Exhibit 10.1

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                          AGREEMENT AND PLAN OF MERGER

                                  by and among

                            TRADESTAR SERVICES, INC.,

                       TRADESTAR ACQUISITION SUB, L.L.C.,

                              THE CYMRI CORPORATION

                                       and

                                 LARRY M. WRIGHT
                            FRANKLIN M. CANTRELL, JR.
                                ROBERT G. WONISH
                                       and
                               MICHAEL W. HOPKINS,



                            Dated as of May 23, 2006







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ARTICLE I DEFINITIONS....................................................... 1

ARTICLE II THE MERGER.......................................................10
   2.1      THE MERGER......................................................10
   2.2      EFFECTIVE TIME..................................................10
   2.3      EFFECTS OF THE MERGER...........................................10
   2.4      ARTICLES OF INCORPORATION, BYLAWS AND DIRECTORS AND OFFICERS....10
   2.5      CONVERSION OF SHARES; STOCK OPTIONS; WARRANTS...................11
   2.6      EXCHANGE OF SHARES FOR MERGER CONSIDERATION.....................11
   2.7      BUYER MEMBERSHIP INTERESTS......................................12
   2.8      DELIVERY OF CERTIFICATES AND CASH...............................12
   2.9      DISSENTER'S RIGHTS..............................................13
   2.10     THE CLOSING.....................................................13
   2.11     CLOSING DELIVERIES BY THE SHAREHOLDERS AND THE COMPANY..........13
   2.12     CLOSING DELIVERIES BY PARENT AND BUYER..........................15

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS..................16
   3.1      ORGANIZATION AND QUALIFICATION OF THE COMPANY AND ITS
              SUBSIDIARIES..................................................17
   3.2      CAPITALIZATION..................................................17
   3.3      STOCK OWNERSHIP BY SHAREHOLDERS.................................18
   3.4      AUTHORIZATION; ENFORCEABILITY...................................18
   3.5      NO CONFLICT; GOVERNMENTAL CONSENTS..............................18
   3.6      FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES................19
   3.7      LABOR MATTERS...................................................19
   3.8      ABSENCE OF CERTAIN CHANGES OR EVENTS............................20
   3.9      TAXES...........................................................21
   3.10     MATERIAL CONTRACTS..............................................23
   3.11     REAL AND PERSONAL PROPERTY; TITLE TO PROPERTY; LEASES...........25
   3.12     CONDITION AND SUFFICIENCY OF TANGIBLE ASSETS....................26
   3.13     LICENSES, PERMITS AND AUTHORIZATIONS............................26
   3.14     INTELLECTUAL PROPERTY...........................................27
   3.15     LITIGATION; COMPLIANCE WITH LAWS................................28
   3.16     INSURANCE.......................................................28
   3.17     EMPLOYEE BENEFIT PLANS..........................................29
   3.18     TRANSACTIONS WITH AFFILIATES....................................31
   3.19     NO BROKERS OR FINDERS...........................................32
   3.20     ACCURACY OF INFORMATION.........................................32
   3.21     RECEIVABLES.....................................................32
   3.22     ENVIRONMENTAL...................................................32
   3.23     RESTRICTIONS ON BUSINESS ACTIVITIES.............................33
   3.24     INTERNAL CONTROLS...............................................33
   3.25     ABSENCE OF CERTAIN PAYMENTS.....................................34
   3.26     BANK ACCOUNTS...................................................34
   3.27     SHAREHOLDER'S INVESTMENT REPRESENTATIONS........................34

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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT.........................34
   4.1      ORGANIZATION AND AUTHORITY OF PARENT AND BUYER..................34
   4.2      NO CONFLICT; GOVERNMENTAL CONSENTS..............................35
   4.3      FINANCIAL STATEMENTS............................................35
   4.4      NO BROKERS OR FINDERS...........................................35
   4.5      PARENT SEC DOCUMENTS............................................36

ARTICLE V ADDITIONAL AGREEMENTS.............................................36
   5.1      NOTICES AND CONSENTS............................................36
   5.2      TAKING OF NECESSARY ACTION; FURTHER ACTION......................37
   5.3      DIRECTORS AND OFFICERS..........................................37
   5.4      DIRECTORS AND OFFICERS..........................................37

ARTICLE VI TAX MATTERS......................................................37
   6.1      CONVEYANCE TAXES................................................37
   6.2      MISCELLANEOUS...................................................37

ARTICLE VII INDEMNIFICATION.................................................38
   7.1      OBLIGATIONS OF SHAREHOLDERS.....................................38
   7.2      OBLIGATIONS OF PARENT...........................................38
   7.3      PROCEDURE.......................................................39
   7.4      SURVIVAL........................................................40
   7.5      NOTICE BY INDEMNIFYING PARTY....................................40
   7.6      INDEMNITY THRESHOLD AND CAP.....................................40
   7.7      EXCLUSIVE REMEDY................................................41
   7.8      MITIGATION......................................................41

ARTICLE VIII GENERAL........................................................41
   8.1      AMENDMENTS; WAIVERS.............................................41
   8.2      SCHEDULES; EXHIBITS; INTEGRATION................................41
   8.3      GOVERNING LAW...................................................41
   8.4      NO ASSIGNMENT...................................................41
   8.5      HEADINGS........................................................42
   8.6      COUNTERPARTS....................................................42
   8.7      PUBLICITY AND REPORTS...........................................42
   8.8      PARTIES IN INTEREST.............................................42
   8.9      NOTICES.........................................................42
   8.10     REMEDIES; WAIVER................................................44
   8.11     ATTORNEY'S FEES.................................................44
   8.12     SEVERABILITY....................................................44
   8.13     ENTIRE AGREEMENT................................................44
   8.14     TIME IS OF THE ESSENCE..........................................44
   8.15     ARBITRATION.....................................................44

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Exhibits
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Exhibit A      Form of Articles of Merger
Exhibit B      Form of Legal Opinion of Counsel for Shareholders and Company
Exhibit C      Form of Employment Agreement
Exhibit D      Form of Release
Exhibit E      Form of Non-Competition Agreement
Exhibit F      Form of Registration Rights Agreement
Exhibit G      Form of Legal Opinion of Counsel for Parent and Buyer
Exhibit H      Form of Warrant
Exhibit I      Form of Subscription Agreement
Exhibit J      Form of Promissory Note
Exhibit K      Form of Assumption and Indemnification Agreement
Exhibit L      Form of Security Agreement

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                          AGREEMENT AND PLAN OF MERGER
                          ----------------------------

     This Agreement and Plan of Merger is entered into as of May 23, 2006, by
and among TRADESTAR SERVICES, INC., a Nevada corporation ("Parent"); TRADESTAR
ACQUISITION SUB, L.L.C., a Nevada limited liability company ("Buyer"); THE CYMRI
CORPORATION, a Texas corporation (the "Company"); and LARRY M. WRIGHT, FRANKLIN
M. CANTRELL, JR., MICHAEL W. HOPKINS and ROBERT G. WONISH, the holders of all of
the capital stock of the Company (each individually a "Shareholder" and
collectively, the "Shareholders"). Parent, Buyer, Company and the Shareholders
are each a "party" and together are "parties" to this Agreement.

                                 R E C I T A L S

     WHEREAS, the Boards of Directors of Parent and the Company and all of the
managers of Buyer have each approved the merger of the Company with and into
Buyer, with Buyer surviving such merger, upon the terms and subject to the
conditions set forth in this Agreement, whereby the issued and outstanding
shares of the capital stock of the Company will be canceled and retired or
converted into the right to receive the Merger Consideration (as defined
herein);

     WHEREAS, it is intended that, for federal income tax purposes, the
transactions contemplated by this Agreement shall qualify as a tax free
reorganization under the provisions of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder (the "Code"); and

     WHEREAS, Parent, Buyer, the Company and the Shareholders desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger (as defined below) and also to prescribe various conditions to the
Merger.

                                A G R E E M E N T

     NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound the parties agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

     For all purposes of this Agreement, except as otherwise expressly provided,

          (a) the terms defined in this Article I have the meanings assigned to
     them in this Article I and include the plural as well as the singular,

          (b) all accounting terms not otherwise defined herein have the
     meanings assigned under GAAP,

          (c) all references in this Agreement to designated "Articles,"
     "Sections" and other subdivisions are to the designated Articles, Sections
     and other subdivisions of the body of this Agreement,

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          (d) pronouns of either gender or neuter shall include, as appropriate,
     the other pronoun forms, and

          (e) the words "herein," "hereof" and "hereunder" and other words of
     similar import refer to this Agreement as a whole and not to any particular
     Article, Section or other subdivision.

          As used in this Agreement and the schedules delivered pursuant to this
     Agreement, the following definitions shall apply:

          "AAA Rules" has the meaning set forth in Section 8.16.

          "Action" means any action, complaint, claim, charge, petition,
     investigation, suit or other proceeding, whether civil or criminal, in law
     or in equity, or before any mediator, arbitrator or Governmental Entity.

          "Affiliate"  means with  respect to any  specified  Person,  any other
     Person that  directly,  or indirectly  through one or more  intermediaries,
     controls,  or is  controlled  by, or is under  common  control  with,  such
     specified Person.

          "Agreement"  means this  Agreement  and Plan of Merger,  as amended or
     supplemented,   together  with  all  exhibits  and  schedules  attached  or
     incorporated by reference.

          "Approval" means any approval,  authorization,  consent, qualification
     or  registration,  or any waiver of any of the  foregoing,  required  to be
     obtained from, or any notice,  statement or other communication required to
     be filed with or delivered to, any Governmental Entity or any other Person.

          "Articles of Merger" has the meaning set forth in Section 2.2.

          "Assets" has the meaning set forth in Section 3.11(d).

          "Assumption and  Indemnification  Agreement" has the meaning set forth
     in Section 2.11(s).

          "Benefit Plans" has the meaning set forth in Section 3.17(a).

          "Business"  means  the  business  of  the  Company  and  each  of  its
     Subsidiaries, and shall be deemed to include any of the following incidents
     of such business:  income, cash flow,  operations,  condition (financial or
     other), assets, anticipated revenues, prospects, liabilities and personnel.

          "Business Day" means any day that is not a Saturday, a Sunday or other
     day on which banks are  required or  authorized  by law to be closed in the
     City of Houston, Texas.

          "Buyer" has the meaning set forth in the preamble to this Agreement.

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          "Cash Portion of the Merger  Consideration"  means any cash payable to
     the Shareholders as Merger Consideration.

          "Certificates" has the meaning set forth in Section 2.6.

          "Claim" has the meaning set forth in Section 7.3.

          "Claim Notice" has the meaning set forth in Section 7.3.

          "Closing" has the meaning set forth in Section 2.10.

          "Closing  Date"  means the date of the Closing as set forth in Section
     2.10.

          "Cloyses Agreement" has the meaning set forth in Section 3.19.

          "Code" has the meaning set forth on the preamble to this Agreement.

          "Common Stock" means the common stock,  par value $0.01 per share,  of
     the Company.

          "Company" has the meaning set forth on the preamble to this Agreement.

          "Company  Financial  Statements"  means (a) the  audited  consolidated
     balance sheets of the Company and its  Subsidiaries as of December 31, 2003
     and  2004,  as well as the  unaudited  consolidated  balance  sheets of the
     Company  and its  Subsidiaries  as of  December  31,  2005 and the  related
     (audited with respect to 2003 and 2004 and unaudited  with respect to 2005)
     statements of income,  changes in stockholders'  equity,  and cash flow for
     each of the fiscal years then ended,  together  with the  auditor's  report
     pertaining to such financial statements for of Melton & Melton, independent
     certified public  accountants,  and (b) an unaudited  consolidated  balance
     sheet of the  Company  and its  Subsidiaries  as of  April  30,  2006  (the
     "Company  Interim  Balance Sheet") and the related  unaudited  consolidated
     statements of income for the four (4) months then ended.

          "Company  Group" means any  "affiliated  group" (as defined in Section
     1504(a) of the Code without regard to the limitations  contained in Section
     1504(b) of the Code) that, at any time before the Closing Date, includes or
     has included the Company or any  predecessor of or successor to the Company
     (or  another  such  predecessor  or  successor),  or  any  other  group  of
     corporations  that, at any time on or before the Closing Date, files or has
     filed Tax Returns on a  combined,  consolidated  or unitary  basis with the
     Company or any  predecessor of or successor to the Company (or another such
     predecessor or successor).

          "Company  Interim  Balance  Sheet"  has the  meaning  set forth in the
     definition of the Company Financial Statements.

          "Contract"  means any agreement,  contract,  arrangement,  bond,  loan
     commitment,  franchise, indemnity, indenture, instrument, lease, license or
     understanding, whether or not in writing.

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          "December 31, 2005 Company Balance Sheet" has the meaning set forth in
     Section 3.6(b).

          "Defensible Title" shall mean as to the oil and gas Assets, such title
     held by the Company or any of the Company's  Subsidiaries  that, subject to
     and except for the  Permitted  Encumbrances:  (i)  entitles  such entity to
     receive  not less than the "Net  Revenue  Interest"  set forth in  Schedule
     3.11, Part II for the relevant Asset of all oil, gas and associated  liquid
     and gaseous hydrocarbons produced, saved and marketed from such Asset, (ii)
     obligates  such  entity  to  bear  costs  and  expenses   relating  to  the
     maintenance, development and operation of an oil and gas Asset in an amount
     not greater than the "Working  Interest" set forth in Schedule  3.11,  Part
     II, with respect to such Asset (unless there is a proportionate increase in
     such entity's "Net Revenue Interest" for such oil and gas Asset); and (iii)
     is free and clear of Encumbrances, other than Permitted Encumbrances.

