and loss statements and statistical data) of Aurora
      for the years ended December 31, 2001, December 31, 2002 and December, 2003
      and
      tax returns for the calendar years 1998, 1999, 2000, 2001, 2002 and 2003 and
      the
      balance sheet of Issuer as of June 30, 2004, attached hereto as Schedule
      4.1(d)(i) .
      Such
      financial and other information is accurate in all material respects as of
      the
      dates and for such periods set forth therein and presents fairly, in all
      material respects, the financial condition and results of operations of the
      Persons reflected therein on a consolidated basis as of such dates and for
      such
      periods.




(ii)  Since
      the
      formation of Aurora or the Issuer, as applicable (a) there has been no material
      adverse change in the business, property, operations, prospects or financial
      condition of Aurora, the Issuer, or the Issuer and its Subsidiaries, taken
      as a
      whole, as applicable and (b) no Restricted Payment or investment (other than
      a
      Permitted Investment) has been, directly or indirectly, declared, ordered,
      paid
      or made. Each of the Issuer, Aurora and its Subsidiaries is
      Solvent.




(iii)  Each
      of
      the Issuer and Aurora has heretofore furnished to the Purchasers the projections
      referred to on Schedule
      4.1(d)(iii) hereto,
      which projections were prepared in good faith, are based upon assumptions that
      the Issuer and Aurora believe are reasonable and, to the best of the Issuer’s
      and Aurora’s knowledge, take into account all material information regarding the
      matters set forth therein, but excluding items which affect the economy
      generally.




(iv)  Except
      as
      set forth in the financial and other information referenced in this Section
      4.1(d) ,
      none of
      the Issuer, Aurora or any Subsidiaries has any liabilities or obligations of
      any
      nature (whether accrued, absolute, contingent or otherwise) required by GAAP
      to
      be set forth on a consolidated balance sheet of Issuer, Aurora or any of its
      Subsidiaries or in the notes thereto or which, individually or in the aggregate,
      could reasonably be expected to result in a Material Adverse
      Change.




(e)  Properties .




(i)  Title;
      Collateral Documents; Interests Issuer Collateral. Subject
      to this paragraph, Issuer (or, with respect to Collateral owned by Aurora,
      Aurora) owns and has good, legal and marketable title (with respect to
      personality) and good, legal and indefeasible title (with respect to real
      property) to the Collateral purported to be so owned and covered by the
      Collateral Documents to which it is a party free and clear of all Liens other
      than Permitted Encumbrances. Issuer’s (or, as applicable, Aurora’s) ownership of
      the interest in Qualified Properties has not been forfeited and there is no
      basis for a claim of forfeiture under any documents relating thereto. Issuer
      (or, as applicable, Aurora) is entitled to receive (net of all Permitted
      Encumbrances) the share of the oil, gas and other minerals produced from or
      allocated to the wells, leases and lands listed or described in Schedule
      4.1(e) hereto
      or in any Security Document (the “ **Collateral
      Properties** ”)
      specified as fractional, percentage or decimal interests in such Schedule
      4.1(e) hereto
      or Security Document under the heading “NRI”. Such shares of production which
      Issuer (or, as applicable, Aurora) is entitled to receive (and Issuer’s (or, as
      applicable, Aurora’s) share of expenses relating to the Collateral Properties
      with respect to each lease and lands affected thereby and also specified in Schedule
      4.1(e) or
      Security Document under the heading “WI”) are not subject to change except, and
      only to the extent that, such changes are reflected in Schedule
      4.1(e) ;
      and
      such shares of production and the oil and gas interests to which some of them
      relate are (and, unless and until released by Collateral Agent, shall remain)
      encumbered by the Collateral Documents. There is no financing statement,
      mortgage or similar document covering any Collateral on file in any public
      office naming any party other than Collateral Agent as mortgagee or secured
      party other than financing statements, mortgage or similar documents which
      have
      heretofore expired or been terminated.




31




(ii)  Status
      of Leases, etc. The
      leases and other contracts and agreements, permits and approvals forming a
      part
      of the Collateral Properties, which are material to the operation or value
      of
      any Properties, when taken as a whole, are in full force and effect. All rents,
      royalties and other payments due and payable under such leases and other
      contracts and agreements, forming a part of the Collateral Properties, or under
      the Permitted Encumbrances, have been properly and timely paid in accordance
      with prudent industry practices, but in no event later than ninety (90) days
      past due. Issuer is not in default with respect to its obligations under such
      leases and other contracts or agreements, or under Permitted Encumbrances,
      or
      otherwise attendant to the ownership or operation of the Collateral Properties,
      where such default could have a Material Adverse Effect.




(iii)  Production
      Sales, etc. Except
      as set forth in the Disclosure Matters, neither Issuer (or, as applicable,
      Aurora) or Issuer’s (or, as applicable, Aurora’s) predecessors-in-title,
      including without limitation Aurora, have received prepayments (including,
      but
      not limited to, payments for gas not taken pursuant to “take or pay”
      arrangements) for any oil or gas to be produced from the Collateral Properties
      after the Closing, no Collateral Property is subject to any contractual or
      other
      arrangement whereby payment for production from such Collateral Property is
      to
      be deferred for a substantial period after the end of the calendar month in
      which such production is delivered in the case of oil, not in excess of thirty
      (30) days, and in the case of gas, not in excess of sixty (60) days. Except
      for
      Disclosed Matters, no Collateral Property is subject to any contractual or
      other
      arrangement for the sale of hydrocarbons which cannot be canceled on ninety
      (90)
      days’ or less notice. No Collateral Property is subject at the present time to
      any regulation refund obligation, and to the best of Issuer’s and Aurora’s
      knowledge and belief, no situation exists where the same might be imposed.
      Except for Disclosed Matters, no Collateral Property is subject to a gas
      balancing arrangement under which an imbalance exists, with respect to which
      imbalance Issuer (or, as applicable, Aurora) is in an overproducing or
      overproduced status and is required to (i) permit one or more third parties
      to
      take a portion of the production attributable to such Collateral without payment
      (or without full payment) therefor and/or (ii) make payment in cash, in order
      to
      correct such imbalance.




(iv)  Operation
      of Collateral Properties .
      The
      Collateral Properties have been and are being operated in a good and workmanlike
      manner in compliance with applicable joint operating agreements, laws, rules
      and
      regulations. Neither Issuer nor Aurora is aware of any fact or condition that
      would cause a material risk that (1) the Collateral Properties will not continue
      to produce Hydrocarbons as projected in the Initial Engineering Report, (2)
      either the Hydrocarbons produced from the Collateral Properties will not be
      sold
      or Issuer’s share of sales proceeds will not be remitted at its direction, in
      each case as consistent with prior practice, and (3) once funded as contemplated
      hereby, the Approved Development Plan will not be conducted as contemplated
      therein.





32




(f)  Litigation;
      Commercial Tort Claims; Environmental Matters .




(i)  After
      giving effect to the Closing Transactions, and except for the Disclosed Matters
      set forth on Schedule
      4.1(f)(i) ,
      there
      are no judgments, decrees or orders in effect and binding on the Issuer, Aurora,
      any of its Subsidiaries or any of their respective assets and no actions, suits,
      or proceedings (or facts that would reasonably be expected to give rise to
      an
      action, suit, or proceeding) by or before any arbitrator or Governmental
      Authority pending against or, to the knowledge of the Issuer or Aurora,
      threatened against the Issuer, Aurora or any of its Subsidiaries or any of
      their
      respective assets.




(ii)  After
      giving effect to the Closing Transactions, and except for the Disclosed Matters
      set forth on Schedule
      4.1(f)(i) ,
      as of
      the Closing Date, the Issuer does not hold any commercial tort claims in respect
      of which a claim has been filed in a court of law or a written notice by an
      attorney has been given to a potential defendant.




(iii)  After
      giving effect to the Closing Transactions, and except for the Disclosed Matters,
      neither the Issuer, Aurora nor any of its Subsidiaries (w) has failed to comply
      with any Environmental Law or to obtain, maintain or comply with any permit,
      license or other approval required under any Environmental Law, (x) has become
      subject to any Environmental Liability, (y) has received written notice of
      any
      claim with respect to any Environmental Liability or (z) has a reasonable basis
      to know of any basis for any Environmental Liability, except to the extent
      any
      such event, individually or in the aggregate, could not reasonably be expected
      to result in a Material Adverse Change.




(g)  Compliance
      with Laws and Agreements .
      Each of
      the Issuer and its Subsidiaries is in compliance with all Governmental
      Requirements applicable to it or its property, including, without limitation,
      all FERC regulations, and all indentures, agreements and other instruments
      binding upon it or its property, except to the extent any noncompliance,
      individually or in the aggregate, could not reasonably be expected to result
      in
      a Material Adverse Change. None of the Issuer, Aurora or any of its Subsidiaries
      or any holder of more than ten percent (10%) of the Capital Stock of Aurora,
      is
      a Person described by section 1 of Executive Order 13224 of September 24, 2001
      entitled Blocking Property and Prohibiting Transactions With Persons Who Commit,
      Threaten to Commit or Support Terrorism, 66 Fed. Reg. 49,079 (2001), and none
      of
      the Issuer, Aurora or any of its Subsidiaries or any holder of more than ten
      percent (10%) of the Capital Stock of Aurora engages in any transactions or
      dealings, or is otherwise associated with any such Persons. Neither the Issuer,
      Aurora nor any of its Subsidiaries is in violation of the USA Patriot Act,
      as
      amended. Neither the Issuer, Aurora nor any of its Subsidiaries is bound by
      any
      agreement, document, instrument, judgment, decree, order, statute, law, rule
      or
      regulation that limits or could reasonably be expected to limit its performance
      under any Closing Document.




33




(h)  Investment
      and Holding Company Status .
      Neither
      the Issuer, Aurora nor any of its Subsidiaries is (i) an “investment company” as
      defined in, or subject to regulation under, the Investment Company Act of 1940
      or (ii) a “holding company” as defined in, or subject to regulation under, the
      Public Utility Holding Company Act of 1935.




(i)  Taxes .
      Aurora
      and each Subsidiary thereof has timely filed or caused to be filed all Tax
      returns and reports required to have been filed and has paid or caused to be
      paid all Taxes required to have been paid by it, except Taxes that are being
      contested in good faith by appropriate proceedings and for which Aurora, and
      such Subsidiary or Subsidiaries of Aurora, as applicable, has set aside on
      its
      books adequate reserves. None of the Issuer, any Subsidiaries of the Issuer
      or
      Aurora has executed any waiver or waivers that would have the effect of
      extending the applicable statute of limitations or period in respect of any
      tax
      liabilities. The charges, accruals and reserves in the financial statements
      referred to in Section
      5.1(c) in
      respect of taxes for all fiscal periods are adequate, and there are no known
      material unpaid assessments for additional taxes for any fiscal period or of
      any
      basis therefor.




(j)  ERISA .
      Neither
      the Issuer, Aurora nor or any ERISA Affiliate has at any time within six years
      prior to the Closing Date sponsored, maintained or contributed to (and has
      not
      been required to do the same) any Plan or any Multiemployer Plan, and no act,
      omission or transaction has occurred which could result in an imposition on
      the
      Issuer, Aurora or any ERISA Affiliate (whether directly or indirectly) of (A)
      liability under Section 502 of ERISA or a tax or penalty imposed pursuant to
      Subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed pursuant
      to
      Chapter 43 of Subtitle D of the Code or (B) breach of fiduciary duty liability
      damages under Section 409 of ERISA which could reasonably be expected to have
      a
      Material Adverse Effect.




(k)  Disclosure .
      The
      Issuer and/or Aurora has disclosed to the Purchasers all agreements, instruments
      and corporate or other restrictions to which it or any of its Subsidiaries
      is
      subject, and all other matters known to it, that, individually or in the
      aggregate, could reasonably be expected to result in a Material Adverse Change.
      The Closing Documents and the other reports, financial statements, certificates
      or other information furnished by or on behalf of the Issuer to any Purchaser
      in
      connection with the negotiation of the Closing Documents or delivered hereunder
      (as modified or supplemented by other information so furnished), do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading; provided , that ,
      with
      respect to projected financial information, the Issuer represents only that
      such
      information was prepared in good faith based upon assumptions believed to be
      reasonable at the time.




34




(l)  Capital
      Structure . Schedule 4.1(l) hereto
      accurately reflects, as of the Closing Date (and after giving effect to the
      Closing Transactions), (i) the exact legal name of the each of Issuer
      Aurora and each of its Subsidiaries, (ii) the jurisdiction of incorporation
      or
      organization of the Issuer, Aurora and its Subsidiaries, (iii) the jurisdiction
      in which each of the Issuer, Aurora and its Subsidiaries is qualified to
      transact business as a foreign corporation, foreign partnership or foreign
      limited liability company, (iv) the organizational identification number of
      the
      Issuer, Aurora and each of its Subsidiaries (or indicates that such entity
      has
      no organizational identification number), (v) the chief executive office
      of
      the Issuer, Aurora and each of its Subsidiaries, (vi) the federal employer identification number of the
      Issuer, Aurora and each of its Subsidiaries, (vii) the authorized, issued and
      outstanding Equity interests of the Issuer, Aurora and its Subsidiaries,
      including the names of (and number of shares or other Equity securities held
      by)
      the record and beneficial owners of such securities, and (viii) all outstanding
      warrants, options (including option plans), subscription rights, convertible
      securities or other rights to purchase Capital Stock, partnership or limited
      liability company interests of the Issuer, Aurora and any of its Subsidiaries.
      All of the outstanding Equity securities of the Issuer, Aurora and each of
      its
      Subsidiaries are and will be, duly authorized, validly issued, fully paid and
      non-assessable free and clear of any preemptive or similar right. Subject to
      the
      accuracy of the representations and warranties set forth in Section
      4.2 ,
      all
      such securities have been offered and sold in compliance with applicable
      securities laws. Except as set forth on Schedule
      4.1(l) hereto
      or in the Closing Documents, there are no outstanding shareholders agreements,
      voting agreements or other agreements of any nature which in any way restrict
      or
      effect the transfer, pledge or voting of any of the Equity securities of the
      Issuer, Aurora or any of its Subsidiaries or subject any of such securities
      to
      any put, call, redemption obligation or similar right or obligation of any
      nature, or require the Issuer, Aurora or any of its Subsidiaries to declare
      or
      pay any dividends or distributions or register securities under applicable
      securities laws. Neither the Issuer, Aurora nor any of its Subsidiaries is
      obligated to issue or sell any of its Equity securities to any Person, except
      as
      set forth on Schedule
      4.1(l) hereto
      or pursuant to the Closing Documents. None of the provisions of the charter
      or
      by-laws of the Issuer or any other agreement, document or instrument binding
      on
      or applicable to the Issuer contains any provision requiring a higher voting
      requirement with respect to action taken (and/or to be taken) by the board
      of
      directors or the holders of shares of stock of the Issuer than that which would
      apply in the absence of such provision.




(m)  Material
      Contracts .
      The
      agreements, leases, indentures, purchase agreements, obligations in respect
      of
      letters of credit, guarantees, joint venture agreements, and other instruments
      set forth on Schedule
      4.1(m) include
      all material contracts and agreements (including, without limitation, any
      contract, lease, agreement, or commitment, written or oral, providing for
      receipt or payment, contingent or otherwise, of (i) $100,000 or more, or (ii)
      which may not be terminated without payment or penalty with notice of ninety
      (90) days or less) of the Issuer, Aurora and its Subsidiaries as of the Closing
      Date (and after giving effect to the Closing Transactions) relating to the
      ownership and operation of the assets of the Issuer and its Subsidiaries or
      any
      Collateral owned by Aurora (collectively, the “ **Material
      Contracts** ”).
      Except as set forth on Schedule
      4.1(m) ,
      as of
      the Closing Date (and after giving effect to the Closing Transactions), each
      Material Contract is in full force and effect, except for such matters in
      respect of all Material Contracts that individually, or in the aggregate, are
      not reasonably likely to have a Material Adverse Effect. The Issuer, Aurora
      and
      its Subsidiaries (or their predecessors in interest) have in all respects
      performed all obligations required to be performed by them as of the Closing
      Date under the Material Contracts, and are not in default under any obligation
      of any Material Contract, and as of the Closing Date, to the knowledge of the
      Issuer, no other party to any Material Contract is in default thereunder, except
      to the extent any such defaults, individually or in the aggregate, could not
      reasonably be expected to result in a Material Adverse Change. As of the Closing
      Date, the Issuer, Aurora and its Subsidiaries have not assigned to any Person
      any of their rights under the Material Contracts other than assignments from
      Aurora to Issuer. As of the Closing Date, the Issuer, Aurora and its
      Subsidiaries have not waived any of their rights of material value under the
      Material Contracts. Schedule
      4.1(m) also
      sets forth all transactions between the Issuer and its Subsidiaries or
      Affiliates within the past 12 months in excess of $500,000, or contemplated
      to
      be entered into after the date hereof.




35




(n)  Defaults .
      No
      Default hereunder has occurred and is continuing.




(o)  Insurance . Schedule 4.1(o) attached
      hereto contains an accurate and complete description, as of the Closing Date
      (and after giving effect to the Closing Transactions), of all material policies
      of fire, liability, workmen’s compensation and other forms of insurance owned or
      held by the Issuer and each Subsidiary. Such policies constitute all policies
      of
      insurance required to be maintained under Section
      5.1(g) hereof.
      All such policies are in full force and effect, all premiums due with respect
      thereto have been paid, and no notice of cancellation or termination in all
      material respects has been received with respect to any such policy. Such
      policies are sufficient for compliance in all material respects with all
      requirements of law and of all agreements to which the Issuer or any Affiliate
      is a party; are valid, outstanding and enforceable policies; provide adequate
      insurance coverage in at least such amounts and against at least such risks
      (but
      including in any event public liability) as are usually insured against in
      the
      same general area by companies engaged in the same or a similar business for
      the
      assets and operations of the Issuer and each Affiliate; will remain in full
      force and effect through the respective dates set forth in Schedule 4.1(o) without
      the payment of additional premiums; and will not in any way be affected by,
      or
      terminate or lapse by reason of, the transactions contemplated by this Agreement
      and the Note Documents and Closing Documents.




(p)  Closing
      Documents .
      The
      Issuer has provided to the Purchasers a true, correct and complete copy of
      each
      Closing Document, and all other material documents, instruments and agreements
      entered into by and between or among the Issuer, any of its Subsidiaries,
      including all amendments and modifications thereto (whether characterized as
      an
      amendment, modification, waiver, consent or similar document) relating to the
      Closing Transactions. No material rights or obligations of any party to any
      of
      the Closing Documents have been waived and neither the Issuer, Aurora nor any
      of
      its Subsidiaries, and to the knowledge of the Issuer, no other party to any
      of
      the Closing Documents, is in default of its obligations or in breach of any
      representations or warranties made thereunder. Each of the Closing Documents
      to
      which Issuer, Aurora or any Affiliate thereof is a party is a valid, binding
      and
      enforceable obligation of the Issuer, Aurora and/or any such Affiliate (as
      applicable) in accordance with their terms and in full force and
      effect.




