Document:

EXHIBIT 10.1

                          AGREEMENT AND PLAN OF MERGER

                          DATED AS OF JANUARY 31, 2005

                                  BY AND AMONG

                         CADENCE RESOURCES CORPORATION,

                            AURORA ACQUISITION CORP.,

                                       AND

                               AURORA ENERGY, LTD.

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                                Table of Contents

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                 R E C I T A L S

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

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

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

                                    AGREEMENT

      1. THE MERGER AND CONSIDERATION; CERTAIN DEFINITIONS.

            1.1 THE MERGER.

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

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

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

                  (d) EFFECT OF MERGER.

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

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

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

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

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

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

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

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            1.2 MERGER CONSIDERATION.

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

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

                  (c) EXCHANGE OF CERTIFICATES.

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

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

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

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

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

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            1.3 CERTAIN DEFINITIONS. As used in this Agreement:

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

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

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

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

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

                        (iii)  All  documents  and  instruments  evidencing  the
                  Interests.

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

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

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

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

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

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

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

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

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

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

                  (n) "Governmental Entity" means any:

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

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

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

                        (iv) multi-national organization or body; or

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

                                       7
<PAGE>

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

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

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

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

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

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

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

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

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

                                       8
<PAGE>

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

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

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

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

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

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

                        (iii) All licenses and servitudes.

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

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

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

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

                                       9
<PAGE>

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

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

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       11
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

            2.2 CAPITALIZATION.

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

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

                                       13
<PAGE>

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

            2.4 NO VIOLATIONS; CONSENTS AND APPROVALS.

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

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

            2.5 FINANCIAL STATEMENTS.

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

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

                                       14
<PAGE>

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

            2.6 OPERATION OF BUSINESS.

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

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

                                       15
<PAGE>

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

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

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

                                       16
<PAGE>

            2.9 OIL AND GAS INTERESTS.

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

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

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

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

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

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

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

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

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

                                       17
<PAGE>

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

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

                                       18
<PAGE>

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

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

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

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

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

                                       19
<PAGE>

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

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

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

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

            2.10 NO UNDISCLOSED LIABILITIES.

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

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

                                       20
<PAGE>

            2.11 LITIGATION; COMPLIANCE WITH LAW; LICENSES AND PERMITS.

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

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

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

            2.12 EMPLOYEE BENEFIT PLANS; ERISA.

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

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

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

                                       21
<PAGE>

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

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

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

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

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

                                       22
<PAGE>

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

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

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

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

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

                                       23
<PAGE>

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

            2.13 INTELLECTUAL PROPERTY.

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

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

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

            2.14 MATERIAL CONTRACTS.

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

                                       24
<PAGE>

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

            2.15 TAXES.

                  (a) Except as set forth in SCHEDULE 2.15:

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

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

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

                                       25
<PAGE>

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

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

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

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

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

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

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

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

                                       26
<PAGE>

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

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

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

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

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

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

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

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

                                       27
<PAGE>

            2.16 AFFILIATED PARTY TRANSACTIONS.

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

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

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

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

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

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<PAGE>

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

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

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

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

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

            2.23 LABOR AND EMPLOYMENT MATTERS.

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

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

                                       29
<PAGE>

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

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

                                       30
<PAGE>

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

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

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

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

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

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

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

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

                                       31
<PAGE>

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

            3.3 NO CONFLICTS OR VIOLATION.

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

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

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

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<PAGE>

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

            3.6 LITIGATION; COMPLIANCE WITH LAW; LICENSES AND PERMITS.

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

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

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

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

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<PAGE>

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

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

            3.10 CAPITALIZATION.

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

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

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<PAGE>

            3.11 FINANCIAL STATEMENTS.

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

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

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

            3.12 OPERATION OF BUSINESS.

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

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

                                       35
<PAGE>

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

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

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

                                       36
<PAGE>

            3.15 OIL AND GAS INTERESTS.

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

                                       38
<PAGE>

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

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

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

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

                                       39
<PAGE>

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

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

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

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

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

            3.16 NO UNDISCLOSED LIABILITIES.

                                       40
<PAGE>

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

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

            3.17 CADENCE EMPLOYEE BENEFIT PLANS; ERISA.

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

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

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

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

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

                                       41
<PAGE>

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

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

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

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

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

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

                                       42
<PAGE>

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

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

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

            3.18 INTELLECTUAL PROPERTY.

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

                                       43
<PAGE>

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

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

            3.19 MATERIAL CONTRACTS.

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

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

                                       44
<PAGE>

            3.20 TAXES.

                  (a) Except as set forth in SCHEDULE 3.20:

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

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

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

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

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

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

                                       45
<PAGE>

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

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

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

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

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

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

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

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

                                       46
<PAGE>

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

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

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

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

            3.21 AFFILIATED PARTY TRANSACTIONS.

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

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

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

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

                                       47
<PAGE>

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

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

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

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

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

                                       48
<PAGE>

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

            3.28 LABOR AND EMPLOYMENT MATTERS.

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

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

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

                                       49
<PAGE>

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

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

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

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

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

                                       50
<PAGE>

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

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

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

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

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

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

                  (a) Howard Crosby;

                  (b) Crosby Enterprises, Inc.;

                  (c) Dotson Exploration Company;

                  (d) John Ryan;

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<PAGE>

                  (e) Nancy Martin Ryan;

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

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

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

                  (i) Andover Capital Corporation;

                  (j) Nathan A. Low Roth IRA;

                  (k) Nathan A. Low;

                  (l) Nathan A. Low Family Trust;

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

                  (n) Thomas Kaplan;

                  (o) Electrum Resources, LLC;

                  (p) Electrum Capital, LLC; and

                  (q) CGT Management, Ltd.

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

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

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

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

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

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<PAGE>

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

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

                  (a) Howard Crosby;

                  (b) Crosby Enterprises, Inc.;

                  (c) Dotson Exploration Company;

                  (d) John Ryan;

                  (e) Nancy Martin Ryan;

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

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

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

                  (i) Andover Capital Corporation;

                  (j) Nathan A. Low Roth IRA;

                  (k) Nathan A. Low;

                  (l) Nathan A. Low Family Trust;

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

                  (n) Thomas Kaplan;

                  (o) Electrum Resources, LLC;

                  (p) Electrum Capital, LLC; and

                  (q) CGT Management, Ltd.

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<PAGE>

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

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

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

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

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

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

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

                  (a) William W. Deneau,

                  (b) John V. Miller, and

                  (c) Thomas W. Tucker.

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<PAGE>

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

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

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

            6.1 NO LEGAL BAR.

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

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

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

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

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

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

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

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<PAGE>

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

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

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

            8.6 OBSERVER RIGHTS.

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<PAGE>

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

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

      9. INDEMNIFICATION.

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

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

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

                                       57
<PAGE>

            9.4   PROCEDURES   FOR   RESOLUTION   AND   PAYMENT  OF  CLAIMS  FOR
INDEMNIFICATION.

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

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

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

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

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

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<PAGE>

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

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

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

                                       59
<PAGE>

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

      11. TERMINATION.

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

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

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

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

      12. MISCELLANEOUS PROVISIONS.

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

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

                                       60
<PAGE>

                           If to Cadence:

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

                           With a copy to:

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

                           If to Acquisition Sub:

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

                           With a copy to:

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

                           If to Aurora:

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

                                       61
<PAGE>

                           With a copy to:

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

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

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

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

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

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

                                       62
<PAGE>

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

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

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

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

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

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

                  [Remainder of page intentionally left blank.]

                                       63
<PAGE>

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

                                CADENCE RESOURCES CORPORATION

                                By: __________________________________________
                                Name:_________________________________________
                                Title:________________________________________

                                AURORA ACQUISITION CORP.

                                By: __________________________________________
                                Name:_________________________________________
                                Title:________________________________________

                                AURORA ENERGY, LTD.

                                By: __________________________________________
                                Name:_________________________________________
                                Title:________________________________________EXHIBIT 10.2

                                                                  EXECUTION COPY

                          SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "AGREEMENT")  is dated as of
January 31, 2005 by and among Cadence Resources Corporation,  a Utah corporation
(the  "COMPANY"),  and each  purchaser  listed  on the  Schedule  of  Purchasers
attached hereto (each, a "PURCHASER" and collectively, the "PURCHASERS").

      WHEREAS:

      A. The  Company  and each  Purchaser  is  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by Section  4(2) of the  Securities  Act of 1933,  as amended  (the  "SECURITIES
ACT"),  and Rule 506 of  Regulation D  ("REGULATION  D") as  promulgated  by the
United  States  Securities  and  Exchange   Commission  (the  "SEC")  under  the
Securities Act.

      B. Each Purchaser wishes to purchase, and the Company wishes to sell, upon
the terms and conditions  stated in this Agreement,  (i) the aggregate number of
shares of common  stock of the  Company,  par value $0.01 per share (the "COMMON
STOCK") set forth opposite such  Purchaser's  name in column (3) on the Schedule
of Purchasers  (collectively,  the "NEW COMMON  STOCK"),  and (ii) Warrants,  in
substantially  the  form  attached  hereto  as  Exhibit  A  (collectively,   the
"WARRANTS")  to  acquire up to that  number of shares of Common  Stock set forth
opposite  such  Purchaser's  name in column (4) of the  Schedule  of  Purchasers
attached hereto (collectively, the "WARRANT SHARES").

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and for  other  good and  valuable  consideration  the  receipt  and
adequacy  of  which  are  hereby  acknowledged,  the  Company  and  each  of the
Purchasers agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

      1.1  Definitions.  In  addition  to the terms  defined  elsewhere  in this
Agreement, the following terms have the meanings indicated:

            "AFFILIATE"  means any Person that,  directly or indirectly  through
      one or more  intermediaries,  controls  or is  controlled  by or is  under
      common  control  with a Person,  as such  terms are used in and  construed
      under Rule 144.

            "ANNUAL REPORT" means the Company's  Annual Report (Form 10-KSB) for
      the fiscal year ended September 30, 2003.

            "AURORA" means Aurora Energy, Ltd, a Nevada company.

<PAGE>

            "BUSINESS  DAY" means any day other than  Saturday,  Sunday or other
      day on which  commercial  banks in The City of New York are  authorized or
      required by law to remain closed.

            "CLOSING"  means the  closing  of the  purchase  and sale of the New
      Common Stock and Warrants pursuant to Section 2.1.

            "CLOSING DATE" means the date of the Closing.

            "COMMON  STOCK"  means the common  stock of the  Company,  par value
      $0.01 per share.

            "COMMON  STOCK  EQUIVALENTS"   means,   collectively,   Options  and
      Convertible Securities.

            "COMPANY COUNSEL" means Jenkens & Gilchrist Parker Chapin LLP.

            "CONVERTIBLE  SECURITIES"  means any stock or securities (other than
      Options) convertible into or exercisable or exchangeable for Common Stock.

            "EFFECTIVE DATE" means the date that the  Registration  Statement is
      first declared effective by the SEC.

            "EFFECTIVENESS PERIOD" means the fourth anniversary of the Effective
      Date or such earlier date when either (i) all  Registrable  Securities  of
      the Purchaser covered by the applicable  Registration  Statement have been
      sold or (ii) all Registrable Securities owned by the Purchaser may be sold
      pursuant to Rule 144(k) as evidenced by a written  opinion  letter to such
      effect,  addressed  to the  Company's  transfer  agent  and  the  affected
      Holders.

            "ELIGIBLE  MARKET" means any of The New York Stock  Exchange,  Inc.,
      the  American  Stock  Exchange,  the Nasdaq  National  Market,  The Nasdaq
      SmallCap Market or the OTC Bulletin Board.

            "EXCHANGE  ACT"  means  the  Securities  Exchange  Act of  1934,  as
      amended.

            "FILING  DATE"  means  thirty days after the  effective  date of the
      closing of the Merger.

            "HYDROCARBONS"  means  oil,  gas,  coal  seam gas,  casinghead  gas,
      condensate,  distillate,  liquid hydrocarbons,  gaseous hydrocarbons,  all
      products  refined,  separated,  settled and  dehydrated  therefrom and all
      products  refined  therefrom,  including,  without  limitation,  kerosene,
      liquefied  petroleum gas,  refined  lubricating  oils,  diesel fuel,  drip
      gasoline, natural gasoline, helium, sulfur and all other gaseous or liquid
      minerals.

            "HYDROCARBON  INTERESTS"  means all rights,  titles,  interests  and
      estates  now  owned  or  hereafter  acquired  by  the  Company  in  and to
      Hydrocarbon  leases,  Hydrocarbon  or  mineral  fee  or  lease  interests,
      farm-ins,  overriding royalty and royalty interests, net profit interests,
      oil payments,  production payment interests and similar mineral interests,
      including any reserved or residual interest of whatever nature.

                                       2
<PAGE>

            "LEAD  PURCHASER"  means  Rubicon  Master Fund, a company  organized
      under the laws of the Cayman Islands.

            "LIEN"  means any  lien,  charge,  claim,  tax,  security  interest,
      encumbrance, right of first refusal or other restriction.

            "LOSSES"  means any and all losses,  claims,  damages,  liabilities,
      settlement costs and expenses,  including,  without  limitation,  costs of
      preparation and reasonable attorneys' fees.

            "MERGER"  means the merger of the  Company (or a  subsidiary  of the
      Company) and Aurora, as contemplated by the Merger Agreement.

            "MERGER S-4" means the  registration  statement on Form S-4, or such
      other form of registration statement permitted by law, with respect to the
      Merger.