          "Dissenting Shareholder" has the meaning set forth in Section 2.9.

          "DOL" has the meaning set forth in Section 3.17(k).

          "Effective Time" has the meaning set forth in Section 2.2.

          "Employee" or "Employees"  means any individual who is (a) an employee
     of the Company or any of its Subsidiaries  immediately prior to the Closing
     Date and (b)  employees  of the Company or any of its  Subsidiaries  on any
     authorized  leave of  absence,  including,  without  limitation,  short- or
     long-term disability leave,  worker's  compensation leave or vacation leave
     as of the Closing Date.

          "Employment Agreement" has the meaning set forth in Section 2.11(d).

          "Encumbrance" means any claim, charge, easement,  encumbrance,  lease,
     covenant,  security interest,  lien, option,  pledge,  rights of others, or
     restriction (whether on voting, sale, transfer,  disposition or otherwise),
     whether  imposed by  agreement,  understanding,  law,  equity or otherwise,
     except  for any  restrictions  on  transfer  generally  arising  under  any
     applicable federal or state securities law.

          "Environmental  Defect"  shall mean a  condition  with  respect to the
     Assets that constitutes a violation of Environmental  Law; provided that an
     Environmental  Defect shall not be deemed to exist for the purposes of this
     Agreement  unless the estimated  Lowest Cost  Response for  remedying  such
     Environmental Defect exceeds $25,000.

          "Environmental  Laws" shall mean all Laws  relating to (a) the control
     of any  potential  pollutant  or  protection  of the  air,  water,  land or
     protected species, (b) solid, gaseous or liquid waste generation, handling,
     treatment, storage, disposal or transportation and (c) the regulation of or
     exposure to hazardous, toxic or other substances alleged to be harmful.

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
     amended, and the related regulations and published interpretations.

          "ERISA Affiliate" has the meaning set forth in Section 3.17(a).

                                       4
<PAGE>

          "Exchange Act" means the Securities  Exchange Act of 1934, as amended,
     and the rules and regulations of the SEC promulgated thereunder.

          "GAAP" means generally  accepted  accounting  principles in the United
     States, as in effect from time to time.

          "GCLN" has the meaning set forth in Section 2.1.

          "Governmental  Entity"  means any  government  or any agency,  bureau,
     board,  commission,  court,  department,  official,  political subdivision,
     tribunal or other instrumentality of any government, whether federal, state
     or local, domestic or foreign.

          "Hazardous Materials" means any "hazardous  substance,"  "pollutant or
     contaminant,"  and "petroleum" and "natural gas liquids" as those terms are
     defined or used in section 101 of the Comprehensive Environmental Response,
     Compensation and Liability Act, and any other material  regulated under any
     Environmental  Law  because  of its  effect or  potential  effect on public
     health and the environment, including without limitation, PCBs, lead paint,
     asbestos,  urea  formaldehyde,  radioactive  materials and wastes generated
     during the production of oil and gas.

          "Income Tax Return" means Tax Returns relating to Income Taxes.

          "Income  Taxes"  shall  mean any Taxes  imposed  on or  determined  by
     reference to net income, together with any interest or penalty, addition to
     tax or additional amount imposed by any taxing authority on account of such
     Taxes.

          "Indemnified Party" has the meaning set forth in Section 7.3.

          "Indemnifying  Party"  has the  meaning  set  forth  in  Section  7.3.
     "Intellectual Property" has the meaning set forth in Section 3.14(a).

          "IRS"  means  the  United  States  Internal  Revenue  Service  or  any
     successor entity, and to the extent relevant,  the United States Department
     of Treasury.

          "Knowledge" or "Known" shall mean, with respect to  Shareholders,  the
     actual knowledge (without  investigation) of any of the Shareholders or Ken
     Thomas.

          "Law" means any constitutional provision,  statute or other law, rule,
     regulation, or interpretation of any Governmental Entity and any Order.

          "Loss"  means  any  action,  cost,  damage,   disbursement,   expense,
     liability,  loss, deficiency,  diminution in value, obligation,  penalty or
     settlement of any kind or nature,  whether  foreseeable  or  unforeseeable,
     including but not limited to, interest or other carrying costs,  penalties,
     legal,  accounting and other professional fees and expenses incurred in the
     investigation,  collection,  prosecution  and defense of claims and amounts
     paid in  settlement,  that  may be  imposed  on or  otherwise  incurred  or
     suffered by the specified Person.

                                       5
<PAGE>

          "Lowest Cost  Response"  shall mean the  response  required or allowed
     under Environmental Laws that addresses the condition present at the lowest
     cost (considered as a whole taking into consideration any material negative
     impact such response may have on the operations of the relevant  assets and
     any potential  material  additional  costs or  liabilities  that may likely
     arise a result of such  response) as compared to any other response that is
     consistent with Environmental Laws.

          "Material  Adverse  Effect" means,  with respect to any Person,  (i) a
     material  adverse  effect  on  the  condition   (financial  or  otherwise),
     business,  prospects, assets, liabilities, or results of operations of such
     Person in an amount  individually  or in the aggregate  equal to or greater
     than  $100,000;  or (ii) a material  adverse  effect on the ability of such
     Person to consummate the transactions contemplated by this Agreement.

          "Material  Contract"  means any  Contract  deemed  material by Section
     3.10.

          "Merger" has the meaning set forth in Section 2.1.

          "Merger Consideration" has the meaning set forth in Section 2.5(a).

          "Non-Competition  Agreement"  has the  meaning  set  forth in  Section
     2.11(o).

          "Note" and "Notes"  means  secured  promissory  notes of Parent in the
     form of Exhibit J hereto.

          "Note  Portion  of Merger  Consideration"  means  that  portion of the
     Merger Consideration that is evidenced by the Notes.

          "Options" has the meaning set forth in Section 2.5(b).

          "Order"  means  any  decree,  injunction,   judgment,  order,  ruling,
     assessment or writ of any Governmental Entity.

          "Parent" has the meaning set forth on the preamble to this Agreement.

          "Parent  Financial  Statements"  means  the (a)  audited  consolidated
     balance  sheets of Parent as of December 31, 2003,  2004 and 2005,  and the
     related audited consolidated statements of income, changes in stockholders'
     equity,  and cash flow for each of the fiscal  years then  ended,  together
     with the auditor's report pertaining to such financial statements of Gordon
     Hughes & Banks, independent certified public accountants; and (b) unaudited
     consolidated  balance  sheet of Parent as of March  31,  2006 (the  "Parent
     Interim Balance Sheet") and the related unaudited consolidated statement of
     income for the three (3) months then ended.

          "Parent Indemnified Party" has the meaning set forth in Section 7.1.

          "Parent Indemnifying Party" has the meaning set forth in Section 7.2.

          "Parent  Interim  Balance  Sheet"  has the  meaning  set  forth in the
     definition of Parent Financial Statements.

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<PAGE>

          "Parent SEC Documents" has the meaning set forth in Section 4.5(a).

          "Parent  Shares" shall mean shares of common  stock,  par value $0.001
     per share, of Parent.

          "PBGC" has the meaning set forth in Section 3.17(k).

          "PEI  Notes"  means (i) the  Promissory  Note dated  December 3, 2004,
     executed by the Company in favor of Don E. Claxton and Betty Jane  Claxton;
     (ii) the Promissory Note dated December 3, 2004, executed by the Company in
     favor of C. T. ("Skip")  Kimball,  III and Linda R. Kimball;  and (iii) the
     Promissory Note dated December 3, 2004, executed by the Company in favor of
     The Irene and Alvin Bellaire, Jr. Trust.

          "Permit"  means  any  license,  permit,   franchise,   certificate  of
     authority, or order, or any waiver of the foregoing,  required to be issued
     by any Governmental Entity.

          "Permitted  Encumbrances"  shall mean, with respect to the oil and gas
     Assets,  any or all of the  following:  (a)  Encumbrances  that arise under
     operating  agreements to secure  payment of amounts not yet  delinquent and
     are of a type  and  nature  customary  in the  oil and  gas  industry;  (b)
     Encumbrances that arise as a result of pooling and unitization  agreements,
     declarations,  orders, or Laws (in each case) to the extent the same do not
     operate to reduce the "Net  Revenue  Interest" of the Company or any of its
     Subsidiaries  in and to any oil and gas Asset to less than the  amount  set
     forth in Schedule 3.11,  Part II for such oil and gas Asset or increase the
     "Working  Interest" of the Company or any of its Subsidiaries in and to any
     oil and gas Asset to greater  than the amount set forth in  Schedule  3.11,
     Part II for such oil and gas Asset (without a corresponding increase in the
     "Net Revenue  Interest" for such Warranty Well); (c) Encumbrances  securing
     payments to  mechanics  and  materialmen  or  securing  payment of taxes or
     assessments  that are, in either  case,  not yet  delinquent;  (d) lessor's
     royalties,  overriding royalties,  division orders,  reversionary interests
     and other  similar  burdens  that do not operate to reduce the "Net Revenue
     Interest" of the Company or any of its  Subsidiaries  in and to any oil and
     gas Asset to less than the amount set forth in Schedule  3.11,  Part II for
     such oil and gas Asset or increase the "Working Interest" of the Company or
     any of its  Subsidiaries  in and to any  Warranty  Well to greater than the
     amount  set  forth in  Schedule  3.11,  Part II for such oil and gas  Asset
     (without a  corresponding  increase in the "Net Revenue  Interest" for such
     oil and gas Asset);  (e)  easements,  rights-of-way,  servitudes,  permits,
     surface  leases,  surface  use  restrictions  and  other  surface  uses and
     impediments on, over or in respect of any of the Assets, provided that they
     do not interfere materially with the ownership, operation, value, or use of
     the property  affected;  (f) production sales  contracts;  division orders;
     contracts  for  sale,  purchase,   exchange,   refining  or  processing  of
     hydrocarbons; farm-out or farm-in agreements; participation agreements; and
     similar agreements to the extent the same (i) are ordinary and customary to
     the oil, gas and other  mineral  exploration,  development,  processing  or
     extraction  business  and (ii) do not  operate to reduce  the "Net  Revenue
     Interest" of the Company or any of its  Subsidiaries  in and to any oil and
     gas Asset to less than the amount set forth in Schedule  3.11,  Part II for
     such oil and gas Asset or increase the "Working Interest" of the Company or
     any of its Subsidiaries in and to any oil and gas Asset to greater than the
     amount  set  forth in  Schedule  3.11,  Part II for such oil and gas  Asset
     (without a  corresponding  increase in the "Net Revenue  Interest" for such
     Warranty Well); (g) preferential purchase rights and transfer restrictions,
     (h)  Encumbrances  created by or in connection  with the Sterling Debt, and
     (i) Encumbrances created by or in connection with the Wells Fargo Debt.

                                       7
<PAGE>

          "Person"  means  an  association,  a  corporation,  an  individual,  a
     partnership,  a limited liability  company,  a trust or any other entity or
     organization, including a Governmental Entity.

          "Qualified Plan" has the meaning set forth in Section 3.17(b).

          "Real Property" has the meaning set forth in Section 3.11(a).

          "Registration  Rights  Agreement" has the meaning set forth in Section
     2.11(p).

          "Release"  means  any  release,  spill,  emission,  leaking,  pumping,
     injection, deposit, disposal,  discharge,  dispersal, leaching or migration
     into the indoor or outdoor environment,  including, without limitation, the
     movement of Hazardous  Materials through air, soil,  surface water,  ground
     water, wetlands, land or subsurface strata

          "SEC" means the United States Securities and Exchange Commission.

          "Securities Act" means the Securities Act of 1933, as amended, and the
     rules and regulations of the SEC promulgated thereunder.

          "Security Agreement" has the meaning set forth in Section 2.11(t).

          "Share" and "Shares" has the meaning set forth in Section 2.5(a).

          "Shareholder"  and  "Shareholders"  has the  meaning  set forth in the
     preamble to this Agreement.

          "Shareholder  Indemnified  Party" has the meaning set forth in Section
     7.2.

          "Shareholder   Indemnifying   Party"  and  "Shareholder   Indemnifying
     Parties" has the meaning set forth in Section 7.1.

          "Sterling  Debt" means all amounts  outstanding  under the Amended and
     Restated  Credit  Agreement,  dated  December  3,  2004,  by and  among the
     Company, Petroleum Engineers, Inc., Petroleum Engineers International, Inc.
     and  Triumph  Energy,  Inc.,  as debtors,  and  Sterling  Bank,  as lender,
     including  that  certain  Revolving  Note  payable to Sterling  Bank in the
     original principal amount of $20,000,000.

          "Stock Option Plans" has the meaning set forth in Section 2.5(b).

          "Stock  Portion of Merger  Consideration"  means  that  portion of the
     Merger  Consideration  that is evidenced by the Parent Shares issued to the
     Shareholders as set forth in Schedule 2.5.

          "Subscription Agreement" has the meaning set forth in Section 3.27.