36




(q)   Intellectual
      Property. Except as set forth in Schedule 4.1(q) ,
      each of
      the Issuer and its Subsidiaries owns or licenses or otherwise has the right
      to
      use all licenses, permits, patents, patent applications, trademarks, trademark
      applications, service marks, trade names, copyrights, copyright applications,
      franchises, authorizations, non-governmental licenses and permits and other
      intellectual property rights that are necessary for the operation of its
      business, without infringement upon or conflict with the rights of any other
      Person with respect thereto, except for such infringements and conflicts which,
      individually or in the aggregate, could not reasonably be expected to result
      in
      a Material Adverse Change. Set forth in Schedule 4.1(q) is a
      complete and accurate list as of the Closing Date of all such material licenses,
      permits, patents, patent applications, trademarks, trademark applications,
      service marks, tradenames, copyrights, copyright applications, franchises,
      authorizations, non-governmental licenses and permits and other intellectual
      property rights of the Issuer and its Subsidiaries. No slogan or other
      advertising device, product, process, method, substance, part or other material
      now employed, or now contemplated to be employed, by the Issuer or its
      Subsidiaries infringes upon or conflicts with any rights owned by any other
      Person, and no claim or litigation regarding any of the foregoing is pending
      or
      threatened, except for such infringements and conflicts which could not,
      individually or in the aggregate, reasonably be expected to result in a Material
      Adverse Change. To the best knowledge of the Issuer and its Subsidiaries, no
      patent, invention, device, application, principle or any statute, law, rule,
      regulation, standard or code is pending or proposed, which, individually or
      in
      the aggregate, could not reasonably be expected to result in a Material Adverse
      Change.




(r)   Location
      of Bank Accounts. Schedule 4.1(r) sets
      forth a complete and accurate list as of the Closing Date of all deposit,
      checking and other bank accounts, all securities and other accounts maintained
      with any broker dealer and all other similar accounts maintained by the Issuer,
      together with a description thereof (i.e., the bank or broker dealer at which
      such deposit or other account is maintained and the account number and the
      purpose thereof).




(s)  Ford
      Disqualified Persons .
      Ford
      Disqualified Persons do not individually or in the aggregate own more than
      35%
      of the Equity of Issuer or Aurora, or any direct or indirect owner of more
      than
      35% of the Equity of Issuer or Aurora.




**Section
      4.2****Representations
      and Warranties of the Purchasers**. Each of the Purchasers hereby,
      represents, warrants and covenants to Issuer as follows:




(a)  Organization
      of Purchasers . Each of
      the Purchasers has been duly formed and is validly existing as a corporation
      or
      other legal entity in good standing under the laws of its jurisdiction of
      organization. Each of the Purchasers has full power and authority to execute
      and
      deliver this Agreement and to perform its obligations hereunder and to
      consummate the transactions contemplated hereby.




(b)  Authority
      of Purchasers . The
      execution and delivery by each of the Purchasers of this Agreement, and the
      performance of its obligations hereunder, have been duly and validly authorized
      by all necessary actions of such Purchaser. This Agreement and all other Closing
      Documents executed by each of the Purchasers have been duly and validly executed
      and delivered by such Purchaser and constitute the legal, valid and binding
      obligations of such Purchaser, enforceable against such Purchaser, in accordance
      with their terms, except to the extent such enforceability (a) may be limited
      by
      bankruptcy, insolvency, reorganization, moratorium or other similar laws
      relating to creditors’ rights generally and (b) is subject to general principles
      of equity.




37




(c)  Compliance
      with Laws and Other Instruments . The
      consummation of the transactions contemplated by this Agreement and the
      execution, delivery and performance of the terms and provisions of the Closing
      Documents to which each of the Purchasers is a party will not (i) contravene,
      result in any breach of, or constitute a default under, any charter or bylaws
      or
      other organizational documents of such Purchaser, or material agreement or
      instrument to which such Purchaser is a party, (ii) conflict with or
      result
      in a breach of any of the terms, conditions or provisions of any Order of any
      court, arbitrator or Governmental Authority applicable to such Purchaser, or
      (iii) violate any provision of any statute or other rule or regulation of any
      Governmental Authority applicable to such Purchaser.




(d)  Acquisition
      for Purchaser’s Account . Each of
      the Purchasers is acquiring and will acquire the Notes for its own account,
      with
      no present intention of distributing or reselling such Notes or any part thereof
      in violation of applicable securities laws.




(e)  Notes
      not Registered .
      Each of
      the Purchasers acknowledges that its Notes have not been, and when issued will
      not be, registered under the Securities Act or the securities laws of any state
      in the United States or any other jurisdiction and may not be offered or sold
      by
      such Purchaser unless subsequently registered under the Securities Act (if
      applicable to the transaction) and any other securities laws or unless
      exemptions from the registration or other requirements of the Securities Act
      and
      any other securities laws are available for the transaction.




(f)  Accredited
      Investor .
      Each of
      the Purchasers represents that it is an “accredited investor” within the meaning
      of Rule 501 of Regulation D promulgated under the Securities Act, as presently
      in effect.




**SECTION
      5**


**COVENANTS
      OF ISSUER**




**Section
      5.1****Affirmative
      Covenants to Purchasers**. To conform with the terms and
      conditions under which the Purchasers are willing to have credit outstanding
      to
      Issuer, and to induce the Purchasers to enter into this Agreement and to
      purchase the Notes, the Issuer (and, where indicated, Aurora) hereby warrants,
      covenants and agrees as follows until such time as the Note Obligations have
      been paid in full and, in the case of Sections
      5.1(d) , (e) , (f) , (g) , (h) , (i) , (j) , (k) ,
      and (l) hereof,
      the Closing Documents have been terminated, unless the Holders otherwise approve
      in writing:




(a)  Board
      Observation Rights .
      Each of
      Fund X-NL and Fund XB-NL (or if both such entities shall no longer be Holders,
      the Administrative Agent on behalf of the Holders) shall be entitled to appoint
      one observer (an “ **Observer** ”)
      to the
      Board of Directors or board of managers (or any similar group performing an
      executive oversight or similar function) of the Issuer and each Subsidiary
      and
      each committee thereof (collectively, the “ **Board** ”).
      Each
      Observer shall have the right to attend and receive all materials distributed
      for or at all meetings (telephonic or otherwise) of the Board, except that
      such
      Observer shall not be entitled to vote on matters presented to or discussed
      by
      the Board nor participate in attorney-client privileged discussions or receive
      or review any documents subject to an attorney-client or attorney work product
      privilege. The Administrative Agent and each Observer shall be notified of
      all
      meetings and all proposed actions (including not less than two (2) Business
      Days
      prior notice of any proposed action to be taken without a meeting) by the Board
      as if such Administrative Agent or Observer were a member of the Board. Each
      Observer shall be entitled to be reimbursed by the Issuer for all reasonable
      and
      documented out-of-pocket costs and expenses it incurred in connection with
      its
      participation in meetings or other activities of the Board.




38




(b)  Separateness
      Covenants .




(i)  The
      Issuer will not commingle its assets with those of any other
      Person.




(ii)  The
      Issuer will conduct its business separately from any direct or ultimate parent
      of the Issuer.




(iii)  The
      Issuer will maintain separate financial statements from those of any other
      Person.




(iv)  The
      Issuer will maintain an “arm’s-length” relationship with its
      Affiliates.




(v)  The
      Issuer will not guarantee or become obligated for the debts of any other Person
      and will not hold out its credit as being available to satisfy the obligations
      of others.




(vi)  The
      Issuer will use separate stationery, invoices and checks and will hold itself
      out as a separate and distinct entity from any other Person.




(vii)  The
      Issuer will observe all corporate formalities.




(viii)  The
      Issuer will allocate fairly and reasonably overhead for shared office space,
      if
      any.




(ix)  Except
      as
      expressly permitted under this Agreement, the Issuer will not pledge its assets
      for the benefit of any other Person or make any loans or advances to any
      Person.




(x)  The
      Issuer will correct any known misunderstanding regarding its separate
      identity.




(xi)  The
      Issuer will maintain adequate capital in light of its contemplated business
      operations.




(xii)  The
      Issuer will maintain a sufficient number of employees in light of the
      contemplated business operations.




39




(xiii)   The
      Issuer will maintain books and records separately from any other
      Person.




(xiv)  The
      Issuer will maintain accounts separately from any other Person.




(xv)  The
      Issuer will conduct its business in its own name.




(c)  Financial
      Statements and Other Information .
      The
      Issuer and Aurora, as applicable, will furnish to each Holder and, if
      applicable, the Collateral Agent:




(i)  within
      90
      days after the end of each Fiscal Year, Aurora’s and the Issuer’s audited
      consolidated and consolidating balance sheet and related statements of
      operations, stockholders’ equity and cash flows as of the end of and for such
      year, setting forth in each case in comparative form the figures for the
      previous Fiscal Year, all certified by one of its Responsible Officers and
      reported on by independent public accountants of recognized national standing
      (without a “going concern” or like qualification or exception and without any
      qualification or exception as to the scope of such audit) to the effect that
      such consolidated and consolidating financial statements present fairly in
      all
      material respects the financial condition and results of operations of Aurora
      or
      the Issuer and its Subsidiaries, as applicable, on a consolidated basis in
      accordance with GAAP consistently applied;




(ii)  within
      45
      days after the end of each Fiscal Quarter, Aurora’s and the Issuer’s
      consolidated and consolidating balance sheet and related statements of
      operations as of the end of and for such Fiscal Quarter and the then elapsed
      portion of the Fiscal Year and the related statements of cash flows and
      stockholders’ equity for the then elapsed portion of the Fiscal Year, setting
      forth in each case in comparative form the figures for the corresponding period
      or periods of (or, in the case of the balance sheet, as of the end of) the
      previous Fiscal Year, all certified by one of its Responsible Officers as
      presenting fairly in all material respects the financial condition and results
      of operations of Aurora or the Issuer and its Subsidiaries, as applicable,
      on a
      consolidated basis in accordance with GAAP consistently applied;




(iii)  concurrently
      with any delivery of the financial statements under Section 5.1(c)(i) or Section 5.1(c)(ii) above,
      (1) in reasonable detail, management’s discussion and analysis of the results of
      operations and financial condition of the Issuer, Aurora and its Subsidiaries
      for such period and (2) a certificate of a Responsible Officer of the Issuer
      (w)
      certifying as to whether a Default or Event of Default has occurred and, if
      a
      Default or Event of Default has occurred, specifying the details thereof and
      any
      action taken or proposed to be taken with respect thereto, (x) setting forth
      reasonably detailed calculations demonstrating compliance with Section
      5.2(f) and Section
      5.2(g) ,
      (y)
      setting forth a calculation of the Collateral Coverage Ratio and (z) stating
      whether any change in GAAP or in the application thereof has occurred since
      the
      date of the audited financial statements referred to in Section
      4.1(d)(i) and, if
      any such change has occurred, specifying the effect of such change on the
      financial statements accompanying such certificate;




40




(iv)  concurrently
      with any delivery of Aurora’s or the Issuer’s financial statements under Section 5.1(c)(i) above, a
      certificate of the accounting firm that reported on Aurora’s or the Issuer’s
      financial statements stating whether they obtained knowledge during the course
      of their examination of such financial statements of any breach or any Default
      or Event of Default;




(v)  promptly
      after the same become publicly available, copies of all periodic and other
      reports, proxy statements and other materials, if any, filed by the Issuer
      or
      any Affiliate with the Commission or with any national securities
      exchange;




(vi)  as
      soon
      as available and in any event no later than the 25 th day of
      the following month, monthly operating reports of the Issuer and Aurora which
      shall include a description by field and well of the gross quantities of
      Hydrocarbons and water produced from the Qualified Properties during such
      period;




(vii)  On
      each
      Quarterly Payment Date, a consolidated report in detail acceptable to
      Administrative Agent containing




(A)  a
      detailed calculation of ANCF for the preceding ANCF Quarter including a detailed
      aging of Issuer’s accounts receivable and payable;




(B)  regardless
      of whether the same are included in such calculation of ANCF, a detailed
      calculation of any LOE, G&A Costs, Capital Expenditures, and other direct
      charges or overhead costs with respect to the Qualified Properties specifying
      any material differences from those Approved and those actually
      incurred;




(C)  a
      summary
      of wells drilled, completed or worked over during the reporting period showing
      the total depth drilled or tested, the depth at which production casing was
      set,
      and the existing or anticipated perforated interval and upon request copies
      of
      any well logs across the pay sectors;




(D)  a
      discussion of any current operating problems with any wells and any proposed
      solutions;




(E)  any
      technical studies conducted during the reporting period of performance;
      and




(F)  a
      projection of Capital Expenditures for the next Calendar Quarter and if any
      of
      such Capital Expenditures are not Approved Capital Expenditures the sources
      of
      capital for the payment thereof, together with accompanying authority for
      expenditures if requested by Administrative Agent or Purchasers.




(viii)  during
      the Commitment Period, (a) a semi-annual Engineering Report, to be effective
      as
      of each January 1 and each July 1 and to be delivered to Administrative Agent
      prior to February 1 and August 1 and for each respective period (or, in the
      case
      of 2004, by the date hereof) and (b) thereafter, an annual Engineering Report
      to
      be effective as of January 1 of each year and to be delivered prior to February
      1 of each year. Each Engineering Report shall:




41




(A)  be
      prepared by the Independent Engineer, concerning all of the oil and gas
      properties of Issuer (or Aurora, as applicable) including without limitation
      the
      Qualified Properties, prepared at Issuer ‘s expense;




(B)  separately
      report on Proved Developed Producing Reserves, Proved Developed Non-Producing
      Reserves and Proved Undeveloped Reserves of the Qualified Properties, and
      separately calculate the NPV10 of each such category of Reserves;




(C)  use
      pricing specified in the definition of NPV10;




(D)  take
      into
      account Issuer ‘s and Aurora’s actual experiences with leasehold operating
      expenses and other costs in determining projected leasehold operating expenses
      and other costs;




(E)  take
      into
      account any “over-produced” status under gas balancing
      arrangements;




(F)  contain
      information and analysis comparable in scope to that contained in the Initial
      Engineering Report; and




(G)  otherwise
      be in form and substance satisfactory to Administrative Agent.




In
      the
      event that Issuer and Administrative Agent disagree over whether or not any
      workovers or other remedial Capital Expenditures should be included in an
      Engineering Report for the purposes of calculating NPV10, the engineers
      preparing the report shall resolve such disagreement by determining whether
      such
      expenditures are likely to be required in accordance with prudent industry
      practice and shall include or exclude such expenditures based upon such
      determination.




(ix)  After
      the
      Commitment Period, a semi-annual engineering report, which shall be generated
      internally by Issuer. Such interim engineering reports shall include, but not
      be
      limited to, calculations of NPV10 on the Qualified Properties, and shall use
      prices supplied by Administrative Agent except as modified by prices actually
      received by Issuer pursuant to oil and gas sales contracts between Issuer (as
      seller) and third parties (as buyers); and




(x)  as
      soon
      as available and in any event not later than November 30 of each Fiscal Year,
      commencing November 30, 2004, an annual budget of the Issuer and its
      Subsidiaries reviewed by the board of directors of the Issuer, setting forth
      in
      reasonable detail, the projected revenues and expenses for the Issuer and its
      Subsidiaries for the next succeeding Fiscal Year.




42




(d)  Notices
      of Certain Events .
      Promptly after the Issuer or Aurora learns of the receipt or occurrence of
      any
      of the following, the Issuer will furnish to each Holder and, if applicable,
      to
      the Collateral Agent, a certificate of the Issuer, signed by a Responsible
      Officer, specifying (1) any official notice of any violation, possible
      violation, non-compliance or possible non-compliance, or claim made by any
      Governmental Authority pertaining to all or any part of the properties or assets
      of the Issuer or any of its Subsidiaries which could reasonably be expected
      to
      have a Material Adverse Effect; (2) any event which constitutes a Default or
      Event of Default, together with a detailed statement specifying the nature
      thereof and the steps being taken to cure such Default or Event of Default;
      (3)
      the receipt of any notice from, or the taking of any other action by, the holder
      of any Indebtedness in excess of $500,000 of the Issuer or Aurora or any of
      its
      Subsidiaries with respect to a claimed default, together with a detailed
      statement specifying the notice given or other action taken by such Holder
      and
      the nature of the claimed default and what action the Issuer is taking or
      proposes to take with respect thereto; (4) any event or condition not previously
      disclosed to the Holders which violates any Environmental Law and which could
      reasonably be expected to have a Material Adverse Effect; (5) any event or
      condition which could reasonably be expected to have a Material Adverse Effect;
      (6) any notice of the institution of, or any material adverse development in,
      any action, suit or proceeding or any governmental investigation or any
      arbitration, before any court or arbitrator or any governmental or
      administrative body, agency or official, against the Issuer or any of its
      Subsidiaries or any material property or asset of any thereof, in which the
      amount involved is material and is not covered by insurance or which, if
      adversely determined, would have a Material Adverse Effect; or (7) the
      occurrence of an ERISA Event or a “prohibited transaction,” as such term is
      defined in Section 406 of ERISA or Section 4975 of the Code, with respect to
      any
      Plan has occurred, which such notice shall specify the nature thereof, the
      Issuer’s proposed response thereto (and, if applicable, the proposed response
      thereto of any Subsidiary of the Issuer and of any ERISA Affiliate) and, where
      known, any action taken or proposed by the Internal Revenue Service, the
      Department of Labor or the PBGC with respect thereto.




(e)  Existence;
      Conduct of Business .
      The
      Issuer and Aurora will, and will cause each of its Subsidiaries to, do or cause
      to be done all things necessary to preserve, renew and keep in full force and
      effect its legal existence and the rights, licenses, permits, privileges and
      franchises material to the conduct of its business.




(f)  Payment
      of Obligations .
      The
      Issuer and Aurora will, and will cause each of its Subsidiaries to, pay its
      obligations, including the obligation to pay Taxes and Additional Amounts,
      before the same shall become delinquent or in default, except where (i) the
      validity or amount thereof is being contested in good faith by appropriate
      proceedings, (ii) such entity has set aside on its books adequate reserves
      with
      respect thereto in accordance with GAAP and (iii) the failure to make payment
      pending such contest could not reasonably be expected to result in a Material
      Adverse Change.




(g)  Maintenance
      of Properties; Insurance . **** The
      Issuer and Aurora will, and will cause each of its Subsidiaries to, (i) keep
      and
      maintain all of its Property in good working order and condition, ordinary
      wear
      and tear excepted, and (ii) maintain, and cause each of its Subsidiaries to
      maintain insurance coverage as provided in Annex
      A hereto
      and (iii) obtain and maintain in effect at all times all material franchises,
      governmental authorizations, intellectual property rights, licenses and permits,
      which are necessary for it to own its Property or conduct its business as
      conducted on the Closing Date. All policies covering the Collateral are to
      be
      made payable to the Collateral Agent for the benefit of the Holders, as their
      interests may appear, in case of loss, under a standard non-contributory
“issuer” or “secured party” clause and are to contain such other provisions as
      the Collateral Agent, the Purchasers or the Requisite Holders may require to
      fully protect the Holders’ interest in the Collateral and any payments to be
      made under such policies. All certificates of insurance are to be delivered
      to
      the Collateral Agent and each Holder and the policies are to be premium prepaid
      or paid in installments in accordance with the prior practice of the Issuer
      (provided, that at the request of the Collateral Agent, the Purchasers or the
      Requisite Holders, as the case may be, all such premiums shall be prepaid),
      with
      the loss payable and additional insured endorsement in favor of the Collateral
      Agent and such other Persons as the Collateral Agent, the Purchasers or the
      Requisite Holders may designate from time to time, and shall provide for not
      less than thirty (30) days’ prior written notice to the Collateral Agent and the
      Holders of the exercise of any right of cancellation. If the Issuer or any
      of
      its Subsidiaries fails to maintain such insurance, the Collateral Agent or
      any
      Holder may arrange for such insurance, but at the Issuer’s expense and without
      any responsibility on the part of the Collateral Agent or any Holder for
      obtaining the insurance, the solvency of the insurance companies, the adequacy
      of the coverage, or the collection of claims. Upon the occurrence and during
      the
      continuance of an Event of Default, the Collateral Agent shall have the sole
      right, in the name of the Holders, the Issuer and its Subsidiaries, to file
      claims under any insurance policies, to receive, receipt and give acquittance
      for any payments that may be payable thereunder, and to execute any and all
      endorsements, receipts, releases, assignments, reassignments or other documents
      that may be necessary to effect the collection, compromise or settlement of
      any
      claims under any such insurance policies. If requested by any Holder or, if
      applicable, any Collateral Agent, the Issuer will furnish or cause to be
      furnished to the Holders and, if applicable, to the Collateral Agent, a
      certificate of insurance coverage from the insurer in form and substance
      satisfactory to the Holders and demonstrating compliance with this Section
      5.1(g) .