            "OIL AND GAS PROPERTIES" means Hydrocarbon  Interests;  the personal
      property  and/or real  property now or hereafter  pooled or unitized  with
      Hydrocarbon  Interests;  all  presently  existing  or future  unitization,
      pooling  agreements and declarations of pooled units and the units created
      thereby  (including  without  limitation  all units  created under orders,
      regulations and rules of any governmental  authority having  jurisdiction)
      which may affect  all or any  portion of the  Hydrocarbon  Interests;  all
      Hydrocarbons in and under and which may be produced,  saved,  processed or
      attributable to the Hydrocarbon  Interests,  the lands covered thereby and
      all  Hydrocarbons  in pipelines,  gathering  lines,  tanks and  processing
      plants and all rents, issues, profits,  proceeds,  products,  revenues and
      other  incomes from or  attributable  to the  Hydrocarbon  Interests;  all
      tenements, hereditaments,  appurtenances and personal property and/or real
      property in any way appertaining,  belonging, affixed or incidental to the
      Hydrocarbon  Interests,  and all  rights,  titles,  interests  and estates
      described or referred to above,  including any and all real property,  now
      owned or hereafter  acquired,  used or held for use in connection with the
      operating,  working or development of any of such Hydrocarbon Interests or
      personal   property  and/or  real  property  and  including  any  and  all
      pipelines,  gathering lines, compression facilities,  tanks and processing
      plants, all oil wells, gas wells, water wells, injection wells, platforms,
      spars or other offshore facilities,  casings,  rods, tubing, pumping units
      and engines,  Christmas trees,  derricks,  separators,  gun barrels,  flow
      lines, gas systems (for gathering,  treating and  compression),  and water
      systems  (for  treating,   disposal  and   injection);   surface   leases,
      rights-of-way,  easements  and  servitude  together  with  all  additions,
      substitutions,  replacements, accessions and attachments to any and all of
      the foregoing.

            "OPTIONS" means any rights,  warrants or options to subscribe for or
      purchase Common Stock or Convertible Securities.

                                       3
<PAGE>

            "PERMITTED  LIENS"  means  (i)  royalties,   overriding   royalties,
      reversionary interests, production payments and similar burdens which have
      been taken into account in the  ownership  interests of the Company in and
      to the Oil and Gas  Properties as set forth in the Annual  Report,  as the
      case may be; (ii) sales  contracts or other  arrangements  for the sale of
      production of Hydrocarbons  which would not (when considered  cumulatively
      with the matters discussed in clause (i) above) deprive the Company of any
      material right in respect of the Oil and Gas Properties (except for rights
      customarily  granted with  respect to such  contracts  and  arrangements);
      (iii)  statutory  Liens  for taxes or other  assessments  that are not yet
      delinquent (or that, if delinquent,  are being  contested in good faith by
      appropriate proceedings, levy and execution thereon having been stayed and
      continue to be stayed and for which the Company has set aside on its books
      adequate reserves);  (iv) easements,  rights of way, servitudes,  permits,
      surface  leases  and  other  rights  in  respect  to  surface  operations,
      pipelines,  grazing,  logging,  canals,  ditches,  reservoirs or the like,
      conditions,  covenants and other  restrictions,  and easements of streets,
      alleys,  highways,  pipelines,  telephone lines, power lines, railways and
      other  easements  and rights of way on,  over or in respect of the Oil and
      Gas Properties and that do not  individually  or in the aggregate,  have a
      material adverse effect on the Oil and Gas Properties; (v) rights reserved
      to or vested in any municipality,  governmental, statutory or other public
      authority to control or regulate the Oil and Gas Properties in any manner,
      and all applicable laws, rules and orders from any governmental authority;
      (vi) Liens in favor of operators and  non-operators  under joint operating
      agreements to secure amounts  owing,  which amounts are not yet due or are
      being  contested  in good faith by  appropriate  proceedings,  if adequate
      reserves shall have been made therefor;  and (vii) such  imperfections  of
      title which do not in the aggregate  materially  detract from the value of
      the Oil and Gas  Properties,  or the use  thereof,  in the business of the
      Company.

            "PERSON" means any individual or  corporation,  partnership,  trust,
      incorporated  or  unincorporated   association,   joint  venture,  limited
      liability  company,  joint  stock  company,  government  (or an  agency or
      subdivision thereof) or any court or other federal,  state, local or other
      governmental authority or other entity of any kind.

            "POST-EFFECTIVE  AMENDMENT" means a post-effective  amendment to the
      Registration Statement.

            "POST-EFFECTIVE  AMENDMENT  FILING DEADLINE" means the tenth Trading
      Day after the Registration  Statement  ceases to be effective  pursuant to
      applicable securities laws due to the passage of time or the occurrence of
      an  event  requiring  the  Company  to  file a  Post-Effective  Amendment;
      provided,  however,  that such number of Trading Days does not include any
      days that the Post-Effective Amendment cannot be filed because one or more
      Purchasers  has not provided the Company with  information  required to be
      contained in the Post-Effective  Amendment,  but only to the extent one or
      more Purchasers fails to deliver such information  within five (5) Trading
      Days after the date that the Company reasonably requests,  in writing, the
      Purchasers to provide such information.

            "PROCEEDING"  means  an  action,   claim,  suit,   investigation  or
      proceeding  (including,  without  limitation,  an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

                                       4
<PAGE>

            "PROSPECTUS"  means  the  prospectus  included  in the  Registration
      Statement (including,  without limitation,  a prospectus that includes any
      information  previously  omitted  from a  prospectus  filed  as part of an
      effective  registration  statement in reliance upon Rule 430A  promulgated
      under the Securities  Act), as amended or  supplemented  by any prospectus
      supplement,  with  respect to the terms of the  offering of any portion of
      the Registrable Securities covered by the Registration Statement,  and all
      other   amendments   and   supplements   to  the   Prospectus,   including
      post-effective  amendments,  and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "REGISTRABLE  SECURITIES"  means  any New  Common  Stock or  Warrant
      Shares issued or issuable pursuant to the Transaction Documents,  together
      with any securities  issued or issuable upon any stock split,  dividend or
      other distribution,  recapitalization or similar event with respect to the
      foregoing.

            "REGISTRATION  STATEMENT" means each registration statement required
      to be filed under  Article VI,  including  (in each case) the  Prospectus,
      amendments and supplements to such  registration  statement or Prospectus,
      including pre- and post-effective  amendments,  all exhibits thereto,  and
      all material  incorporated  by reference or deemed to be  incorporated  by
      reference in such registration statement.

            "REQUIRED  EFFECTIVENESS  DATE" means 90 days after the Filing Date,
      provided, however, that such date shall be extended by such number of days
      as the  Company  is  unable  to  file  the  Registration  Statement  or an
      amendment  thereto  because one or more  Purchasers  has not  provided the
      Company  with  information  required to be  included  in the  Registration
      Statement  or an  amendment  thereto,  but only to the  extent one or more
      Purchasers fails to deliver such information  within five (5) Trading Days
      after the date that the Company reasonably requests,  in writing, that the
      Purchasers to provide such information.

            "RULE 144," "RULE 415," and "RULE 424" means Rule 144,  Rule 415 and
      Rule 424, respectively,  promulgated by the SEC pursuant to the Securities
      Act, as such Rules may be amended  from time to time,  or any similar rule
      or regulation  hereafter adopted by the SEC having  substantially the same
      effect as such Rule.

            "SECURITIES"  means,  collectively,  New Common Stock,  Warrants and
      Warrant Shares.

            "SUBSIDIARY"  means any  Person in which the  Company,  directly  or
      indirectly, owns capital stock or holds an equity or similar interest.

            "TRADING  DAY" means (a) any day on which the Common Stock is listed
      or quoted  and traded on its  primary  Trading  Market,  (b) if the Common
      Stock is not then listed or quoted and traded on any Eligible Market, then
      a day on which  trading  occurs  on The  Nasdaq  SmallCap  Market  (or any
      successor  thereto),  or (c) if  trading  does  not  occur  on The  Nasdaq
      SmallCap Market (or any successor thereto), any Business Day.

            "TRADING  MARKET" means the OTC Bulletin Board or any other Eligible
      Market on which the Common Stock is then listed or quoted.

                                       5
<PAGE>

            "TRANSACTION  DOCUMENTS"  means this  Agreement,  the Warrants,  the
      Transfer Agent Instructions and any other documents or agreements executed
      in connection with the transactions contemplated hereunder.

            "TRANSFER AGENT" means OTC Stock Transfer Company of Salt Lake City,
      Utah, or any other transfer agent selected by the Company

            "TRANSFER AGENT INSTRUCTIONS"  means the Irrevocable  Transfer Agent
      Instructions,  in the form of  Exhibit  B,  executed  by the  Company  and
      delivered to and acknowledged in writing by the Transfer Agent.

                                   ARTICLE II
                                PURCHASE AND SALE

      2.1 Closing. Subject to the satisfaction (or waiver) of the conditions set
forth in Section 5 below,  the Company  shall issue and sell to each  Purchaser,
and each  Purchaser  severally,  but not  jointly,  agrees to purchase  from the
Company on the Closing Date, (A) such number of shares of New Common Stock as is
set forth  opposite  such  Purchaser's  name in column  (3) on the  Schedule  of
Purchasers, and (B) one or more Warrants to acquire up to that number of Warrant
Shares as is set  forth  opposite  such  Purchaser's  name in column  (4) on the
Schedule of  Purchasers.  The aggregate  purchase price for the Securities to be
purchased by each Purchaser at the Closing (the  "PURCHASE  PRICE") shall be the
amount set forth opposite such Purchaser's name in column (5) of the Schedule of
Purchasers.  For the  avoidance  of doubt and  subject to the  satisfaction  (or
waiver) of the  conditions set forth in Section 5 below,  no Purchaser  shall be
obligated to purchase any Securities  hereunder  other than such  Securities set
forth opposite such Purchaser's name on the Schedule of Purchasers.  The Closing
shall  take  place  at the  offices  of  Schulte  Roth & Zabel  LLP  immediately
following the execution hereof, or at such other location or time as the parties
may agree.

      2.2 Closing Deliveries.

            (a) At the  Closing,  the  Company  shall  deliver  or  cause  to be
delivered to each Purchaser the following:

                  (i) each of the Transaction  Documents to which the Company is
      a party duly executed by the Company;

                  (ii) Warrants and  certificates  for the New Common Stock such
      Purchaser is purchasing  hereunder (in each case, in such denominations as
      the Purchaser shall reasonably request).

                  (iii) a certificate,  executed by a duly authorized  executive
      officer of the Company,  dated as of the Closing Date in the form attached
      hereto as Exhibit D.

                  (iv) a certificate,  executed by a duly  authorized  executive
      officer  of  Aurora,  dated as of the  Closing  Date in the form  attached
      hereto as Exhibit E.

                                       6
<PAGE>

                  (v) a legal opinion of Company Counsel, in the form of Exhibit
      C, executed by such counsel and delivered to the Purchasers; and

                  (vi) duly executed Transfer Agent Instructions acknowledged by
      the Transfer Agent.

            (b) At the  Closing,  each  Purchaser  shall  deliver or cause to be
delivered to the Company (i) each  Transaction  Document to which such Purchaser
is a party duly executed by such Purchaser and (ii) the purchase price indicated
below such Purchaser's  name on the signature page of this Agreement,  in United
States  dollars  and in  immediately  available  funds,  by wire  transfer to an
account designated in writing by the Company for such purpose.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

      3.1  Representations  and  Warranties of the Company.  The Company  hereby
represents and warrants to each of the Purchasers as follows:

            (a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those  listed in Schedule  3.1(a).  Except as  disclosed  in Schedule
3.1(a),  the Company owns,  directly or indirectly,  all of the capital stock or
comparable  equity  interests of each Subsidiary free and clear of any Lien, and
all the issued and  outstanding  shares of capital  stock or  comparable  equity
interests  of  each   Subsidiary   are  validly   issued  and  are  fully  paid,
non-assessable and free of preemptive and similar rights.

            (b) Organization and Qualification.  Except as disclosed in Schedule
3.1(b)  each of the Company and the  Subsidiaries  is an entity duly  organized,
validly  existing and in good standing under the laws of the jurisdiction of its
incorporation  or  organization  (as  applicable),  with the requisite power and
authority to own and use its  properties and assets and to carry on its business
as currently  conducted.  Neither the Company nor any Subsidiary is in violation
of  any  of  the  provisions  of  its  respective  certificate  or  articles  of
incorporation,  bylaws or other  organizational  or  charter  documents.  To the
knowledge  of the  Company,  each of the  Company and the  Subsidiaries  is duly
qualified to do business  and is in good  standing as a foreign  corporation  or
other entity in each jurisdiction in which the nature of the business  conducted
or property  owned by it makes such  qualification  necessary,  except where the
failure to be so qualified or in good  standing,  as the case may be, could not,
individually or in the aggregate, (i) adversely affect the legality, validity or
enforceability  of any Transaction  Document,  (ii) have or result in a material
adverse  effect on the results of  operations,  assets,  prospects,  business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) impair the Company's ability to materially perform on a timely
basis its obligations  under any of the Transaction  Documents (any of (i), (ii)
or (iii), a "MATERIAL ADVERSE EFFECT").

            (c)  Authorization;  Enforcement.  The  Company  has  the  requisite
corporate  power and authority to enter into and to consummate the  transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction  Documents  by  the  Company  and  the  consummation  by it  of  the
transactions  contemplated  hereby and thereby have been duly  authorized by all
necessary  action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of the
Transaction  Documents  has been (or upon delivery will be) duly executed by the
Company and is, or when  delivered in  accordance  with the terms  hereof,  will
constitute,  the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.

                                       7
<PAGE>

            (d) No Conflicts.  The  execution,  delivery and  performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated  hereby and thereby do not and will not (i)  conflict
with or violate any provision of the Company's, Aurora's or any Subsidiary's (or
following  the  effective  date of the  closing  of the  Merger,  the  surviving
entity's)   certificate   or   articles  of   incorporation,   bylaws  or  other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with  notice or lapse of time or both would  become a default)
under, or give to others any rights of termination,  amendment,  acceleration or
cancellation  (with or without notice,  lapse of time or both) of, any agreement
(including the Merger  Agreement),  credit  facility,  debt or other  instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company, Aurora, or any Subsidiary (or following the effective date of
the  closing of the  Merger,  the  surviving  entity) is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected,  except
to the  extent  that such  conflict,  default  or  termination  right  could not
reasonably  be  expected to have a Material  Adverse  Effect,  or (iii),  to the
knowledge of the Company,  result in a violation of any law,  rule,  regulation,
order,  judgment,  injunction,  decree  or  other  restriction  of any  court or
governmental  authority  to  which  the  Company  or  a  Subsidiary  is  subject
(including  federal and state  securities laws and regulations and the rules and
regulations  of any  self-regulatory  organization  to which the  Company or its
securities  are subject),  or by which any property or asset of the Company or a
Subsidiary is bound or affected.