                                       8
<PAGE>

          "Subsidiary"  means,  with respect to any Person,  (a) any corporation
     50% or more of whose  stock of any  class or  classes  having  by the terms
     thereof  ordinary voting power to elect a majority of the directors of such
     corporation  (irrespective of whether or not at the time stock of any class
     or classes of such corporation have or might have voting power by reason of
     the  happening  of any  contingency)  is at the time owned by such  Person,
     directly  or  indirectly  through  Subsidiaries;  and (b) any  partnership,
     limited  liability  company,  association,  joint  venture,  trust or other
     entity in which such Person,  directly or indirectly through  Subsidiaries,
     is either a general  partner,  has a 50% or greater equity  interest at the
     time or otherwise owns a controlling interest.

          "Surviving Entity" has the meaning set forth in Section 2.1.

          "Tax" (and, with correlative meaning, "Taxes") means: (i) any federal,
     state, local or foreign net income, gross income, gross receipts,  windfall
     profit,  severance,  property,  production,  sales, use,  license,  excise,
     franchise, employment, payroll, withholding, alternative or add-on minimum,
     ad valorem,  value added,  transfer,  stamp, or  environmental  tax, or any
     other tax,  custom,  duty,  governmental  fee or other like  assessment  or
     charge of any kind  whatsoever,  together  with any  interest  or  penalty,
     addition to tax or additional amount imposed by any governmental authority;
     and (ii) any  liability of the Company or any of its  Subsidiaries  for the
     payment of amounts with  respect to payments of a type  described in clause
     (i) as a result of being a member of an affiliated,  consolidated, combined
     or unitary group, or as a result of any obligation of the Company or any of
     its  Subsidiaries  under  any  Tax  Sharing  Arrangement  or Tax  Indemnity
     Agreement.

          "Tax Indemnity  Agreement" means any written or unwritten agreement or
     arrangement  pursuant to which the Company may be required to  indemnify or
     reimburse another party for any liability relating to Taxes.

          "Tax Return" means any return, report or similar statement required to
     be filed  with  respect  to any Tax  (including  any  attached  schedules),
     including  any  information  return,  claim for refund,  amended  return or
     declaration of estimated Tax.

          "Tax Sharing  Arrangement" means any written or unwritten agreement or
     arrangement for the allocation or payment of Tax liabilities or payment for
     Tax benefits with respect to a consolidated, combined or unitary Tax Return
     which includes the Company.

          "TBCA" has the meaning set forth in Section 2.1.

          "Threshold" has the meaning set forth in Section 7.6(a).

          "Third Party Intellectual Rights" has the meaning set forth in Section
     3.14(b).

          "Title Defect" shall mean, with respect to any oil and gas Asset,  any
     encumbrance,  encroachment,  irregularity,  or  defect  in the title of the
     Company or any Subsidiary of the Company that alone or in combination  with
     other defects in title  renders the title of the Company or any  Subsidiary
     of the  Company to the oil and gas  Assets or part  thereof to be less than
     Defensible Title; provided that a Title Defect shall not be deemed to exist
     for the purposes of this Agreement unless the estimated cost to remedy such
     Title Defect exceeds One Hundred Thousand Dollars ($100,000.00).

                                       9
<PAGE>

          "Wells  Fargo  Debt" means all  amounts  outstanding  under the Credit
     Agreement,  dated May 23, 2006, by and among Petroleum Engineers,  Inc. and
     Tradestar  Construction  Services,  Inc.,  as  debtors,  and  Wells  Fargo,
     National  Association,  as lender,  including  that certain  Revolving Note
     payable to Wells Fargo in the original principal amount of $5,000,000.


                                   ARTICLE II

                                   THE MERGER
                                   ----------

     2.1 The Merger. At the Effective Time and upon the terms and subject to the
conditions  of  this  Agreement  and  in  accordance  with  the  Texas  Business
Corporation  Act  (the  "TBCA")  and  the  General  Corporation  Law of  Nevada,
including  but not limited to Chapters  78 (Private  Corporations),  86 (Limited
Liability   Companies)   and  92(a)   (Mergers,   Conversions,   Exchanges   and
Divestitures)  of Title 7 of the Nevada  Revised  Statutes,  (the  "GCLN"),  the
Company  shall be merged  with and into  Buyer  (the  "Merger").  Following  the
Merger,  Buyer shall continue as the surviving  entity (the "Surviving  Entity")
and the separate corporate existence of the Company shall cease.  Parent, as the
sole owner of Buyer, hereby approves the Merger and this Agreement.

     2.2 Effective  Time.  Subject to the terms and conditions set forth in this
Agreement,  on the Closing Date, Articles of Merger substantially in the form of
Exhibit A  (collectively,  the "Articles of Merger")  shall be duly executed and
acknowledged  by  the  Company  and  Buyer  and  thereafter   delivered  to  the
Secretaries  of State of each of the States of Texas and Nevada for filing.  The
Merger shall become  effective at such time as a properly  executed  copy of the
Articles  of Merger is duly filed with the  Secretaries  of State of each of the
States of Texas and Nevada or such later time as Parent and the Shareholders may
agree  upon and as set  forth in the  Articles  of Merger  (the time the  Merger
becomes effective being referred to herein as the "Effective Time").

     2.3 Effects of the Merger.  The Merger  shall have the effects set forth in
the TBCA and the GCLN.  Without  limiting the  generality  of the  foregoing and
subject thereto, at the Effective Time, all the properties,  rights, privileges,
powers and  franchises  of the  Company  and Buyer  shall vest in the  Surviving
Entity,  and all debts,  liabilities  and  obligations  of the Company and Buyer
shall become the debts, liabilities and obligations of the Surviving Entity.

     2.4 Articles of  Incorporation,  Bylaws and  Directors  and  Officers.  The
Articles of  Incorporation  of the Company shall,  without  further  action,  be
terminated, and the organizational documents of Buyer in effect at the Effective
Time shall be the organizational documents of the Surviving Entity until amended
in accordance  with  applicable  law. From and after the Effective  Time,  until
successors  are duly  elected or appointed  and  qualified  in  accordance  with
applicable law, the managers and the initial  officers of Buyer at the Effective
Time shall  become  managers and the  officers of the  Surviving  Entity and the
officers and directors of the Company shall cease to act as such effective as of
the Effective Time.

                                       10
<PAGE>


     2.5 Conversion of Shares; Stock Options; Warrants.

          (a) At the  Effective  Time,  by virtue of the Merger (and without any
     action on the part of Buyer or the  Company),  each share of common  stock,
     par  value  $0.01  per  share,   of  the  Company   (each  a  "Share"  and,
     collectively, the "Shares") issued and outstanding immediately prior to the
     Effective  Time shall be  converted  into the right to  receive  the Merger
     Consideration.  The "Merger  Consideration" is as set forth on Schedule 2.5
     attached  hereto,  which Merger  Consideration is comprised of (i) the Cash
     Portion  of  Merger  Consideration,   (ii)  the  Stock  Portion  of  Merger
     Consideration, and (iii) the Note Portion of Merger Consideration, less all
     amounts outstanding (including but not limited to all principal and accrued
     and unpaid  interest)  under the  Sterling  Debt  immediately  prior to the
     Closing  and all  amounts  outstanding  (including  but not  limited to all
     principal and accrued and unpaid interest) under the PEI Notes  immediately
     prior to the Closing.

          (b) The Company  shall take such  action in order  that,  prior to the
     Effective  Time, the options granted under any Company stock option plan or
     agreement (collectively, as such plans or agreements may have been amended,
     supplemented  or modified from time to time, the "Stock Option Plans") that
     are unexercised,  whether or not then  exercisable  (the "Options"),  shall
     have been  extinguished.  The Company shall ensure that, in connection with
     the  extinguishment  of each  Option,  a release  of any and all rights the
     holder  had or may have had in the  Option is  obtained.  All Stock  Option
     Plans shall  terminate as of the Effective  Time and the  provisions in any
     other plan,  program or arrangement  providing for the issuance or grant of
     any other  interest in respect of the  capital  stock of the Company or any
     Subsidiary shall be extinguished as of the Effective Time.

          (c) The Company  shall take such  action in order  that,  prior to the
     Effective Time, all warrants  issued to purchase  securities of the Company
     shall be canceled and the holders of such  warrants  shall  release any and
     all rights such holders had or may have had in such warrants.

     2.6 Exchange of Shares for Merger  Consideration.  At the  Effective  Time,
each Share issued and outstanding  immediately prior to the Effective Time shall
no longer be outstanding  and shall  automatically  be cancelled and retired and
shall cease to exist, and each certificate previously evidencing any such Shares
(the  "Certificates")  shall thereafter  represent the right to receive only the
amount of Merger  Consideration set forth opposite such  Shareholder's  name who
holds the  Certificates as set forth on Schedule 2.5. Each share of any class of
Company capital stock issued and outstanding  immediately prior to the Effective
Time that is owned by the Company or by any  Subsidiary  of the  Company  (other
than shares in trust accounts, security accounts, custodial accounts and similar
holdings like that are beneficially owned by third parties), shall automatically
be  canceled  and  retired  and  shall  cease  to  exist,  and no cash or  other
consideration shall be delivered or deliverable in exchange therefor.

     2.7 Buyer  Membership  Interests.  At the Effective  Time, the  outstanding
membership  interests  of Buyer shall be converted  into 100% of the  membership
interests of the Surviving Entity.

                                       11
<PAGE>


     2.8 Delivery of Certificates and Cash.

          (a)  Delivery.  At the Closing,  each  Shareholder  shall deliver such
     Shareholder's  Certificate(s) to Parent. Upon delivery of a Certificate for
     cancellation to Parent,  Parent shall deliver in exchange  therefor payment
     of the Merger  Consideration  determined in accordance with Section 2.5 and
     the Cash Portion of Merger  Consideration shall be paid by check or by wire
     transfer to the  respective  accounts  designated  by each  Shareholder  as
     provided to Parent not less than two (2) Business Days prior to the Closing
     Date  and  the  Certificate(s)  so  surrendered  by the  Shareholder  shall
     forthwith be canceled.  If any cash is to be paid to a name other than that
     which the Certificate(s) surrendered in exchange therefor is registered, or
     in the event of a transfer of ownership of Shares that is not registered in
     the transfer records of the Company,  it shall be a condition of payment of
     the Merger  Consideration  that the  Certificate  so  surrendered  shall be
     properly  endorsed or shall be  otherwise  in proper form for  transfer and
     that the Person  requesting  such payment  shall have paid any transfer and
     other taxes  required by reason of the payment of the Merger  Consideration
     to a Person other than the registered holder of the Certificate surrendered
     or shall  have  established  to the  satisfaction  of Parent  that such tax
     either has been paid or is not applicable. Parent reserves the right in its
     sole discretion to pay Merger  Consideration  only to the Person whose name
     is on the Certificate(s) surrendered in exchange therefor and registered on
     the transfer records of the Company.  Until  surrendered as contemplated by
     this Section 2.8,  each  Certificate  shall be deemed at any time after the
     Effective  Time to represent  only the right to receive upon such surrender
     the Merger Consideration as contemplated by this Section 2.8.

          (b) No Further  Registration.  The Merger  Consideration paid upon the
     surrender of Shares in accordance  with the terms hereof shall be deemed to
     have  been  paid in full  satisfaction  of all  rights  pertaining  to such
     Shares.  From and after  the  Effective  Time,  there  shall be no  further
     registration of transfers on the transfer books of the Surviving  Entity of
     the Shares that were outstanding immediately prior to the Effective Time.

          (c) Withholding Taxes. Parent shall be entitled to deduct and withhold
     from the  Merger  Consideration  otherwise  payable  to a holder  of Shares
     pursuant  to the Merger  such  amounts as Parent is  required to deduct and
     withhold  with respect to the making of such payment  under the Code or any
     provision of state,  local or foreign tax law. To the extent amounts are so
     withheld by Parent,  the withheld  amounts  shall be (i) timely paid to the
     appropriate  Governmental  Entity  to whom  such  taxes  are  owed and (ii)
     treated  for all  purposes  of this  Agreement  as having  been paid to the
     holder of the Shares in respect of which the deduction and  withholding was
     made.

          (d)  Certificates.  If any Certificate shall have been lost, stolen or
     destroyed,  upon the  making of an  affidavit  of that  fact by the  person
     claiming such Certificate to be lost,  stolen or destroyed and, if required
     by Parent,  the posting by such person of a bond in such reasonable  amount
     as  Parent  may  direct as  indemnity  against  any claim  that may be made
     against  it with  respect  to such  Certificate,  Parent  shall  deliver in
     exchange for such lost,  stolen or  destroyed  Certificate  the  applicable
     Merger Consideration with respect thereto.