43




(h)  Books
      and Records; Inspection Rights .
      The
      Issuer and Aurora will, and will cause each of its Subsidiaries to, furnish
      to
      Administrative Agent, Collateral Agent and any Holder any information which
      Administrative Agent, Collateral Agent or any Holder may from time to time
      reasonably request concerning any covenant, provision or condition of the Note
      Documents or any matter in connection with the Collateral or Issuer’s or
      Aurora’s, or the Subsidiaries’ of Issuer or Aurora, businesses and operations.
      The Issuer and Aurora will, and will cause each of its Subsidiaries to, keep
      proper books of record and account in which full, true and correct entries
      are
      made of all dealings and transactions in relation to its business and
      activities. The Issuer and Aurora will, and will cause each of its Subsidiaries
      to, permit any representatives designated by Administrative Agent, Collateral
      Agent or any Holder, upon reasonable prior notice, to visit and inspect its
      properties, to examine and make extracts from its books and records, and to
      consult with and advise its senior management, officers and independent
      accountants with respect to its affairs, finances, accounts and condition and
      any other matters relating to the operation of Issuer or any of its Subsidiaries
      all at such reasonable times and as often as reasonably requested. In addition,
      upon the written request of the Administrative Agent, Collateral Agent or any
      Holder, the Issuer and Aurora shall furnish to the requesting party any
      document, report, financial data or other information with respect to the
      operation of Issuer or any of its Subsidiaries so requested by such requesting
      party.




(i)  Compliance
      with Laws .
      The
      Issuer and Aurora will, and will cause each of its Subsidiaries to, comply
      with
      all laws, rules, regulations and orders of any Governmental Authority applicable
      to it or its property except to the extent any noncompliance, individually
      or in
      the aggregate, could not reasonably be expected to result in a Material Adverse
      Change.




44




(j)  Further
      Assurances .
      At any
      time or from time to time after the Closing, each of the parties hereto shall
      execute and deliver to the other parties hereto such other documents and
      instruments, provide such materials and information and take such other actions
      as such other parties may reasonably request to consummate the transactions
      contemplated hereby. The Issuer will, and will cause each Subsidiary to, cure
      promptly any defects in the creation and issuance of the Notes and the execution
      and delivery of the Closing Documents and this Agreement. The Issuer and Aurora
      will, and will cause each Subsidiary to, promptly deliver to any Holder, upon
      request, such information about the business and affairs and financial condition
      of the Issuer and its Subsidiaries as any such Holder or, if applicable,
      Collateral Agent shall reasonably request. Without limiting the foregoing,
      the
      Issuer and Aurora, at its expense, will, and will cause each Subsidiary to,
      promptly execute and deliver to the such holders, upon receipt, all such other
      documents, agreements and instruments to comply with or accomplish the covenants
      and agreements of the Issuer, Aurora or any Subsidiary, as the case may be,
      in
      the Closing Documents and this Agreement, or to further evidence and more fully
      describe the collateral intended as security for the Note Obligations, or to
      correct any omissions in the Security Agreement, or to state more fully the
      security obligations set out herein or in any of the Collateral Documents or
      the
      Security Agreement, or to perfect, protect or preserve any Liens created
      pursuant to any of the Collateral Documents or the Security Agreement, or to
      make any recordings, to file any notices or obtain any consents, all as may
      be
      necessary or appropriate in connection therewith. The Issuer and Aurora hereby
      authorize the Holders, and their respective agents, successors and assigns,
      to
      file any and all necessary financing statements under the UCC, assignments
      or
      continuation statements as necessary from time to time (in the Holders’
      discretion) to perfect (or continue perfection of) the Liens granted pursuant
      to
      the Note Documents.




(k)  Environmental
      Matters .




(i)  The
      Issuer and Aurora will, and will cause each Subsidiary to, establish and
      implement such policies and procedures as are reasonably calculated to assure
      on
      an on-going basis the following: (x) all assets of the Issuer, Aurora and its
      Subsidiaries and the operations conducted therewith and other activities of
      the
      Issuer, Aurora and its Subsidiaries are in compliance with and do not violate
      the requirements of any Environmental Laws and any documentation of such
      compliance with Environmental Laws which any Holder may reasonably request
      shall
      be provided as promptly as practicable and (y) no oil, hazardous substances
      or
      solid wastes are disposed of or otherwise released on or to any Properties
      owned
      by any such party in violation of any Environmental Laws.




(ii)  The
      Issuer and Aurora will promptly notify the Holders and, if applicable, the
      Collateral Agent in writing of any threatened action, investigation or inquiry
      by any Governmental Authority of which the Issuer or Aurora has knowledge in
      connection with any violation of or liability under Environmental
      Laws.




45




(iii)  The
      Issuer and Aurora will, and will cause each Subsidiary to, conduct environmental
      due diligence reviews as reasonably requested by the Holders in connection
      with
      any future material acquisitions or construction.




(iv)  The
      Issuer and Aurora will keep any property either owned or operated by it or
      any
      of its Subsidiaries free of any Environmental Liens.




(v)  The
      Issuer and Aurora will provide each Holder with written notice within five
      (5)
      days of obtaining knowledge of any Release of a Hazardous Material in excess
      of
      any reportable quantity from or onto property at any time owned or operated
      by
      it or any of its Subsidiaries and take any Remedial Actions required under
      Environmental Laws to abate said Release.




(vi)  The
      Issuer and Aurora will provide the Collateral Agent and each Holder with written
      notice within ten (10) days of the receipt of any of the following:
      (A) notice that an Environmental Lien has been filed against any property
      of the Issuer or any of its Subsidiaries; (B) commencement of any
      Environmental Action or notice that an Environmental Action will be filed
      against the Issuer or any of its Subsidiaries; and (C) notice of a
      violation, citation or other administrative order which could have a Material
      Adverse Effect.




(l)   Change
      in Collateral; Collateral Records. The Issuer will, and will cause
      each of its Subsidiaries to (i) give the Collateral Agent and each Holder not
      less than thirty (30) days’ prior written notice of any change in the
      location of any Collateral, other than to locations set forth on Schedule 5.1(l) ,
      (ii) advise the Collateral Agent and each Holder promptly, in sufficient
      detail, of any material adverse change relating to the type, quantity or quality
      of the Collateral or the Lien granted thereon and (iii) execute and
      deliver, and cause each of its Subsidiaries to execute and deliver, to the
      Collateral Agent and each Holder for the benefit of the Holders from time to
      time, solely for the Collateral Agent’s convenience in maintaining a record of
      Collateral, such written statements and schedules as the Collateral Agent,
      the
      Purchasers or the Requisite Holders may reasonably require, designating,
      identifying or describing the Collateral.




(m)  Execution
      of Supplements to ORRI Conveyance .
      Issuer
      and, as applicable, Aurora shall execute and deliver to ORRI Assignee from
      time
      to time, upon request of ORRI Assignee, Supplements to the ORRI Conveyance
      conveying to ORRI Assignee overriding royalties in the form and substance
      acceptable to ORRI Assignee (collectively, the “ **Supplements
      to ORRI Conveyance** ”)
      with
      respect to all Lands beneficially owned or in which interests are owned or
      held
      by Issuer, Aurora or any Subsidiary, whether now or hereafter acquired, at
      any
      time after the Closing Date through and including the later of (i) the Maturity
      Date or (ii) the date of the payment in full of the Notes, which Lands comprise
      a portion of the Project and which are either (1) included in or covered by
      the
      Initial Engineering Report or (2) drilled, acquired, or otherwise developed
      in
      the Project Area, and funded by the proceeds of an Advance or Approved Capital
      Expenditures; provided, however, that Issuer shall not be obligated to convey
      an
      overriding royalty on, or include in a Supplement to ORRI Conveyance, the
      working interests acquired by Issuer from OIL Energy Corp., Oilfield Investments
      Ltd., O.I.L. Energy, Corp., NorAm Energy, LLC, NorAm Energy Services, LLC,
      T.D.
      Provins Family Trust, LLC, Provins Family, LLC and/or their affiliates or
      subsidiaries (collectively “ **OIL** ”)
      after
      the Amendment Closing Date in producing horizons (i.e. a geologic interval
      to
      which PDP Reserves are attributable on the date of acquisition) of well bores
      of
      wells acquired from OIL. For purposes of clarity, Issuer and, as applicable,
      Aurora, shall convey an overriding royalty on, and include in a Supplement
      to
      ORRI Conveyance, the working interests and other interests acquired by Issuer
      or
      Aurora from OIL in the Project Area excepting and excluding therefrom only
      the
      producing horizons of well bores of wells producing on the date of acquisition
      from OIL.




46




(n)  Commodity
      Hedging Agreements .
      At any
      time that the Note Obligations (other than the obligations under the ORRI
      Documents) remain outstanding, the Requisite Holders (or administrative agent
      acting on their behalf) may give notice to the Issuer, in their sole and
      absolute discretion, that Issuer shall enter into a commodity hedging agreements
      in form and substance satisfactory to Administrative Agent, with respect to
      volumes of Hydrocarbons (up to 75% of the projected production of Issuer’s PDP
      Reserves during the three years after the date of such notice). Issuer shall
      enter into such commodity hedging agreement with respect to the specified
      volumes no later than thirty (30) days after the date of such
      notice.




(o)  Development
      Plan; Project Area .
      Issuer
      and Aurora shall cause the Development Plan to be performed substantially in
      accordance with the terms thereof. All interests in the Project Area owned
      by
      Aurora or any Affiliate of Aurora other than the Unassigned Interests shall
      be
      owned by Issuer and no Affiliate of Issuer shall own or acquire any interest
      in
      the Project Area other than the Unassigned Interests. Aurora shall cause all
      interests in the Project Area heretofore acquired by Aurora or any Affiliate
      thereof other than Unassigned Interests to be assigned to Issuer no later than
      the Closing Date. From and after the Closing, Aurora shall cause all Unassigned
      Interests to be assigned to Issuer without reservation and by warranty
      assignment no later than thirty (30) days after the date of acquisition by
      Aurora or any Affiliate thereof. Aurora shall cause all interests in Michigan
      State leases to be assigned to Issuer by the applicable form of Assignment
      of
      Oil and Gas Leases of the Michigan Department of Natural Resources, Forest,
      Mineral and Fire Management (“MDNR”), subject to consent, by the Closing Date
      and thereafter diligently prosecute to completion any filings and take such
      other actions necessary to obtain any necessary approval of the assignment
      to
      Issuer. From and after the Closing, Aurora shall cause all of its interests
      in
      Michigan State leases in the Project Area to be assigned to Issuer by the
      applicable form of assignment of the MDNR (subject to consent) within thirty
      (30) days after the date of execution of any such Michigan State lease and
      thereafter diligently prosecute to completion any filings and take such other
      actions necessary to obtain any necessary approval of the assignment to Issuer.




(p)  Resignation
      as Operator .
      Issuer,
      Aurora and any Subsidiary thereof shall, within fifteen (15) days after request
      from Administrative Agent, Collateral Agent or Requisite Holders after the
      occurrence of an Event of Default, resign as operator of any Collateral and
      designate and vote for, as successor operator, the party designated by
      Administrative Agent, Collateral Agent, Requisite Holders or any receiver or
      purchaser in foreclosure of such Collateral.




(q)  Wholly
      Owned Subsidiary; Negative Pledge . **** Aurora
      and Issuer will cause Aurora to at all times be the holder of 100% of all
      classes of the membership interests of Issuer and of any options, warrants
      or
      other rights with respect to any of such membership interests. Aurora shall
      grant a security interest in its membership interest in Issuer to Collateral
      Agent to secure the Note Obligations but shall not otherwise pledge, encumber
      or
      assign any such membership interest or any option, warranty or other right
      with
      respect to any such membership interest.




47




(r)  Michigan
      State Lease Approvals .
      Aurora
      shall promptly deliver notice to the Purchasers upon receipt of an approval
      from
      the MDNR with regard to the assignment of a Michigan State lease to
      Issuer.




**Section
      5.2****Negative
      Covenants to Purchasers**.To conform with the terms and conditions under which the Purchasers
      are
      willing to have credit outstanding to Issuer, and to induce the Purchasers
      to
      enter into this Agreement and purchase the Notes, the Issuer hereby warrants,
      covenants and agrees as follows until such time as the Note Obligations have
      been paid in full and this Agreement has been terminated, unless the Holders
      otherwise approve in writing:




(a)  Restricted
      Payments .
      The
      Issuer will not, and will not permit any of its Subsidiaries to, declare or
      make, or agree to pay or make, directly or indirectly, any Restricted Payment,
      except that Issuer may, on any Quarterly Payment Date after all Note Obligations
      then due have been paid in full pay to Aurora an amount equal to the lesser
      of
      (i) 25% of Issuer’s Adjusted Net Cash Flow during the preceding ANCF Quarter and
      (ii) $300,000 solely to fund general and administrative expenses of Aurora
      so
      long as (a) no Coverage Deficiency or Event of Default or payment Default exists
      and (b) Issuer is, and after taking such payment or distribution into effect,
      will be, in compliance with Sections 5.3(a), (b) and (c) .




(b)  Investments,
      Loans, Advances, Guarantees and Acquisitions .
      The
      Issuer will not, and will not permit any of its Subsidiaries to, purchase,
      hold
      or acquire (including pursuant to any merger with any Person that was not a
      Wholly Owned Subsidiary prior to such merger) any Capital Stock, evidences
      of
      indebtedness or other securities (including any option, warrant or other right
      to acquire any of the foregoing) of, make or permit to exist any loans or
      advances to, Guarantee any obligations of, or make or permit to exist any
      investment or any other interest in, any other Person, or purchase or otherwise
      acquire (in one transaction or a series of transactions) any assets of any
      other
      Person constituting a business unit, or agree to do any of the foregoing,
      except:




(i)  Permitted
      Investments;




(ii)  investments
      by the Issuer or any of its Subsidiaries in any other Wholly Owned Subsidiary
      of
      the Issuer approved by Requisite Holders;




(iii)  Guarantees
      constituting Indebtedness permitted by Section
      5.2(f) ;




(iv)  trade
      accounts receivable for goods or services furnished in the ordinary course
      of
      business; and




(v)  routine
      employee advances in the ordinary course of business, but not to exceed an
      outstanding amount, at any time, of $50,000.




48




(c)  Transactions
      with Affiliates .




(i)
      The
      Issuer will not, and will not permit any of its Subsidiaries to, sell, lease
      or
      otherwise transfer any property or assets to, or purchase, lease or otherwise
      acquire any property or assets from, or otherwise engage in any other
      transactions with, any of its Affiliates, except (i) in the ordinary course
      of
      business at prices and on terms and conditions not less favorable to the Issuer
      or such Subsidiary than could be obtained on an arm’s-length basis from
      unrelated third parties provided , however ,
      that
      any transactions with Affiliates having a value in excess of $25,000 in the
      aggregate during a Fiscal Quarter shall require the prior written approval
      of
      Requisite Holders; provided
      further ,
      that
      transactions between Issuer and Hudson Pipeline shall not require prior written
      approval of Requisite Holders so long as such transactions are on terms no
      less
      favorable to Issuer than would be obtained in an arms-length transaction and
      so
      long as such transactions are on terms consistent with those obtained in
      transactions with third parties in the Project Area and (ii) transactions
      between or among the Issuer and its Wholly Owned Subsidiaries not involving
      any
      other Affiliate.




(ii)
      Aurora will not, and will not permit any of its Subsidiaries to, sell, lease
      or
      otherwise transfer any property or assets that are part of the Collateral to,
      or
      purchase, lease or otherwise acquire any property or assets that are part of
      the
      Collateral from, or otherwise engage in any other transactions with, any of
      its
      Affiliates, except (i) in the ordinary course of business at prices and on
      terms
      and conditions not less favorable to Aurora or such Subsidiary than could be
      obtained on an arm’s-length basis from unrelated third parties provided , however ,
      that
      any transactions with Affiliates having a value in excess of $25,000 in the
      aggregate during a Fiscal Quarter shall require the prior written approval
      of
      Requisite Holders and (ii) transactions between or among Issuer and its Wholly
      Owned Subsidiaries not involving any other Affiliate.




(d)  Proceeds
      of Notes .
      The
      Issuer will not use the proceeds of the issuance of the Notes other than
      exclusively to pay the Tamco Origination Fee and all reasonable expenses of
      the
      Purchasers, including, without limitation, the fees and expenses of its counsel,
      consultants and other advisors in accordance with Section
      10.15 hereof,
      and fund future Capital Expenditures. In no event shall any proceeds from the
      sale of the Notes be used directly or indirectly by any Person for personal,
      family, household or agricultural purposes or for the purpose, whether
      immediate, incidental or ultimate, of purchasing, acquiring or carrying any
      “margin stock” or any “margin securities” (as such terms are defined
      respectively in Regulations T, U and X promulgated by the Board of Governors
      of
      the Federal Reserve System) or to extend credit to others directly or indirectly
      for the purpose of purchasing or carrying any such margin stock or margin
      securities. Issuer represents and warrants to the Purchasers that Issuer is
      not
      engaged principally, or as one of Issuer’s important activities, in the business
      of extending credit to others for the purpose of purchasing or carrying such
      margin stock or margin securities. The Issuer will not take, or permit any
      Person acting on behalf of the Issuer to take, any action which might cause
      any
      of the Note Documents to violate Regulations U or X or any other regulation
      of the Board of Governors of the Federal Reserve System or to violate
      Section 7 of the Securities Exchange Act of 1934, as amended, or any
      rule
      or regulation thereunder, in each case as now in effect or as the same may
      hereinafter be in effect.




(e)  Additional
      Subsidiaries .
      The
      Issuer will not, and will not permit any Subsidiary to, (i) create any
      additional Subsidiaries except in compliance with Section
      5.2(b) and
      approved in advance by Requisite Holders, or (ii) sell or issue any stock or
      ownership interest of a Subsidiary, except to the Issuer or any Wholly Owned
      Subsidiary and except in compliance with Section
      5.2(b) .




49




(f)  Indebtedness .
      The
      Issuer will not, and will not permit any Subsidiary to, create, incur, assume
      or
      permit to exist any Indebtedness, except:




(i)  Indebtedness
      existing on the date hereof and set forth in Schedule
      5.2(f) of this
      Agreement and extensions, renewals and replacements of any such Indebtedness
      that do not increase the outstanding principal amount thereof or change any
      material term thereof;




(ii)  the
      Note
      Obligations;




(iii)  trade
      debt arising in the ordinary course of business for goods or
      services;




(iv)  endorsements
      of checks or drafts in the ordinary course of business; and




(v)  accrued
      obligations related to employee benefit plans.




(g)  Liens .
      The
      Issuer and Aurora will not, and will not permit any Subsidiary to, create,
      incur, assume or permit to exist any Lien on any Collateral or any property
      or
      asset now owned or hereafter acquired by Issuer, or assign or sell any income
      or
      revenues (including accounts receivable) or rights in respect of any thereof,
      except:




(i)  Permitted
      Encumbrances;




(ii)  any
      Lien
      on any property or asset of the Issuer or any Subsidiary existing on the date
      hereof and set forth in Schedule
      5.2(g) ; provided that (x)
      such Lien shall not apply to any other property or asset of the Issuer or any
      Subsidiary, (y) such Lien shall secure only those obligations which it secures
      on the date hereof and extensions, renewals and replacements thereof that do
      not
      increase the outstanding principal amount thereof and (z) those Liens designated
      on Schedule
      5.2(g) as
      having to be released as of the date and time of the Initial Advance shall
      be
      released as of such date and time; and




(iii)  Liens
      in
      favor of the Holders or the Collateral Agent securing the payment of the Note
      Obligations.