            (e)  Issuance of the  Securities.  New Common Stock and Warrants are
duly authorized and, when issued and paid for in accordance with the Transaction
Documents,  shall be free and clear  from all Liens  with  respect  to the issue
thereof  and shall not be subject  to  preemptive  rights or  similar  rights of
stockholders.  As of the Closing  Date, a number of shares of Common Stock shall
have been duly  authorized  and reserved  for issuance  which equals 130% of the
number of shares of Common Stock issuable upon conversion of the exercise of the
Warrants to be issued at such Closing.  Upon exercise and issuance in accordance
with the Warrants,  the Warrant Shares shall be validly  issued,  fully paid and
nonassessable  and free from all Liens with respect to the issue  thereof,  with
the holders being  entitled to all rights  accorded to a holder of Common Stock.
Assuming  the  accuracy of each of the  representations  and  warranties  of the
Purchasers  contained  in  Section  3.2,  the  issuance  by the  Company  of the
Securities is exempt from registration under the Securities Act.

            (f) Capitalization. The number of shares and type of all authorized,
issued and  outstanding  capital  stock,  options  and other  securities  of the
Company   (whether  or  not  presently   convertible   into  or  exercisable  or
exchangeable  for  shares  of  capital  stock of the  Company)  is set  forth in
Schedule  3.1(f).  All outstanding  shares of capital stock are duly authorized,
validly issued,  fully paid and nonassessable and have been issued in compliance
with  all  applicable  securities  laws,  except  where  the  failure  to  be so
authorized,  issued or in compliance  could not reasonably be expected to result
in a Material Adverse Effect (as defined below). Except as disclosed in Schedule
3.1(f), there are no outstanding options,  warrants,  script rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations  convertible  into or exercisable or exchangeable  for, or
giving any Person any right to  subscribe  for or acquire,  any shares of Common
Stock, or contracts,  commitments,  understandings  or arrangements by which the
Company or any Subsidiary is or may become bound to issue  additional  shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock. Except as set forth in Schedule 3.1(f), there are no anti-dilution
or price adjustment  provisions  contained in any security issued by the Company
(or in any  agreement  providing  rights to security  holders) and the issue and
sale of the  Securities  will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company  securities  to adjust the  exercise,
conversion,  exchange or reset price under such securities.  To the knowledge of
the Company,  except as specifically  disclosed in Schedule 3.1(f), no Person or
group of related Persons beneficially owns (as determined pursuant to Rule 13d-3
under the Exchange  Act), or has the right to acquire,  by agreement  with or by
obligation binding upon the Company,  beneficial ownership of in excess of 5% of
the outstanding  Common Stock,  ignoring for such purposes any limitation on the
number of shares of Common Stock that may be owned at any single time.

                                       8
<PAGE>

            (g) SEC  Reports;  Financial  Statements.  The Company has filed all
reports  required to be filed by it under the  Securities  Act and the  Exchange
Act,  including  pursuant to Section 13(a) or 15(d)  thereof,  for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively  referred
to  herein as the "SEC  REPORTS"  and,  together  with  this  Agreement  and the
Schedules to this Agreement,  the  "DISCLOSURE  MATERIALS") on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. The Company has delivered
to the  Purchasers  true,  correct and complete  copies of all SEC Reports filed
within  the ten (10) days  preceding  the date  hereof.  As of their  respective
dates, the SEC Reports  complied in all material  respects with the requirements
of the Securities Act and the Exchange Act and the rules and  regulations of the
SEC promulgated  thereunder,  and none of the SEC Reports, when filed, contained
any  untrue  statement  of a material  fact or omitted to state a material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.  The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting  requirements and the
rules and  regulations of the SEC with respect  thereto as in effect at the time
of filing.  Such  financial  statements  have been prepared in  accordance  with
United States generally accepted  accounting  principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such  financial  statements or the notes  thereto,  and fairly present in all
material  respects the  financial  position of the Company and its  consolidated
subsidiaries  as of and for the dates thereof and the results of operations  and
cash  flows  for the  periods  then  ended,  subject,  in the case of  unaudited
statements,  to normal,  immaterial,  year-end audit  adjustments.  All material
agreements  to which the  Company or any  Subsidiary  is a party or to which the
property or assets of the Company or any  Subsidiary are subject are included as
part of or specifically identified in the SEC Reports.

                                       9
<PAGE>

            (h) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports,  except as specifically disclosed in
the SEC Reports,  (i) there has been no event,  occurrence or development  that,
individually  or in the  aggregate,  has had or that could  result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise)  other than (A) trade payables and accrued  expenses  incurred in the
ordinary  course of business  consistent  with past practice and (B) liabilities
not required to be reflected in the Company's  financial  statements pursuant to
GAAP or required to be disclosed in filings made with the SEC, (iii) the Company
has not altered its method of accounting  or the identity of its auditors,  (iv)
the Company has not  declared or made any  dividend or  distribution  of cash or
other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital  stock,  and (v) the Company has
not issued any equity securities to any officer,  director or Affiliate,  except
pursuant  to existing  Company  stock  option  plans or as set forth in Schedule
3.1(h). No event, liability, development or circumstance has occurred or exists,
or is contemplated  to occur with respect to the Company or its  Subsidiaries or
their  respective  business,  properties,  prospects,  operations  or  financial
condition,  that  would  be  required  to be  disclosed  by  the  Company  under
applicable  securities  laws on a registration  statement on Form S-1 filed with
the SEC  relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.

            (i) Absence of Litigation.  Except as set forth in Schedule  3.1(i),
there is no action, suit, claim, proceeding,  inquiry or investigation before or
by any court, public board, government agency,  self-regulatory  organization or
body  pending  or,  to the  knowledge  of the  Company,  threatened  against  or
affecting the Company or any of its Subsidiaries that could,  individually or in
the  aggregate,  have a Material  Adverse  Effect.  Schedule  3.1(i)  contains a
complete list and summary description of any pending or, to the knowledge of the
Company,  threatened  proceeding  against or affecting the Company or any of its
Subsidiaries  that  could  individually  or in the  aggregate,  have a  Material
Adverse Effect.

            (j)  Compliance.  Neither the Company nor any  Subsidiary  (i) is in
default  under or in violation  of (and no event has occurred  that has not been
waived that, with notice or lapse of time or both,  would result in a default by
the Company or any  Subsidiary  under),  nor has the  Company or any  Subsidiary
received  notice  of a  claim  that  it is in  default  under  or  that it is in
violation of, any indenture,  loan or credit agreement or any other agreement or
instrument  to which it is a party  or by which it or any of its  properties  is
bound  (whether or not such default or violation  has been  waived),  (ii) is in
violation of any order of any court,  arbitrator or governmental  body, or (iii)
to the  knowledge  of the  Company,  is or has been in violation of any statute,
rule or regulation of any governmental  authority,  including without limitation
all  foreign,  federal,  state and local laws  relating to taxes,  environmental
protection,  occupational  health and  safety,  product  quality  and safety and
employment and labor matters,  except in each case as could not, individually or
in the aggregate, have or result in a Material Adverse Effect.

                                       10
<PAGE>

            (k) Title to Assets.  The Company and the Subsidiaries have good and
marketable title in all personal  property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens,  except for Liens as do not materially  affect the value of such property
and do not  materially  interfere  with the use made and  proposed to be made of
such  property by the  Company and the  Subsidiaries.  To the  knowledge  of the
Company,  any real property and  facilities  held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and the Subsidiaries are in compliance.

            (l)  Certain  Fees.  Except  as set  forth on  Schedule  3.1(l),  no
brokerage or finder's fees or commissions  are or will be payable by the Company
to any  broker,  financial  advisor  or  consultant,  finder,  placement  agent,
investment  banker,  bank or  other  Person  with  respect  to the  transactions
contemplated by this Agreement.  The Company has not taken any action that would
cause any Purchaser to be liable for any such fees or commissions.

            (m) Private Placement.  Neither the Company nor any Person acting on
the  Company's  behalf has sold or offered to sell or solicited any offer to buy
the Securities by means of any form of general  solicitation or advertising.  To
the knowledge of the Company,  neither the Company nor any of its Affiliates nor
any Person acting on the Company's  behalf has,  directly or indirectly,  at any
time  within  the past six  months,  made any offer or sale of any  security  or
solicitation of any offer to buy any security under circumstances that would (i)
eliminate the availability of the exemption from registration under Regulation D
under the Securities Act in connection with the offer and sale of the Securities
as contemplated  hereby or (ii) cause the offering of the Securities pursuant to
the  Transaction  Documents to be integrated with prior offerings by the Company
for  purposes  of  any  applicable  law,  regulation  or  stockholder   approval
provisions,  including,  without limitation,  under the rules and regulations of
any  Trading  Market.  The  Company  is  not,  and is not an  Affiliate  of,  an
"investment  company" within the meaning of the Investment  Company Act of 1940,
as amended. The Company is not a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of 1980.

            (n) Form SB-2  Eligibility.  The Company is eligible to register its
Common Stock for resale by the Purchasers using Form SB-2 promulgated  under the
Securities Act.

            (o)  Listing  and  Maintenance  Requirements.   The  Company  is  in
compliance  with the listing or maintenance  requirements  of its Trading Market
and will take all steps necessary to have its shares of Common Stock continue to
be traded and listed on its Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

            (p) Registration Rights. Except as described in Schedule 3.1(p), the
Company has not  granted or agreed to grant to any Person any rights  (including
"piggy-back"  registration  rights)  to  have  any  securities  of  the  Company
registered with the SEC or any other  governmental  authority that have not been
satisfied.

                                       11
<PAGE>

            (q) Application of Takeover  Protections.  There is no control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
charter  documents  or the laws of its state of  incorporation  that is or could
become applicable to any of the Purchasers as a result of the Purchasers and the
Company  fulfilling  their  obligations  or  exercising  their  rights under the
Transaction  Documents,  including,  without  limitation,  as a  result  of  the
Company's  issuance  of the  Securities  and the  Purchasers'  ownership  of the
Securities.  The foregoing  notwithstanding,  the Company has  authorized in its
articles of incorporation blank check preferred stock.

            (r) Disclosure.  The Company  confirms that neither it nor any other
Person  acting on its behalf has provided any of the  Purchasers or their agents
or counsel with any information that  constitutes or might constitute  material,
nonpublic  information.  The Company  understands  and confirms that each of the
Purchasers will rely on the foregoing  representations in effecting transactions
in  securities  of the  Company.  All  disclosure  provided  to  the  Purchasers
regarding the Company,  its business and the transactions  contemplated  hereby,
including  the  Schedules  to this  Agreement,  furnished by or on behalf of the
Company  are true and  correct  and do not  contain  any untrue  statement  of a
material fact or omit to state any material fact  necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made,  not  misleading.  No event or  circumstance  has occurred or  information
exists with  respect to the Company or any of its  Subsidiaries  or its or their
business,  properties,  prospects,  operations or financial  conditions,  which,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  by the  Company but which has not been so  publicly  announced  or
disclosed.  The Company  acknowledges  and agrees that no Purchaser makes or has
made  any  representations  or  warranties  with  respect  to  the  transactions
contemplated hereby other than those specifically set forth in Section 3.2.

            (s) Acknowledgment Regarding Purchasers' Purchase of Securities. The
Company  acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm's length purchaser with respect to this Agreement and the
transactions  contemplated  hereby.  The Company  further  acknowledges  that no
Purchaser  is acting as a financial  advisor or  fiduciary of the Company or any
other Purchaser (or in any similar  capacity) with respect to this Agreement and
the  transactions  contemplated  hereby and any advice given by any Purchaser or
any of their  respective  representatives  or  agents  in  connection  with this
Agreement and the transactions  contemplated hereby is merely incidental to such
Purchaser's  purchase of the Securities.  The Company further represents to each
Purchaser  that the  Company's  decision to enter into this  Agreement  has been
based solely on the  independent  evaluation  of the  transactions  contemplated
hereby by the Company and its representatives.

            (t) Patents and Trademarks.  The Company and the Subsidiaries  have,
or have rights to use, all patents, patent applications,  trademarks,  trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights  that  are  necessary  or  material  for  use in  connection  with  their
respective  businesses  as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect  (collectively,  the  "INTELLECTUAL
PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has received a written
notice  that  the  Intellectual  Property  Rights  used  by the  Company  or any
Subsidiary violates or infringes upon the rights of any Person. To the knowledge
of the Company, all such Intellectual  Property Rights are enforceable and there
is no  existing  infringement  by  another  Person  of any  of the  Intellectual
Property Rights.

                                       12
<PAGE>

            (u) Regulatory Permits. To the knowledge of the Company, the Company
and the Subsidiaries possess all certificates, authorizations and permits issued
by the  appropriate  federal,  state,  local or foreign  regulatory  authorities
necessary  to  conduct  their  respective  businesses  as  described  in the SEC
Reports,   except  where  the  failure  to  possess  such  permits   could  not,
individually  or in the aggregate,  have or result in a Material  Adverse Effect
("MATERIAL  PERMITS"),  and neither the Company nor any  Subsidiary has received
any notice of  proceedings  relating to the  revocation or  modification  of any
Material Permit.

            (v) Transactions With Affiliates and Employees.  Except as set forth
below or in SEC Reports  filed at least ten days prior to the date hereof,  none
of the  officers or  directors  of the  Company  and,  to the  knowledge  of the
Company,  none of the  employees  of the  Company  is  presently  a party to any
transaction  with the  Company or any  Subsidiary  (other  than for  services as
employees,  officers and directors),  including any contract, agreement or other
arrangement  providing for the  furnishing  of services to or by,  providing for
rental of real or personal property to or from, or otherwise  requiring payments
to or from any officer,  director or such  employee or, to the  knowledge of the
Company, any entity in which any officer,  director,  or any such employee has a
substantial interest or is an officer, director, trustee or partner.