                                       12
<PAGE>

     2.9 Dissenter's  Rights. Any Shares that a Shareholder  properly exercising
his,  her or its  dissent  or  appraisal  rights  under the TBCA (a  "Dissenting
Shareholder")   holds  will  be  converted   into  the  right  to  receive  such
consideration  as may be  determined  to be due to such  Dissenting  Shareholder
under the TBCA; except that any such Shares that a Dissenting  Shareholder holds
for which, after the Effective Time, such Dissenting  Shareholder withdraws his,
her or its demand for  purchase or loses its  purchase  right as provided in the
TBCA,  will be deemed to be converted,  as of the Effective Time, into the right
to receive the applicable Merger Consideration, without any interest thereon, in
accordance  with Section 2.5. The Company will give Parent (a) prompt  notice of
any written  demands for purchase,  withdrawals  of demands for purchase and any
other  instruments  served under the TBCA, and (b) the opportunity to direct all
negotiations  and  proceedings  with respect to demands for  purchase  under the
TBCA.  The Company  will not  voluntarily  make any payment  with respect to any
purchase  demands and will not,  except with  Parent's  prior  written  consent,
settle or offer to settle any such demands. Each Dissenting Shareholder shall be
responsible for all costs and expenses (including reasonable attorney's fees and
costs) of Parent,  Buyer or the Surviving Entity associated with such Dissenting
Shareholder  exercising  his, her or its dissent or  appraisal  rights under the
TBCA.

     2.10 The  Closing.  Upon the terms and  subject to the  conditions  of this
Agreement, the transactions contemplated by this Agreement shall take place at a
closing  (the  "Closing")  to be held at the  offices of Haynes and Boone,  LLP,
legal counsel to Parent and Buyer, located at One Houston Center, 1221 McKinney,
Suite 2100, Houston,  Texas 77010  contemporaneously  with the execution of this
Agreement, or at such other place or at such other time or on such other date as
the  Shareholders  and Parent may mutually agree upon in writing,  provided that
all closing  deliveries  required  of the  parties in this  Article II have been
delivered  (the day on which the Closing takes place being the "Closing  Date").
It is  anticipated by the parties hereto that the Closing will occur on or about
May 23, 2006.  The Closing may,  with the consent of all parties,  take place by
delivering an exchange of documents by facsimile transmission or electronic mail
with originals to follow by overnight mail service courier.


     2.11  Closing  Deliveries  by the  Shareholders  and  the  Company.  At the
Closing, against delivery of, among other things, the Merger Consideration,  the
Shareholders shall deliver or cause to be delivered to Parent:

          (a) the Certificates in accordance with Section 2.8;

          (b) a legal opinion from Hirsch & Westheimer,  P.C.,  legal counsel to
     the Company and the Shareholders, addressed to Parent and dated the Closing
     Date, substantially in the form of Exhibit B;

          (c)  each  in  form  and  substance  satisfactory  to  Parent  in  its
     reasonable  discretion,  all  Approvals  of all  Governmental  Entities and
     officials  which are necessary  for the  consummation  of the  transactions
     contemplated  by this  Agreement and all third party  consents and estoppel
     certificates identified on Schedule 3.5;

          (d) an employment agreement with the Surviving Entity duly executed by
     Larry M. Wright in the form attached  hereto as Exhibit C (the  "Employment
     Agreement");

                                       13
<PAGE>

          (e)  a   non-foreign   status   certificate   that  would  exempt  the
     transactions  contemplated by this Agreement from  withholding  pursuant to
     the  provisions  of  Sections  897 and 1445 of the  Code  and the  Treasury
     Regulations promulgated thereunder;

          (f) a Subscription Agreement duly executed by each Shareholder;

          (g) All minute books,  seals and other records of the Company and each
     of its Subsidiaries;

          (h) Certificates of the Secretary of State and the taxing  authorities
     of the State of Texas or Louisiana,  as  applicable,  or other  appropriate
     government  authority,  dated  not more  than  five  (5) days  prior to the
     Closing  Date,  attesting  to the  incorporation  and good  standing of the
     Company  and  each  Subsidiary  as a  corporation  in its  jurisdiction  of
     incorporation, and to the payment of all state taxes due and owing thereby;

          (i) Copies,  certified by the  Secretary of State of Texas,  dated not
     more than five (5) days  prior to the  Closing  Date,  of the  Articles  of
     Incorporation of the Company, and all amendments thereto;

          (j) Copies, certified by the Secretary of State of the jurisdiction of
     incorporation  of each Subsidiary of the Company,  dated not more than five
     (5) days prior to the Closing  Date,  of the charter of such  Subsidiary of
     the Company, and all amendments thereto;

          (k) Copies,  certified the by Secretary or Assistant  Secretary of the
     Company  as of the  Closing  Date,  of the bylaws of the  Company,  and all
     amendments thereto;

          (l) Copies,  certified the by Secretary or Assistant Secretary of each
     Subsidiary  of the  Company as of the Closing  Date,  of the bylaws of such
     Subsidiary of the Company, and all amendments thereto;

          (m) a release duly executed by the Shareholders in the form of Exhibit
     D attached hereto;

          (n) any Permits necessary to the operations of the Business amended to
     adequately  reflect any change of control or other  amendment  necessary to
     reflect the Merger;

          (o) a Confidentiality,  Non-Competition and Non-Solicitation Agreement
     by and between each Shareholder (except Larry M. Wright) and Parent, in the
     form of Exhibit E attached  hereto  (each a  "Non-Competition  Agreement"),
     executed by each Shareholder (except Larry M. Wright);

          (p) a Registration  Rights Agreement by and among the Shareholders and
     Parent providing for piggy-back  registration  rights for the Shareholders,
     in  the  form  of  Exhibit  F  attached  hereto  (a  "Registration   Rights
     Agreement"), executed by each Shareholder;

                                       14
<PAGE>

          (q)  written  evidence  of  the  termination  or  cancellation  of all
     guaranties,   reimbursements,  "hold  harmless,"  indemnities  and  similar
     obligations  and  liabilities  of the Company on behalf of any Person other
     than the  Company  or any  Subsidiary  of the  Company,  including  without
     limitation those obligations listed on Schedule 2.11(q);

          (r) the Articles of Merger duly executed by the Company;

          (s) an Assumption and Indemnification Agreement in the form of Exhibit
     K (the  "Assumption and  Indemnification  Agreement") duly executed by each
     Shareholder (except Michael W. Hopkins) and the Company; and

          (t) a Pledge  and  Security  Agreement  in the form of  Exhibit L (the
     "Security  Agreement")  duly  executed by Larry M.  Wright and  Franklin M.
     Cantrell, Jr.

     2.12  Closing  Deliveries  by Parent and  Buyer.  At the  Closing,  against
delivery  of,  among other  things,  the  Certificates,  Buyer and Parent  shall
deliver to the applicable Shareholders:

          (a)  except as  otherwise  set forth in Section  2.5  above,  the Cash
     Portion of Merger  Consideration by wire transfer in immediately  available
     funds to the bank account(s) designated by the applicable Shareholders;

          (b)  stock  certificates   evidencing  the  Stock  Portion  of  Merger
     Consideration;

          (c) the Notes evidencing the Note Portion of Merger Consideration;

          (d) a legal  opinion  from  Haynes and Boone,  LLP,  legal  counsel to
     Parent and Buyer, addressed to the Shareholders and dated the Closing Date,
     substantially in the form of Exhibit G;

          (e) the Employment Agreement duly executed by the Surviving Entity;

          (f) Certificates of the Secretary of State and the taxing  authorities
     of the State of Nevada or other appropriate government authority, dated not
     more  than  five  (5) days  prior to the  Closing  Date,  attesting  to the
     incorporation  and  good  standing  of  Parent  as  a  corporation  in  its
     jurisdiction  of  incorporation,  and to the payment of all state taxes due
     and owing thereby;

          (g) a Subscription  Agreement with each  Shareholder  duly executed by
     Parent;

          (h) a Non-Competition Agreement with each Shareholder (except Larry M.
     Wright) duly executed by Parent;

          (i) a copy,  certified  as of the  Closing  Date by the  Secretary  or
     Assistant  Secretary of Parent,  of the bylaws of Parent and all amendments
     thereto and  resolutions  of the Board of Directors  of Parent  authorizing
     Parent's  execution,  delivery  and  performance  of  this  Agreement,  the
     consummation the transactions  contemplated  herein,  and the taking of all
     such other corporate  action as shall have been required as a condition to,
     or in connection with the consummation of the contemplated transactions;

          (j) the Registration Rights Agreement duly executed by Parent;

                                       15
<PAGE>

          (k) warrants  issued to Larry M. Wright and Franklin M. Cantrell,  Jr.
     to  purchase  Parent  Shares,  in the form of Exhibit H, duly  executed  by
     Parent;

          (l) Certificates of the Secretary of State and the taxing  authorities
     of the State of Nevada or other appropriate government authority, dated not
     more  than  five  (5) days  prior to the  Closing  Date,  attesting  to the
     incorporation   and  good  standing  of  Buyer  as  a  corporation  in  its
     jurisdiction  of  incorporation,  and to the payment of all state taxes due
     and owing thereby;

          (m) a copy,  certified  as of the  Closing  Date by the  Secretary  or
     Assistant  Secretary of Buyer,  of the resolutions of the managers and sole
     member of Buyer authorizing Buyer's execution,  delivery and performance of
     this Agreement, the consummation the transactions  contemplated herein, and
     the taking of all such other limited liability company action as shall have
     been required as a condition to, or in connection with the  consummation of
     the contemplated transactions;

          (n) Copies,  certified by the Secretary of State of Nevada,  dated not
     more than five (5) days  prior to the  Closing  Date,  of the  Articles  of
     Organization of Buyer, and all amendments thereto;

          (o) Copies,  certified the by Secretary or Assistant  Secretary or any
     manager of Buyer as of the Closing  Date,  of the  Operating  Agreement  of
     Buyer, and all amendments thereto;

          (p) the Articles of Merger duly executed by Buyer;

          (q) the  Assumption  and  Indemnification  Agreement  duly executed by
     Parent and Buyer; and

          (r) the Security Agreement duly executed by Parent.


                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
                 ----------------------------------------------

     The  Shareholders,  jointly and severally,  represent and warrant to Parent
and agree as follows:

     3.1 Organization and Qualification of the Company and its Subsidiaries.

          (a) The Company is a corporation duly organized,  validly existing and
     in good standing under the laws of the State of Texas.  Each of the Company
     and its  Subsidiaries  has all necessary  corporate  power and authority to
     own,  operate or lease the  properties  and assets now owned,  operated  or
     leased by it and to carry on the  Business as it has been and is  currently
     conducting.  Each of the Company and its  Subsidiaries  is duly licensed or
     qualified to do business and is in good  standing in each  jurisdiction  in
     which the properties owned or leased by it or the operation of its business
     makes such  licensing or  qualification  necessary.  Schedule 3.1 correctly
     lists with  respect to the Company and its  Subsidiaries  their  respective
     jurisdiction  of  incorporation,   each  jurisdiction  in  which  they  are
     qualified to do business as a foreign corporation,  and their directors and
     executive officers.  The Shareholders have delivered to Parent complete and
     correct   copies  of  the  charter  and  bylaws  of  the  Company  and  its
     Subsidiaries as now in effect as of the Closing Date.

                                       16
<PAGE>

          (b) Each of the  Company  and its  Subsidiaries  owns all  assets  and
     rights   necessary   to  conduct  the  Business  of  the  Company  and  its
     Subsidiaries  as  presently  conducted.  Each  of the  Subsidiaries  of the
     Company is listed on Schedule 3.1.

     3.2 Capitalization.

          (a) The authorized  capital stock of the Company consists of 1,000,000
     shares of Common  Stock.  As of the date hereof,  100,000  shares of Common
     Stock are issued and  outstanding  and each record  owner of Shares and the
     number of Shares  held by each record  owner is set forth on Schedule  3.2.
     Except as set forth on Schedule  3.2,  there are no shares of capital stock
     of the  Company  issued and  outstanding.  All of the Shares have been duly
     authorized and validly issued and is fully paid and non-assessable. None of
     the Shares was issued in violation of any  preemptive  rights or is subject
     to any preemptive rights of any Person.  All of the Shares have been issued
     and  granted  in  all  material  respects  in  compliance  with  applicable
     securities Laws and other requirements of Law. No legend or other reference
     to any Encumbrance  appears upon any certificate  representing  the Shares,
     except for  customary  legends  with respect to transfer  restrictions  for
     restricted securities under federal and Texas securities Law.

          (b) The authorized capital stock of each Subsidiary of the Company and
     the number of shares of capital  stock of each  Subsidiary  of the Company,
     including the record and beneficial owner thereof, is set forth on Schedule
     3.2. All of the shares of capital stock of each of the  Subsidiaries of the
     Company has been duly  authorized  and validly issued and is fully paid and
     non-assessable.  None  of the  capital  stock  of the  Subsidiaries  of the
     Company was issued in violation of any  preemptive  rights or is subject to
     any  preemptive  rights of any Person.  All of the capital stock of each of
     the Subsidiaries of the Company has been issued and granted in all respects
     in compliance  with applicable  securities  Laws and other  requirements of
     Law.  No legend or other  reference  to any  Encumbrance  appears  upon any
     certificate  representing  the  capital  stock  of  any  Subsidiary  of the
     Company, except for customary legends with respect to transfer restrictions
     for  restricted  securities  under  federal and Texas  securities  Law. The
     Company owns no capital stock or other  securities in any Person other than
     the Subsidiaries of the Company set forth on Schedule 3.2.