(h)  Fundamental
      Changes .




(i)  The
      Issuer and Aurora will not, and will not permit any Subsidiary to, merge into
      or
      consolidate with any other Person, or permit any other Person to merge into
      or
      consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
      transaction or in a series of transactions) all or substantially all of its
      assets (whether now owned or hereafter acquired), or liquidate or dissolve,
      except that, if at the time thereof and immediately after giving effect thereto
      no Default or Event of Default shall have occurred and be continuing and the
      prior written approval of the Requisite Holders is obtained (w) any Subsidiary
      may merge into the Issuer in a transaction in which the Issuer is the surviving
      corporation, (x) any Subsidiary may merge into any Wholly Owned Subsidiary
      in a
      transaction in which the surviving entity is a Wholly Owned Subsidiary, (y)
      any
      Wholly Owned Subsidiary may sell, transfer, lease or otherwise dispose of its
      assets to the Issuer or to another Wholly Owned Subsidiary and (z) any
      Subsidiary may liquidate or dissolve if the Issuer determines in good faith
      that
      such liquidation or dissolution is in the best interests of the Issuer and
      is
      not materially disadvantageous to the Holders; provided  that any such
      merger involving a Person that is not a Wholly Owned Subsidiary immediately
      prior to such merger shall not be permitted unless also permitted by Section
      5.2(b) .




50




(ii)  The
      Issuer will not, and will not permit any of its Subsidiaries to, engage in
      any
      business other than businesses of the type conducted by the Issuer and its
      Subsidiaries on the date of execution of this Agreement and businesses
      reasonably related thereto.




(i)  Sale
      and Leaseback Arrangements .
      The
      Issuer will not, and will not permit any of its Subsidiaries to, enter into
      any
      arrangement, directly or indirectly, with any Person whereby the Issuer or
      its
      Subsidiaries shall sell or transfer any asset, whether now owned or hereafter
      acquired, and whereby the Issuer or its Subsidiaries shall then or thereafter
      rent or lease as lessee such asset or any part thereof or other asset which
      the
      Issuer or its Subsidiaries intends to use for substantially the same purpose
      or
      purposes as the asset sold or transferred.




(j)  ERISA
      Compliance .




(i)  The
      Issuer will not engage in, or permit any Subsidiary or ERISA Affiliate to engage
      in, any transaction in connection with which the Issuer, its Subsidiaries or
      any
      ERISA Affiliate could reasonably be expected to be subjected to either a civil
      penalty assessed pursuant to Sections 502(c) or 502(i) of ERISA or a
      tax
      imposed by Section 4975 of the Code;




(ii)  The
      Issuer will not contribute to or assume an obligation to contribute to, or
      permit any Subsidiary or ERISA Affiliate to contribute to or assume an
      obligation to contribute to, any Plan or Multiemployer Plan;




(iii)  The
      Issuer will not acquire, or permit any Subsidiary or ERISA Affiliate to acquire,
      an interest in any Person that causes such Person to become an ERISA Affiliate
      with respect to the Issuer, any Subsidiary or any ERISA Affiliate if such Person
      sponsors, maintains or contributes to, or at any time in the six-year period
      preceding such acquisition has sponsored, maintained, or contributed to, (i)
      any
      Multiemployer Plan, or (ii) any other Plan that is subject to Title IV
      of
      ERISA; and




(iv)  The
      Issuer will not contribute to or assume an obligation to contribute to, or
      permit any Subsidiary or ERISA Affiliate to contribute to or assume an
      obligation to contribute to, any employee welfare benefit plan, as defined
      in
      Section 3(1) of ERISA, including, without limitation, any such plan
      maintained to provide benefits to former employees of such entities, that may
      not be terminated by such entities in their sole discretion at any time without
      any material liability except in those circumstances required to comply with
      Section 4980B of the Code.




51




(k)  Sale
      or Discount of Receivables .
      The
      Issuer will not, and will not permit any of its Subsidiaries to, discount or
      sell (with or without recourse) any of its or its Subsidiaries notes receivable
      or accounts receivable other than sales of overdue receivables made in the
      ordinary course of business in connection with the collection or compromise
      thereof.




(l)  Current
      Ratio .
      The
      Current Ratio of the Issuer shall be calculated on every Quarterly Payment
      Date.
      The Issuer shall not permit the Current Ratio for any applicable period ending
      on the then most recent Quarterly Payment Date to be less than
      1.00.




(m)  Amendments
      to Organizational Documents; Other Material Agreements .
      The
      Issuer will not, and will not permit any of its Subsidiaries to, enter into
      or
      permit any modification of, or waive any material right or obligation of any
      Person under its, as the case may be, Operating Agreement, certificate or
      articles of incorporation, articles of organization, bylaws, regulations or
      other organizational documents other than amendments, modifications and waivers
      which will not, individually or in the aggregate, have a Material Adverse
      Effect.




(n)  Liens
      on Equity .
      The
      Issuer will not, and will not permit any of its Subsidiaries to, directly or
      indirectly, incur or permit to exist, or enter into an agreement to permit
      to
      exist, any Lien on any Equity of the Issuer or its Subsidiaries, other than
      the
      Liens in favor of the Collateral Agent.




(o)  Limitation
      on Financing Sources .
      Prior
      to the Commitment Expiry Date, neither Issuer, Aurora nor any Affiliate of
      Issuer or Aurora shall obtain any financing to fund any development or
      acquisition in the Area of Mutual Interest from any source other than TCW or
      an
      Affiliate of TCW.






**Section
      5.3**  **Coverage
      Ratios**


.


(a)  Collateral
      Coverage Ratio .
      The
      Collateral Coverage Ratio of the Issuer shall be calculated (i) twice every
      year
      for 2005 and 2006 and once a year thereafter, as of the date of delivery of
      the
      current Engineering Report (it being understood that the Collateral Coverage
      Ratio for the period from the date hereof to February 1, 2004 shall be
      calculated in reliance on the Initial Engineering Report, unless an Engineering
      Report has subsequently been prepared, in which case such later Engineering
      Report shall be relied upon), (ii) upon the receipt by Purchasers of a Request
      for Additional Advance using the most recently prepared Engineering Report,
      and
      (iii) at such other times as Administrative Agent or Requisite Holders shall
      elect in their sole discretion. The Issuer shall not permit the Collateral
      Coverage Ratio for any applicable period ending on the then most recent
      Quarterly Payment Date to be less than 1.20.




(b)  PDP
      Coverage Ratio .
      The PDP
      Coverage Ratio of the Issuer shall be calculated (i) twice every year for 2005
      and 2006 and once a year thereafter, as of the date of delivery of the current
      Engineering Report (it being understood that the PDP Coverage Ratio for the
      period from the date hereof to February 1, 2004 shall be calculated in reliance
      on the Initial Engineering Report, unless an Engineering Report has subsequently
      been prepared, in which case such later Engineering Report shall be relied
      upon), (ii) upon the receipt by Purchasers of a Request for Additional Advance
      using the most recently prepared Engineering Report, and (iii) at such other
      times as Administrative Agent or Requisite Holders shall elect in their sole
      discretion.




(c)  If
      any
      Coverage Deficiency exists, Issuer shall as soon as reasonably commercially
      practicable after obtaining knowledge thereof give notice thereof to
      Administrative Agent and may cure such Coverage Deficiency, either by furnishing
      and mortgaging additional engineered producing oil and gas wells satisfactory
      to
      Requisite Holders in order to increase Modified NPV10 or by making payments
      in
      order to reduce the Total Indebtedness. If any Coverage Default exists, Issuer
      shall within thirty (30) days after obtaining knowledge thereof cure such
      Coverage Default, either by furnishing and mortgaging additional engineered
      producing oil and gas wells satisfactory to Requisite Holders in order to
      increase Modified NPV10 or by making payments in order to reduce the Total
      Indebtedness.




52




**SECTION
      6**


**CONDITIONS
      TO ADVANCES**







Section
      6.1 **Closings.** The
      Initial Closing occurred on August 12, 2004. The Amendment Closing shall be
      deemed to occur upon the satisfaction (or waiver in writing by the
      Administrative Agent in its sole and absolute discretion) of the conditions
      set
      forth in Section 6.2.




**Section
      6.2**  **Conditions
      to Amendment Closing.** The
      effectiveness of this Agreement and the obligations of Purchasers to make any
      Subsequent Advance hereunder are subject to the condition precedent that each
      of
      the following events shall have occurred:




(a)  Purchasers
      shall have received all of the following, duly executed and delivered and in
      form, substance and date satisfactory to the Purchasers:




(i)  the
      Subsequent Advance Notes;




(ii)  Amendments
      to the Mortgages and other Collateral Documents hereto delivered by the Issuer
      and Aurora in form acceptable to Administrative Agent reflecting, inter alia,
      the increase in the Total Commitment Amount and any other **** Closing
      Documents requested by Administrative Agent;




(iii)  an
      opinion of Leibenguth & Boos & Associates PC to the Purchasers, in form
      and substance attached hereto as Exhibit
      E and
      reasonably satisfactory to the Purchasers;




(iv)  a
      “ **Compliance
      Certificate** ,”
      substantially in the form attached hereto as Exhibit
      I ,
      of a
      director of Issuer of even date with such Subseqent Advance, in which the Issuer
      shall have certified (x) to the satisfaction of the conditions in this Section
      6.1 ,
      and (y)
      to the truth and accuracy in all material respects of all representations and
      warranties made by Issuer or Aurora in any of the Note Documents;




53




(v)  an
      “ **Omnibus
      Certificate** ”
      of the
      Secretary or the Board of Directors of each of Issuer and Aurora which shall
      contain the names and signatures of its officers authorized to execute the
      Note
      Documents to which it is a part and which shall certify to the truth,
      correctness and completeness of the following exhibits attached to the
      certificate: (i) a copy of resolutions of its board of directors in full force
      and effect at the time this Agreement is entered into, authorizing the execution
      of the Note Documents delivered or to be delivered by it in connection herewith
      and the consummation of the transactions contemplated in the Note Documents;
      (ii) a copy of its articles of incorporation and all amendments thereto,
      certified by its company secretary; and (iii) a copy of the appointment or
      all
      legal representatives and legal advisors in fact of Issuer duly registered;
      and




(vi)  such
      other information as the Purchasers may have reasonably required, including
      evidence satisfactory to the Purchasers that all conditions precedent to any
      Advance under the Original Note Purchase Agreement shall have been
      satisfied.




(b)  The
      Investment Committee of TCW shall have approved the amendments reflected in
      this
      Agreement.




(c)  Issuer
      and Aurora shall have obtained the Licenses and all other Governmental Approvals
      necessary under Governmental Rules in the ordinary course as well as for the
      consummation of the transactions contemplated in the Note Documents and for
      the
      granting of the security interests contemplated under the Collateral Documents
      necessary for the ownership and operation of the wells on which drilling has
      been commenced or on which PDP Reserves have been identified, except for those
      Governmental Approvals which were not then required, and each of the foregoing
      shall have been in full force and effect and in form and substance reasonably
      satisfactory to the Purchasers.




(d)  The
      organizational structure and capital structure of Issuer and Aurora shall have
      been as set forth in Schedule 4.1(l) ,
      which
      Schedule shall have been in
      form
      and substance satisfactory to Purchaser in its sole and absolute
      discretion .




(e)  The
      Purchasers shall have received and approved a revised Operating Budget developed
      in connection with Project and the Operating Agreement.




(f)  The
      Purchasers shall have received and approved a report of the Insurance Advisor
      pertaining to the insurance program and a certificate of insurance coverage
      of
      the Issuer evidencing that the Issuer is carrying insurance in accordance with Section
      5.1(g) .




(g)  No
      material litigation, investigation or proceeding shall have been commenced
      or
      threatened against the Issuer or Aurora or so far as they are aware, against
      the
      Collateral Properties or the transactions contemplated hereby or
      thereby.




(h)  No
      event
      or circumstance shall have existed giving rise to, or reasonably likely to
      give
      rise to, any Material Adverse Effect.




(i)  Perfection
      of Liens .
      The
      Purchasers shall have received evidence, in form and substance satisfactory
      to
      it in its sole and absolute discretion, that all documentation, actions,
      consents and approvals required in connection with the granting of Liens and
      perfection of security interests in the Collateral as contemplated by Section
      5.2(g) hereof
      and by the Collateral Documents have been executed, delivered and filed as
      of
      the Closing Date and that the Liens of the Collateral Documents constitute
      first
      Liens.




54




(j)  Organizational
      Documents .
      The
      Purchasers shall have received such documents and certificates as it or its
      counsel may reasonably request relating to the organization, existence and
      good
      standing of the Issuer and its Subsidiaries, the authorization of the Closing
      Transactions and any other legal matters relating to the Issuer, this Agreement,
      the Closing Documents, all in form and substance satisfactory to Purchasers
      and
      their counsel.




(k)  Payment
      of Expenses .
      The
      Purchasers and their counsel shall have received all fees and other amounts
      due
      and payable on or prior to the Amendment Closing Date with respect to this
      Agreement, including, without limitation, fees and reimbursement or payment
      of
      all out-of-pocket expenses required to be reimbursed or paid by the Issuer
      hereunder or under the Original Note Purchase Agreement.




(l)  Financial
      Statements .
      The
      Purchasers shall have received, in form and substance satisfactory to them
      and
      attached as Schedule
      6.1(l) ,
      projections of the Issuer prepared through the Maturity Date demonstrating
      the
      ability of Issuer to (i) repay its debts, including the Note Obligations, and
      satisfy its other obligations when due and (ii) comply with the covenants
      contained in Section Five hereof.




**Section
      6.3**  **Conditions
      Precedent to Any Advance** **.** The
      Purchasers shall have no obligation to make any Advance (including the Initial
      Advance) unless all of the following conditions precedent have been satisfied,
      to the satisfaction of the Requisite Holders and the Administrative Agent and
      in
      their reasonable discretion (in which event the Advance shall be
      made):




(a)  Tamco
      Origination Fee .
      Issuer
      shall pay to Tamco an origination fee (the “ **Tamco
      Origination Fee** ”)
      equal
      to 1.5% of any Advance prior to or concurrently with the disbursement of such
      Advance. Payment of the Tamco Origination Fee shall be by wire transfer of
      immediately available funds or upon the instruction of Issuer, by deduction
      from
      the purchase price of the Notes.




(b)  All
      representations and warranties made by Issuer and Aurora in any Note Document
      shall be true in all material respects on and as of the date of such Advance
      as
      if such representations and warranties had been made as of the date of such
      Advance;




(c)  No
      Default shall exist as of the date of such Advance, taking into account the
      making of such Advance;




(d)  No
      Material Adverse Effect shall have occurred since, with respect to the Initial
      Advance, December 31, 2003; and with respect to any other Advance, the date
      of
      the Initial Advance or the most recent Advance, as applicable;




55




(e)  Issuer
      and Aurora shall have performed and complied in all material respects with
      all
      agreements and conditions required in the Note Documents to be performed or
      complied with by it on or prior to the date of such Advance;




(f)  The
      making of such Advance shall not be prohibited by any law or any regulation
      or
      order of any court or governmental agency or authority and shall not subject
      the
      Note Holders or Collateral Agent to any penalty or other onerous condition
      which
      would impose on any Note Holder a material additional cost in making a funding
      under or pursuant to any such law, regulation or order;




(g)  The
      Note
      Holders shall have reviewed the financial condition of the Issuer and Aurora
      as
      disclosed in the Disclosure Schedule and found the same to be
      satisfactory;




(h)  Issuer
      shall have procured and maintained the insurance required hereunder or under
      any
      other Note Document; and




**Section
      6.4**  **Special
      Conditions Precedent for** **a
      Subsequent Advance** **.** After
      the Initial Advance, the Purchasers shall be obligated to make Subsequent
      Advances only:




(a)  before
      the Commitment Expiry Date;




(b)  in
      the
      amount requested by Issuer in the Request for Subsequent Advance, in the form
      attached as Exhibit
      G ,
      not to
      have exceeded the Aggregate Commitment Amount in the aggregate for all
      Advances;




(c)  if
      no
      Coverage Deficiency shall have existed as of the date of such Advance, taking
      into account the making of such Advance in the amount of Total
      Indebtedness;




(d)  upon
      the
      Purchasers’ receipt of a timely Request for Subsequent Advance and all documents
      and instruments which the Purchasers have then requested in addition to those
      described in Section
      6.1 (including opinions of legal counsel, corporate documents and records, documents
      evidencing Governmental Approvals and exemptions, and certificates of
      Governmental Persons and of officers and representatives of Issuer and other
      parties), as to (i) the accuracy and validity of or compliance with,
      in all
      material respects, all representations, warranties and covenants made in the
      Note Documents, (ii) the satisfaction of all conditions contained therein,
      and (iii) all other matters pertaining thereto. All such additional
      documents and instruments shall have been satisfactory to the Purchasers in
      form, substance and date; and




(e)  upon
      receipt by the Note Holders of evidence that no Lien or other interest
      had
      been filed against Issuer or any Collateral other than Permitted
      Liens.




**Section
      6.5**  **** (a)  [Intentionally
      deleted.]




56




**SECTION
      7**


**SECURITY**




**Section
      7.1**  **The
      Security** . The
      Note
      Obligations will be secured by perfected first-priority liens (subject only
      to
      Liens permitted under Section
      5.2(g) if
      expressly permitted to be senior to the Liens securing the Note Obligations)
      in
      any real or personal property of Issuer or its Subsidiaries (including accounts,
      material leases and rental agreements, hedge agreements, as well as insurance
      policies and proceeds), together with all Property of any kind which is subject
      to a Lien in favor of the Holders or the Collateral Agent or which, under the
      terms of any Collateral Document or this Agreement (including security interests
      in the membership interests of Issuer and all Unassigned Interests and interests
      of Aurora in the Project Area), is purported or intended to be subject to such
      a
      Lien or for which a Lien is granted in any additional Collateral Documents
      hereafter delivered by any Related Party and accepted by Agent or Collateral
      Agent (the “ **Collateral** ”).




**Section
      7.2**  **Agreement
      to Deliver Collateral Documents** .
       Issuer and Aurora agree to deliver or cause to be delivered, to further
      secure the Note Obligations, mortgages, chattel mortgages, security agreements,
      financing statements and other Collateral Documents in form and substance
      satisfactory to Collateral Agent for the purpose of granting, confirming, and
      perfecting first and prior liens or security interests in any real or personal
      property of Issuer and any Collateral of Aurora on the earlier of (i) each
      quarter after Issuer or Aurora acquires additional leasehold, (ii) prior to
      drilling being commenced on a well, (iii) with respect to the Hudson Pipeline
      interest, ten (10) days after the earlier of (A) the formation of Hudson
      Pipeline or (B) the acquisition of the interest in Hudson Pipeline by Issuer
      or
      (iv) whenever requested by Agent or Collateral Agent in its sole and absolute
      discretion. In addition, Issuer agrees to cause each and every Subsidiary of
      Issuer to execute and deliver a counterpart of, as the circumstances shall
      require, a Subsidiary Guarantee by the date hereof or ten (10) days after such
      Subsidiary becomes a Subsidiary of Issuer as the case may be. Issuer and Aurora
      also agree to deliver, whenever requested by Requisite Holders or the Collateral
      Agent, in their sole and absolute discretion, assurances of title reasonably
      acceptable to Requisite Holders and the Collateral Agent (a) stating that
      Issuer, Aurora or any Subsidiary, as the case may be, has good and defeasible
      title thereto, free and clear of all Liens (other than Liens permitted under Section
      5.2(g) ),
      (b)
      confirming that such properties and interests are subject to Collateral
      Documents securing the Note Obligations that constitute and create legal, valid
      and duly perfected Liens in such properties and interests and in the proceeds
      thereof having the priority specified in this Agreement, and (c) covering such
      other matters as the Collateral Agent, acting at the written direction of the
      Requisite Holders in their sole and absolute discretion, may
      request.