            (w)  Indebtedness.  Except as disclosed in Schedule 3.1(w),  neither
the Company nor any of its  Subsidiaries  has any outstanding  Indebtedness  (as
defined below).  Schedule 3.1(w) provides a detailed description of the material
terms of any such outstanding Indebtedness.  For purposes of this Agreement: (i)
"INDEBTEDNESS" of any Person means, without duplication (A) all indebtedness for
borrowed  money,  (B) all  obligations  issued,  undertaken  or  assumed  as the
deferred  purchase  price of  property or  services  (other than trade  payables
entered into in the  ordinary  course of  business),  (C) all  reimbursement  or
payment  obligations  with respect to letters of credit,  surety bonds and other
similar instruments,  (D) all obligations evidenced by notes, bonds,  debentures
or  similar  instruments,   including   obligations  so  evidenced  incurred  in
connection  with the  acquisition  of property,  assets or  businesses,  (E) all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreement,  or incurred as financing,  in either case with respect to
any property or assets  acquired  with the proceeds of such  indebtedness  (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property),  (F) all
monetary  obligations  under  any  leasing  or  similar  arrangement  which,  in
accordance  with GAAP, is classified as a capital  lease,  (G) all  indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder
of such  Indebtedness  has an existing  right,  contingent or  otherwise,  to be
secured by) any Lien upon or in any property or assets  (including  accounts and
contract  rights)  owned by any Person,  even though the Person  which owns such
assets or  property  has not  assumed or become  liable for the  payment of such
indebtedness,  and (H) all Contingent  Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A) through (G) above;
and (ii) "CONTINGENT OBLIGATION" means, as to any Person, any direct or indirect
liability,  contingent  or  otherwise,  of  that  Person  with  respect  to  any
indebtedness,  lease,  dividend  or other  obligation  of another  Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect  thereof,  is to provide  assurance to the obligee of such liability that
such  liability  will be paid or  discharged,  or that any  agreements  relating
thereto will be complied  with,  or that the holders of such  liability  will be
protected (in whole or in part) against loss with respect thereto.

                                       13
<PAGE>

            (x) Solvency.  Based on the financial condition of the Company as of
the Closing Date,  (i) the Company's  fair saleable  value of its assets exceeds
the amount that will be  required  to be paid on or in respect of the  Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature;  (ii) the Company's  assets do not  constitute  unreasonably  small
capital to carry on its  business for the current  fiscal year as now  conducted
and as proposed to be conducted  including its capital needs taking into account
the particular  capital  requirements of the business  conducted by the Company,
and projected capital requirements and capital  availability  thereof; and (iii)
the current  cash flow of the  Company,  together  with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated  uses of the cash,  would be sufficient to pay all amounts on or
in respect of its debt when such  amounts are  required to be paid.  The Company
does not  intend to incur  debts  beyond  its  ability to pay such debts as they
mature  (taking  into account the timing and amounts of cash to be payable on or
in respect of its debt).

            (y) Internal Accounting  Controls.  To the knowledge of the Company.
the  Company  and the  Subsidiaries  maintain  a system of  internal  accounting
controls  sufficient to provide  reasonable  assurance that (i) transactions are
executed in accordance  with  management's  general or specific  authorizations,
(ii)  transactions are recorded as necessary to permit  preparation of financial
statements in conformity with generally  accepted  accounting  principles and to
maintain  asset  accountability,  (iii)  access to assets is  permitted  only in
accordance with  management's  general or specific  authorization,  and (iv) the
recorded  accountability  for assets is  compared  with the  existing  assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.

            (z)  Sarbanes-Oxley  Act. The Company is in compliance  with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the  date  hereof,  and any  and  all  applicable  rules  and  regulations
promulgated  by the SEC  thereunder  that are  effective  as of the date hereof,
except  where  such  noncompliance  would  not  have,  individually  or  in  the
aggregate, a Material Adverse Effect.

            (aa)  Merger.   The  Company  and  Aurora  have  executed  a  merger
agreement,  in the form  delivered to the Lead Purchaser on or prior to the date
hereof (the "Merger Agreement").  The Merger Agreement has been duly and validly
executed on or prior to the date hereof by the parties  thereto,  is enforceable
in accordance with its terms and has not been terminated,  amended,  modified or
revoked nor has Cadence or Aurora agreed to, or given notice,  whether formal or
informal of its intention to, terminate,  amend, modify or revoke or make claims
relating to the Merger Agreement, on or prior to the date hereof. As of the date
hereof,  neither  Cadence nor Aurora has failed to comply with any material term
or  condition of the Merger  Agreement  or asserted  that the other party has so
failed or may fail,  and no third party or  authority  has  asserted  any claims
relating to or  indicated  any  intention  to assert any claims  relating to the
Merger  Agreement.  As of the date hereof the  conditions  to the closing of the
Merger  set forth on  Schedule  3.1(aa)  have been met to the  extent  set forth
therein.

                                       14
<PAGE>

      3.2  Representations  and  Warranties of the  Purchasers.  Each  Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:

            (a)  Organization;  Authority.  Such  Purchaser  is an  entity  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its organization with the requisite  corporate or partnership or
other  applicable  power  and  authority  to enter  into and to  consummate  the
transactions  contemplated by the  Transaction  Documents and otherwise to carry
out its obligations hereunder and thereunder.  The purchase by such Purchaser of
the Securities hereunder has been duly authorized by all necessary action on the
part of such Purchaser.  This Agreement and the Security Agreement has been duly
executed and delivered by such Purchaser and  constitutes  the valid and binding
obligation of such  Purchaser,  enforceable  against it in  accordance  with its
terms.

            (b)  Investment  Intent.  Such  Purchaser is (i)  acquiring  the New
Common Stock and Warrants  and (ii) upon  exercise of the Warrants  will acquire
the Warrant  Shares  issuable  upon  exercise of the  Warrants,  in the ordinary
course of  business  for its own  account  and not with a view  towards,  or for
resale in  connection  with,  the public sale or  distribution  thereof,  except
pursuant to sales  registered or exempted  under the Securities  Act;  provided,
however,  that by making the  representations  herein,  such  Purchaser does not
agree to hold any of the  Securities  for any minimum or other specific term and
reserves the right to dispose of the  Securities at any time in accordance  with
or pursuant to a  registration  statement or an exemption  under the  Securities
Act. Such  Purchaser does not have any agreement or  understanding,  directly or
indirectly, with any Person to distribute any of the Securities.

            (c)  Purchaser  Status.  At the time such  Purchaser was offered the
Securities  it was,  and at the date hereof it is, an  "accredited  investor" as
defined in Rule 501(a) under the Securities Act.

            (d) Experience of such Purchaser.  Such  Purchaser,  either alone or
together  with its  representatives,  has  such  knowledge,  sophistication  and
experience in business and  financial  matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated  the merits and risks of such  investment.  Such  Purchaser is able to
bear the economic risk of an investment  in the  Securities  and, at the present
time, is able to afford a complete loss of such investment.

            (e) Access to Information.  Such Purchaser  acknowledges that it has
reviewed the Disclosure  Materials and has been afforded (i) the  opportunity to
ask such questions as it has deemed  necessary of, and to receive  answers from,
representatives  of the  Company  concerning  the  terms and  conditions  of the
offering  of the  Securities  and the  merits  and  risks  of  investing  in the
Securities;  (ii) access to information  about the Company and the  Subsidiaries
and their  respective  financial  condition,  results of  operations,  business,
properties,  management  and  prospects  sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is  necessary  to make an  informed  investment  decision  with  respect  to the
investment.  Neither such inquiries nor any other investigation  conducted by or
on behalf of such  Purchaser or its  representatives  or counsel  shall  modify,
amend or  affect  such  Purchaser's  right to rely on the  truth,  accuracy  and
completeness of the Disclosure  Materials and the Company's  representations and
warranties contained in the Transaction Documents.

                                       15
<PAGE>

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a) The  Securities may only be disposed of pursuant to an effective
registration  statement  under the  Securities  Act or pursuant to an  available
exemption  from the  registration  requirements  of the  Securities  Act, and in
compliance  with any applicable  state  securities  laws. In connection with any
transfer  of  Securities  other  than  pursuant  to  an  effective  registration
statement or to the Company or pursuant to Rule 144(k),  except as otherwise set
forth herein,  the Company may require the  transferor to provide to the Company
an opinion of counsel  selected by the  transferor,  the form and  substance  of
which  opinion shall be reasonably  satisfactory  to the Company,  to the effect
that such  transfer  does not require  registration  under the  Securities  Act.
Notwithstanding  the  foregoing,  the Company  hereby  consents to and agrees to
register on the books of the Company and with its  Transfer  Agent,  without any
such legal opinion, any transfer of Securities by a Purchaser to an Affiliate of
such Purchaser, provided that the transferee certifies to the Company that it is
an "accredited investor" as defined in Rule 501(a) under the Securities Act.

            (b) The Purchasers  agree to the imprinting,  so long as is required
by this Section 4.1(b),  of a legend  substantially in the following form on any
certificate evidencing Securities:

      THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
      COMMISSION OR THE  SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON AN
      EXEMPTION FROM  REGISTRATION  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE  "SECURITIES  ACT"),  AND,  ACCORDINGLY,  MAY NOT BE  OFFERED OR SOLD
      EXCEPT  PURSUANT  TO  AN  EFFECTIVE   REGISTRATION   STATEMENT  UNDER  THE
      SECURITIES  ACT  OR  PURSUANT  TO AN  AVAILABLE  EXEMPTION  FROM,  OR IN A
      TRANSACTION  NOT  SUBJECT  TO,  THE   REGISTRATION   REQUIREMENTS  OF  THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE  STATE  SECURITIES  LAWS.
      NOTWITHSTANDING  THE  FOREGOING,   THESE  SECURITIES  MAY  BE  PLEDGED  IN
      CONNECTION  WITH A BONA FIDE  MARGIN  ACCOUNT OR OTHER  LOAN OR  FINANCING
      ARRANGEMENT SECURED BY SUCH SECURITIES.

                                       16
<PAGE>

Certificates  evidencing Securities shall not be required to contain such legend
or any other legend (i) while a  Registration  Statement  covering the resale of
such  Securities  is effective  under the  Securities  Act;  provided,  that the
Company's  counsel shall have delivered a legal opinion  relating to the removal
of legends upon a sale or transfer of such  Securities,  or (ii)  following  any
sale of such  Securities  pursuant to Rule 144, or (iii) if such  Securities are
eligible  for sale under Rule  144(k),  or (iv) if such  legend is not  required
under  applicable   requirements  of  the  Securities  Act  (including  judicial
interpretations and pronouncements  issued by the Staff of the SEC). The Company
shall cause its  counsel to issue the legal  opinion  included  in the  Transfer
Agent  Instructions  to the Transfer  Agent on the Effective Date and to deliver
any required legal opinions with respect to the removal of legends upon the sale
or transfer of Securities.  Following the Effective Date or at such earlier time
as a legend is no longer  required for certain  Securities,  the Company will no
later than five  Trading  Days  following  the  delivery by a  Purchaser  to the
Company  of  a  legended  certificate  representing  such  Securities,  use  its
reasonable  best efforts to deliver or cause to be delivered to such Purchaser a
certificate  representing  such Securities that is free from all restrictive and
other  legends.  The  Company  may not make any  notation on its records or give
instructions to any transfer agent of the Company that enlarge the  restrictions
on  transfer  set  forth  in this  Section.  For so long as any  Purchaser  owns
Securities,  the Company will not effect or publicly  announce its  intention to
effect any exchange,  recapitalization  or other  transaction  that  effectively
requires or rewards  physical  delivery of  certificates  evidencing  the Common
Stock.

                  (c) The Company  acknowledges  and agrees that a Purchaser may
      from time to time  pledge or grant a security  interest  in some or all of
      the  Securities in connection  with a bona fide margin  agreement or other
      loan or financing  arrangement  secured by the Securities and, if required
      under the terms of such agreement, loan or arrangement, such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such a pledge or transfer  would not be subject to approval of the Company
      and no legal  opinion of the pledgee,  secured  party or pledgor  shall be
      required in connection therewith.  Further, no notice shall be required of
      a pledge. At the appropriate Purchaser's expense, the Company will execute
      and deliver such reasonable documentation as a pledgee or secured party of
      Securities may reasonably  request in connection with a pledge or transfer
      of the  Securities,  including the  preparation and filing of any required
      prospectus  supplement under Rule 424(b)(3) of the Securities Act or other
      applicable provision of the Securities Act to appropriately amend the list
      of selling stockholders thereunder.

      4.2 Furnishing of Information.  As long as any Purchaser owns  Securities,
the  Company  covenants  to use its best  efforts  to  timely  file  (or  obtain
extensions in respect  thereof and file within the applicable  grace period) all
reports  required to be filed by the Company  after the date hereof  pursuant to
the Exchange Act. Upon the request of any  Purchaser,  the Company shall deliver
to such Purchaser a written  certification  of a duly  authorized  officer as to
whether it has complied  with the preceding  sentence.  As long as any Purchaser
owns any Securities,  if the Company is not required to file reports pursuant to
such laws,  it will  prepare and  furnish to the  Purchasers  and make  publicly
available in accordance  with  paragraph (c) of Rule 144 such  information as is
required for the Purchasers to sell the  Securities  under Rule 144. The Company
further  covenants  that it will take such  further  action as any  Purchaser or
subsequent holder of Securities may reasonably request to satisfy the provisions
of Rule 144 applicable to the issuer of securities  relating to transactions for
the sale of  securities  pursuant  to Rule 144,  but only to the extent that the
Company,  or counsel of the Company  agree,  that the  Purchaser  or  subsequent
holder is able to avail themselves of the exemption created by Rule 144.

                                       17
<PAGE>

      4.3 Integration.  The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall,  sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities Act of the sale of the Securities to the Purchasers, or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and regulations of any Trading Market.

      4.4 Reservation and Listing of Common Stock.

                  (a) The  Company  shall  maintain  a  reserve  from  its  duly
      authorized shares of Common Stock for issuance pursuant to the Transaction
      Documents in such amount as may be required to fulfill its  obligations in
      full under the  Transaction  Documents.  In the event that at any time the
      then authorized shares of Common Stock are insufficient for the Company to
      satisfy  its  obligations  in full under the  Transaction  Documents,  the
      Company  shall  promptly  take such actions as may be required to increase
      the number of authorized shares.