          (c) There are no outstanding options, warrants, agreements, conversion
     rights, preemptive rights or other rights to subscribe for or purchase from
     any of the Shareholders, the Company or any Subsidiaries of the Company, or
     any plans,  contracts or commitments  providing for the issuance of, or the
     granting of rights to acquire,  (i) any  capital  stock or other  ownership
     interests  of  the  Company  or any of  the  Subsidiaries  of the  Company,
     including,   but  not  limited  to  the  Shares;  or  (ii)  any  securities
     convertible  into or  exchangeable  for any  such  capital  stock  or other
     ownership interests.  There are no outstanding  contractual  obligations or
     plans of any of the  Shareholders,  the Company or any  Subsidiaries of the
     Company to transfer,  issue,  repurchase,  redeem or otherwise  acquire any
     outstanding  shares of capital  stock or other  ownership  interests of the
     Company or any Subsidiaries of the Company,  including,  but not limited to
     the Shares.  Except as described on Schedule  3.1,  neither the Company nor
     any  of  its   Subsidiaries   owns  or  has  any  contract,   agreement  or
     understanding to acquire,  any equity securities or other securities of any
     Person or any direct or indirect equity or ownership  interest in any other
     business.

                                       17
<PAGE>

     3.3  Stock  Ownership  by  Shareholders.  Each  Shareholder  has  good  and
marketable title to, and sole record and beneficial  ownership of, the Shares as
listed  on  Schedule  3.2 and the  Shares  are  free  and  clear  of any and all
covenants,  conditions,  marital  property  rights or other  Encumbrances.  Upon
consummation of the transactions contemplated by this Agreement, Parent will own
all the issued and  outstanding  capital stock of the Surviving  Entity free and
clear  of all  Encumbrances,  and such  capital  stock  will be  fully  paid and
nonassessable.  There are no voting trusts,  stockholder agreements,  proxies or
other  agreements  or  understandings  in effect  with  respect to the voting or
transfer  of any of the  Shares  or  any  of  the  capital  stock  of any of the
Subsidiaries of the Company.

     3.4 Authorization;  Enforceability. The execution, delivery and performance
of this Agreement by each  Shareholder  and the Company and the  consummation by
each  Shareholder and the Company of the transactions  contemplated  hereby have
been duly authorized by all requisite action on the part of each Shareholder and
the  Company.  This  Agreement  has been duly  executed  and  delivered  by each
Shareholder  and the  Company,  and assuming due  authorization,  execution  and
delivery by Buyer and Parent,  this  Agreement  constitutes  a valid and binding
obligation of each of the Shareholders and the Company  enforceable against each
of the Shareholders and the Company in accordance with its terms,  except to the
extent  that  the  enforceability  may be  limited  by  bankruptcy,  insolvency,
reorganization,  moratorium or similar Laws, or by equitable principles relating
to the rights of creditors generally.

     3.5 No Conflict; Governmental Consents.

          (a) The execution,  delivery and performance of this Agreement by each
     of the  Shareholders  and the  Company  do not and  will  not (i)  violate,
     conflict  with or result in the breach of any  provision  of the charter or
     by-laws of the  Company,  (ii) except as set forth in Schedule  3.5, to the
     Knowledge  of the  Shareholders,  conflict  with or violate in any material
     respect  any Law or  Order  applicable  to any of the  Shareholders  or the
     Company  or any of its  Subsidiaries,  or  (iii)  except  as set  forth  in
     Schedule 3.5,  conflict with, result in any breach of, constitute a default
     (or event which with the giving of notice or lapse of time, or both,  would
     become a default)  under,  require any consent under, or give to others any
     rights of termination,  amendment, acceleration,  suspension, revocation or
     cancellation of, or result in the creation of any Encumbrance on any of the
     Shares or on any of the assets or  properties  of the  Shareholders  or the
     Company pursuant to, any note, bond, mortgage,  indenture, license, permit,
     lease,  sublease or other Contract to which any of the  Shareholders or the
     Company  is a party or by which any of the  Stock or any of such  assets or
     properties is bound or affected.

          (b) The execution,  delivery and performance of this Agreement by each
     of the  Shareholders  and the  Company  do not and  will  not  require  any
     Approval  or Order of any  Governmental  Entity,  except  as  described  in
     Schedule 3.5.

                                       18
<PAGE>

     3.6 Financial Statements and Undisclosed Liabilities.

          (a) The  Shareholders  have  delivered  to Parent  true,  correct  and
     complete copies of the Company Financial Statements.  The Company Financial
     Statements  have  been  prepared  in  conformity  with  GAAP  applied  on a
     consistent  basis (except that such Company  Financial  Statements  may not
     include  footnotes  which may be  required  by GAAP and may be  subject  to
     normal year-end  adjustments).  Such statements of operations and cash flow
     present fairly in all material  respects the results of operations and cash
     flows  of the  Company  and  each of its  Subsidiaries  for the  respective
     periods  covered,  and the balance  sheets  present  fairly in all material
     respects  the   financial   condition  of  the  Company  and  each  of  its
     Subsidiaries as of their respective dates.  Except as disclosed on Schedule
     3.6,  since  December  31,  2005,  there  has been no  change in any of the
     significant accounting policies,  practices or procedures of Company or any
     of its Subsidiaries.

          (b)  Neither  the  Company  nor  any  of  its   Subsidiaries  has  any
     liabilities  or  obligations  of any nature  (whether  known or unknown and
     whether  absolute,   accrued,   contingent,   or  otherwise),   except  for
     liabilities or obligations  reflected or reserved  against the December 31,
     2005 balance sheet of the Company (the  "December 31, 2005 Company  Balance
     Sheet"),  current  liabilities  incurred in the ordinary course of business
     and consistent  with past practice since December 31, 2005 and  liabilities
     that  would not be  reasonably  expected  to result in a  Material  Adverse
     Effect on the Company or any of its Subsidiaries.

     3.7 Labor  Matters.  Neither the Company  nor any of its  Subsidiaries  has
entered into any collective bargaining agreements. With respect to the Company's
employees and the  employees of the  Subsidiaries  of the Company,  there are no
presently  pending,  or to the Knowledge of any of the Shareholders,  threatened
(x) arbitration proceedings,  labor strikes, slowdowns or stoppages,  grievances
or other labor disputes;  (y) Actions related to an alleged  material  violation
pertaining to labor relations or employment  matters,  including but not limited
to  claims  for  unpaid  wages  or  penalties,  discrimination,  harassment,  or
retaliation,  or wrongful  discharge in violation of public  policy;  or (z) any
scheduled vote or application for certification of a collective bargaining agent
or,  to the  Knowledge  of any of the  Shareholders,  any  organizing  campaign.
Neither the Company nor any of its  Subsidiaries  is  delinquent in any material
respect  in  payments  to  any  of  its  employees  for  any  wages,   salaries,
commissions, bonuses or other direct compensation for any services performed for
it or amounts required to be reimbursed to such employees.  There are no pending
claims  against  the  Company  or any of its  Subsidiaries  under  any  workers'
compensation plan or policy or for long term disability. To the Knowledge of the
Shareholders,  no employee of the Company or any Subsidiary of the Company is in
any  material  respect  in  violation  of any term of any  employment  contract,
non-disclosure agreement, non-competition agreement, or any restrictive covenant
to a former  employee  relating to the right of any such employee to be employed
by the Company or the applicable Subsidiary of the Company because of the nature
of the business  conducted by it or to the use of trade  secrets or  proprietary
information of others.

     3.8 Absence of Certain  Changes or Events.  Except as set forth in Schedule
3.8 (with subsection  references  corresponding to those set forth below), since
December  31, 2005,  the Company has operated the Business  only in the ordinary
course and consistent with past practice. As amplification and not limitation of
the  foregoing,  since  December 31, 2005,  except as described on Schedule 3.8,
there has not been:

                                       19
<PAGE>

          (a) any change in the Company's authorized or issued capital stock;

          (b) any amendment to the Company's charter or by-laws;

          (c) the  occurrence  of any event that might  reasonably  be deemed to
     have a Material Adverse Effect on the Company or any of its Subsidiaries;

          (d) to the Knowledge of the Shareholders,  any damage,  destruction or
     loss,  whether  covered  by  insurance  or  not,  adversely  affecting  the
     Company's or any of its Subsidiaries'  respective  properties or businesses
     which might  reasonably be expected to result in a Material  Adverse Effect
     on the Company or any of its Subsidiaries;

          (e) any declaration, setting aside or payment of any dividend or other
     distribution  (whether in cash,  stock or property) with respect to, or the
     incurrence  of any  obligation  to  repurchase,  any shares of any class of
     capital stock of the Company;

          (f) any  entry  into  an  employment  or  severance  agreement  or any
     understanding  for  payments  to any  employee  or former  employee  of the
     Company or any of its  Subsidiaries  which might  reasonably be expected to
     result  in a  Material  Adverse  Effect  on  the  Company  or  any  of  its
     Subsidiaries;

          (g) any material  increase in compensation or benefits  expense to the
     Company or any of its  Subsidiaries,  any increase in the  compensation  or
     other  benefits  payable or to become  payable by the Company or any of its
     Subsidiaries  to  its  directors,  officers  or  employees  or  any  bonus,
     insurance,  pension or other employee benefit plan,  payment or arrangement
     made to, for or with any of its  directors,  officers or  employees,  other
     than the items disclosed on Schedule 3.8;

          (h) any entry  into any  commitment  or  transaction  material  to the
     Company (including but not limited to, any borrowing,  sale, lease or other
     disposition  of an asset or group of assets with an original cost in excess
     of $75,000 in the  aggregate  or  capital  expenditure  or group of capital
     expenditures in excess of $75,000 in the aggregate);

          (i) any  entry  into  any  transaction  with  any  director,  officer,
     shareholder  or Affiliate of the Company that is either not in the ordinary
     course of  business,  or on terms less  favorable to the Company than those
     that would have been  obtained in a comparable  transaction  by the Company
     with an unrelated Person;

          (j) to the Knowledge of the  Shareholders,  any cancellation or waiver
     of any claims or rights which might  reasonably  be expected to result in a
     Material Adverse Effect on the Company or any of its Subsidiaries;

          (k) any material  change in the Tax or accounting  methods used by the
     Company;

          (l)  to  the  Knowledge  of  the   Shareholders,   any   cancellation,
     termination or amendment to any Material Contract; or

                                       20
<PAGE>

          (m) to the Knowledge of the Shareholders,  any agreement, whether oral
     or written, to do any of the foregoing.

     3.9 Taxes. Except as set forth in Schedule 3.9 (with subsection  references
corresponding to those set forth below):

          (a) All Tax  Returns  required  to be filed by or with  respect to the
     Company and each of its Subsidiaries have been timely filed (other than the
     2005 Income and Franchise  Tax Returns,  as to which  extensions  have been
     timely  filed),  and all such Tax Returns are  complete  and correct in all
     respects.  Each of the Company and its  Subsidiaries has paid (or there has
     been paid on its  behalf)  all  material  Taxes,  whether  shown on any Tax
     Returns, that are due from or with respect to it for the periods covered by
     such Tax  Returns  and has  made all  required  estimated  payments  of Tax
     sufficient to avoid any penalties for  underpayment.  The accrual for Taxes
     in the Company Interim Balance Sheet is adequate to cover any and all Taxes
     (whether or not disputed and whether or not due) of Company with respect to
     all taxable  periods  ending on or before the date of such Company  Interim
     Balance Sheet. Neither the Company nor any of its Subsidiaries has incurred
     any  liability  for Taxes  subsequent  to the date of the  Company  Interim
     Balance Sheet other than in the ordinary  course of the Company's  business
     or in connection with transactions contemplated by this Agreement;

          (b) To the Knowledge of the Shareholders,  no claim has ever been made
     by an  authority  in a  jurisdiction  where  the  Company  or  any  of  its
     Subsidiaries  does not file a Tax  Return  that the  Company  or any of its
     Subsidiaries  may be subject to taxation in that  jurisdiction and no basis
     exists for any such claim.  There is no proposed  assessment  and no audit,
     examination, suit, investigation or similar proceeding pending, proposed or
     threatened with respect to Taxes of the Company or any of its  Subsidiaries
     and, to the Knowledge of the Shareholders, no basis exists therefor;

          (c) There are no outstanding waivers extending the statutory period of
     limitation  relating to the payment of Taxes due from the Company or any of
     its  Subsidiaries  which are expected to be  outstanding  as of the Closing
     Date;

          (d) All Tax Sharing Arrangements and Tax Indemnity Agreements relating
     to the Company or any of its Subsidiaries  (other than this Agreement) will
     terminate  prior to the Closing Date and neither the Company nor any of its
     Subsidiaries  will have any  liability  thereunder  on or after the Closing
     Date;

          (e) There are no Encumbrances for Taxes upon the assets of the Company
     or any of its Subsidiaries  except  Encumbrances  relating to current Taxes
     not yet due and payable;

          (f) No power of attorney  granted by or with respect to the Company or
     any of its Subsidiaries relating to Taxes is currently in force;

          (g) To  the  Knowledge  of  the  Shareholders,  no  closing  agreement
     pursuant to Section 7121 of the Code or any similar provision of any state,
     local  or  foreign  law has been  entered  into by or with  respect  to the
     Company or any of its  Subsidiaries  which could  reasonably be expected to
     have an effect on the Company's  liability for or reporting of Taxes in any
     period ending after the Closing Date;

                                       21
<PAGE>

          (h) All  Taxes  which  the  Company  and each of its  Subsidiaries  is
     required  by Law to  withhold  or to  collect  for  payment  have been duly
     withheld and collected, and have been paid or accrued, reserved against and
     added on the books of the Company.  To the  Knowledge of the  Shareholders,
     the  Company  has  complied  with  all  information  reporting  and  backup
     withholding  requirements,  including  maintenance of required records with
     respect  thereto,  in  connection  with  amounts  owing  to  any  employee,
     independent contractor, creditor, stockholder or other third party;