**Section
      7.3**  **Perfection
      and Protection of Security Interests and Liens** . Issuer
      and Aurora will from time to time deliver to Collateral Agent any financing
      statements, continuation statements, extension agree-ments and other documents
      properly completed and executed (and acknowledged when required) by any Related
      Party in form and substance satisfactory to Collateral Agent, which Agent or
      Collateral Agent requests for the purpose of perfecting, confirming, or
      protecting any Liens or other rights in Collateral securing any Note
      Obligations.




**Section
      7.4**  **Appointment
      of Agent and Collateral Agent**


(a)  Purchasers,
      for themselves in the capacity in which they are acting herein, and each other
      Holder hereby appoints TAMCO as agent (together with its successors in such
      capacity herein called “ **Agent** ”)
      to act
      for and on behalf of the Purchasers and each other Holder under or pursuant
      to
      this Agreement and the other Note Documents, and TAMCO hereby accepts such
      appointment. Agent is authorized to act on behalf of the Lenders and each other
      Holder in (i) exercising rights and remedies with respect to Collateral (which
      may be delegated to Collateral Agent) or with respect to any other matter under
      any of the Note Documents, (ii) giving notices or instructions to Issuer ,
      (iii)
      receiving information from or notices by Issuer ,
      and
      (iv) communicating to Issuer determinations required or permitted to be made under this Agreement or any
      other Note Document. Agent may, on behalf of the Purchasers and any other
      Holder, take any other action which any Purchaser or such Holder is entitled
      to
      take hereunder or under any of the Note Documents. Such appointment of TAMCO
      as
      Agent shall not, however, impair or modify any rights, obligations or duties
      which TAMCO or any Affiliate of TAMCO otherwise has with respect to any
      Purchaser or any other Holder. In its administration of this Agreement and
      the
      other Note Documents, except to the extent to which another standard applies
      to
      TAMCO by reason of any other document between TAMCO and the Lenders or other
      Holder, Agent will exercise the same care that it exercises in the
      administration or handling of transactions for its own account, subject,
      however, to subsection (h) below.




(b)  **Collateral
      Agent.** The
      Purchasers, for themselves in each capacity in which they are acting herein,
      and
      each other Holder hereby appoints TAMCO as Collateral Agent (herein, together
      with its successors and assigns in such capacity, “ **Collateral
      Agent** ”)
      under
      the Note Documents, to exercise such powers under the Note Documents as are
      delegated to Collateral Agent by the terms thereof, together with all such
      powers as are reasonably incidental thereto, including taking, holding and
      disposing of the Collateral. TAMCO hereby accepts such appointment. Collateral
      Agent shall act for and on behalf of the Purchasers and the Holders in
      connection with all Collateral and Collateral Documents. In its administration
      of this Agreement and the other Note Documents, except to the extent to which
      another standard applies to TAMCO by reason of any other document between TAMCO
      and the Purchasers and any other Holder, Collateral Agent will exercise the
      same
      care that it exercises in the administration or handling of transactions for
      its
      own account, subject, however, to subsection (h) below.




(c)  **Requisite
      Holders.** Except
      with respect to any matters expressly provided for by this Agreement, the Notes,
      the Collateral Documents, any other Note Documents or the TCW Governing
      Documents (as defined in subsection (d)(iii) below), each Holder agrees that
      neither Agent nor Collateral Agent shall be required to exercise any discretion
      or take any action, but shall be required to act or to refrain from acting
      (and
      each Holder agrees that Agent and Collateral Agent shall be fully protected
      in
      so acting or refraining from acting) upon the written instructions of the
      Requisite Holders. The Requisite Holders may, in their reasonable discretion,
      remove TAMCO from its respective appointments as Agent and Collateral Agent
      and
      then select a new party to fulfill, in accordance with the terms hereof, such
      positions. All powers of Agent and Collateral Agent shall be exercised for
      the
      benefit of all Holders and in accordance with the directions of the Requisite
      Holders. Agent and Collateral Agent shall take every reasonable action to
      implement the Requisite Holders’ directions. If (i) any Note is ever held by any
      Person other than the original Holders in accordance herewith or (ii) TAMCO
      resigns as Agent and Collateral Agent, Issuer and all holders of Notes shall
      execute an agency agreement, in form satisfactory to Agent and Collateral Agent
      and providing for satisfactory indemnification, before carrying out any further
      actions under the Note Documents. Issuer shall pay all customary fees and costs
      in connection with the drafting and execution of such agency agreement. Until
      any such agency agreement is executed: (i) Agent and Collateral Agent
      shall
      be fully protected in acting on the instructions of Requisite Holders; (ii)
      TAMCO shall have the right to withdraw as Agent and Collateral Agent,
      respectively, subject, however, to its rights an duties under any other
      agreements with the Purchasers or any other Holder; and (iii) any action of
      Collateral Agent under any Security Document shall be binding on the Purchasers
      and Holders.




57




(d)  **Limitation
      of Duties and Fiduciary Relationship.** Neither
      Agent nor Collateral Agent shall have any duties or responsibilities, except
      those expressly set forth in:




(i)  this
      Agreement;




(ii)  the
      Collateral Documents; and




(iii)  the
      other
      documents entered into between Trustco and TAMCO described in the definitions
      of
“Purchasers” and “Holders” (such other documents, collectively the “ **TCW
      Governing Documents** ”),




nor
      shall
      Agent or Collateral Agent have any additional fiduciary relationship with any
      Holder arising under this Section
      7.4 and no
      implied covenants, functions, responsibilities, duties, obligations or
      liabilities shall be read into this Agreement or the other Note Documents
      against Agent or Collateral Agent.




(e)  **Distribution
      of Proceeds.** The
      Holders shall share in the proceeds obtained by Agent and in any other benefit
      either arising under the Notes and the Collateral Documents or obtained by
      Agent
      or Collateral Agent in connection therewith, in the relative proportions which
      the amounts then owed by Issuer to each of the Holders bear to the total amount
      then owed by Issuer to all of the Holders; provided that
      Agent and Collateral Agent shall be the first to be reimbursed for all costs
      and
      expenses incurred on behalf of all parties in their respective capacities as
      Agent and Collateral Agent to the extent permitted by the TCW Governing
      Documents. The duties undertaken by Agent and Collateral Agent have been
      undertaken as an accommodation to the Holders and, accordingly, Agent and
      Collateral Agent shall not be compensated for their services hereunder except
      as
      provided in the TCW Governing Documents.




(f)  **Written
      Directions.** Agent or
      Collateral Agent may at any time request written directions from all the Holders
      with respect to (i) any interpretation of this Agreement, the Notes and the
      Collateral Documents, or (ii) any action to be taken or not to be taken
      hereunder or thereunder and may withhold any action until such directions have
      been received from the Requisite Holders. Agent and Collateral Agent shall
      in
      all cases be fully protected in acting, or in refraining from acting, under
      this
      Agreement in accordance with a direction of the Requisite Holders under the
      terms of this Agreement and such request and any action taken or withheld
      pursuant to such direction shall be binding upon all the Holders.




(g)  **Agents
      and Attorneys.** Agent or
      Collateral Agent may execute any of its respective duties under this Agreement,
      the Notes and the Collateral Documents by or through agents or attorneys
      selected by Agent or Collateral Agent, respectively, using reasonable care.
      Neither Agent nor Collateral Agent shall be responsible for the negligence
      or
      misconduct of any agents or attorneys so selected. Agent and Collateral Agent
      shall be entitled to the advice of counsel concerning all matters pertaining
      to
      their respective duties hereunder.




58




(h)  **Limitation
      of Liability.** Agent,
      Collateral Agent, and their respective officers, directors, employees, agents,
      attorneys-in-fact and affiliates shall not:




(i)  be
      liable
      for any action taken or omitted to be taken by any of such Persons or for any
      error in judgment under or in connection with this Agreement, the Notes and
      the
      Collateral Documents, except for any such Person’s gross negligence or willful
      misconduct; or




(ii)  be
      responsible in any manner to any Holder or any other Person for any failure
      of
      any other party to perform its obligations under this Agreement, the Notes
      and
      the Collateral Documents.




Nothing
      in this subsection, however, shall be deemed to limit or restrict any liability,
      fiduciary duty or responsibility of TAMCO in any capacity other than as Agent
      or
      Collateral Agent, including any liability, fiduciary duty or responsibility
      under the TCW Governing Documents.




(i)  **Reliance
      upon Documentation.** Agent or
      Collateral Agent shall be entitled to rely, and shall be fully protected in
      relying, upon any writing, resolution, notice, consent, certificate, affidavit,
      letter, cablegram, telegram, telecopy, telex or teletype message, statement,
      order or other document or any telephone conversation believed, respectively,
      by
      Agent or Collateral Agent to be genuine and correct and to have been signed,
      sent, made or spoken by the proper person or persons, and upon the advice and
      statements of legal counsel, independent accountants and other experts selected,
      respectively, by Agent or Collateral Agent.




(j)  **Reliance
      by Issuer.** Each of
      the Purchasers and each Holder agree that, prior to the delivery to Issuer of a
      notice of the removal or termination of TAMCO as Agent as set forth below, Issuer shall be
      entitled to rely on TAMCO’s or any subsequent Agent’s authority to act on behalf
      of each of the Purchasers and each Holder in all dealings with TAMCO (or any
      such subsequent Agent) with respect to the Notes and the Note Documents; Issuer shall be
      protected in relying on actions, communications, notices and terminations
      relating thereto or required or permitted thereunder by Agent; and Issuer shall
      discharge their obligations under this Agreement and the Note Documents by
      delivering payments, notices and other information to Agent. In the event of
      the
      removal of Agent and the appointment of a successor Agent by Holders, Issuer shall
      not be required to recognize any such removal or appointment unless and until Issuer shall
      have received a writing setting forth such removal and appointment executed
      by
      the Requisite Holders, and Issuer shall be
      entitled to rely on such writing as being genuine and what it purports to be
      without any necessity of any investigation whatsoever. Issuer shall be
      entitled to rely upon the actions, communications and notices of TAMCO with
      respect to the Collateral until Issuer receives
      notice in writing from Agent that TAMCO has resigned or been replaced as
      Collateral Agent.







**SECTION
      8**


**TRANSFERABILITY
      OF SECURITIES**




**Section
      8.1   Restrictive Legend** **.** Each
      note, certificate or other instrument evidencing the Notes issued by Issuer
      shall be stamped or otherwise imprinted with a legend in substantially the
      following forms:




“THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
      OR
      PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
      ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
      UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
      REGISTRATION.




THE
      SECURITIES EVIDENCED BY THIS INSTRUMENT ARE SUBJECT TO THE TERMS OF A CERTAIN
      NOTE PURCHASE AGREEMENT DATED AS OF AUGUST __, 2004 BETWEEN AURORA ANTRIM NORTH,
      LLC, THE PURCHASERS, THE COLLATERAL AGENT AND THE ADMINISTRATIVE AGENT (EACH
      AS
      DEFINED THEREIN), A COPY OF WHICH IS ON FILE AT THE OFFICES OF AURORA ANTRIM
      NORTH, LLC AND WILL BE FURNISHED BY AURORA ANTRIM NORTH, LLC TO THE HOLDER
      HEREOF UPON REQUEST.”




Notwithstanding
      the foregoing, the restrictive legend set forth above shall not be required
      after the date on which the securities evidenced by such note, certificate
      or
      other instrument bearing such restrictive legend no longer constitute Restricted
      Notes, and upon the request of the Holder of such Notes, Issuer, without expense
      to the Holder, shall issue a new note, certificate or other instrument as
      applicable not bearing the restrictive legend otherwise required to be borne
      thereby.




**SECTION
      9**


**EVENTS
      OF DEFAULT AND REMEDIES**




**Section
      9.1**  **Events
      of Default.**




(a)  “ **Event
      of Default** ,”
      wherever used herein, means any one of the following events (whatever the reason
      for such Event of Default and whether it shall be caused voluntarily or
      involuntarily or effected, without limitation, by operation of law or pursuant
      to any judgment, decree or order of any court or any order, rule or regulation
      of any administrative or governmental body):




(i)  default
      in the payment of principal of (or premium, if any, on) any Note when the same
      becomes due and payable, whether on the Maturity Date or other due date thereof
      or at a date fixed for prepayment thereof or, upon acceleration, redemption
      or
      otherwise, which default continues for a period of two (2) Business
      Days;




(ii)  default
      in the payment of interest on any Note or any fee or any other amount
      constituting a Note Obligation payable under this Agreement or any other Note
      Document when the same becomes due and payable, which default continues for
      a
      period of five (5) Business Days;




(iii)  Issuer
      or
      any Affiliate defaults in the performance of or breaches any covenant, condition
      or agreement contained in Section
      5.2 of this
      Agreement or contained in Sections
      5.1(a) , (b) , (c) , (d) , (g)(ii) , (m) , (p) and (q) of this
      Agreement;




(iv)  Issuer
      or
      any Affiliate defaults in the performance of or breaches any other covenant
      or
      condition contained in this Agreement or any other Closing Document, which
      default or breach continues for a period of thirty (30) days;




59




(v)  a
      material breach of any representations and warranties made by the Issuer
      pursuant to Section
      4.1 or in
      any other Closing Document;




(vi)  there
      occurs with respect to any Indebtedness of Issuer or any Affiliate having an
      outstanding amount of $100,000 or more in the aggregate for all such issues
      of
      all such Persons, whether such Indebtedness now exists or shall hereafter be
      created, the failure to make a principal or interest payment and such defaulted
      payment shall not have been made, waived or extended within the applicable
      cure
      period thereof or any other “event of default” occurs thereunder;




(vii)  a
      decree,
      judgment, or order by a court of competent jurisdiction shall have been entered
      adjudging the Issuer, Aurora or any Subsidiary of Issuer as bankrupt or
      insolvent, or ordering relief against the Issuer, Aurora or any Subsidiary
      of
      Issuer in response to the commencement of an involuntary bankruptcy case, or
      approving as properly filed a petition seeking reorganization or liquidation
      of
      the Issuer, Aurora or any Subsidiary of Issuer under any bankruptcy or similar
      law, and such decree, judgment or order shall have continued undischarged and
      unstayed for a period of sixty (60) days; or a decree, judgment or order of
      a
      court of competent jurisdiction over the appointment of a receiver, liquidator,
      trustee, or assignee in bankruptcy or insolvency of the Issuer, Aurora or any
      Subsidiary of Issuer, or of the Property of any such Person, or for the winding
      up or liquidation of the affairs of any such Person, shall have been entered,
      which decree, judgment, or order shall have remained in force undischarged
      and
      unstayed for a period of sixty (60) days;




(viii)  the
      Issuer, Aurora or any Subsidiary of Issuer shall institute voluntary bankruptcy
      proceedings, or shall consent to the filing of a bankruptcy proceeding against
      it, or shall file a petition or answer or consent seeking reorganization or
      liquidation under any bankruptcy or similar law or similar statute, or shall
      consent to the filing of any such petition, or shall consent to the appointment
      of a custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
      insolvency of it or any of its assets or Property, or shall make a general
      assignment for the benefit of creditors, or shall admit in writing its inability
      to pay its debts generally as they become due, or shall, within the meaning
      of
      any Bankruptcy Law, become insolvent, fail generally to pay its debts as they
      become due, or take any limited liability action in furtherance of or to
      facilitate, conditionally or otherwise, any of the foregoing;




(ix)  one
      or
      more final judgments not covered by insurance for the payment of money, or
      the
      issuance of any writ or warrant of attachment against any portion of the
      Property or assets of the Issuer, Aurora or any Subsidiary of Issuer or Aurora,
      which, in the aggregate, exceed $250,000 at any one time shall be entered
      against the Issuer, Aurora or any Subsidiary of Issuer of Aurora by a court
      of
      competent jurisdiction and not be stayed, bonded or discharged for a period
      (during which execution shall not be effectively stayed) of sixty (60) days
      (or,
      in the case of any such final judgment which provides for payment over time,
      which shall so remain unstayed, unbonded or undischarged beyond any applicable
      payment date provided therein);




(x)  a
      Material Adverse Change has occurred;




60




(xi)  a
      Coverage Default has occurred; and




(xii)  failure
      of Issuer or its Subsidiaries to maintain perfected Liens as required pursuant
      to Section
      7.1 hereof.




(b)  Upon
      the
      occurrence of an Event of Default described in clauses (viii) or (ix) above,
      the
      entire unpaid balance of the Notes (together with all accrued and unpaid
      interest) shall automatically become and be immediately due and payable on
      all
      outstanding Notes without any declaration or other act on the part of the
      Holders. Upon the occurrence and continuation of an Event of Default described
      in clauses (i), (ii) or (x) above, the entire unpaid balance of the Notes
      (together with all accrued and unpaid interest) held by a Holder shall, at
      the
      option of such Holder, become immediately due and payable without demand,
      presentment, notice of demand or of dishonor and nonpayment, protest, notice
      of
      protest, notice of intention to accelerate, declaration or notice of
      acceleration, or any other notice or declaration of any kind, all of which
      are
      hereby expressly waived by Issuer. Upon the occurrence and continuation of
      an
      Event of Default described in clauses (iii), (iv), (v), (vi), (vii) or (xi)
      above, the holders of a majority of the outstanding principal amount of the
      Notes, respectively, at any time and from time to time may declare the entire
      unpaid balance of the Notes of such series (together with all accrued and unpaid
      interest) immediately due and payable without demand, presentment, notice of
      demand or of dishonor and nonpayment, protest, notice of protest, notice of
      intention to accelerate, declaration or notice of acceleration, or any other
      notice or declaration of any kind, all of which are hereby expressly waived
      by
      Issuer. Upon the acceleration of the entire unpaid balance of any Note pursuant
      to this Section
      9.1 ,
      the
      Holder thereof shall be entitled to any prepayment premium on such Note
      (calculated in accordance with Sections
      3.5 in
      addition to all other amounts due and payable in respect of such Note and any
      other Note Obligation.




**Section
      9.2**  **Remedies** **.** If
      any
      Event of Default shall occur, the holder or holders of Notes entitled to
      accelerate and declare the unpaid balance of a Note or Notes due and payable
      pursuant to Section
      9.1 above
      may protect and enforce their rights under the Note Documents by any appropriate
      proceedings, including proceedings for specific performance of any covenant
      or
      agreement contained in any Note Document, and such holder or holders may enforce
      the payment of any Note Obligations due or enforce any other legal or equitable
      right.




In
      addition to any and all other rights and remedies that the Holders shall have,
      the Holders shall have the option to either:




(i)  Maintain
      this Agreement in full force and effect and sue for the principal payments
      and
      interest as they become due and payable;




(ii)  Accelerate
      all amounts due under the Notes and sue for the principal payment and interest
      as they become due and payable; or




(iii)  Accelerate
      all amounts due under the Notes, and to collect in addition to the amount of
      outstanding principal, accrued interest and other amounts owing with respect
      to
      the Obligations, all costs and expenses of the Holders in enforcing these
      provisions, including without limitation attorneys’ fees and costs; and the
      Prepayment Premium.




61




**Section
      9.3**  **Indemnity** **.** Each
      of
      Aurora and Issuer agrees, and agrees to cause each of its Subsidiaries, (i)
      to
      indemnify each Indemnified Party (as hereinafter defined), upon demand, from
      and
      against any and all liabilities, obligations, claims, losses, damages,
      penalties, fines, actions, judgments, suits, settlements, costs, expenses or
      disbursements (including reasonable fees of attorneys, accountants, experts
      and
      advisors) of any kind or nature whatsoever (in this section collectively called
      “liabilities and costs”) which to any extent (in whole or in part) may be
      imposed on, incurred by, or asserted against such Indemnified Party arising
      out
      of or resulting from or in any other way associated with (x) any of the Closing
      Documents or any transaction contemplated thereby or (y) this Agreement
      or
      any of the transactions and events (including the enforcement or defense
      thereof) at any time associated herewith or contemplated herein (including,
      but
      not limited to, any violation or noncompliance with any Environmental Laws
      by
      any Related Party thereof or any liabilities or duties of any Related Party
      thereof or of any Indemnified Party with respect to Hazardous Materials found
      in
      or released into the environment); and (ii) to reimburse each Indemnified Party,
      upon demand, for its legal and other expenses as they are incurred in connection
      with the foregoing.