                  (b) The Company  shall take all steps  necessary  to cause its
      Common Stock to be approved for listing on its Trading Market and maintain
      the  listing  of such  Common  Stock on such  Trading  Market  or  another
      Eligible  Market.  The  Company  covenants  to  promptly  file any listing
      application  required  by its Trading  Market with  respect to the Warrant
      Shares.

      4.5 [Intentionally Deleted.]

      4.6 Variable Securities; Additional Registration Statement. For so long as
any Warrants remain outstanding,  the Company shall not, in any manner, issue or
sell any rights,  warrants or options to subscribe for or purchase  Common Stock
or directly or indirectly  convertible  into or  exchangeable or exercisable for
Common  Stock at a price which  varies or may vary with the market  price of the
Common Stock, including by way of one or more reset(s) to any fixed price unless
the  conversion,  exchange or exercise price of any such security cannot be less
than the then  applicable  Exercise  Price (as  defined  in the  Warrants)  with
respect to the Common  Stock under any into which any  Warrant is  exerciseable.
Until the Effective  Time,  the Company will not file a  registration  statement
under the  Securities  Act relating to securities  that are not the  Securities,
other  than (i) a  registration  statement  on Form  S-8,  in order to  register
increases in the shares underlying equity incentive plans in existence as of the
date of this  Agreement,  and or (ii)  the  Merger  S-4 in  connection  with the
Merger.

                                       18
<PAGE>

      4.7 Securities Laws Disclosure; Publicity. The Company shall, on or before
8:30 a.m., New York City Time, on the day following execution of this Agreement,
issue a press  release,  not in violation  of any  applicable  securities  laws,
acceptable to the Purchasers  disclosing all material terms of the  transactions
contemplated  hereby.  On the Closing  Date,  the  Company  shall file a Current
Report on Form 8-K with the SEC (the "8-K FILING")  describing  the terms of the
transactions contemplated by the Transaction Documents and including as exhibits
to such Current  Report on Form 8-K this  Agreement,  the form of Warrant in the
form required by the Exchange Act. Thereafter, the Company shall timely file any
filings and notices  required by the SEC or  applicable  law with respect to the
transactions  contemplated  hereby and provide  copies thereof to the Purchasers
promptly  after  filing.  Except  with  respect  to the 8-K Filing and the press
release referenced above (a copy of which will be provided to the Purchasers for
their review as early as practicable prior to its filing), the Company shall, at
least two Trading Days prior to the filing or  dissemination  of any  disclosure
required by this  paragraph,  provide a copy thereof to the Purchasers for their
review.  The Company and the Purchasers shall consult with each other in issuing
any press  releases or otherwise  making public  statements or filings and other
communications  with the SEC or any  regulatory  agency or Trading  Market  with
respect to the transactions  contemplated  hereby, and neither party shall issue
any such press release or otherwise  make any such public  statement,  filing or
other  communication  without  the prior  consent of the  other,  except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior  notice of such public  statement,  filing or
other  communication.  Notwithstanding  the  foregoing,  the  Company  shall not
publicly  disclose  the  name  of any  Purchaser,  or  include  the  name of any
Purchaser in any filing with the SEC or any regulatory agency or Trading Market,
without the prior written consent of such  Purchaser,  except to the extent such
disclosure  (but not any disclosure as to the  controlling  Persons  thereof) is
required by law or Trading Market  regulations,  in which case the Company shall
provide the Purchasers with prior notice of such  disclosure.  The Company shall
not,  and  shall  cause  each of its  Subsidiaries  and its  and  each of  their
respective  officers,  directors,  employees  and  agents  not to,  provide  any
Purchaser with any material nonpublic  information  regarding the Company or any
of its  Subsidiaries  from and after the  filing of the 8-K Filing  without  the
express  written  consent  of such  Purchaser.  In the  event of a breach of the
foregoing  covenant by the Company,  any of its  Subsidiaries,  or any of its or
their respective officers,  directors,  employees and agents, in addition to any
other remedy provided herein or in the Transaction  Documents, a Purchaser shall
have  the  right to make a public  disclosure,  in the form of a press  release,
public  advertisement  or  otherwise,  of such  material  nonpublic  information
without the prior approval by the Company,  its  Subsidiaries,  or any of its or
their respective  officers,  directors,  employees or agents. No Purchaser shall
have any  liability to the  Company,  its  Subsidiaries,  or any of its or their
respective officers, directors,  employees,  stockholders or agents for any such
disclosure.   Each  Purchaser  hereby  agrees  not  to  knowingly   request  any
information from the Company, its directors, officers, employees or agents which
such  purchaser  should  reasonably  know is  material  non-public  information.
Subject to the foregoing,  neither the Company nor any Purchaser shall issue any
press releases or any other public  statements with respect to the  transactions
contemplated  hereby;  provided,  however,  that the Company  shall be entitled,
without the prior approval of any Purchaser,  to make any press release or other
public   disclosure  with  respect  to  such  transactions  (i)  in  substantial
conformity  with the 8-K Filing and  contemporaneously  therewith and (ii) as is
required by applicable law and regulations  (provided that in the case of clause
(i) the Lead Purchaser  shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release).  Each press
release  disseminated  during the 12 months preceding the date of this Agreement
did not at the time of release  contain any untrue  statement of a material fact
or omit to state a material fact  required to be stated  therein or necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they are made, not misleading

      4.8 Use of Proceeds.  The Company shall use the net proceeds from the sale
of the New Common Stock and Warrants  hereunder  (i) to pay any and all expenses
incurred in connection  with the sale of the Securities  hereunder,  (ii) to pay
for the filing and maintaining of any  registration  statement  required by this
Agreement,  (iii) to pay for any and all expenses related to the Merger, (iv) to
pay off up to  $6,000,000  of notes issued by the Company which are to be repaid
pursuant  to the  Merger,  (v) to pay for any and all  expenses  relating to the
filing of the Merger S-4 and (vi) for the general working  capital  requirements
of the Company.

                                       19
<PAGE>

      4.9  Reimbursement.  If any  Purchaser  or any  of its  Affiliates  or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED  PERSON")  becomes involved in any capacity
in any  Proceeding  brought by or against any Person in connection  with or as a
result of the transactions  contemplated by the Transaction Documents other than
one brought by the applicable Purchaser or a Related Person thereof, the Company
will  indemnify  and hold  harmless  such  Purchaser  or Related  Person for its
reasonable legal and other expenses  (including the costs of any  investigation,
preparation and travel) and for any Losses incurred in connection therewith,  as
such expenses or Losses are incurred, excluding only Losses that result directly
from  such   Purchaser's  or  Related   Person's  gross  negligence  or  willful
misconduct.  In addition,  the Company  shall  indemnify  and hold harmless each
Purchaser and Related  Person from and against any and all Losses,  as incurred,
arising  out  of or  relating  to  any  breach  by  the  Company  of  any of the
representations,  warranties or covenants  made by the Company in this Agreement
or any other Transaction  Document,  or any allegation by a third party that, if
true, would  constitute such a breach.  The conduct of any Proceedings for which
indemnification  is available  under this paragraph shall be governed by Section
6.4(c)  below.  The  indemnification  obligations  of  the  Company  under  this
paragraph  shall be in addition to any liability  that the Company may otherwise
have and shall be  binding  upon and  inure to the  benefit  of any  successors,
assigns,  heirs and  personal  representatives  of the  Purchasers  and any such
Related  Persons.  The Company also agrees that neither the  Purchasers  nor any
Related Persons shall have any liability to the Company or any Person  asserting
claims on behalf of or in right of the Company in connection with or as a result
of the  transactions  contemplated by the Transaction  Documents,  except to the
extent that any Losses incurred by the Company result from the gross  negligence
or  willful  misconduct  of  the  applicable  Purchaser  or  Related  Person  in
connection with such transactions. If the Company breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or  reimburse  the  Purchasers  on  demand  for  all  costs  of  collection  and
enforcement  (including reasonable attorneys fees and expenses).  Subject to the
foregoing, the Company specifically agrees to reimburse the Purchasers on demand
for all costs of enforcing the indemnification obligations in this paragraph.

      4.10 Lost, etc. Certificates  Evidencing New Common Stock; Exchange.  Upon
receipt by the Company of evidence  reasonably  satisfactory  to it of the loss,
theft,  destruction or mutilation of any  certificate  evidencing any New Common
Stock  owned  by one of the  Purchasers,  and (in the  case of  loss,  theft  or
destruction)   of  an  unsecured   indemnity   satisfactory   to  it,  and  upon
reimbursement to the Company of all reasonable expenses incidental thereto,  and
upon surrender and cancellation of such certificate,  if mutilated,  the Company
will make and  deliver in lieu of such  certificate  a new  certificate  of like
tenor and for the number of shares  evidenced by such  certificate  which remain
outstanding.  Such Purchaser's agreement of indemnity shall constitute indemnity
satisfactory to the Company for purposes of this Section 4.10. Upon surrender of
any certificate  representing any New Common Stock for exchange at the office of
the  Company,  the  Company at its  expense  will cause to be issued in exchange
therefor  new  certificates  in such  denomination  or  denominations  as may be
requested for the same aggregate  number of New Common Stock  represented by the
certificate  so  surrendered  and  registered  as such holder may  request.  The
Company will also pay the cost of all deliveries of certificates for such shares
to the office of such Purchaser (including the cost of insurance against loss or
theft in an amount  satisfactory to the holders) upon any exchange  provided for
in this Section 4.10.

                                       20
<PAGE>

      4.11 Corporate Existence.  So long as any Purchaser  beneficially owns any
Warrants,  the Company shall maintain its corporate existence and shall not sell
all or  substantially  all of the  Company's  assets,  except  in the event of a
merger or  consolidation  or sale of all or  substantially  all of the Company's
assets,  where the surviving or successor entity in such transaction (i) assumes
the Company's  obligations  hereunder and under the agreements  and  instruments
entered into in connection  herewith and (ii) is a publicly  traded  corporation
whose common stock is quoted on or listed for trading on an Eligible Market.

                                   ARTICLE V
                                   CONDITIONS

      5.1  Conditions  Precedent  to  the  Obligations  of the  Purchasers.  The
obligation of each  Purchaser to acquire the  Securities set forth opposite such
Purchaser's  name on the Schedule of Purchasers at the Closing is subject to the
satisfaction or waiver by such Purchaser,  at or before the Closing,  of each of
the following conditions:

                  (a)  Representations  and Warranties.  The representations and
      warranties  of the Company  contained  herein shall be true and correct in
      all  material  respects  as of the date when made and as of the Closing as
      though made on and as of such date.

                  (b)  Performance.  The Company and each other  Purchaser shall
      have performed,  satisfied and complied in all material  respects with all
      covenants, agreements and conditions required by the Transaction Documents
      to be  performed,  satisfied  or  complied  with by it at or  prior to the
      Closing.

                  (c) Good  Standing.  The Company shall have  delivered to such
      Purchaser a certificate  evidencing the formation and good standing of the
      Company and each of its  Subsidiaries  in such  entity's  jurisdiction  of
      formation issued by the Secretary of State (or comparable  office) of such
      jurisdiction, as of a date within 10 days of the Closing Date.

                  (d)  Qualification.  The Company shall have  delivered to such
      Purchaser  a  certificate  evidencing  the  Company's  qualification  as a
      foreign corporation and good standing issued by the Secretary of State (or
      comparable  office)  of each  jurisdiction  in  which  the  Company  is so
      qualified, as of a date within 10 days of the Closing Date.

                  (e)  Listing.  The Common  Stock (I) shall be  designated  for
      quotation  or listed on the  Trading  Market  and (II) shall not have been
      suspended,  as of the Closing Date, by the SEC or the Trading  Market from
      trading  on the  Trading  Market  nor shall  suspension  by the SEC or the
      Trading Market have been threatened, as of the Closing Date, either (A) in
      writing  by the SEC or the  Trading  Market  or (B) by  falling  below the
      minimum listing maintenance requirements of the Trading Market.

                                       21
<PAGE>

      5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell the Securities set forth opposite each  Purchaser's  name
on the Schedule of  Purchasers is subject to the  satisfaction  or waiver by the
Company, at or before the Closing, of each of the following conditions:

                  (a)  Representations  and Warranties.  The representations and
      warranties of the Purchasers contained herein shall be true and correct in
      all material  respects as of the date when made and as of the Closing Date
      as though made on and as of such date; and

                  (b)   Performance.   The  Purchasers   shall  have  performed,
      satisfied  and  complied  in all  material  respects  with all  covenants,
      agreements  and  conditions  required by the  Transaction  Documents to be
      performed, satisfied or complied with by the Purchasers at or prior to the
      Closing.

                                   ARTICLE VI
                               REGISTRATION RIGHTS

      6.1 Shelf Registration

                  (a) On or prior to the Filing Date,  the Company shall prepare
      and file with the SEC a "Shelf" Registration Statement covering the resale
      of all  Registrable  Securities for an offering to be made on a continuous
      basis pursuant to Rule 415. The  Registration  Statement  shall be on Form
      SB-2  (except if the Company is not then  eligible to register  for resale
      the Registrable  Securities on Form SB-2, in which case such  registration
      shall  be on  another  appropriate  form  in  accordance  herewith  as the
      Purchasers may reasonably  consent) and shall contain (except if otherwise
      directed by the Purchasers) the "Plan of Distribution"  attached hereto as
      Exhibit G.

                  (b) The Company shall use its commercially  reasonable efforts
      to cause the Registration Statement to be declared effective by the SEC as
      promptly as possible after the filing  thereof,  but in any event prior to
      the Required  Effectiveness  Date,  and shall use its best efforts to keep
      the Registration Statement continuously effective under the Securities Act
      until  the  end  of  the  Effectiveness  Period;  provided,  however,  the
      Company's  obligation to keep such Registration  Statement effective shall
      cease in the event the Company has  replaced  such  Regitration  Statement
      with a Registration  Statement on Form S-3, declared effective by the SEC,
      covering the resale of all of the  Registrable  Securities for an offering
      to be made on a continuous  basis  pursuant to Rule 415. The Company shall
      use its best  efforts  to keep  such  Registration  Statement  on Form S-3
      continuously  effective  under  the  Securities  Act  until the end of the
      Effectiveness Period.