          (i) Neither the Company nor any of its  Subsidiaries has been a member
     of any Company  Group other than each Company Group of which it is a member
     as of the date  hereof and the  Company  has not had any direct or indirect
     ownership in any limited liability company,  partnership,  joint venture or
     other "pass-through" entity for Tax purposes;

          (j) Since  December  31,  2005,  neither  the  Company  nor any of its
     Subsidiaries  has prepared or filed any Tax Return  inconsistent  with past
     practice or, on any such Tax Return, taken any position, made any election,
     or adopted any method that is inconsistent with positions taken,  elections
     made or methods used in  preparing  or filing  similar Tax Returns in prior
     periods  (including,  without limitation,  positions,  elections or methods
     which  would  have the  effect of  deferring  income to  periods  after the
     Closing  Date or  accelerating  deductions  to  periods  on or prior to the
     Closing Date);

          (k)  To  the  Knowledge  of  the  Shareholders,   no  consent  to  the
     application of Section 341(f)(2) of the Code (or any similar state or local
     law  provision) has been made or filed by or with respect to the Company or
     any of its Subsidiaries. None of the assets or properties of the Company or
     any of its Subsidiaries is an asset or property that is or will be required
     to be treated as being (A) owned by any Person  (other  than the Company or
     its  Subsidiaries)  pursuant to the provisions of Section  168(f)(8) of the
     Internal Revenue Code of 1954, as amended and in effect  immediately before
     the enactment of the Tax Reform Act of 1986, as amended;  or (B) tax exempt
     use property within the meaning of Section 168(h)(1) of the Code;

          (l) To the  Knowledge  of the  Shareholders,  there is no  contract or
     arrangement,   plan  or  agreement  by  or  with  Company  or  any  of  its
     Subsidiaries  covering any Person as to which payment or vesting thereunder
     (including  any  payment  or  vesting  as  a  result  of  the  transactions
     contemplated  by this  Agreement),  could  give rise to the  payment of any
     amount  that would not be  deductible  by the  Company by reason of Section
     280G of the Code or an excise  tax to the  beneficiary  of such  payment or
     vesting pursuant to Section 4999 of the Code;

          (m) No state or federal "net operating loss" of the Company determined
     as of the  Closing  Date is subject to  limitation  on its use  pursuant to
     Section 382 of the Code or  comparable  provisions of state Law as a result
     of any "ownership  change" within the meaning of Section 382(g) of the Code
     or comparable  provisions  of any state Law occurring  prior to the Closing
     Date.

                                       22
<PAGE>

          (n) No Tax rulings  have been  requested by the Company or, since June
     1, 2004, any of its Subsidiaries.

          (o) The Company and its Subsidiaries do not have any income reportable
     for  a  period  ending  after  the  Closing  Date  but  attributable  to  a
     transaction  (e.g.,  installment  sale) or a change  in  accounting  method
     occurring  in or made for a period  ending on or prior to the Closing  Date
     which results in a deferred  reporting on income from such  transaction  or
     from such change in accounting  method.  The Shareholders have delivered to
     Parent (i) a schedule of the filing dates of all Tax Returns required to be
     filed  by the  Company  and  its  Subsidiaries,  and  (ii)  a  list  of the
     countries,  states,  territories  and  jurisdictions  (whether  foreign  or
     domestic)  to which any Tax is  properly  payable  by the  Company  and its
     Subsidiaries. The Company and its Subsidiaries have retained all supporting
     and backup papers,  receipts,  spreadsheets and other information necessary
     for (i) the  preparation  of all Tax Returns  that have not yet been filed,
     and (ii) the defense of all Tax audits  involving  taxable  periods  either
     ending on or during  the six (6) years  prior to the  Closing  Date or from
     which  there  are  unutilized  net  operating  losses,  capital  losses  or
     investment  tax  credit  carryovers.  Neither  the  Company  nor any of its
     Subsidiaries  has been  party  to a  "listed  transaction"  as  defined  in
     Treasury Regulation  1.6011-4(b)(2).  The Company and its Subsidiaries have
     disclosed  on their U.S.  federal  income Tax Returns all  positions  taken
     therein  that could give rise to a  substantial  understatement  of federal
     income Tax within the meaning of IRC Section 6662.

     3.10  Material  Contracts.  The  following  shall be deemed to be  Material
Contracts and  identified on Schedule  3.10,  and each such Contract was entered
into in the ordinary course of business by the Company and/or its Subsidiaries:

          (a) any Contract for the  furnishing  of services to or by the Company
     or any of its  Subsidiaries or otherwise  related to the Business under the
     terms of which the Company or any of its Subsidiaries: (A) is likely to pay
     or  otherwise  give  consideration  of more than  $50,000 in the  aggregate
     during the calendar year ended  December 31, 2006,  (B) is likely to pay or
     otherwise give consideration of more than $50,000 in the aggregate over the
     remaining term of such Contract or (C) cannot be canceled by the Company or
     one of its Subsidiaries without penalty or further payment and without more
     than thirty (30) days' notice;

          (b) any Contract that represents a contract upon which the Business is
     substantially dependent or which is otherwise material to the Business;

          (c) any Contract  that limits or  restricts  the ability of Company or
     any of its  Subsidiaries to compete or otherwise to conduct its Business in
     any manner or place;

          (d) any  Contract  for the  employment,  severance or retention of any
     director,  officer, employee, agent, shareholder,  consultant or advisor or
     any  other   Contract  with  any  director,   officer,   employee,   agent,
     shareholder, consultant or advisor that does not provide for termination at
     will by the  Company or one of its  Subsidiaries  without  further  cost or
     liability to the Company or such  Subsidiary as of or at any time after the
     date of this Agreement;

          (e) any  Contract  in the  nature of a profit  sharing,  bonus,  stock
     option,  stock  purchase,  pension,  deferred  compensation  or retirement,
     severance,  hospitalization,  insurance or other plan or contract providing
     benefits  to any  Person  or former  director,  officer,  employee,  agent,
     shareholder,   consultant   or   advisor  or  such   Persons'   dependents,
     beneficiaries or heirs;

                                       23
<PAGE>

          (f)  any  Contract  in an  amount  exceeding  $50,000  or with a value
     exceeding $50,000 in the nature of an indenture, mortgage, promissory note,
     loan or credit  agreement or other  Contract  relating to the  borrowing of
     money or a line of credit by or from the Company or any of its Subsidiaries
     or to the direct or indirect  guaranty or  assumption by the Company or any
     of its Subsidiaries of obligations of others;

          (g) any  Contract  for  capital  expenditures  in an amount  exceeding
     $50,000 in any individual case or in the aggregate;

          (h) any  Contract  that  is a joint  venture,  partnership,  or  other
     agreement (however named) involving a sharing of profits, losses, costs, or
     liabilities  involving an amount exceeding  $50,000  individually or in the
     aggregate;

          (i) any  Contracts  that are leases,  rental or occupancy  agreements,
     licenses,   installments  and  conditional   sale  agreements,   and  other
     agreements affecting the ownership of, leasing of, title to, use of, or any
     leasehold  or other  interest  in, any real or  personal  property  (except
     personal  property leases and installment and conditional  sales agreements
     having a value per item or aggregate payments of less than $50,000 and with
     terms of less than one (1) year);

          (j) any Contracts  that are licensing  agreements or other  agreements
     with  respect to patents,  trademarks,  copyrights,  or other  Intellectual
     Property,   including   agreements   with  current  or  former   employees,
     consultants,   or   contractors   regarding   the   appropriation   or  the
     non-disclosure of any of the Intellectual Property;

          (k) any  Contracts in an amount  exceeding  or with a value  exceeding
     $50,000 to which the Company or any of its Subsidiaries is a party with any
     Governmental Entity;

          (l)  any  Contracts  between  or  among  the  Company  or  any  of its
     Subsidiaries  and any of the  Shareholders  or any  Affiliate of any of the
     Shareholders; and

          (m) any Contract that was not made in the ordinary course of business,
     including agreements with:

               (i)  consequential  or  liquidated  damages  or  other  indemnity
          provisions  that  are  not  based  upon  the  Company's  or any of its
          Subsidiaries' negligence in the performance of its services;

               (ii)  fitness for  purpose  warranties  or  process,  efficacy or
          similar guarantees;

               (iii)  lump  sum  turn  key,   or  similar   contract   risks  or
          arrangements; or

               (iv)  provisions  relating to the  testing,  discovery,  removal,
          remediation or disposal of any Hazardous Substance.

                                       24
<PAGE>

          True and complete copies of the Contracts  appearing on Schedule 3.10,
     including all  amendments and  supplements,  have been delivered to Parent.
     Each Material  Contract is valid and legally binding and the Company or its
     Subsidiaries,  as  applicable,  have  duly  performed  all its  obligations
     thereunder to the extent that such obligations to perform have accrued.  No
     breach or default,  alleged  breach or default,  or event which would (with
     the  passage  of time,  notice  or both)  constitute  a breach  or  default
     thereunder by the Company or any of its  Subsidiaries  or, to the Knowledge
     of the Shareholders,  any other party or obligor with respect thereto,  has
     occurred  or as a result of this  Agreement  or  performance  thereof  will
     occur. Consummation of the transactions contemplated by this Agreement will
     not (and will not give any  person a right  to)  terminate  or  modify  any
     rights of, or accelerate or augment any  obligation  of, the Company or any
     of its  Subsidiaries  under  any of those  agreements  to the  extent  such
     termination, modification, acceleration or augmentation could be reasonably
     expected  to have a Material  Adverse  Effect on the  Company or any of its
     Subsidiaries.

     3.11 Real and Personal Property; Title to Property; Leases.

          (a) Schedule 3.11, Part I accurately identifies,  by street address or
     other identifying information,  all real property and leased property owned
     or leased by the Company or any of its Subsidiaries  that is not related to
     the oil and gas  business of the Company or its  Subsidiaries  and Schedule
     3.11,  Part II identifies  all leasehold and other real property  interests
     owned by the Company or any of its Subsidiaries  that is part of or related
     to the oil and gas  businesses  of the  Company or any of its  Subsidiaries
     (collectively, the "Real Property"). Each of the Shareholders has delivered
     or made available to Parent copies of the deeds and other  instruments  (as
     recorded)  in the  possession  of such  Shareholder  or the Company and its
     Subsidiaries  and  relating  to such  property  by which the Company or its
     Subsidiaries acquired such property.

          (b) The Real Property,  other than the oil and gas Assets, is free and
     clear  of all  Encumbrances  and is not  subject  to  any  rights  of  way,
     exceptions,  reservations,  or other Encumbrances of any nature except: (a)
     mortgages,  liens or security interests  securing  obligations shown on the
     December 31, 2005 Company Balance Sheet as securing  specified  liabilities
     or  obligations,  with  respect to which no default  (or event  that,  with
     notice or lapse of time or both, would  constitute a default)  exists;  (b)
     Encumbrances for current Taxes not yet due, (c) (i) minor  imperfections of
     title,  if any, that do not materially  impair the use of the Real Property
     subject  thereto  for its current  purposes  and (ii) zoning laws and other
     land use restrictions that do not materially impair the use of the property
     subject thereto for its current purposes and (d) Permitted Encumbrances.

          (c)  Except as set forth in  Schedule  3.11,  Part II and  except  for
     Permitted  Encumbrances,  the  Company's and its  Subsidiaries'  defensible
     title to the oil and gas Assets is free of any Title Defects.

          (d) Either the  Company or its  Subsidiaries  owns,  leases or has the
     legal  right  to use all the  properties  and  assets,  including,  without
     limitation,  the  Intellectual  Property  and the  Real  Property,  used or
     intended to be used in the  conduct of the  Business  or  otherwise  owned,
     leased  or used  by the  Companies  or any of its  Subsidiaries  (all  such
     properties and assets being the "Assets").

                                       25
<PAGE>

          (e) The  Assets  constitute  all the  properties,  assets  and  rights
     forming  a part of,  used,  held or  intended  to be used in,  and all such
     properties,  assets  and rights as are  necessary  in the  conduct  of, the
     Business as it is currently conducted as of the date hereof. The Assets are
     free and clear of all  Encumbrances  or other third party  interests of any
     nature  whatsoever,  except (i) those set forth on Schedule 3.11 hereto and
     (ii) Permitted Encumbrances.

          (f)  Immediately   following  the  consummation  of  the  transactions
     contemplated  by this  Agreement,  the  Company  or its  Subsidiaries  will
     continue  to own,  or lease,  under  valid  and  subsisting  Contracts,  or
     otherwise  retain its respective  interest in the Assets without  incurring
     any penalty or other adverse  consequence,  including,  without limitation,
     any increase in rentals,  royalties, or licenses or other fees imposed as a
     result  of,  or  arising  from,  the   consummation  of  the   transactions
     contemplated  by  this  Agreement,   except  for  Permitted   Encumbrances.
     Immediately  following the Closing,  either the Company or its Subsidiaries
     shall  own and  possess  all  documents,  books,  records,  agreements  and
     financial  data of any sort used by the Company or any of its  Subsidiaries
     in the conduct of the Business.