**THE
      FOREGOING INDEMNIFICATION AND REIMBURSEMENT SHALL APPLY WHETHER OR NOT SUCH
      LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN
      PART,
      UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR ARE IN ANY EXTENT CAUSED,
      IN
      WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
      INDEMNIFIED PARTY,** provided
      only that no Indemnified Party shall be entitled under this section to receive
      indemnification or reimbursement for that portion, if any, of any liabilities
      and costs which is proximately caused by its own individual gross negligence
      or
      willful misconduct, as determined in a final judgment. As used in this section,
      the term “ **Indemnified
      Party** ”
      refers
      to each Purchaser (including any of their officers, directors, employees, agents
      or any of their respective Affiliates, or Purchasers’ successors and assigns and
      subsequent Holders) and Collateral Agent, any of its officers, directors,
      employees, agents and any of their respective Affiliates acting in such
      capacity.




**SECTION
      10**


**MISCELLANEOUS**




**Section
      10.1**  **Waivers
      and Amendments; Acknowledgment.**





**(a)**  **Waivers
      and Amendments.**




(i)  No
      failure or delay (whether by course of conduct or otherwise) by the Holders
      in
      exercising any right, power or remedy which either may have under any of the
      Closing Documents shall operate as a waiver thereof or of any other right,
      power
      or remedy, nor shall any single or partial exercise by the Holders of any such
      right, power or remedy preclude any other or further exercise thereof or of
      any
      other right, power or remedy. No waiver of any provision of any Note Document
      and no consent to any departure therefrom shall ever be effective unless it
      is
      in writing and signed by the Requisite Holders, and may be given or withheld
      in
      their sole and absolute discretion, and then such waiver or consent shall be
      effective only in the specific instances and for the purposes for which given
      and to the extent specified in such writing; provided , however ,
      that no
      waiver of any




62




provision
      in Section
      5.2 (or any
      definition utilized therein), Section
      9.1,  Section
      9.2 or this Section
      10.1(a) shall be
      effective unless it is approved in writing by holders
      of more than 50% of the Notes;  provided , further ,
      that no
      waiver of any Note Interest Rate, required principal or other payments, fees,
      interest coupon payments, payment terms, prepayment premiums or the Maturity
      Date of the Notes shall be effective without the consent of holders of 100%
      of
      the outstanding Notes. This Agreement and the other Note Documents set forth
      the
      entire understanding and agreement of the parties hereto and thereto with
      respect to the transactions contemplated herein and therein and supersede all
      prior discussions and understandings with respect to the subject matter hereof
      and thereof, and no modification or amendment of or supplement to this Agreement
      or the other Note Documents shall be valid or effective unless the same is
      in
      writing and signed by the party against whom it is sought to be enforced. **THIS
      WRITTEN AGREEMENT AND THE OTHER NOTE DOCUMENTS REPRESENT THE FINAL AGREEMENT
      BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
      CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
      PARTIES.** This
      Agreement may be amended, but only with the written consent of each of the
      Issuer and the Requisite Holders; provided , however ,
      that Section
      5.2 (or any
      definition utilized therein), Section
      9.1 , Section
      9.2 or this Section
      10.1(a) shall
      not be amended or supplemented in any manner without the written consent of
      holders of more than 50% of the Notes; provided , further ,
      that no
      amendment, supplement or change of any Note Interest Rate, required principal
      or
      other payments, fees, interest coupon payments, payment terms, prepayment
      premiums or the Maturity Date of the Notes shall be effective without the
      consent of holders of 100% of the outstanding Notes. The remedies provided
      for
      herein are cumulative and are not exclusive of any remedies that may be
      available to the Holders at law or in equity or otherwise.




(ii)  The
      Issuer will not, and will not permit any of its Subsidiaries to, directly or
      indirectly, offer to purchase or otherwise acquire any outstanding Notes, except
      for an offer to purchase the Notes that (A) is made in writing and is pro rata
      to all of the Holders on identical terms and (B) remains open for a period
      of at
      least 15 Business Days. In addition, if Holders holding more than 10% of the
      outstanding principal amount of all of the Notes accepts any such offer within
      such 15 Business Day period, then the Issuer shall be required to notify the
      other Holders of such acceptance(s), and shall be required to remake such offer
      and leave it open for an additional 10 Business Days. All acquisitions of Notes
      pursuant to the foregoing offers shall be closed concurrently on a pro rata
      basis with all Holders who accept such offers.




(iii)  None
      of
      the Issuer or any of its Affiliates or any other party to any Closing Documents
      will, directly or indirectly, request or negotiate for, or offer or pay any
      remuneration or grant any security as an inducement for, any proposed amendment
      or waiver of any of the provisions of this Agreement or any of the other Closing
      Documents unless each Holder of the Notes (irrespective of the kind and amount
      of Notes then owned by it) shall be informed thereof by the Issuer and, if
      such
      Holder is entitled to the benefit of any such provision proposed to be amended
      or waived, shall be afforded the opportunity of considering the same, shall
      be
      supplied by the Issuer and any other party hereto with sufficient information
      to
      enable it to make an informed decision with respect thereto and shall be offered
      and paid such remuneration and granted such security on the same
      terms.




63




(iv)  In
      determining whether the requisite Holders of Notes have given any authorization,
      consent or waiver under any Closing Document, any Notes owned by Issuer or
      any
      of its Affiliates shall be disregarded and deemed not to be
      outstanding.




(v)  Any
      amendment or waiver made pursuant to this Section by a Holder that has
      transferred or has agreed to transfer its Notes to the Issuer or any of its
      respective Affiliates and has provided or has agreed to provide such amendment
      or waiver as a condition to such transfer shall be void and of no force and
      effect except solely as to such Holder, and any amendments effected or waivers
      granted that would not have been or would not be so effected or granted but
      for
      such amendment or waiver (and the amendments or waivers of all other Holders
      that were acquired under the same or similar conditions) shall be void and
      of no
      force and effect, retroactive to the date such amendment or waiver initially
      took or takes effect, except solely as to such Holder.




(b)  **Acknowledgments
      and Admissions.** Each of
      Issuer and Aurora hereby represents, warrants, acknowledges and admits
      that:




(i)  it
      has
      been advised by counsel in the negotiation, execution and delivery of the Note
      Documents to which it is a party;




(ii)  it
      has
      made an independent decision to enter into this Agreement and the other Note
      Documents to which it is a party, without reliance on any representation,
      warranty, covenant or undertaking by any Purchaser, whether written, oral or
      implicit, other than as expressly set out in this Agreement or in any other
      Note
      Documents delivered on or after the date hereof,




(iii)  there
      are
      no representations, warranties, covenants, undertakings or agreements by the
      Purchasers as to the Note Documents except as expressly set out in this
      Agreement or in another Note Document delivered on or after the date
      hereof,




(iv)  none
      of
      the Purchasers, in its capacity as Purchaser or Holder, owes any fiduciary
      duty
      to Issuer or any other Purchaser with respect to any Note Document or the
      transactions contemplated thereby;




(v)  no
      partnership or joint venture exists with respect to the Note Documents between
      the Companies and any of the Purchasers;




(vi)  should
      an
      Event of Default or Default or breach occur or exist, the Purchasers will
      determine in their sole discretion and for their own reasons what remedies
      and
      actions they will or will not exercise or take at that time;




(vii)  without
      limiting any of the foregoing, Issuer is not relying upon any representation
      or
      covenant by Purchaser, or any representative thereof, and no such representation
      or covenant has been made, that such Purchaser will, at the time of an Event
      of
      Default or Default or breach, or at any other time, waive, negotiate, discuss,
      or take or refrain from taking any action permitted under the Closing Documents
      with respect to any such Event of Default or Default or breach or any other
      provision of the Closing Documents; and




(viii)  the
      obligations of the Holders are several, not joint and several, and no Holder
      shall be liable for any act or omission by another Holder;




64




(ix)  each
      of
      the Purchasers has relied upon the truthfulness of the acknowledgments in this
      Section in deciding to execute and deliver this Agreement and the other Closing
      Documents and to purchase the Notes.




**Section
      10.2**  **Survival
      of Agreements; Cumulative Nature.** **** All
      of
      the Issuer’s and Aurora’s various representations, warranties, covenants and
      agreements in the Agreement, the Note Documents shall survive the execution
      and
      delivery of this Agreement, the other Note Documents and the performance hereof
      and thereof, including the purchase of the Notes and the delivery of the Notes
      and the Note Documents. Except as expressly provided herein, the
      representations, warranties, and covenants made by the Issuer in the Closing
      Documents, and the rights, powers and privileges granted to the Holders in
      the
      Closing Documents, are cumulative, and, except for expressly specified waivers
      and consents, no Closing Document shall be construed in the context of another
      to diminish, nullify, or otherwise reduce the benefit to the Holders of any
      such
      representation, warranty, covenant, right, power or privilege. In particular
      and
      without limitation, no exception set out in this Agreement to any
      representation, warranty or covenant herein contained shall apply to any similar
      representation, warranty or covenant contained in any other Closing Document,
      and each such similar representation, warranty or covenant shall be subject
      only
      to those exceptions which are expressly made applicable to it by the terms
      of
      the various Closing Documents.




**Section
      10.3**  **Notices.** **** All
      notices, requests, consents, demands and other communications required or
      permitted under any Note Document shall be in writing, unless otherwise
      specifically provided in such Note Document, shall be effective only upon
      receipt and shall be given or furnished upon delivery, when delivered by
      personal delivery, by telecopy, by delivery service with proof of delivery,
      or
      by United States mail as registered, certified or first class United States
      mail, postage prepaid, to the Issuer or the Purchasers at the addresses set
      forth on the signature pages hereto (unless changed by similar notice in writing
      given by the particular Person whose address is to be changed):




If
      to
      Issuer




or
      Aurora: Aurora
      Antrim North, LLC


4110
      Copper Ridge, Suite 110


Traverse
      City, MI 49684


Attention:
      William W. Deneau


Telephone:
      (231) 941-0073


Facsimile:
      (231) 933-0757







With
      copies to: Leibenguth
      & Boos & Associates PC


3220
      Racquet Club Drive


Traverse
      City, Michigan 49684


Attention:
      Jim Leibenguth


Telephone:
      (231) 947-0777


Facsimile:
      (231) 947-2930







If
      to
      Purchasers: TCW
      Asset
      Management Company


333
      Clay
      Street, Suite 4150


Houston,
      TX 77002


Attention:
      Patrick Hickey


Telephone:
      (713) 615-7413


Facsimile:
      (713) 615-7460







With
      copies to: TCW
      Asset
      Management Company


865
      South
      Figueroa Street, Suite 1800


Los
      Angeles, CA 90017


Attention:
      Thomas F. Mehlberg


Telephone:
      (213) 244-0702


Facsimile:
      (213) 244-0604




TCW
      Asset
      Management Company


8010
      Towers Crescent Drive, Suite 410


Vienna,
      VA 22182


Attention:
      R. Blair Thomas


Telephone:
      (703) 506-0498


Facsimile:
      (703) 506-0741




and




Milbank
      Tweed Hadley & McCloy LLP


601
      South
      Figueroa Street, 30 th Floor


Los
      Angeles, CA 90017


Attention:
      David A. Lamb


Telephone:
      (213) 892-4434


Facsimile:
      (213) 629-5063




**Section
      10.4**  **Governing
      Law; Submission to Process** **.** **EXCEPT
      TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN
      A
      NOTE DOCUMENT, THE NOTE DOCUMENTS, INCLUDING THIS AGREEMENT, SHALL BE GOVERNED
      BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
      WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE COMPANIES HEREBY
      IRREVOCABLY SUBMITS ITSELF AND EACH OTHER RELATED PARTY TO THE NON-EXCLUSIVE
      JURISDICTION OF THE STATE AND FEDERAL**




65




**COURTS
      SITTING IN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK AND AGREES AND
      CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT OR ANY OF ITS SUBSIDIARIES
      IN ANY LEGAL PROCEEDING RELATING TO THE NOTE DOCUMENTS OR THE NOTE OBLIGATIONS
      BY ANY MEANS ALLOWED UNDER NEW YORK OR FEDERAL LAW. EACH OF THE COMPANIES
      IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
      OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
      SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
      BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
      FORUM.**




**Section
      10.5**  **Limitation
      on Interest.**




(a)  The
      Holders, Issuer and any other parties to the Note Documents intend to contract
      in strict compliance with applicable usury law from time to time in effect.
      In
      furtherance thereof such Persons stipulate and agree that none of the terms
      and
      provisions contained in the Note Documents shall ever be construed to create
      a
      contract to pay, for the use, forbearance or detention of money, interest in
      excess of the maximum amount of interest permitted to be charged by applicable
      law from time to time in effect. Neither of the Companies nor any present or
      future guarantors, endorsers, or other Persons hereafter becoming liable for
      payment of any Note Obligation shall ever be liable for unearned interest
      thereon or shall ever be required to pay interest thereon in excess of the
      maximum amount that may be lawfully charged under applicable law from time
      to
      time in effect, and the provisions of this Section shall control over all other
      provisions of the Note Documents which may be in conflict or apparent conflict
      herewith.




(b)  The
      Holders expressly disavow any intention to contract for, charge or collect
      unearned interest or finance charges in the event the maturity of any Note
      Obligation is accelerated. If (i) the maturity of any Note Obligation is
      accelerated for any reason, (ii) any Note Obligation is prepaid and as a result
      any amounts held to constitute interest are determined to be in excess of the
      legal maximum, or (iii) the Holders or any other holder of any or all of the
      Note Obligations shall otherwise collect moneys which are determined to
      constitute interest which would otherwise increase the interest on any or all
      of
      the obligations to an amount in excess of that permitted to be charged by
      applicable law then in effect, then all such sums determined to constitute
      interest in excess of such legal limit shall, without penalty, be promptly
      applied to reduce the then-outstanding principal of the related Note Obligations
      or, at the Holders’ option, promptly returned to Issuer or the other payor
      thereof upon such determination.




(c)  In
      determining whether or not the interest paid or payable under any specific
      circumstances exceeds the maximum amount permitted under applicable law, the
      Holders and the Related Parties thereof (and any other payors thereof) shall,
      to
      the greatest extent permitted under applicable law, (i) characterize any
      non-principal payment as an expense, fee or premium rather than as interest,
      (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
      prorate, allocate, and spread the total amount of interest throughout the entire
      contemplated term of the instruments evidencing the Note Obligations in
      accordance with the amounts outstanding from time to time thereunder and the
      Highest Lawful Rate from time to time in effect under applicable law in order
      to
      lawfully charge the maximum amount of interest permitted under applicable
      law.




66




**Section
      10.6**  **Termination;
      Limited Survival.** **** Issuer
      may, in its sole and absolute discretion at any time that no Note Obligation
      is
      owing under the Note Documents, elect in a notice delivered to the Holders
      to
      terminate this Agreement. Upon receipt by the Holders of such a notice, if
      no
      such Note Obligation is then owing, then this Agreement and all other Note
      Documents shall thereupon be terminated, and the parties thereto released from
      all prospective obligations thereunder; provided further,
      that any obligations hereunder in favor of the Holders of any Notes (other
      than
      the Notes) shall survive such termination. Notwithstanding the foregoing or
      anything herein to the contrary, any representation or warranty made by the
      Companies to Purchaser herein, any waivers or admissions made by Issuer in
      any
      Note Document and any obligations which any Person may have to indemnify or
      compensate the Holders shall survive any termination of this Agreement or any
      other Closing Document. At Issuer’s request and expense, the Holders shall
      prepare and execute all necessary instruments to reflect and effect such
      termination of the Note Documents. All representations and warranties and
      covenants made herein by the Issuer or in any certificate or other instrument
      delivered by it or on its behalf under this Agreement shall be considered to
      have been relied upon by Purchasers and shall survive the issuance of the Notes
      regardless of any investigation made by or on behalf of Purchasers.




**Section
      10.7**  **Registration,
      Transfer, Exchange, Substitution of** **Notes** **.**




(a)  Registration
      of Notes . Issuer
      shall keep at its principal executive office a register for the registration
      and
      registration of transfers of the Notes (the “ **Register** ”).
      The
      name and address of each Holder, each transfer thereof and the name and address
      of each transferee of one or more Notes shall be registered in such Register.
      Prior to due presentment for registration of transfer, the Person in whose
      name
      any Security shall be registered shall be deemed and treated as the owner and
      Holder thereof for all purposes hereof, and Issuer shall not be affected by
      any
      notice or knowledge to the contrary. Issuer shall give to any Holder, promptly
      upon request therefor, a complete and correct copy of the names and addresses
      of
      all registered Holders of Notes.




(b)  Transfer
      and Exchange of Notes . Upon
      surrender of any Security at the principal executive office of Issuer for
      registration of transfer or exchange (and in the case of a surrender for
      registration of transfer, duly endorsed or accompanied by a written instrument
      of transfer duly executed by the registered Holder or its attorney duly
      authorized in writing and accompanied by the address for notices of each
      transferee of such Security or part thereof), Issuer shall execute and deliver,
      at Issuer’s expense, one or more new Notes (as requested by the Holder thereof)
      of the same series in exchange therefore and, in the case of any Note, in an
      aggregate principal amount equal to the unpaid principal amount of the
      surrendered Security; provided , however ,
      that no
      transfer of any Security may be made (i) to a transferee who is not an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
      under the Securities Act or a Qualified Institutional Buyer (as defined in
      Rule
      144A promulgated under the Securities Act) and (ii) unless such transfer is
      made
      pursuant to an exemption from registration under the securities laws of the
      United States including, without limitation, any resale of any Security under
      Rule 144A of the Securities Act. Any purported transfer of a Security or an
      interest therein which is prohibited hereby shall be null




67




and
      void *ab
      initio* and of
      no force or effect whatever. In the case of a transfer of Notes, each such
      new
      Note and shall be payable to such Person as such holder may request and shall
      be
      substantially in the form of Exhibit A .
      Each
      such new Note shall be dated and bear interest from the date to which interest
      shall have been paid on the surrendered Note or dated the date of the
      surrendered Note if no interest shall have been paid thereon. Notes shall not
      be
      transferred in denominations of less than $1,000,000, provided, that if
      necessary to enable the registration of transfer by a Holder of its entire
      holding of Notes, one Note may be in a denomination of less than $1,000,000; provided ,
      further, that transfers by a Holder and its Affiliates shall be aggregated
      for
      purposes of determining whether or not such $1,000,000 threshold has been
      reached. If any Purchaser shall request that the restrictive legend on a
      Security be removed, such Purchaser, if requested by Issuer, will have the
      obligation in connection with such request, as applicable, at such Purchaser’s
      expense, of delivering an opinion of counsel in form and substance reasonably
      satisfactory to Issuer, in connection with such request to the effect that
      the
      removal of such restrictive legend would not be in violation of the Securities
      Act or any applicable state securities laws.