                                       22
<PAGE>

                  (c)  The  Company  shall  notify  each  Purchaser  in  writing
      promptly  (and in any  event  within  one  Trading  Day)  after  receiving
      notification  from  the SEC  that  the  Registration  Statement  has  been
      declared effective.

                  (d) As  promptly as  possible,  and in any event no later than
      the  Post-Effective  Amendment Filing Deadline,  the Company shall prepare
      and file with the SEC a  Post-Effective  Amendment.  The Company shall use
      its best  efforts to cause the  Post-Effective  Amendment  to be  declared
      effective by the SEC as promptly as possible after the filing thereof, but
      in any event prior to the fifteenth  Trading Day after the  Post-Effective
      Amendment  Filing  Deadline.  The Company  shall notify each  Purchaser in
      writing  promptly  (and  in any  event  within  one  business  day)  after
      receiving notification from the SEC that the Post-Effective  Amendment has
      been declared effective.

                  (e) Upon the  occurrence of any Event (as defined below) prior
      to  the  24-month  anniversary  of  the  Closing,  and  on  every  monthly
      anniversary  thereof  occurring no later than the 24-month  anniversary of
      the Closing until the applicable Event is cured, as partial relief for the
      damages  suffered  therefrom by the Purchasers  (which remedy shall not be
      exclusive of any other remedies available under this Agreement,  at law or
      in equity),  the Company shall pay to each Purchaser an amount in cash, as
      liquidated  damages  and not as a  penalty,  equal to 1% of the  aggregate
      purchase price paid by such  Purchaser.  The payments to which a Purchaser
      shall be entitled  pursuant to this Section  6.1(e) are referred to herein
      as "EVENT  PAYMENTS".  Any Event  Payments  payable  pursuant to the terms
      hereof shall apply on a pro-rata basis for any portion of a month prior to
      the cure of an  Event.  In the  event  the  Company  fails  to make  Event
      Payments  within 10  Business  Days of any  demand  therefore,  such Event
      Payments  shall bear interest at the rate of 1.5% per month  (prorated for
      partial months) until paid in full.

      For such purposes, each of the following shall constitute an "EVENT":

                  (i) the Registration Statement is not filed on or prior to the
      Filing  Date or is not  declared  effective  on or prior  to the  Required
      Effectiveness Date;

                  (ii) a  Post-Effective  Amendment  is not filed on or prior to
      the Post-Effective  Amendment Filing Deadline or is not declared effective
      on or prior to the  twenty-first  Trading  Day  after  the  Post-Effective
      Amendment Filing Deadline;

                  (iii) after the  Effective  Date, a Purchaser is not permitted
      to sell  Registrable  Securities  under the  Registration  Statement (or a
      subsequent  Registration  Statement filed in replacement  thereof) for any
      reason (other than the requirement of the Company to file a Post-Effective
      Amendment and for such Post-Effective  Amendment to be declared effective)
      for either (A) 10 or more consecutive Trading Days or (B) 30 Trading Days,
      whether or not  consecutive,  in any 365-day period);  provided,  however,
      that none of the  foregoing  shall  constitute  an "Event" if the delay is
      caused by any act of war, terrorism, natural disaster or power failure.

                                       23
<PAGE>

                  (f) The Company shall not,  prior to the Effective Date of the
      Registration  Statement,  prepare  and file  with  the SEC a  registration
      statement  relating to an  offering  for its own account or the account of
      others under the Securities Act of any of its equity securities.

      6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:

                  (a) Not less than three  Trading Days prior to the filing of a
      Registration  Statement  or any related  Prospectus  or any  amendment  or
      supplement  thereto  (including any document that would be incorporated or
      deemed to be  incorporated  therein by  reference),  the Company shall (i)
      furnish to each  Purchaser  and any counsel  designated  by any  Purchaser
      (each,  a  "PURCHASER  COUNSEL",  and the  Lead  Purchaser  has  initially
      designated Schulte Roth & Zabel LLP) copies of all such documents proposed
      to be filed,  which documents (other than those  incorporated or deemed to
      be  incorporated  by  reference)  will be  subject  to the  review of such
      Purchasers  and each  Purchaser  Counsel,  and (ii) cause its officers and
      directors, counsel and independent certified public accountants to respond
      to such inquiries as shall be necessary, in the reasonable opinion of each
      Purchaser  Counsel,  to  conduct a  reasonable  investigation  within  the
      meaning of the  Securities  Act. The Company shall not file a Registration
      Statement or any such Prospectus or any amendments or supplements  thereto
      to which Purchasers holding a majority of the Registrable Securities shall
      reasonably  object.   However,   any  objection  to  the  filing  of  such
      registration  statement or other document  enumerated above, shall suspend
      from  occurring  any of the  "Events"  listed  above in  Section  6.1 ((e)
      i.-iv.) for the period of time during which the objection remains,  but in
      no case will the period of suspension exceed ten Trading Days.

                  (b)  (i)  Prepare  and  file  with  the SEC  such  amendments,
      including  post-effective  amendments,  to each Registration Statement and
      the  Prospectus  used in connection  therewith as may be necessary to keep
      the  Registration  Statement  continuously  effective as to the applicable
      Registrable  Securities for the Effectiveness  Period and prepare and file
      with the SEC such additional  Registration Statements in order to register
      for resale under the  Securities  Act all of the  Registrable  Securities;
      (ii) cause the related  Prospectus  to be amended or  supplemented  by any
      required  Prospectus  supplement,  and as so supplemented or amended to be
      filed  pursuant  to Rule 424;  (iii)  respond as  promptly  as  reasonably
      possible,  and in any event  within ten  Business  Days,  to any  comments
      received  from the SEC with respect to the  Registration  Statement or any
      amendment  thereto and as promptly as reasonably  practicable  provide the
      Purchasers true and complete copies of all correspondence  from and to the
      SEC  relating  to the  Registration  Statement;  and  (iv)  comply  in all
      material  respects  with  the  provisions  of the  Securities  Act and the
      Exchange Act with respect to the disposition of all Registrable Securities
      covered by the  Registration  Statement  during the  applicable  period in
      accordance  with the intended  methods of  disposition  by the  Purchasers
      thereof set forth in the  Registration  Statement as so amended or in such
      Prospectus as so supplemented

                                       24
<PAGE>

                  (c) Notify the Purchasers of Registrable Securities to be sold
      and each Purchaser Counsel as promptly as reasonably practicable,  and (if
      requested by any such Person) confirm such notice in writing no later than
      two Trading Days thereafter,  of any of the following events:  (i) the SEC
      notifies the Company whether there will be a "review" of any  Registration
      Statement;  (ii) the SEC comments in writing on any Registration Statement
      (in which case the Company shall deliver to each  Purchaser a copy of such
      comments and of all written  responses  thereto);  (iii) any  Registration
      Statement or any post-effective amendment is declared effective;  (iv) the
      SEC or any other  Federal or state  governmental  authority  requests  any
      amendment or  supplement  to any  Registration  Statement or Prospectus or
      requests additional  information  related thereto;  (v) the SEC issues any
      stop order suspending the  effectiveness of any Registration  Statement or
      initiates  any  Proceedings  for that purpose;  (vi) the Company  receives
      notice  of  any  suspension  of  the   qualification   or  exemption  from
      qualification of any Registrable  Securities for sale in any jurisdiction,
      or the initiation or threat of any  Proceeding for such purpose;  or (vii)
      the financial  statements  included in any  Registration  Statement become
      ineligible for inclusion therein or any statement made in any Registration
      Statement  or  Prospectus  or any  document  incorporated  or deemed to be
      incorporated therein by reference is untrue in any material respect or any
      revision to a  Registration  Statement,  Prospectus  or other  document is
      required so that it will not contain  any untrue  statement  of a material
      fact or omit to state any material fact  required to be stated  therein or
      necessary  to  make  the   statements   therein,   in  the  light  of  the
      circumstances under which they were made, not misleading.

                  (d) Use its reasonable efforts to avoid the issuance of or, if
      issued,   obtain  the   withdrawal  of  (i)  any  order   suspending   the
      effectiveness of any Registration Statement, or (ii) any suspension of the
      qualification (or exemption from  qualification) of any of the Registrable
      Securities  for  sale in any  jurisdiction,  at the  earliest  practicable
      moment.

                  (e)  Furnish to each  Purchaser  and each  Purchaser  Counsel,
      without charge, at least one conformed copy of each Registration Statement
      and each amendment thereto,  including financial statements and schedules,
      all  documents  incorporated  or  deemed  to be  incorporated  therein  by
      reference,  and all  exhibits  to the  extent  requested  by  such  Person
      (including  those  previously  furnished or  incorporated by reference) as
      promptly as practicable after the filing of such documents with the SEC.

                  (f)  Promptly  deliver to each  Purchaser  and each  Purchaser
      Counsel,  without charge, as many copies of the Prospectus or Prospectuses
      (including  each form of  prospectus)  and each  amendment  or  supplement
      thereto as such Persons may reasonably request within two Business Days of
      such request.  The Company hereby  consents to the use of such  Prospectus
      and each amendment or supplement thereto by each of the selling Purchasers
      in  connection  with the offering and sale of the  Registrable  Securities
      covered by such Prospectus and any amendment or supplement thereto.

                  (g) (i) In the  time  and  manner  required  by  each  Trading
      Market,  prepare and file with such Trading  Market an  additional  shares
      listing application covering all of the Registrable Securities;  (ii) take
      all steps  necessary to cause such  Registrable  Securities to be approved
      for  listing on each  Trading  Market as soon as  practicable  thereafter;
      (iii)  provide  to the  Purchasers  evidence  of such  listing;  and  (iv)
      maintain the listing of such  Registrable  Securities on each such Trading
      Market or another Eligible Market.

                  (h) Prior to any public  offering of  Registrable  Securities,
      use its best efforts to register or qualify or cooperate  with the selling
      Purchasers and each  applicable  Purchaser  Counsel in connection with the
      registration  or  qualification  (or exemption from such  registration  or
      qualification) of such Registrable Securities for offer and sale under the
      securities or blue sky laws of such jurisdictions within the United States
      as any Purchaser  requests in writing,  to keep each such  registration or
      qualification (or exemption  therefrom) effective during the Effectiveness
      Period and to do any and all other acts or things  necessary  or advisable
      to  enable  the  disposition  in  such  jurisdictions  of the  Registrable
      Securities covered by a Registration  Statement;  provided,  however, that
      the Company shall not be obligated to file any general  consent to service
      of  process  or to  qualify  as a  foreign  corporation  or as a dealer in
      securities  in any  jurisdiction  in  which it is not so  qualified  or to
      subject   itself  to  taxation  in  respect  of  doing   business  in  any
      jurisdiction in which it is not otherwise subject.

                                       25
<PAGE>

                  (i) Cooperate  with the  Purchasers  to facilitate  the timely
      preparation   and  delivery  of  certificates   representing   Registrable
      Securities  to be  delivered to a  transferee  pursuant to a  Registration
      Statement,  which  certificates  shall be free, to the extent permitted by
      this Agreement, of all restrictive legends, and to enable such Registrable
      Securities to be in such denominations and registered in such names as any
      such Purchasers may request.

                  (j) Upon the  occurrence  of any event  described  in  Section
      6.2(c)(vii),  as promptly as reasonably practicable,  prepare a supplement
      or amendment,  including a post-effective  amendment,  to the Registration
      Statement  or a  supplement  to the  related  Prospectus  or any  document
      incorporated or deemed to be incorporated  therein by reference,  and file
      any other required document so that, as thereafter delivered,  neither the
      Registration   Statement  nor  such  Prospectus  will  contain  an  untrue
      statement of a material  fact or omit to state a material fact required to
      be stated  therein or necessary  to make the  statements  therein,  in the
      light of the circumstances under which they were made, not misleading.

                  (k) Reasonably cooperate with any due diligence  investigation
      undertaken by the  Purchasers in connection  with the sale of  Registrable
      Securities, including without limitation by making available any documents
      and  information;  provided  that the  Company  will not  deliver  or make
      available to any Purchaser  material,  nonpublic  information  unless such
      Purchaser specifically requests in advance to receive material,  nonpublic
      information in writing.

                  (l) If  Holders of a majority  of the  Registrable  Securities
      being offered pursuant to a Registration Statement select underwriters for
      the  offering,  the Company  shall enter into and perform its  obligations
      under an  underwriting  agreement,  in usual and customary form reasonably
      acceptable to the Company,  including,  without  limitation,  by providing
      customary  legal  opinions,   comfort  letters  and   indemnification  and
      contribution obligations;  provided, that no such agreement shall obligate
      the Company to pay any amount not otherwise  contemplated  by this Article
      VI.

                  (m) Comply with all  applicable  rules and  regulations of the
      SEC.

                                       26
<PAGE>

      6.3  Registration  Expenses.  The  Company  shall  pay (or  reimburse  the
Purchasers  for)  all  fees  and  expenses  incident  to the  performance  of or
compliance with this Agreement by the Company,  including without limitation (a)
all  registration  and filing fees and expenses,  including  without  limitation
those related to filings with the SEC, any Trading Market and in connection with
applicable state securities or Blue Sky laws, (b) printing  expenses  (including
without limitation expenses of printing certificates for Registrable  Securities
and of  printing  prospectuses  requested  by the  Purchasers),  (c)  messenger,
telephone  and  delivery  expenses  incurred  by  the  Company,   (d)  fees  and
disbursements  of counsel for the Company and up to $5,000 in the  aggregate for
the  Purchaser  Counsels  (incurred  in  preparing  the  initial  filing  of the
registration statement for the Registrable Securities and all amendments thereto
prior to it being  declared  effective),  (e) fees  and  expenses  of all  other
Persons  retained  by the Company in  connection  with the  consummation  of the
transactions contemplated by this Agreement, and (f) all listing fees to be paid
by the Company to the Trading  Market.  In all events,  the Purchasers  shall be
solely  responsible  for paying all brokerage fees,  underwriter  commissions or
similar  compensation  relating to their sale of Registrable  Securities and any
income taxes resulting from any such sale of Registrable Securities.