     3.12 Condition and Sufficiency of Tangible Assets.  To the Knowledge of the
Shareholders,  the buildings,  plants,  structures, and equipment of the Company
and its Subsidiaries are structurally sound, are in good operating condition and
repair,  except for  ordinary  wear and tear,  and are  adequate for the uses to
which they are being put, and none of such  buildings,  plants,  structures,  or
equipment is in need of  maintenance  or repairs  except for  ordinary,  routine
maintenance  and  repairs  that are not  material  in  nature  or  cost.  To the
Knowledge of the Shareholders,  the building,  plants, structures, and equipment
of the Company and its Subsidiaries are sufficient for the continued  conduct of
the  Business  after the Closing in  substantially  the same manner as conducted
prior to the Closing.

     3.13 Licenses,  Permits and Authorizations.  The Company,  its Subsidiaries
and, to the Knowledge of the Shareholders,  their respective  Employees hold all
licenses,   permits,   franchises  and  other  authorizations  required  by  any
Governmental  Entity that are necessary for the Business as presently  conducted
or, in the case of such  Employees,  to carry out their  duties on behalf of the
Company  or its  Subsidiaries.  Such  licenses,  permits,  franchises  and other
authorizations  of the Company,  its  Subsidiaries  and, to the Knowledge of the
Shareholders, the Company's Employees are valid and in full force and effect and
will  remain  so upon  consummation  of the  transactions  contemplated  by this
Agreement.  None  of  the  Shareholders  knows  of  any  threatened  suspension,
cancellation  or  invalidation  of, or challenge to, any such  license,  permit,
franchise or other authorization.

     3.14 Intellectual Property.

          (a)  To  the  Knowledge  of  the  Shareholders,  the  Company  or  its
     Subsidiaries own, or is licensed or otherwise possesses legally enforceable
     rights to use, all patents,  trademarks, trade names, service marks, domain
     names,  copyrights,  and any  applications  therefor,  trade  secrets,  and
     computer software programs or applications (collectively, the "Intellectual
     Property") that are used in the Business as currently  conducted.  Schedule
     3.14 sets forth each item of Intellectual  Property and lists the owners of
     all right,  title and interest in and to any item of Intellectual  Property
     not solely owned by the Company.  All requisite  renewals and affidavits of
     use have been filed with respect to each of the  registrations set forth in
     Schedule  3.14,  and each is presently in full force and effect and each of
     the trade names and trademarks is valid, and is in good standing and active
     use and none has been abandoned.

                                       26
<PAGE>

          (b) To the  Knowledge of the  Shareholders,  there is no  unauthorized
     use,  disclosure,  infringement  or  misappropriation  of any  Intellectual
     Property rights of the Company,  or any third party patents,  trademarks or
     copyrights, including software (collectively, the "Third Party Intellectual
     Property  Rights") to the extent  licensed by or through the Company or any
     of its Subsidiaries, by any third party.

          (c) To the Knowledge of the Shareholders,  neither the Company nor any
     of its Subsidiaries is in breach of any license or other agreement relating
     to the Intellectual  Property of the Company, its Subsidiaries or any Third
     Party Intellectual Property Rights.

          (d) Within the last three (3) years,  neither  the  Company nor any of
     its  Subsidiaries  (i) has  been a party  to,  or to the  Knowledge  of the
     Shareholders,  been notified or advised of, any suit,  action or proceeding
     that involves a claim of infringement of any patents,  trademarks,  service
     marks,  copyrights  or violation  of any trade secret or other  proprietary
     right  of any  third  party;  or  (ii)  has  brought  any  action,  suit or
     proceeding  for  infringement  of  Intellectual  Property  or breach of any
     license agreement involving  Intellectual Property against any third party.
     The design,  development,  distribution,  marketing,  licensing  or sale of
     products or services of the Company and its Subsidiaries  does not infringe
     on any patent, trademark, service mark or copyright of any third party.

          (e)  To the  Knowledge  of  the  Shareholders,  the  Company  and  its
     Subsidiaries  have  secured  valid  written  assignments  or work  for hire
     agreements  from all  consultants  and  employees  who  contributed  to the
     creation and  development  of  Intellectual  Property of the rights to such
     contributions  that the Company or its Subsidiaries does not already own by
     operation of law.

          (f)  To the  Knowledge  of  the  Shareholders,  the  Company  and  its
     Subsidiaries have taken reasonable steps to protect their respective rights
     in its confidential  information and trade secrets that reasonably  require
     protection.

     3.15 Litigation; Compliance with Laws.

          (a) Except as set forth on Schedule  3.15,  there is no Action pending
     or, to the Knowledge of the Shareholders,  threatened  against or affecting
     any of the  Shareholders,  the Company,  any Subsidiaries of the Company or
     any of their  respective  Assets,  and there is no basis  known to any such
     Shareholder for any such Action.

          (b) Except as disclosed on Schedule  3.15,  neither the  Shareholders,
     the Company nor any  Subsidiaries of the Company is (i) to the Knowledge of
     the Shareholders,  in violation of any applicable Law or (ii) subject to or
     in default with respect to any Order to which any of them,  or any of their
     respective  properties or assets (owned or used), is subject.  At all times
     since June 1, 2004,  each of the Company and its  Subsidiaries  has been in
     full  compliance  with each Law that is or was  applicable  to it or to the
     conduct or operation of the Business or the  ownership or use of any of its
     Assets.

                                       27
<PAGE>

          (c) To the  Knowledge  of the  Shareholders,  no event has occurred or
     circumstance  exists that (with or without notice or lapse of time) (i) may
     constitute  or  result  in a  violation  by  the  Company  or  any  of  its
     Subsidiaries  of, or a failure on the part of any of them,  to comply with,
     any Law.

          (d) Except as provided in Schedule 3.15, none of the Shareholders, the
     Company nor any Subsidiaries of the Company has received, at any time since
     June 1, 2004, any notice or other  communication  (whether oral or written)
     from any Governmental  Entity or any other Person regarding (i) any actual,
     alleged,  possible,  or potential  violation of, or failure to comply with,
     any Law or (ii) any actual,  alleged,  possible, or potential obligation on
     the part of the Company or any of its Subsidiaries to undertake, or to bear
     all or any portion of the cost of, any remedial action of any nature.

     3.16 Insurance.

          (a) Schedule 3.16 sets forth the following information with respect to
     each  insurance  policy under which the Company or any of its  Subsidiaries
     has been an insured, a named insured or otherwise the principal beneficiary
     of coverage at any time within the past year:

               (i) the  name,  address  and  telephone  number  of the  agent or
          broker;

               (ii)  the name of the  insurer  and the  names  of the  principal
          insured and each named insured; and

               (iii) the policy number,  general description of coverage and the
          period of coverage.

          The  Company  has  delivered  to Parent  copies of all such  insurance
     policies.

          (b) Except as set forth in Schedule 3.16, there is no actual, pending,
     or, to the Knowledge of the Shareholders, threatened claims against Company
     or any of its  Subsidiaries  that  would  come  within  the  scope  of such
     coverage  listed on Schedule  3.16,  nor has any current  carrier  provided
     notice to Company or any of its  Subsidiaries  that it intends to terminate
     any policy or to deny  coverage  with  respect  to any claim.  There are no
     actual, pending or, to the Knowledge of the Shareholders, threatened claims
     against the Company or any of its  Subsidiaries  that would not come within
     the scope of the  insurance  coverage  of the  Company or its  Subsidiaries
     listed in Schedule 3.16.

          (c) The  Company  has  maintained  during the past three (3) years and
     currently  maintains  (i) insurance on all of the Assets used in connection
     with the Business of a type customarily  insured,  covering property damage
     and loss of income by fire or other casualty,  and (ii) adequate  insurance
     protection (subject to the deductible amounts and dollar limits of coverage
     set forth in  Schedule  3.16)  against all errors and  omissions  and other
     liabilities,  claims,  and risks,  which it is customary and  reasonable to
     insure  with  respect to the  Business.  Neither the Company nor any of its
     Subsidiaries  has,  within the past three (3) years,  allowed any insurance
     policy to lapse for failure to renew or for any other  reason.  Neither the
     Company  nor any of its  Subsidiaries  has  failed  to give any  notice  or
     present  any claim  under any  insurance  policy in due and timely  fashion
     under the applicable insurance policy.

                                       28
<PAGE>

          (d)  None  of the  Shareholders  has  Knowledge  of (i)  any  proposed
     material  increases in the premiums for insurance or for  contributions for
     worker's  compensation or unemployment  insurance applicable to the Company
     or any of its Subsidiaries, (ii) any conditions or circumstances applicable
     to the Business as currently conducted that could reasonably be expected to
     result in such  increase,  or (iii) any  material  decrease  in coverage or
     other policy benefits. Further, none of the Shareholders has Knowledge that
     any existing  insurer of the Company or any of its  Subsidiaries has denied
     the Company or its Subsidiaries coverage on any claim or refused to approve
     any proposed settlement.

     3.17 Employee Benefit Plans.

          (a)  Schedule  3.17  sets  forth a true and  complete  list of (i) all
     employee  benefit plans" as defined by Section 3(3) of ERISA, all specified
     fringe benefit plans as defined in Section 6039D of the Code, and all other
     bonus, incentive compensation, deferred compensation, profit sharing, stock
     option,  stock appreciation  right,  stock bonus, stock purchase,  employee
     stock ownership,  savings,  severance,  supplemental unemployment,  layoff,
     salary continuation,  retirement,  pension, health, life insurance, dental,
     disability,  accident,  group  insurance,  vacation,  holiday,  sick leave,
     fringe  benefit or welfare plan,  and any other  employee  compensation  or
     benefit  plan,  agreement,  policy,  practice,  commitment,   contract,  or
     understanding  (whether qualified or nonqualified,  currently  effective or
     terminated, written or unwritten), and any trust, escrow or other agreement
     related thereto, which currently is sponsored,  established,  maintained or
     contributed  to or required to be  contributed  by the Company,  any of its
     Subsidiaries  or for which the Company or any of its  Subsidiaries  has any
     liability,  contingent or otherwise, and (ii) all "multiemployer plans," as
     that term is  defined in Section  4001 of ERISA and all  "employee  benefit
     plans" (as  defined in Section  3(3) of ERISA) that are subject to Title IV
     of  ERISA or  Section  412 of the  Code  which  the  Company  or any  other
     corporation  or trade or  business  controlled  by,  controlling,  or under
     common  control with the Company  (within the meaning of Section 414 of the
     Code or Section  4001(a)(14) or 4001(b) of ERISA) ("ERISA  Affiliate")  has
     maintained or  contributed to or been required to contribute to at any time
     within the last six (6) years or with respect to which,  the Company or any
     ERISA Affiliate has any liability (collectively,  (i) and (ii) are referred
     to herein as the "Benefit Plans").

          (b) Neither the Company nor any of its  Subsidiaries  maintains  or is
     obligated  to provide  benefits  under any life,  medical,  or health  plan
     (other than as an incidental  benefit under any Benefit Plan intended to be
     "qualified"  within the meaning of Section  401(a) of the Code  ("Qualified
     Plan")) which provides  benefits to retirees or other terminated  employees
     other than  benefit  continuation  rights  under the  Consolidated  Omnibus
     Budget  Reconciliation  Act of  1985,  as  amended.  No  Benefit  Plan is a
     "multiple employer welfare arrangement" within the meaning of Section 3(40)
     of ERISA.

          (c) No Benefit Plan is a "multiemployer plan," as that term is defined
     in  Section  4001 of ERISA or an  "employee  benefit  plan" (as  defined in
     Section  3(3) of ERISA) that is subject to Title IV of ERISA or Section 412
     of the Code.

                                       29
<PAGE>

          (d) Each of the Benefit Plans and its  administration  is currently in
     compliance  in all material  respects with ERISA and the Code and all other
     applicable  Laws and has been  operated  in  accordance  with the terms and
     conditions of the plan documents.

          (e) The  Company  and its  Subsidiaries  have  performed  all of their
     obligations  under  all  Benefit  Plans,  and all  contributions  and other
     payments  required to be made by the Company or any of its  Subsidiaries to
     any Benefit Plan have been made or reserves adequate for such contributions
     or other  payments have been set aside  therefor and have been reflected in
     the Company Financial Statements.

          (f) There are no pending,  or to the Knowledge of Sellers,  threatened
     claims  by or on behalf  of any  Benefit  Plan,  or by any  person  covered
     thereby,  other than ordinary claims for benefits submitted by participants
     or beneficiaries, or any pending or threatened claims regarding breaches of
     fiduciary duty under ERISA, and there is no basis for any such claim.

          (g) No employer  securities,  employer real property or other employer
     property is included in the assets of any Benefit Plan.