(c)  Replacement
      of Notes . Upon
      receipt by Issuer of evidence reasonably satisfactory to it of the ownership
      of
      and the loss, theft, destruction or mutilation of any Security, and (i) in
      the
      case of loss, theft or destruction, of indemnity reasonably satisfactory to
      it
      ( provided that if
      the Holder of such Security is, or is a nominee for, a Purchaser or another
      Holder with a minimum net worth of at least $5,000,000, such Person’s own
      unsecured agreement of indemnity shall be deemed to be satisfactory), or (ii)
      in
      the case of mutilation, upon surrender and cancellation thereof, Issuer at
      its
      own expense shall execute and deliver, in lieu thereof, a new Security of the
      same series, dated and, in the case of a Note, bearing interest from the date
      to
      which interest shall have been paid on such lost, stolen, destroyed or mutilated




**Section
      10.8**  **Waiver
      of Jury Trial, Punitive Damages, Etc.** **** **ISSUER,
      FOR ITSELF AND EACH OF ITS AFFILIATES, AURORA, AND THE HOLDERS
      HEREBY:**




**(a)**  **KNOWINGLY,
      VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT
      PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
      LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT
      OF,
      UNDER OR IN CONNECTION WITH THE NOTE DOCUMENTS OR THE PURCHASE AND SALE OF
      ANY
      SECURITIES CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER
      MATURITY;**




**(b)**  **IRREVOCABLY
      WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
      CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
      CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
      DAMAGES;**




**(c)**  **CERTIFY
      THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
      HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY
      WOULD
      NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS;
      AND**




68




**(d)**  **ACKNOWLEDGE
      THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER NOTE DOCUMENTS
      AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS,
      THE
      MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
      SECTION.**




**Section
      10.9**  **Exhibits
      and Schedules; Additional Definitions.** All
      Exhibits and Schedules to this Agreement are a part hereof for all
      purposes.




**Section
      10.10** **Confidentiality
      of Holders.**




(a)  Notwithstanding
      the termination of this Agreement and except as otherwise provided herein or
      in
      this subsection (a) or subsection (c) below, Issuer shall, and shall cause
      its
      Subsidiaries and Affiliates to, maintain the confidentiality of the identities
      of (i) any Holder or any holder of any Note Obligation other than the Notes;
      and
      (ii) any owner of a beneficial interest in the Notes (collectively,
“ **Confidential
      Information** ”)
      and
      shall not, without the prior written consent of the Requisite Holders, as
      applicable, disclose any such information to another Person or use such
      information for purposes other than those contemplated herein.




(b)  Notwithstanding
      the termination of this Agreement and except as otherwise provided herein or
      in
      this subsection (b) or subsection (c) below, each Holder shall maintain the
      confidentiality of any information delivered to a Holder by or on behalf of
      the
      Issuer or any Subsidiary in connection with the transactions contemplated by
      or
      otherwise pursuant to the Closing Documents that is (a) proprietary
      or
      confidential in nature and (b) is clearly marked “Confidential - Subject to
      Confidentiality and Disclosure Restrictions” (collectively, the “ **Issuer
      Confidential Information** ”)
      and
      shall not, without the prior written consent of the Issuer, disclose any such
      information to another Person or use such information for purposes other than
      those contemplated herein.




(c)  Subject
      to Section
      10.10(d) ,
      the
      Issuer may disclose Confidential Information, and subject to Section
      10.10(d) ,
      each of
      the Holders may disclose Issuer Confidential Information, to its respective
      directors, officers, members, partners, employees, and agents (including
      attorneys, accountants, and consultants) to whom such disclosure is reasonably
      necessary for the execution or effectuation hereof, provided the
      Issuer or Holder notifies all such Persons that the Confidential Information
      or
      Issuer Confidential Information disclosed to them is subject to this section
      and
      requires them not to disclose or use such information in breach of this Section.
      The Issuer may also disclose Confidential Information (i) in filings
      with
      the Commission to the extent required to be disclosed therein, or (ii) any
      Person which offers to purchase any security of the Issuer (if such Person
      has
      agreed in writing prior to its receipt of such Confidential Information to
      be
      bound by the provisions of this Section
      10.10 ).
      Subject to Section
      10.10(d) ,
      each
      Holder may also disclose Issuer Confidential Information to (i) any other Holder
      of any Notes,




69




(ii)
      any
      partner, beneficial holder or similar party (and each of their attorneys,
      accountants and consultants), (iii) any Person to which it sells or offers
      to
      sell such Notes or any part thereof or any participation therein (if such Person
      has agreed in writing prior to its receipt of such Issuer Confidential
      Information to be bound by the provisions of this Section
      10.10 ),
      (iv)
      any federal or state regulatory authority having jurisdiction over it and (v)
      the National Association of Insurance Commissioners, the National Association
      of
      Securities Dealers or any similar organization, or any nationally recognized
      rating agency that requires access to information about its investment portfolio
      or (w) to effect compliance with any law, rule, regulation or order applicable
      to it, (x) in response to any subpoena or other legal process, (y) in connection
      with any litigation to which it is a party or (z) if an Event of Default has
      occurred and is continuing, to the extent it may reasonably determine such
      delivery and disclosure to be necessary or appropriate in the enforcement or
      for
      the protection of the rights and remedies under the Note Documents.




(d)  If
      Administrative Agent is notified that any Holder is requested or required by
      legal process (including law or regulation, oral questions, interrogatories,
      request for information or documents, subpoena, and civil investigative demand)
      to disclose any Confidential Information or Issuer Confidential Information,
      if
      and to the extent legally permitted to do so, the Administrative Agent, on
      behalf of any such Holder, shall promptly notify the Holder or Holders, as
      applicable, of such request prior to complying with such process so that the
      Holder or Holders may seek an appropriate protective order or waive the
      respondent’s compliance with this Section. If, after such notice and after
      providing the Holder or Holders a reasonable opportunity to obtain a protective
      order or to grant such waiver (so long as the granting of such time does not
      put
      such Holder or Holders in breach of its obligations to disclose), such Holder
      or
      Holders is nonetheless legally compelled to disclose such information, such
      Holder or Holders may do so without liability under this Section.




(e)  Any
      Confidential Information or Issuer Confidential Information which becomes
      publicly available through no breach by the relevant party hereunder or a breach
      by a third party of a confidential obligation to the relevant party hereunder
      shall no longer be deemed to be Confidential Information or Issuer Confidential
      Information.




**Section
      10.11**  **Reproduction
      of Documents.** **** This
      Agreement and all documents relating hereto may be reproduced by a Holder and
      by
      any photographic, photostatic, microfilm, microcard, miniature photographic
      or
      other similar process and you may destroy any original documents so produced.
      Each of the parties hereto agrees and stipulates that, to the extent permitted
      by applicable law, any such reproduction shall be admissible in evidence as
      the
      original itself in any judicial or administrative proceeding (whether or not
      the
      original is in existence and whether or not such reproduction was made by you
      in
      the regular course of business) and any enlargement, facsimile or further
      reproduction of such reproduction shall likewise be admissible in
      evidence.




**Section
      10.12**  **Successors
      and Assigns** **.** Except
      as
      otherwise expressly provided herein, this Agreement shall inure to the benefit
      of and be binding upon the successors and assigns of each of the parties
      (including any Purchaser or subsequent Holder) whether so expressed or
      not.




70






**Section
      10.13**  **Counterparts.** Two
      or
      more duplicate originals of this Agreement may be signed by the parties, each
      of
      which shall be an original but all of which together shall constitute one and
      the same instrument.




**Section
      10.14**  **Severability.** In
      the
      event that any one or more of the provisions contained herein, or the
      application thereof in any circumstance, is held invalid, illegal or
      unenforceable, the validity, legality and enforceability of any such provision
      in every other respect and of the remaining provisions contained herein shall
      not be affected or impaired thereby.




**Section
      10.15**  **Expenses.** Issuer
      shall pay all reasonable costs and expenses incurred by the Holders (a) relating
      to the negotiation, preparation, execution and delivery of this Agreement and
      the other Note Documents and the issuance of the Notes (including, without
      limitation, reasonable fees, office charges and expenses of counsel to (1)
      Purchaser, Milbank, Tweed, Hadley & McCloy LLP and (2) any other consultants
      or advisors retained in connection with the Closing Transactions), (b) relating
      to printing the instruments evidencing the Notes, (c) relating to any
      amendments, waivers or consents (whether or not executed) under this Agreement
      to the same extent as set forth in clause (a) and (b) above, (d) in
      connection with the participation of any Observer in meetings or other
      activities pursuant to Section
      5.1(a) hereof
      including, without limitation, travel expenses associated with such meetings
      or
      other activities, (e) relating to the filing, recording, refiling and
      re-recording of any Note Document and any other documents or instruments or
      further assurances required to be filed or recorded or refiled or re-recorded
      by
      the terms of any Note Document, or any other event with respect to which Issuer
      shall have the right to recover from any party expenses or costs paid or
      reimbursed to Holders, (f) incident to the enforcement by the Holders
      of,
      or the protection or preservation of any right or remedy of the Holders under,
      this Agreement, the other Note Documents or any other document or agreement
      furnished pursuant hereto or thereto or in connection herewith or therewith
      (including, without limitation, reasonable fees and expenses of counsel) and
      (g)
      relating to any bankruptcy, insolvency or other similar action or proceeding
      in
      any jurisdiction involving the Issuer. The Issuer shall pay such costs and
      expenses, to the extent then payable, on the date of issuance of the Notes
      or,
      with respect to those matters described in clauses (b) through (g) above, or
      from time to time upon demand by Purchasers or Holders upon presentation, in
      each such case, of a reasonably detailed statement thereof. The Issuer’s
      obligations under this Section
      10.15 shall
      survive the payment of the Notes.




**Section
      10.16**  **Specific
      Performance.** Each
      of
      Issuer and Aurora recognizes that money damages may be inadequate to compensate
      the Holders for a breach by the Issuer or Aurora of its obligations hereunder,
      and each of the Issuer and Aurora irrevocably agrees that the Holders shall
      be
      entitled to the remedy of specific performance or the granting of such other
      equitable remedies as may be awarded by a court of competent jurisdiction in
      order to afford the Purchasers the benefits of this Agreement and that Issuer
      shall not object and hereby waive any right to object to such remedy or such
      granting of other equitable remedies on the grounds that money damages will
      be
      sufficient to compensate the Holders.




71




**Section
      10.17**  **Joinder
      by Aurora.** Aurora
      joins in the execution and delivery of this Agreement for the purpose of
      expressly agreeing to, representing, warranting and covenanting as set forth
      in,
      the provisions of Sections
      2.7 , 4.1 , 5.1(c) , (d) , (e) , (f) , (g) , (h) , (i) , (j) , (k) , (m) , (o) , (p) , 5.2(a) , (c) , (g) , 7.2 , 7.3 and 9.3 and Article
      10 hereof.





[SIGNATURE
      PAGES FOLLOW]




72





IN
      WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
      as of the date first written above.




**ISSUER** :






**AURORA
      ANTRIM NORTH, LLC** ,


a
      Michigan limited liability company




By:
      Aurora Energy, Ltd., its Manager




By:  _________________________________


Name:
      William W. Deneau


Title:
      President






**AURORA:**






**AURORA
      ENERGY, LTD.** ,


a
      Nevada
      corporation




By:  __________________________________


Name:
      William W. Deneau


Title:
      President




**Signature
            Page to**
 **Note
            Purchase Agreement**




**PURCHASERS:**




TCW
      ENERGY FUND X - NL, L.P. ,


a
      California limited partnership




By
      TCW
      (ENERGY X) LLC,


its
      General Partner:




By:
      TCW
      Asset Management Company,


its
      Managing Member






By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director






By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President









TCW
      ENERGY FUND XB - NL, L.P. ,
      a
      California limited partnership




By
      TCW
      (ENERGY X) LLC,


its
      General Partner:




By:
      TCW
      Asset Management Company, its Managing Member






By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director






By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President






**Signature
            Page to**
 **Note
            Purchase Agreement**




TCW
      ENERGY FUND XC - NL, L.P. ,
      a
      California limited partnership




By
      TCW
      (ENERGY X) LLC,


its
      General Partner:




By:
      TCW
      Asset Management Company, its Managing Member






By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director






By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President









TCW
      ENERGY FUND XD - NL, L.P. ,
      a
      California limited partnership




By
      TCW
      (ENERGY X) LLC,


its
      General Partner:




By:
      TCW
      Asset Management Company, its Managing Member






By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director






By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President








**Signature
            Page to**
 **Note
            Purchase Agreement**






TCW
        ASSET
        MANAGEMENT COMPANY, a
        California corporation, as Investment Manager under the Amended and Restated
        Investment Management and Custody Agreement dated as of December 3, 2003
        among
        Ensign Peak Advisors, Inc. and others






By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director




By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President







TCW
      ASSET
      MANAGEMENT COMPANY, a
      California corporation, as Investment Manager under the Amended and Restated
      Investment Management and Custody Agreement dated as of March 18, 2004 among
      ING
      Life Insurance and Annuity Company and others






By:  __________________________________




Name:
      Thomas F. Mehlberg


Title:
      Managing Director






By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President






**Signature
            Page to**
 **Note
            Purchase Agreement**






TCW
      Asset
      Management Company, a California corporation, as Investment Manager under the
      Amended and Restated Investment Management and Custody Agreement dated as of
      December 11, 2003, among Harry L. Bradley, Jr. Partition Trust and
      others







By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director




By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President









TCW
      Asset
      Management Company, a California corporation, as Investment Manager under
      the Investment Management Agreement dated June 13, 2005 among The Ford Foundation
      and others






By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director






By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President








TCW
      ASSET
      MANAGEMENT COMPANY, a
      California corporation, as Administrative Agent







By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director




By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President






**Signature
            Page to**
 **Note
            Purchase Agreement**







TCW
      ASSET
      MANAGEMENT COMPANY, a
      California corporation, as Collateral Agent









By:  __________________________________


Name:
      Thomas F. Mehlberg


Title:
      Managing Director






By:  __________________________________


Name:
      Patrick Hickey


Title:
      Senior Vice President






**Signature
            Page to**
 **Note
            Purchase Agreement**






**Exhibits
      and Schedules:**


Annex
                    A
                Insurance
                    CoverageExhibit
                    A
                Form
                    of Senior NoteExhibit
                    B-1
                Purchaser’s
                    Initial Commitment AmountExhibit
                    B-2
                Purchaser’s
                    Subsequent Commitment AmountExhibit
                    C
                Form
                    of Overriding Royalty ConveyanceExhibit
                    D
                Wire
                    Transfer InstructionsExhibit
                    E
                Form
                    of Opinion of Leibenguth, Boos & Associates, PC addressed to
                    PurchasersExhibit
                    F
                Intentionally
                    DeletedExhibit
                    G
                Form
                    of Request for Subsequent AdvanceExhibit
                    H
                Form
                    of Prepayment NoticeExhibit
                    I
                Form
                    of Compliance CertificateExhibit
                    J
                Form
                    of Notice to Hydrocarbon PurchasersSchedule
                    1.1(a)
                Description
                    of Use of Funds - Approved Capital Expenditures****Schedule
                    1.1(b)
                Approved
                    LOESchedule
                    1.1(c)
                Operating
                    Agreement of IssuerSchedule
                    2.5
                Development
                    PlanSchedule
                    4.1(d)(i)
                Audited
                    Financial Statements and Balance SheetSchedule
                    4.1d(iii)
                ProjectionsSchedule
                    4.1(e)
                Collateral
                    PropertiesSchedule
                    4.1(f)(i)
                Disclosed
                    MattersSchedule
                    4.1(l)
                Capital
                    StructureSchedule
                    4.1(m)
                List
                    of Material ContractsSchedule
                    4.1(o)
                InsuranceSchedule
                    4.1(q)
                Intellectual
                    PropertySchedule
                    4.1(r)
                List
                    of AccountsSchedule
                    4.1(s)
                Ford
                    Disqualified PersonsSchedule
                    5.1(l)
                Location
                    of CollateralSchedule
                    5.2 (f)
                IndebtednessSchedule
                    5.2(g)
                Disclosed
                    EncumbrancesSchedule
                    6.1(l)
                Pro
                    Forma Unaudited Balance
                    Sheet












**ANNEX
      A**





See
      Original Note Purchase Agreement Annex A which is hereby incorporated herein
      by
      this reference














**EXHIBIT
      A**





See
      Original Note Purchase Agreement Exhibit A which is hereby incorporated herein
      by this reference











**Exhibit
      B-1**





**Denominations
      and Holders of Notes Evidencing Initial Advances**





Holder
            Note
                and Commitment AmountTCW
                Energy Fund X-NL, L.P., a California limited partnership
            $6,911,617TCW
                Energy Fund XB-NL, L.P., a California limited partnership
            $8,587,602TCW
                Energy Fund XC-NL, L.P., a California limited partnership
            $2,846,177TCW
                Energy Fund XD-NL, L.P., a California limited partnership
            $6,338,469Trust
                Company of the West as Sub-Custodian under the Amended and Restated
                Investment Management and Custody Agreement dated as of December
                3, 2003
                among Ensign Peak Advisors, Inc., TCW Asset Management Company and
                Trust
                Company of the West
            $2,044,668Trust
                Company of the West as Sub-Custodian under the Amended and Restated
                Investment Management and Custody Agreement dated as of December
                11, 2003
                among Harry L. Bradley, Jr. Partition Trust, Harry L. Bradley, Jr.
                Trust,
                Jane Bradley Uihlien Pettit Partition Trust, Jane Bradley Uihlien
                Trust,
                TCW Asset Management Company and Trust Company of the West
            $1,226,799ING
                Life Insurance and Annuity Company
            $2,044,668**Total**
            **$30,000,000**















**Exhibit
      B-2**





**Denominations
      and Holders of Notes Evidencing Subsequent Advances**








Holder
            Note
                and Commitment AmountTCW
                Energy Fund X-NL, L.P., a California limited partnership
            $3,455,807TCW
                Energy Fund XB-NL, L.P., a California limited partnership
            $4,293,801TCW
                Energy Fund XC-NL, L.P., a California limited partnership
            $1,423,086TCW
                Energy Fund XD-NL, L.P., a California limited partnership
            $3,169,235Trust
                Company of the West as Sub-Custodian under the Amended and Restated
                Investment Management and Custody Agreement dated as of December
                3, 2003
                among Ensign Peak Advisors, Inc., TCW Asset Management Company and
                Trust
                Company of the West
            $1,022,334Trust
                Company of the West as Sub-Custodian under the Amended and Restated
                Investment Management and Custody Agreement dated as of December
                11, 2003
                among Harry L. Bradley, Jr. Partition Trust, Harry L. Bradley, Jr.
                Trust,
                Jane Bradley Uihlien Pettit Partition Trust, Jane Bradley Uihlien
                Trust,
                TCW Asset Management Company and Trust Company of the West
            $613,403ING
                Life Insurance and Annuity Company
            $1,022,334Trust
                Company of the West as Sub-Custodian under the Investment Management
                Agreement dated June 13, 2005 among The Ford Foundation, TCW Asset
                Management Company and Trust Company of the West
            $5,000,000**Total**
            **$20,000,000**















**EXHIBIT
      C**





See
      Original Note Purchase Agreement Exhibit C which is hereby incorporated herein
      by this reference











**EXHIBIT
      D**





**WIRE
      TRANSFER INSTRUCTIONS**





Payments
      of principal, interest and other amounts (excluding royalty
      payments):





A)
      As to
      Ford:





Designated
                Bank:
            Mellon
                Trust of New EnglandAddress:
            One
                Boston Place, Boston, MA 02108ABA
                No.:
            011-001-234Demand
                Deposit A/C No.:
            169064For
                Further Credit:
            Account
                #TCNFFORD002Account
                Name:
            The
                Ford FoundationContact
                Person:
            Amy
                MomeyerTelephone:
            (412)
                236-2031




B)
      As to
      others:





Designated
                Bank:
            Mellon
                Trust of New EnglandAddress:
            One
                Boston Place, Boston, MA 02108ABA
                No.:
            011-001-234Demand
                Deposit A/C No.:
            169064For
                Further Credit:
            Account
                #TCNFENRGX02Account
                Name:
            TCW
                Energy Fund XContact
                Person:
            Amy
                MomeyerTelephone:
            (412)
                236-2031










Royalty
      Payments:





A)
      Ford
      as to 10% of the royalty payments:




Designated
                Bank:
            Mellon
                Trust of New EnglandAddress:
            One
                Boston Place, Boston, MA 02108ABA
                No.:
            011-001-234Demand
                Deposit A/C No.:
            169064For
                Further Credit:
            Account
                #TCNFFORD002Account
                Name:
            The
                Ford FoundationContact
                Person:
            Amy
                MomeyerTelephone:
            (412)
                236-2031












B)
      Others
      as to 90% of the royalty payments:


Designated
                Bank:
            Mellon
                Trust of New EnglandAddress:
            One
                Boston Place, Boston, MA 02108ABA
                No.:
            011-001-234Demand
                Deposit A/C No.:
            169064For
                Further Credit:
            Account
                #TCNFENRGX02Account
                Name:
            TCW
                Energy Fund XContact
                Person:
            Amy
                MomeyerTelephone:
            (412)
                236-2031













**EXHIBIT
      E**





See
      Attached












**EXHIBIT
      F**





See
      Original Note Purchase Agreement Exhibit G which is hereby incorporated herein
      by this reference













**EXHIBIT
      G**





FORM
      OF


REQUEST
      FOR SUBSEQUENT ADVANCE




Reference
      is made to that certain First Amended and Restated Note Purchase Agreement
      dated
      as of ________ __, 2005 (as from time to time amended, supplemented, modified
      or
      extended the " **Note
      Purchase Agreement** ")
      by and
      among Aurora Antrim North, LLC, a Michigan limited liability company (the **“Issuer”** );
      Aurora
      Energy, Ltd., a Nevada corporation (“ **Aurora** ”);
      TCW
      Energy Fund X - NL, L.P., a California limited partnership (“ **Fund
      X - NL** ”);
      TCW
      Energy Fund XB - NL, L.P., a California limited partnership (“ **Fund
      XB - NL** ”);
      TCW
      Energy Fund XC - NL, L.P., a California limited partnership (“ **Fund
      XC - NL** ”);
      TCW
      Energy Fund XD - NL, L.P., a California limited partnership (“ **Fund
      XD - NL** ”);
      TCW
      Asset Management Company (“ **Tamco** ”),
      a
      California corporation, as Investment Manager under the Amended and Restated
      Investment Management and Custody Agreement dated as of December 3, 2003 among
      Ensign Peak Advisors, Inc. and others; Tamco as Investment Manager under the
      Amended and Restated Investment Management and Custody Agreement dated as of
      March 18, 2004 among ING Life Insurance and Annuity Company and others; Tamco
      as
      Investment Manager under the Amended and Restated Investment Management and
      Custody Agreement dated as of December 11, 2003, among Harry L. Bradley, Jr.
      Partition Trust and others; Tamco, as Investment Manager under the Investment
      Management Agreement dated June 13, 2005 among The Ford Foundation and others
      (Tamco in the capacities designated above, Fund X - NL, Fund XB - NL, Fund
      XC -
      NL and Fund XD - NL are hereinafter collectively referred to as the
“ **Purchasers** ,”
      each a
“ **Purchaser** ”);
      Tamco
      as Administrative Agent (together with its successors in such capacity, the
      “ **Administrative
      Agent** ”);
      and
      Tamco as Collateral Agent (together with its successors in such capacity, the
      “ **Collateral
      Agent** ”).
      Undefined capitalized terms are used herein with the meanings set forth in
      the
      Note Purchase Agreement.




Pursuant
      to the terms of the Note Purchase Agreement, Issuer hereby requests that
      Purchasers make an Advance to Issuer in the principal amount of $________ and
      specifies ________ __, 200_, as the date on which Issuer desires that Purchasers
      make such Advance and to deliver to Issuer the proceeds thereof in the manner
      set forth on Schedule 1 attached
      hereto.




To
      induce
      Purchasers to make such Advance, Issuer hereby represents, warrants,
      acknowledges, and agrees that:




(a)  The
      person signing this instrument on behalf of Issuer is _____ of Issuer, having
      all necessary authority to act for Issuer in making the request herein
      contained.




(b)  The
      representations and warranties of Issuer set forth in the Note Purchase
      Agreement and the other Note Documents are true and correct in all material
      respects on and as of the date hereof, with the same effect as though such
      representations and warranties had been made on and as of the date
      hereof.




(c)  The
      amount of the Advance hereby requested does not exceed the amount available
      for
      such Advance pursuant to the Note Purchase Agreement.













(d)  There
      does not exist on the date hereof any condition or event which constitutes
      a
      Default or Coverage Deficiency which has not been waived in writing as provided
      in Section 10.1(a) of the Note Purchase Agreement; nor will any such Default
      or
      Coverage Deficiency exist upon Issuer's receipt and application of the Advance
      requested hereby. Issuer will use the Advance hereby requested for the purposes
      set forth in Schedule
      1 attached
      hereto and in compliance with Section 2.5 of the Note Purchase
      Agreement.




(e)  Except
      to
      the extent waived in writing as provided in Section 10.1(a) of the Note Purchase
      Agreement, Issuer has performed and complied in all material respects with
      all
      agreements and conditions in the Note Purchase Agreement required to be
      performed or complied with by Issuer on or prior to the date hereof, and each
      of
      the conditions precedent to Advances contained in the Note Purchase Agreement
      remains satisfied.




(f)  The
      Loan
      Documents have not been modified, amended or supplemented by any unwritten
      representations or promises, by any course of dealing, or by any other means
      not
      provided for in Section 10.1(a) of the Note Purchase Agreement. The Note
      Purchase Agreement and the other Note Documents are hereby ratified, approved,
      and confirmed in all respects.




The
      person signing this instrument hereby certifies that, to the best of his
      knowledge after due inquiry, the above representations, warranties,
      acknowledgments, and agreements of Issuer are true, correct and
      complete.




IN
      WITNESS WHEREOF, this instrument is executed as of _____ ___, 20__.






**AURORA
      ANTRIM NORTH, LLC** ,


a
      Michigan limited liability company




By:
      Aurora Energy, Ltd., its Manager




By:  _________________________________


Name:


Title:












Schedule
      1




Issuer
      hereby requests that Purchasers disburse by wire transfer in immediately
      available funds the proceeds of the Advance as follows:





[LIST
      AMOUNT, BANK, ABA NOS., PAYEES, BANK ACCOUNTS NOS., AND OTHER
      INSTRUCTIONS]












**EXHIBIT
      H**





See
      Original Note Purchase Agreement Exhibit M which is hereby incorporated herein
      by this reference












**EXHIBIT
      I**





See
      Original Note Purchase Agreement Exhibit N which is hereby incorporated herein
      by this reference














**EXHIBIT
      J**





See
      Original Note Purchase Agreement Exhibit O which is hereby incorporated herein
      by this reference












**EXHIBIT
      K**





See
      Original Note Purchase Agreement Exhibit P which is hereby incorporated herein
      by this reference












**EXHIBIT
      L**





See
      Original Note Purchase Agreement Exhibit Q which is hereby incorporated herein
      by this reference













**Schedule
      1.1(a)**





See
      Original Note Purchase Agreement Schedule 1.1(a) which is hereby incorporated
      herein by this reference















**Schedule
      1.1(b)**


**OPERATING
      COSTS**





Group
                  Name
              Unit
                  Name
              Year
                  1$919/well/month
                Year
                  2$864/well/month
                Year
                  3$809/well/month
                Year
                  4$773/well/month
                Year
                  5$755/well/month
                Year
                  6$736/well/month
                Year
                  7$572/well/month
                Year
                  8+$414/well/month
              $1,564.29/well/month
              $0.210/Mcf
              $0.375/Mcf
              $0.484/Mcf
              $0.734/Mcf
              $0.858/Mcf
              $0.878/Mcf
              $1.118/Mcf
              $1.138/Mcf
              $1.152/Mcf400
                  Antrim
              Iron
              X
              
              
              X400
                  Antrim
              LeBlanc
              X
              
              
              X400
                  Antrim
              Zink
              X
              
              XAlpena
              Beyer
              X
              
              
              
              
              XAlpena
              Black
                  Bean #1
              X
              
              
              
              
              XAlpena
              Black
                  Bean #2
              X
              
              
              
              
              XAlpena
              Black
                  Bean #3
              X
              
              
              
              
              XAlpena
              Black
                  Bean #4
              X
              
              
              
              
              XAlpena
              Discard
              X
              
              
              
              
              XAlpena
              El
                  Dorado
              X
              
              
              
              
              XAlpena
              Gehrke
              X
              
              
              
              
              XAlpena
              Green
                  Bean #1
              X
              
              
              
              
              XAlpena
              Green
                  Bean #2
              X
              
              
              
              
              XAlpena
              Leeseberg
                  #1
              X
              
              
              
              
              XAlpena
              Leeseberg
                  #2
              X
              
              
              
              
              XAlpena
              Mackinaw
                  #1
              X
              
              
              
              
              XAlpena
              Mackinaw
                  #2
              X
              
              
              
              
              XAlpena
              Nicholson
                  Hill #1
              X
              
              
              
              
              XAlpena
              Nicholson
                  Hill #2
              X
              
              
              
              
              XAlpena
              Nicholson
                  Hill #3
              X
              
              
              
              
              XAlpena
              Paxton
                  Quarry
              X
              
              
              
              
              XAlpena
              Sanborn
                  #1
              X
              
              
              
              
              XAlpena
              Sanborn
                  #2
              X
              
              
              
              
              XAlpena
              Seguin
              X
              
              
              
              
              XAlpena
              Treasure
                  Island
              X
              
              
              
              
              XArrowhead
              Arrowhead
              X
              
              
              XArrowhead
              Blue
                  Chip
              X
              
              
              XBlack
                  Bear
              Black
                  Bear Central
              X
              
              
              
              XBlack
                  Bear
              Black
                  Bear Jewell
              X
              
              
              
              XBlack
                  Bear
              Black
                  Bear West
              X
              
              
              
              XClear
                  Lake
              Clear
                  Lake
              X
              
              XHudson
              Boyne
                  Valley
              
              X
              
              
              
              
              
              XHudson
              Chandler
              
              X
              
              
              
              
              
              
              
              
              XHudson
              Corwith
              
              X
              
              
              
              
              
              
              XHudson
              Hudson
                  13
              
              X
              
              
              
              
              
              
              XHudson
              Hudson
                  19
              
              X
              
              
              
              
              
              
              
              XHudson
              Hudson
                  34
              
              X
              
              
              
              
              
              XHudson
              Hudson
                  NE
              
              X
              
              
              
              
              
              
              
              XHudson
              Hudson
                  NW
              
              X
              
              
              
              
              
              
              
              XHudson
              Hudson
                  SW
              
              X
              
              
              
              
              
              XHudson
              Hudson
                  West
              
              X
              
              
              
              
              XMt.
                  Mohican
              Mt.
                  Mohican
              X
              
              
              X














**Schedule
      1.1(c)**





See
      Original Note Purchase Agreement Schedule 1.1(c) which is hereby incorporated
      herein by this reference














**Schedule
      2.5**





See
      Original Note Purchase Agreement Schedule 2.5 which is hereby incorporated
      herein by this reference













**Schedule
      4.1(d)(iii)**




See
      Original Note Purchase Agreement Schedule 4.1(iii) which is hereby incorporated
      herein by this reference















**Schedule
      4.1(e)**





See
      Attached












**Schedule
      4.1(f)(i)**





See
      Attached












**Schedule
      4.1(l)**





Capital
      Structure as of the Amendment Closing Date





**Cadence
      Resources (post-merger with Aurora Energy, Ltd)**


**As
      of November 1, 2005**





**PRINCIPAL
      SHAREHOLDERS**





The
      following table sets forth, as of November 1, 2005, certain


information
      regarding the ownership of voting securities of Cadence by each stockholder
      known to our management to be (i) the beneficial owner of more than5% of our
      outstanding Common Stock, (ii) our directors, (iii) our current executive
      officers and (iv) all executive officers and directors as a group. We believe
      that, except as otherwise indicated, the beneficial owners of the Common Stock
      listed below, based on information furnished by such owners, have sole
      investment and voting power with respect to such shares.





Unless
      otherwise specified, the address of each of the persons set forth below is
      in
      care of Cadence Resources Corporation, 3760 North US 31 South, P.O. Box 961,
      Traverse City, Michigan, 49685-0961.


Name
                        and Address of Beneficial Owner (1)
                    Amount
                        and Nature
                      of
                        Beneficial
                      Ownership
                    Percent
                        of
                      Outstanding
                      SharesHoward
                        M. Crosby
                    1,477,808
                        (2)
                    2.49%John
                        P. Ryan
                    1,006,124
                        (3)
                    1.69%Kevin
                        D. Stulp
                    527,500
                        (4)
                    0.89%Nathan
                        A. Low Roth IRA and affiliates
                    5,052,142
                        (5)
                    8.47%641
                        Lexington AvenueNew
                        York, New York 10022Thomas
                        Kaplan
                    3,090,992
                        (6)
                    5.14%154
                        West 18th StreetNew
                        York, New York 10011Rubicon
                        Master Fund (7)
                    8,000,000
                        (8)
                    13.47%c/o
                        Rubicon Fund Management LLPP103
                        Mount StreetLondon
                        W1K 2TJ, UKCrestview
                        Capital Master, LLC
                    4,000,000(9)
                    6.50%95
                        Revere Drive, Suite ANorthbrook,
                        Illinois, 60062William
                        W. Deneau
                    4,212,500
                        (10)
                    7.02%Gary
                        J. Myles
                    259,998
                        (11)
                    0.44%Earl
                        V. Young
                    386,204
                        (12)
                    0.65%Richard
                        Deneau
                    --
                    --Ronald
                        E. Huff
                    --
                    --John
                        V. Miller, Jr.
                    3,289,762
                        (13)
                    5.49%Thomas
                        W. Tucker
                    2,240,620
                        (14)
                    3.74%Lorraine
                        M. King
                    360,000
                        (15)
                    0.60%All
                        executive officers and directors as a group (11 persons)
                    3,754,816
                        (16)
                    23.00%
 (1) 
            Addresses are only given for holders of more than 5% of the outstanding common
            stock of Cadence.





(2) 
      Includes 270,000 shares of our common stock held by Crosby Enterprises, Inc.,
      40,000 shares of our common stock owned by the Crosby Family Living Trust,
      130,000 shares of our common stock owned by CORK Investments, Inc. and
      options to purchase 50,000 shares of our common stock.





(3) 
      Includes options currently exercisable for 50,000 shares of our common stock
      and
      warrants currently exercisable for 37,500 shares of our common stock;
      172,875 shares of our common stock owned by Nancy Martin-Ryan; 45,000
      shares of our common stock owned by John Ryan as custodian for Karen
      Ryan; 45,000 shares of our common stock owned by John Ryan as custodian
      for Patrick Ryan; 150,000 shares of our common stock owned by J.P.
      Ryan
      Company, Inc.; and 87,500 shares of our common stock owned by Andover
      Capital Corporation.





(4) 
      Includes options currently exercisable for 50,000 shares of our common stock
      and
      warrants currently exercisable for 100,000 shares of our common stock,
      2,750 shares of our common stock owned by the Kevin Dale Stulp IRA and
      1,750
      shares of our common stock owned by the Kevin and Marie Stulp Charitable
      Remainder Unitrust of which Mr. Stulp is a co-trustee.





(5) 
      Based on information included in an amendment to Schedule 13D/A filed with the
      SEC
      on November 10, 2005, Nathan A. Low has the sole power to vote or direct
      the vote of, and the sole power to direct the disposition of, the shares
      held by the Nathan A. Low Roth IRAs and the shares held by him individually,
      which total 4,034,767 shares of our common stock, which includes
      108,375 shares of our common stock issuable upon exercise of warrants.
      Although Nathan A. Low has no direct voting or dispositive power over
      an
      aggregate 1,017,375 shares of our common stock held by Lisa Low as trustee
      for the Nathan A. Low Family Trust and as custodian for the Neufeld
      minor children, he may be deemed to beneficially own those shares because
      his wife, Lisa Low, is the trustee of the Family Trust and custodian
      for the Neufeld children. Similarly, Nathan A. Low may be deemed to
      beneficially own those shares of our common stock underlying options and
      warrants (a total of 157,375 shares of our common stock) held for the benefit
      of his children, because his wife has sole voting and dispositive power
      over such shares. Therefore, Nathan A. Low reports shared voting and dispositive
      power over 5,052,142 shares of our common stock. . Does not include
      warrants to purchase 1,714,000 shares of our common stock, which warrants
      were acquired January 31, 2005





(6) 
      Consists of 480,811 shares of our common stock owned by LCM Holdings LDC; 480,811
      shares of our common stock owned by Electrum Resources, LLC; and 1,329,370
      shares of our common stock owned by Electrum Capital, LLC. Does not
      include warrants to purchase 800,000 shares of our common stock, which warrants
      were acquired January 31, 2005.





(7) 
      Pursuant to investment agreements, each of Rubicon Fund Management Ltd., a company
      organized under the laws of the Cayman Islands, which we refer to in
      this
      footnote as Rubicon Fund Management Ltd., and Rubicon Fund Management
      LLP, a limited liability partnership organized under the laws of
      the
      United Kingdom, which we refer to in this footnote as Rubicon Fund Management
      LLP, Mr. Paul Anthony Brewer, Mr. Jeffrey Eugene Brummette, Mr. William
      Francis Callanan, Mr. Vilas Gadkari, Mr. Robert Michael Greenshields
      and Mr. Horace Joseph Leitch III, share all investment and voting
      power with respect to the securities held by Rubicon Master Fund. Mr.
      Brewer, Mr. Brummette, Mr. Callanan, Mr. Gadkari, Mr. Greenshields and Mr.
      Leitch control both Rubicon Fund Management Ltd. and Rubicon Fund Management
      LLP. Each of Rubicon Fund Management Ltd., Rubicon Fund Management
      LLP, Mr. Brewer, Mr. Brummette, Mr. Callanan, Mr. Gadkari, Mr. Greenshields
      and Mr. Leitch disclaim beneficial ownership of these securities.





(8) 
      Based on Form 3 - Initial Statement of Beneficial Ownership of Securities filed
      with the SEC by Rubicon Master Fund on April 13, 2005. Does not include
      warrants to purchase 8,000,000 shares of our common stock, which warrants
      were acquired January 31, 2005.





(9) 
      Does not include warrants to purchase 2,160,000 shares of our common stock,
      which warrants were acquired January 31, 2005.





(10) 
      Includes options currently exercisable for 600,000 shares of our common stock.





(11)
      Includes options currently exercisable for 199,998 shares of our common stock.





(12)
      Includes options currently exercisable for 199,998 shares of our common stock.





(13)
      Includes options currently exercisable for 600,000 shares of our common stock.





(14)
      Includes options currently exercisable for 600,000 shares of our common stock.





(15)
      Includes options currently exercisable for 160,000 shares of our common stock.





(16)
      Includes options and warrants currently exercisable for an aggregate of 2,597,497
      shares of our common stock.













**Schedule
      4.1(m)**





See
      Original Note Purchase Agreement Schedule 4.1(m) which is hereby incorporated
      herein by this reference












**Schedule
      4.1(o)**





See
      Original Note Purchase Agreement Schedule 4.1(o) which is hereby incorporated
      herein by this reference














**Schedule
      4.1(q)**





See
      Original Note Purchase Agreement Schedule 4.1(q) which is hereby incorporated
      herein by this reference












**Schedule
      4.1(r)**





See
      Original Note Purchase Agreement Schedule 4.1(r) which is hereby incorporated
      herein by this reference














**Schedule
      4.1(s)**





See
      Attached













**Schedule
      5.1(l)**





See
      Original Note Purchase Agreement Schedule 5.2(l) which is hereby incorporated
      herein by this reference














**Schedule
      5.2(f)**





See
      Attached













**Schedule
      5.2(g)**





See
      Attached












**Schedule
      6.1(l)**




See
      Original Note Purchase Agreement Schedule 6.1(l) which is hereby incorporated
      herein by this reference