            6.4 Indemnification

                  (a)  Indemnification  by  the  Company.   The  Company  shall,
      notwithstanding  any  termination  of this  Agreement,  indemnify and hold
      harmless each  Purchaser,  the  officers,  directors,  partners,  members,
      agents,   brokers  (including  brokers  who  offer  and  sell  Registrable
      Securities  as principal as a result of a pledge or any failure to perform
      under a margin call of Common Stock), investment advisors and employees of
      each of them,  each Person who  controls  any such  Purchaser  (within the
      meaning of Section 15 of the  Securities Act or Section 20 of the Exchange
      Act) and the officers, directors,  partners, members, agents and employees
      of each such  controlling  Person,  to the  fullest  extent  permitted  by
      applicable law, from and against any and all Losses, as incurred,  arising
      out of or relating to any untrue or alleged untrue statement of a material
      fact contained in the Registration  Statement,  any Prospectus or any form
      of  prospectus  or in  any  amendment  or  supplement  thereto  or in  any
      preliminary  prospectus,  or arising out of or relating to any omission or
      alleged  omission  of a material  fact  required  to be stated  therein or
      necessary to make the statements therein (in the case of any Prospectus or
      form  of  prospectus  or   supplement   thereto,   in  the  light  of  the
      circumstances  under which they were made) not  misleading,  except to the
      extent, but only to the extent,  that (i) such untrue statements,  alleged
      untrue  statements,  omissions or alleged  omissions are based solely upon
      information  regarding such Purchaser  furnished in writing to the Company
      by such  Purchaser  expressly for use therein,  or to the extent that such
      information relates to such Purchaser or such Purchaser's  proposed method
      of distribution  of Registrable  Securities and was reviewed and expressly
      approved  in  writing  by  such   Purchaser   expressly  for  use  in  the
      Registration  Statement,  such Prospectus or such form of Prospectus or in
      any amendment or  supplement  thereto or (ii) in the case of an occurrence
      of an event of the type specified in Section  6.2(c)(v)-(vii),  the use by
      such  Purchaser of an outdated or defective  Prospectus  after the Company
      has notified such  Purchaser in writing that the Prospectus is outdated or
      defective  and  prior  to the  receipt  by such  Purchaser  of the  Advice
      contemplated  in Section  6.5.  The Company  shall  notify the  Purchasers
      promptly of the  institution,  threat or  assertion of any  Proceeding  of
      which  the  Company  is  aware  in   connection   with  the   transactions
      contemplated by this Agreement.

                  (b)  Indemnification  by  Purchasers.  Each  Purchaser  shall,
      severally and not jointly,  indemnify  and hold harmless the Company,  its
      directors,  officers,  agents and employees,  each Person who controls the
      Company  (within  the  meaning  of Section  15 of the  Securities  Act and
      Section 20 of the Exchange Act), and the  directors,  officers,  agents or
      employees of such controlling  Persons, to the fullest extent permitted by
      applicable  law, from and against all Losses (as  determined by a court of
      competent  jurisdiction  in a final  judgment  not  subject  to  appeal or
      review)  arising  solely out of any untrue  statement  of a material  fact
      contained in the Registration  Statement,  any Prospectus,  or any form of
      prospectus,  or in any amendment or supplement  thereto, or arising solely
      out of any omission of a material  fact  required to be stated  therein or
      necessary to make the statements therein (in the case of any Prospectus or
      form  of  prospectus  or   supplement   thereto,   in  the  light  of  the
      circumstances  under which they were made) not  misleading  to the extent,
      but  only to the  extent,  that  such  untrue  statement  or  omission  is
      contained in any  information so furnished in writing by such Purchaser to
      the Company  specifically for inclusion in such Registration  Statement or
      such  Prospectus  or to the  extent  that (i) such  untrue  statements  or
      omissions  are based  solely upon  information  regarding  such  Purchaser
      furnished in writing to the Company by such  Purchaser  expressly  for use
      therein,  or to the extent that such information relates to such Purchaser
      or  such  Purchaser's  proposed  method  of  distribution  of  Registrable
      Securities  and was  reviewed  and  expressly  approved in writing by such
      Purchaser expressly for use in the Registration Statement, such Prospectus
      or such form of Prospectus  or in any  amendment or supplement  thereto or
      (ii) in the case of an  occurrence  of an event of the type  specified  in
      Section  6.2(c)(v)-(vii),  the use by such  Purchaser  of an  outdated  or
      defective  Prospectus  after the Company has  notified  such  Purchaser in
      writing  that the  Prospectus  is outdated or  defective  and prior to the
      receipt by such Purchaser of the Advice contemplated in Section 6.5. In no
      event shall the liability of any selling Purchaser hereunder be greater in
      amount  than  the  dollar  amount  of the net  proceeds  received  by such
      Purchaser upon the sale of the Registrable  Securities giving rise to such
      indemnification obligation.

                                       27
<PAGE>

                  (c) Conduct of Indemnification  Proceedings. If any Proceeding
      shall be brought or  asserted  against any Person  entitled  to  indemnity
      hereunder (an "INDEMNIFIED  PARTY"), such Indemnified Party shall promptly
      notify the Person from whom indemnity is sought (the "INDEMNIFYING PARTY")
      in writing,  and the Indemnifying  Party shall assume the defense thereof,
      including  the  employment  of  counsel  reasonably  satisfactory  to  the
      Indemnified  Party and the  payment of all fees and  expenses  incurred in
      connection  with  defense  thereof;  provided,  that  the  failure  of any
      Indemnified  Party to give such notice shall not relieve the  Indemnifying
      Party of its obligations or liabilities pursuant to this Agreement, except
      (and only) to the extent that it shall be finally determined by a court of
      competent  jurisdiction  (which  determination is not subject to appeal or
      further  review) that such failure shall have  proximately  and materially
      adversely prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense  thereof,  but the fees
and expenses of such counsel shall be at the expense of such  Indemnified  Party
or Parties unless:  (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses;  or (ii) the Indemnifying Party shall have failed promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory  to such  Indemnified  Party in any such  Proceeding;  or (iii) the
named parties to any such Proceeding  (including any impleaded  parties) include
both such  Indemnified  Party and the  Indemnifying  Party, and such Indemnified
Party shall have been  advised by counsel  that a conflict of interest is likely
to exist if the same counsel were to represent  such  Indemnified  Party and the
Indemnifying  Party (in which  case,  if such  Indemnified  Party  notifies  the
Indemnifying  Party in writing that it elects to employ separate  counsel at the
expense of the Indemnifying  Party,  the  Indemnifying  Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

                                       28
<PAGE>

            All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent  incurred in connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying  Party (regardless of whether
it is  ultimately  determined  that an  Indemnified  Party  is not  entitled  to
indemnification  hereunder;  provided,  that the Indemnifying  Party may require
such  Indemnified  Party to undertake to reimburse all such fees and expenses to
the extent it is finally  judicially  determined that such Indemnified  Party is
not entitled to indemnification hereunder).

                  (d) Contribution. If a claim for indemnification under Section
      6.4(a) or (b) is  unavailable  to an  Indemnified  Party (by reasons other
      than the specified exclusions to indemnification),  then each Indemnifying
      Party, in lieu of indemnifying such Indemnified Party, shall contribute to
      the amount paid or payable by such  Indemnified  Party as a result of such
      Losses, in such proportion as is appropriate to reflect the relative fault
      of the  Indemnifying  Party and  Indemnified  Party in connection with the
      actions,  statements or omissions  that resulted in such Losses as well as
      any other relevant  equitable  considerations.  The relative fault of such
      Indemnifying  Party and Indemnified Party shall be determined by reference
      to,  among other  things,  whether any action in question,  including  any
      untrue or alleged  untrue  statement  of a material  fact or  omission  or
      alleged omission of a material fact, has been taken or made by, or relates
      to information  supplied by, such Indemnifying Party or Indemnified Party,
      and the parties'  relative  intent,  knowledge,  access to information and
      opportunity to correct or prevent such action,  statement or omission. The
      amount  paid or  payable  by a party as a result  of any  Losses  shall be
      deemed to include, subject to the limitations set forth in Section 6.4(c),
      any reasonable attorneys' or other reasonable fees or expenses incurred by
      such party in  connection  with any  Proceeding  to the extent  such party
      would  have  been   indemnified   for  such  fees  or   expenses   if  the
      indemnification  provided for in this Section was  available to such party
      in accordance with its terms.

            The parties  hereto agree that it would not be just and equitable if
contribution  pursuant  to this  Section  6.4(d)  were  determined  by pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding  the provisions of this Section  6.4(d),  no Purchaser  shall be
required to contribute,  in the aggregate, any amount in excess of the amount by
which the  proceeds  actually  received by such  Purchaser  from the sale of the
Registrable  Securities  subject  to the  Proceeding  exceeds  the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

                                       29
<PAGE>

            The indemnity and contribution  agreements contained in this Section
are in addition to any liability that the  Indemnifying  Parties may have to the
Indemnified Parties.

      6.5  Dispositions.  Each  Purchaser  agrees  that it will  comply with the
prospectus  delivery  requirements  of the Securities Act as applicable to it in
connection  with sales of Registrable  Securities  pursuant to the  Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company  of the  occurrence  of any  event of the  kind  described  in  Sections
6.2(c)(v),  (vi) or (vii),  such Purchaser will discontinue  disposition of such
Registrable  Securities under the Registration  Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 6.2(j), or until it is advised in writing (the
"ADVICE")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and,  in  either  case,  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such Prospectus or Registration Statement.  The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.

      6.6 No Piggyback on  Registrations.  Except as set forth on Schedule  6.6,
neither the Company nor any of its security  holders  (other than the Purchasers
in such capacity  pursuant hereto) may include  securities of the Company in the
Registration Statement other than the Registrable  Securities.  In addition, the
Company shall not after the date hereof enter into any  agreement  providing any
such right to any of its security holders.

      6.7  Piggy-Back  Registrations.  If at any time  during the  Effectiveness
Period  there is not an  effective  Registration  Statement  covering all of the
Registrable  Securities and the Company shall determine to prepare and file with
the SEC a registration  statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity  securities,
other  than on Form S-4 or Form S-8 (each as  promulgated  under the  Securities
Act) or their then equivalents relating to equity securities to be issued solely
in  connection  with  any  acquisition  of any  entity  or  business  or  equity
securities  issuable in connection  with stock option or other employee  benefit
plans,  then the Company  shall send to each  Purchaser  written  notice of such
determination and if, within fifteen days after receipt of such notice, any such
Purchaser  shall so  request  in  writing,  the  Company  shall  include in such
registration  statement  all or any  part of such  Registrable  Securities  such
Purchaser requests to be registered.

                                   ARTICLE VII
                                  MISCELLANEOUS

      7.1  Termination.  This Agreement may be terminated by the Lead Purchaser,
by written notice to the other parties,  if the Closing has not been consummated
by the fourth Trading Day following the date of this Agreement; provided that no
such termination will affect the right of any party to sue for any breach by the
other party (or parties).

                                       30
<PAGE>

      7.2 Fees and Expenses.  At the Closing, and only upon Closing, the Company
shall  pay the  reasonable  fees  and  expenses  of  legal  counsel  to the Lead
Purchaser  incurred in connection  with the  preparation  and negotiation of the
Transaction  Documents.  In lieu of the foregoing  payment,  Lead  Purchaser may
retain  such  amount at the  Closing or require  the  Company to pay such amount
directly  to Schulte  Roth & Zabel  LLP.  Except as  expressly  set forth in the
Transaction  Documents  to the  contrary,  each  party  shall  pay the  fees and
expenses of its advisers,  counsel,  accountants and other experts,  if any, and
all  other  expenses  incurred  by  such  party  incident  to  the  negotiation,
preparation,  execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance of the Securities.

      7.3  Entire  Agreement.  The  Transaction  Documents,  together  with  the
Exhibits and Schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents,  exhibits and schedules. At or
after the Closing, and without further  consideration,  the Company will execute
and  deliver to the  Purchasers  such  further  documents  as may be  reasonably
requested  in order to give  practical  effect to the  intention  of the parties
under  the  Transaction  Documents.  Notwithstanding  anything  to the  contrary
herein,  the Securities may be assigned to any Person in connection  with a bona
fide  margin  account or other  loan or  financing  arrangement  secured by such
Securities.

      7.4  Notices.  Any  notices,  consents,  waivers  or other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight  courier service,  in each case properly  addressed to the party to
receive the same.  The addresses and facsimile  numbers for such  communications
shall be:

                  (a) If to the Company:

                          Cadence Resources Corporation
                          6 East Rose Street
                          P.O. Box 2056
                          Walla Walla, WA  99362
                          Facsimile No.: (509) 526-3492
                          Telephone No.: (509) 526-3491
                          Attn:  Howard Crosby

                      With a copy to:
                          Jenkens & Gilchrist Parker Chapin LLP
                          The Chrysler Building
                          New York, New York 10174
                          Facsimile No.: (212) 704-6288
                          Telephone No.: (212)704-6000
                          Attn: Henry I Rothman, Esq.

                                       31
<PAGE>

                      If to a Purchaser, to its address and facsimile number set
                      forth on the Schedule of  Purchasers,  with copies to such
                      Purchaser's  representatives  as set forth on the Schedule
                      of Purchasers,

                      With a copy (for informational purposes only) to:

                          Schulte Roth & Zabel LLP
                          919 Third Avenue
                          New York, New York  10022
                          Telephone: (212) 756-2000
                          Facsimile: (212) 593-5955
                          Attention: Peter Halasz, Esq.

or to such other address and/or facsimile number and/or to the attention of such
other Person as the  recipient  party has  specified by written  notice given to
each  other  party  five (5) days  prior to the  effectiveness  of such  change.
Written  confirmation  of receipt  (A) given by the  recipient  of such  notice,
consent,  waiver or other  communication,  (B)  mechanically  or  electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile  number  and an image of the first  page of such  transmission  or (C)
provided  by an  overnight  courier  service  shall be  rebuttable  evidence  of
personal  service,  receipt by facsimile  or receipt  from an overnight  courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

      7.5 Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision,  condition or requirement of this Agreement shall
be deemed to be a continuing  waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise  any right  hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent  to depart  from the  provisions  hereof  with  respect to a
matter that relates exclusively to the rights of Purchasers under Article VI and
that does not directly or indirectly  affect the rights of other  Purchasers may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.

      7.6  Construction.  The headings herein are for  convenience  only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

      7.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  The
Company may not assign this  Agreement  or any rights or  obligations  hereunder
without the prior written  consent of the  Purchasers.  Any Purchaser may assign
its  rights  (except  those of  indemnification  or  reimbursement)  under  this
Agreement  to any  Person  to whom  such  Purchaser  assigns  or  transfers  any
Securities, provided such transferee agrees in writing to be bound, with respect
to the  transferred  Securities,  by the  provisions  hereof  that  apply to the
"Purchasers." Notwithstanding anything to the contrary herein, Securities may be
assigned to any Person in  connection  with a bona fide margin  account or other
loan or financing arrangement secured by such Securities.

                                       32
<PAGE>

      7.8 No  Third-Party  Beneficiaries.  This  Agreement  is intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.

      7.9 Governing Law; Venue;  Waiver Of Jury Trail. all questions  concerning
the  construction,  validity,  enforcement and  interpretation of this Agreement
shall be governed by and construed  and enforced in accordance  with the laws of
the state of new york. THE COMPANY AND PURCHASERS Hereby  Irrevocably  Submit To
The Exclusive  Jurisdiction  Of The State And Federal Courts Sitting In The CITY
OF NEW YORK, BOROUGH OF MANHATTAN For The Adjudication Of Any Dispute BROUGHT BY
THE  COMPANY OR ANY  PURCHASER  Hereunder,  In  Connection  Herewith Or With Any
Transaction  Contemplated  Hereby Or Discussed Herein (Including With Respect To
The Enforcement Of Any Of The  Transaction  Documents),  And Hereby  Irrevocably
Waive, And Agree Not To Assert In Any Suit, Action Or ProceedinG  BROUGHT BY THE
COMPANY OR ANY  PURCHASER,  Any Claim That It Is Not  Personally  Subject To The
Jurisdiction  Of Any Such  Court,  OR That Such Suit,  Action Or  Proceeding  Is
Improper.  Each party Hereby  Irrevocably Waives Personal Service Of Process And
Consents  To Process  Being  Served In Any Such Suit,  Action Or  Proceeding  By
Mailing A Copy Thereof Via  Registered Or Certified  Mail Or Overnight  Delivery
(With  Evidence Of  Delivery) To Such Party At The Address In Effect For Notices
To It Under This  Agreement And Agrees That Such Service Shall  Constitute  Good
And Sufficient  Service Of Process And Notice Thereof.  Nothing Contained Herein
Shall Be  Deemed To Limit In Any Way Any Right To Serve  Process  In Any  Manner
Permitted By Law. The Company AND PURCHASERS  Hereby Waive All Rights To A Trial
By Jury.

      7.10 Survival. The representations,  warranties,  agreements and covenants
contained  herein shall survive the Closing and the delivery  and/or exercise of
the Securities, as applicable.

      7.11   Execution.   This   Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

                                       33
<PAGE>

      7.12  Severability.  If any  provision  of  this  Agreement  is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      7.13  Rescission and  Withdrawal  Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option  under a  Transaction  Document and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part without prejudice to its future actions and rights.

      7.14   Replacement  of  Securities.   If  any  certificate  or  instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated  with the  issuance of such  replacement  Securities.  The  Purchaser
agrees that the loss, mutilation, theft, or destruction of any certificate shall
not trigger the  occurrence  of an Event as defined in Section 6.1 (e)  sections
i-iv, unless such loss, mutilation,  theft, or destruction is directly caused by
the negligence of the Company. The phrase "directly"  specifically  excludes any
persons or parties who are agents of the Company.

      7.15  Remedies.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

      7.16 Payment Set Aside.  To the extent that the Company makes a payment or
payments to any Purchaser  hereunder or any Purchaser  enforces or exercises its
rights hereunder or thereunder,  and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are  subsequently  invalidated,
declared to be fraudulent or preferential,  set aside, recovered from, disgorged
by or are required to be refunded,  repaid or otherwise  restored to the Company
by a trustee,  receiver or any other  Person under any law  (including,  without
limitation,  any bankruptcy  law, state or federal law,  common law or equitable
cause of action),  then to the extent of any such  restoration the obligation or
part thereof originally  intended to be satisfied shall be revived and continued
in  full  force  and  effect  as if  such  payment  had  not  been  made or such
enforcement or setoff had not occurred.

                                       34
<PAGE>

      7.17  Adjustments  in Share Numbers and Prices.  In the event of any stock
split,  subdivision,  dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock),  combination or other
similar  recapitalization  or  event  occurring  after  the  date  hereof,  each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.

      7.18  Independent  Nature  of  Purchasers'  Obligations  and  Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser  under any  Transaction  Document.  The decision of each  Purchaser to
purchase  the  Securities  pursuant  to this  Agreement  has  been  made by such
Purchaser  independently  of  any  other  Purchaser  and  independently  of  any
information,  materials,  statements  or opinions as to the  business,  affairs,
operations, assets, properties,  liabilities,  results of operations,  condition
(financial or otherwise) or prospects of the Company or of the Subsidiary  which
may have been made or given by any other  Purchaser  or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any other  Purchaser (or any other Person)  relating to or
arising from any such information,  materials,  statements or opinions.  Nothing
contained  herein or in any  Transaction  Document,  and no action  taken by any
Purchaser  pursuant  thereto,  shall be deemed to constitute the Purchasers as a
partnership,  an  association,  a joint venture or any other kind of entity,  or
create a presumption  that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction  Document.  Each Purchaser  acknowledges that no other Purchaser has
acted as agent for such  Purchaser  in  connection  with  making its  investment
hereunder and that no other  Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder.  Each Purchaser shall be
entitled to  independently  protect and  enforce its rights,  including  without
limitation  the  rights  arising  out of  this  Agreement  or  out of the  other
Transaction Documents,  and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

                           [Signature pages to follow]

                                       35
<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    CADENCE RESOURCES CORPORATION

                                    By:     ____________________________________
                                    Name:   John P. Ryan
                                    Title:  Vice President

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]
<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    RUBICON MASTER FUND

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Crestview Capital Master, LLC

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Union Spring Fund Ltd.

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Nathan A. Low Family Trust dated 4/12/96

                                    By:     ____________________________________
                                    Name:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Bear Stearns as Custodian
                                    For Nathan A. Low Roth IRA

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Ruth Low

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Zinc Partners, LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Zinc Partners Offshore, Ltd.

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Cordillera Fund L.P.

                                    By:     ____________________________________
                                    Name:   James P. Andrew
                                    Title:  Co-CEO of ANdrew Carter Capital,
                                            Inc., the General Partner of ACCF
                                            GenPar, L.P., the General Partner of
                                            the Cordillera Fund L.P.

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Enable Growth Partners LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Michael Weiss

                                    By:     ____________________________________
                                            Name: Michael Weiss

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Don Sanders

                                    By:     ____________________________________
                                            Name:    Don Sanders

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Sanders Opportunity Fund (INST) LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Sanders Opportunity Fund LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Sanders 1998 Children's Trust

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

        Don Weir AND JULIE E. WEIR

        By:     ____________________        By:_____________________
                Name:    Don Weir               Name: Julie E. Weir

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Ben Morris

                                    By:     ____________________________________
                                            Name:    Ben Morris

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    George K. Ball

                                    By:     ____________________________________
                                    Name:   George K. Ball

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Fredrick Saalwachter

                                    By:     ____________________________________
                                    Name:   Fredrick Saalwachter

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

       John Malanga AND JODI MALANGA

       By:     ____________________        By:  _____________________
               Name:    John Malanga            Name: Jodi Malanga

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Bruce McMaken

                                    By:     ____________________________________
                                    Name:   Bruce McMaken

<PAGE>

      IN  WITNESS  WHEREOF,  each  of  the  parties  hereto  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed  by  their  respective  authorized  signatories  as of the  date  first
indicated above.

                                    Mike Chadwick

                                    By:     ____________________________________
                                    Name:   Mike Chadwick

<PAGE>

                             SCHEDULE OF PURCHASERS

<TABLE>
<CAPTION>
     (1)                             (2)                    (3)           (4)        (5)                      (6)
                                                          NUMBER OF     NUMBER                               LEGAL
                                                          SHARES OF       OF                            REPRESENTATIVE'S
                       ADDRESS AND                       NEW COMMON     WARRANT    PURCHASE               ADDRESS AND
PURCHASER              FAX NUMBER                          STOCK        SHARES       PRICE                 FAX NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                                 <C>         <C>          <C>           <C>
                       c/o Rubicon Fund Management LLP
 Rubicon Master        103 Mount St.                                                              Schulte Roth & Zabel LLP
 Fund                  London W1K2TJ                                                              919 Third Avenue
                       United Kingdom                                                             New York, New York  10022
                       Facsimile No.:  +44 207-074 4280                                           Attention:  Peter Halasz, Esq.
                       Telephone No.:  +44 207 074 4299                                           Facsimile No.:  (212) 593-5955
                       Attn: William Callanan              2,800,000   8,000,000    $3,500,000    Telephone No.:  (212) 756-2238
                       95 RevereDrive

 Crestview             Suite A
 Capital Master,       Northbrook, Illinois  60062
 LLC                   Facsimile No.:  (847) 559-5807
                       Telephone No.:  (847) 418-8302
                       Attn: Stuart Flink                  1,840,000   1,840,000    $2,300,000    N/A

 Union Spring          c/o Dundee Leeds Management                                                Mayer, Brown, Rowe & Maw LLP
 Fund Ltd.             129 Front Street                                                           190 South LaSalle Street
                       Services Ltd.                                                              Chicago, Illinois 60603
                       Hamilton HM 12, Bermuda                                                    Attention: Deborah A. Monson, Esq.
                       Attention: Robin J. Bedford                                                Facsimile No.:  312-706-9103
                       Facsimile No.:  441-292-2239                                               Telephone No.:  312-701-8356
                       Telephone No.:  441-495-8617        560,000     1,600,000    $700,000

 Nathan A. Low         c/o Nathan A. Low
 Family Trust          Sunrise Securities Corp.
 dated 4/12/96         641 Lexington Avenue
                       25th Floor
                       New York, NY  10022
                       Facsimile No.:  (212) 750-7277
                       Telephone No.:  (212) 421-1616
                                       Ext. 135            360,000     360,000      $450,000*     N/A

 Bear Stearns as       c/o Nathan A. Low
 Custodian For         Sunrise Securities Corp.
 Nathan A. Low         641 Lexington Avenue
 Roth IRA              25th Floor
                       New York, NY  10022
                       Facsimile No.:  (212) 750-7277
                       Telephone No.:  (212) 421-1616
                                       Ext. 135            200,000     200,000      $250,000*     N/A

 Ruth Low              c/o Nathan A. Low
                       Sunrise Securities Corp.
                       641 Lexington Avenue
                       25th Floor
                       New York, NY  10022
                       Facsimile No.:  (212) 750-7277
                       Telephone No.:  (212) 421-1616
                                       Ext. 135            240,000     240,000      $300,000*     N/A
</TABLE>

<PAGE>

<TABLE>
<S>                    <C>                                 <C>         <C>          <C>           <C>
 Zinc Partners LP      c/o Zinc Capital Management LLC
                       711 Fifth Avenue, 5th floor
                       New York, NY  10022
                       Facsimile No.:  (212) 813-2825
                       Telephone No.:  (212) 813-2820      88,256      88,256       $110,320      N/A

 Zinc Partners         c/o Zinc Capital Management LLC
 Offshore, Ltd.        711 Fifth Avenue, 5th floor
                       New York, NY  10022
                       Facsimile No.:  (212) 813-2825
                       Telephone No.:  (212) 813-2820      231,744     231,744      $289,680      N/A

 Cordillera Fund       C/o Andrew Carter Capital, Inc.
 L.P.                  8201 Preston Road
                       Suite 400
                       Dallas, TX 75225
                       Facsimile No.:  214-722-1360
                       Telephone No.:  214-969-5700
                        Attn: James Andrew                 400,000     400,000      $500,000      N/A

 Enable Growth         One Ferry Building, Suite 255
 Partners LP           San Francisco, CA 94111
                       Facsimile No.:  415-677-1580
                       Telephone No.:  415-677-1578
                       Attn: Brendan O'Neil                240,000     240,000      $300,000      N/A

 Michael Weiss         25 Briarwood Land
                       Lawrence, NY  11559
                       Telephone No.:  212-838-7200        50,000      50,000       $62,500       N/A

 Don Sanders           600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      160,000     160,000      $200,000      N/A

 Sanders               600 Travis
 Opportunity Fund      Suite 3100
 (Inst) LP             Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      246,823     246,823      $308,529      N/A

 Sanders               600 Travis
 Opportunity Fund      Suite 3100
 LP                    Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      77,177      77,177       $96,471       N/A

 Sanders 1998          600 Travis
 Children's Trust      Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      120,000     120,000      $150,000      N/A

 Don Weir and          600 Travis
 Julie E. Weir         Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      80,000      80,000       $100,000      N/A
</TABLE>

<PAGE>

<TABLE>
<S>                    <C>                                 <C>         <C>          <C>           <C>
 Ben T. Morris         600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A

 George K. Ball        600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A

 Fredrick              600 Travis
 Saalwachter           Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A

 John Malanga and      600 Travis
 Jodi Malanga          Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      16,000      16,000       $20,000       N/A

 Bruce McMaken         600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A

 Mike Chadwick         600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A
====================================================================================================================================
TOTAL                                                                            $2,262,500

</TABLE>

* Purchase price paid through debt conversion.

<PAGE>

Exhibits:
A      Form of Warrant
B      Form of Transfer Agent Instructions
C      Form of Opinion of Company Counsel
D      Company Officer's Certificate
E      Aurora Officer's Certificate
F      Plan of Distribution

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}]]