          (h) The Company has delivered to Parent:

               (i)  copies  of  the  current   Benefit  Plan  document  and  any
          amendments  thereto  for each  Benefit  Plan and copies of any related
          trusts,  and (A) the most recent  summary  plan  descriptions  of such
          Benefit  Plans for which the  Company  or any of its  Subsidiaries  is
          required to prepare,  file, and distribute  summary plan descriptions,
          and  (B)  the  most  recent  copy of all  summaries  and  descriptions
          furnished to participants and  beneficiaries  regarding  Benefit Plans
          for  which a plan  description  or  summary  plan  description  is not
          required;

               (ii) a sample copy of the forms currently used by the Company and
          any of its Subsidiaries for providing all notifications required to be
          given to employees  under Section 601 et seq. of ERISA,  Section 4980B
          of the Code,  Section  9801 et seq.  of the Code,  and under all other
          applicable  federal and state laws regulating the notice  requirements
          of "group health plans" (as defined in Section 607(1) of ERISA);

               (iii) the Form 5500  filed in each of the most  recent  three (3)
          plan years with respect to each Benefit Plan,  including all schedules
          thereto and any opinions of independent accountants relating thereto;

               (iv) all insurance policies or agreements regarding other funding
          arrangements  that are  currently in force which were  purchased by or
          that provide  benefits  under any Benefit Plan or otherwise  reimburse
          for benefits paid under the Benefit Plans;

               (v) all written agreements that are currently in force with third
          party administrators,  investments  managers,  consultants and service
          providers  relating  to any  Benefit  Plan  and any  and  all  written
          reports, including discrimination testing, submitted to the Company or
          any of its Subsidiaries by such third party administrators, investment
          managers,  consultants and service providers within the four (4) years
          preceding the date hereof;

                                       30
<PAGE>

               (vi) with respect to Benefit Plans that are Qualified  Plans, the
          most recent determination letter for each such Benefit Plan; and

               (vii) with  respect to each trust  funding a Benefit Plan that is
          intended to be qualified  under Section  501(c)(9) of the Code, a copy
          of the determination letter for such trust.

          (i)  Each  Benefit  Plan  can be  terminated  without  payment  of any
     additional  contribution  or amount and, except for any vesting of benefits
     of a Qualified  Plan,  without the vesting or  acceleration of any benefits
     promised by such Benefit Plan.

          (j) The Company has the right to modify and  terminate  benefits as to
     retirees  (other than  pensions)  with  respect to both  retired and active
     employees.

          (k) To the Knowledge of the Shareholders,  neither the Company nor any
     of its Subsidiaries  has filed or been required to file any notices,  forms
     or reports  with the IRS, the Pension  Benefit  Guaranty  Corporation  (the
     "PBGC") or the Department of Labor ("DOL"), pursuant to statute, other than
     annual reports, within the four (4) years preceding the date hereof.

          (l) Neither the Company nor any of its  Subsidiaries  has received any
     notice from the IRS,  the PBGC,  or the DOL  relating  to any Benefit  Plan
     regarding  an audit of any  Benefit  Plan or the  assessment  of a material
     penalty.

          (m) To the  Knowledge of the  Shareholders,  neither the  execution of
     this Agreement nor the consummation of the transactions contemplated herein
     will result in the payment,  vesting,  or acceleration of any benefit under
     any  Benefit  Plan,  assuming  that no  employee  incurs a  termination  of
     employment  or  reduction  in hours  in  connection  with the  transactions
     contemplated herein.

     3.18  Transactions  with Affiliates.  To the Knowledge of the Shareholders,
except (i) for employment and benefit  arrangements,  (ii) arrangements on arm's
length terms in the ordinary  course of business and (iii)  agreements set forth
on Schedule 3.18, no director, officer or Affiliate of the Company or any of its
Subsidiaries or, to the Knowledge of the Shareholders,  any Person with whom any
such  director,  officer or  Affiliate  has any direct or  indirect  relation by
blood, marriage or adoption,  or any entity in which any such director,  officer
or  Affiliate  owns  any  beneficial   interest  (other  than  a  publicly  held
corporation  whose stock is traded on a national  securities  exchange or in the
over-the-counter  market and less than one percent (1%) of the stock of which is
beneficially  owned by all such  Persons),  has any interest in (a) any Contract
with the Company or relating to the  Business,  including  any  Contract  for or
relating to indebtedness of the Company or any of its  Subsidiaries;  or (b) any
property,  including Intellectual Property and Real Property,  used or currently
intended to be used in, the Business.

     3.19 No Brokers or Finders.  Except as may arise out of that certain letter
agreement,  dated February 20, 2006,  between Parent and Cloyses  Partners,  LLC
(the "Cloyses Agreement"), no agent, broker, finder, or investment or commercial
banker,  or other  Person or firm  engaged  by or acting on behalf of any of the
Shareholders,  the  Company,  any  Subsidiary  of the  Company  or any of  their
respective  Affiliates,  in  connection  with  the  negotiation,   execution  or
performance  of  this  Agreement  or  the  transactions   contemplated  by  this
Agreement, is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement or such transactions.

                                       31
<PAGE>

     3.20 Accuracy of Information. To the Knowledge of the Shareholders, None of
the information supplied in writing by or on behalf any of the Shareholders, the
Company or any Subsidiaries of the Company, to Parent or its Affiliates,  agents
or  representatives  in connection  with the  transactions  contemplated in this
Agreement,  this  Agreement  or the  negotiations  leading up to this  Agreement
contain,  or at the respective times such  information was delivered,  contained
any  untrue  statement  of a  material  fact,  or omit or  omitted  to state any
material  fact  required to be stated  therein or necessary in order to make the
statements therein not misleading.

     3.21   Receivables.   All   receivables  of  the  Company  or  any  of  its
Subsidiaries,  whether  reflected  on  the  Company  Interim  Balance  Sheet  or
otherwise  and  including  "work in process"  inventory and accrued and unbilled
revenues,  represent actual revenues  invoiced or expected to be invoiced in the
ordinary  course  of  business,  and  are,  or  when  invoiced,  will  be  fully
collectible  net of any  reserves  shown on the Company  Interim  Balance  Sheet
(which reserves are adequate and were calculated on a basis consistent with GAAP
and past practices).  The  Shareholders  have delivered to Parent a complete and
accurate aging list of all receivables of the Company and its Subsidiaries.

     3.22 Environmental.

          (a)  Except  as set  forth  in  Schedule  3.22,  to the  Shareholders'
     Knowledge,  the Assets, the Company and the Company's Subsidiaries are free
     of any Environmental Defects, except as would not reasonably be expected to
     have a Material Adverse Effect on the Company,  the Company's  Subsidiaries
     or the Assets.

          (b) With respect to the Assets,  except as set forth in Schedule 3.22,
     neither the Company nor any of its  Subsidiaries  has entered  into,  or is
     subject to, any agreements,  consents,  orders, decrees, judgments or other
     directives of Governmental  Entities in existence at this time based on any
     Environmental Laws.

          (c)  Except  as set  forth  in  Schedule  3.22,  to the  Shareholders'
     Knowledge,  none of the Company nor the Company's Subsidiaries has received
     written notice from any Person of, and no investigation or written claim is
     pending regarding, any Release,  disposal, event, condition,  circumstance,
     activity, practice or incident concerning the Company, any of the Company's
     Subsidiaries,   the  Assets,   the   Company's  or  any  of  the  Company's
     Subsidiaries'  current or prior operations or any land, facility,  asset or
     property currently or formerly owned or leased by any of the Company or the
     Company's Subsidiaries and alleging either (i) a violation of Environmental
     Law,  including common law, or (ii) obligations,  including  remediation or
     other  liabilities under  Environmental  Law, except, in the case of either
     clause (i) or (ii) hereof,  as would not  reasonably  be expected to have a
     Material Adverse Effect on the Company,  and of the Company's  Subsidiaries
     or the Assets.

                                       32
<PAGE>

          (d)  Except  as set  forth  in  Schedule  3.22,  to the  Shareholders'
     Knowledge,  there has been no  Release  on or from the Assets or on or from
     any property currently or formerly owner, or operated by the Company or any
     of the Company's Subsidiaries of any Hazardous Materials in any substantial
     amount  or  concentration  that is  reasonably  likely  to have a  Material
     Adverse Effect on the Company, the Company's Subsidiaries or the Assets.

          (e) Except as set forth in Schedule  3.22,  the Company or one or more
     of the  Company's  Subsidiaries,  or, to the  Shareholders'  Knowledge,  an
     operator  of  the  Assets,   holds  those  licenses,   permits,   or  other
     authorizations  necessary under  Environmental  Laws to carry on operations
     connected  with the  Assets to the  extent of and as  currently  conducted,
     except  where  the  failure  to obtain  such  licenses,  permits,  or other
     authorizations  could not  reasonably be expect to have a Material  Adverse
     Effect on any of the Company, the Company's Subsidiaries or the Assets.

     3.23 Restrictions on Business Activities. There is no agreement,  judgment,
injunction, order or decree binding upon Company or any of its Subsidiaries that
has,  or could  reasonably  be expected to have,  the effect of  prohibiting  or
materially impairing the conduct of the Business as presently conducted.

     3.24 Internal Controls.  The Company and its Subsidiaries maintain a system
of internal controls sufficient to provide reasonable assurances that:

          (a) transactions are executed in accordance with management's  general
     or specific authorization;

          (b) transactions  are recorded as necessary (1) to permit  preparation
     of  financial  statements  in  conformity  with GAAP or any other  criteria
     applicable  to such  statements  and  (2) to  maintain  accountability  for
     assets; and

(c) access to proprietary assets is permitted only in accordance with
management's general or specific authorization.

     3.25 Absence of Certain Payments.  None of the  Shareholders,  the Company,
the Subsidiaries of the Company, nor, to the Knowledge of the Shareholders,  any
director,  officer,  agent,  employee or Affiliate of any of them,  has used any
corporate  funds  for  unlawful  contributions,  gifts,  entertainment  or other
unlawful expenses relating to political activity, or made any direct or indirect
unlawful payments to government  officials or employees from corporate funds, or
established or maintained any unlawful or unrecorded funds.

     3.26 Bank Accounts. Schedule 3.26 sets forth an accurate list of each bank,
trust company, savings institution or other financial institution with which the
Company or any of its  Subsidiaries  has an account or safe  deposit box and the
names and  identification  of all Persons  authorized to draw thereon or to have
access  thereto,  and sets  forth the  names of each  Person  holding  powers of
attorney or agency  authority from the Company or any of its  Subsidiaries and a
summary of the terms thereof.

     3.27 Shareholder's Investment Representations. Each of the Shareholders has
made  representations  and warranties  contained in the Subscription  Agreement,
dated  the date  hereof  and in the  form  attached  hereto  as  Exhibit  I (the
"Subscription Agreement").

                                       33
<PAGE>


                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF PARENT
                    ----------------------------------------

     Parent represents and warrants to the Shareholders and agrees as follows:

     4.1 Organization and Authority of Parent and Buyer.

          (a) Parent is a corporation  duly organized,  validly  existing and in
     good  standing  under the laws of the State of  Nevada  and the  execution,
     delivery  and   performance  of  this  Agreement  by  the  Parent  and  the
     consummation by Parent of the  transactions  contemplated  hereby have been
     duly authorized by all requisite  action on the part of Parent.  The Parent
     Shares to be issued to the Shareholders as part of the Merger Consideration
     have been duly authorized by all necessary  corporate action on the part of
     Parent  and,  upon  receipt of the Shares  from the  Shareholders,  will be
     validly issued, fully paid and nonassessable.  This Agreement has been duly
     executed and delivered by Parent, and assuming due authorization, execution
     and delivery by the  Shareholders,  the Company and Buyer,  this  Agreement
     constitutes a valid and binding  obligation of Parent  enforceable  against
     Parent  in  accordance  with  its  terms,  except  to the  extent  that the
     enforceability  may be limited by bankruptcy,  insolvency,  reorganization,
     moratorium  or similar  laws,  or by equitable  principles  relating to the
     rights of creditors generally.

          (b) Buyer is a  limited  liability  company  duly  organized,  validly
     existing and in good standing under the laws of the State of Nevada and the
     execution,  delivery  and  performance  of this  Agreement by Buyer and the
     consummation  by Buyer of the  transactions  contemplated  hereby have been
     duly  authorized  by all  requisite  action  on the  part  of  Buyer.  This
     Agreement has been duly  executed and delivered by Buyer,  and assuming due
     authorization,  execution and delivery by the Shareholders, the Company and
     the Parent,  this Agreement  constitutes a valid and binding  obligation of
     Buyer enforceable against Buyer in accordance with its terms, except to the
     extent that the  enforceability  may be limited by bankruptcy,  insolvency,
     reorganization,  moratorium  or similar  laws,  or by equitable  principles
     relating to the rights of creditors generally.

     4.2 No Conflict; Governmental Consents.

          (a) The execution, delivery and performance of this Agreement by Buyer
     and Parent does not and will not (a)  violate,  conflict  with or result in
     the breach of any  provision  of the  charter or bylaws of Buyer or Parent,
     (b)  conflict  with or violate  in any  material  respect  any Law or Order
     applicable to Buyer or Parent,  or (c) conflict with,  result in any breach
     of, constitute a default (or event which with the giving of notice or lapse
     of time, or both, would become a default) under, require any consent under,
     or give to others  any  rights  of  termination,  amendment,  acceleration,
     suspension, revocation or cancellation of, or result in the creation of any
     Encumbrance on any of the assets or properties of Buyer or Parent  pursuant
     to, any note, bond, mortgage,  indenture,  license, permit, lease, sublease
     or other  material  contract,  agreement,  or instrument or  arrangement to
     which  Buyer  or  Parent  is a party or by which  any of  their  assets  or
     properties is bound or affected,  except for conflicts or violations  which
     would not have a material  adverse effect on the ability of Buyer or Parent
     to consummate the transactions contemplated by this Agreement.

                                       34
<PAGE>

          (b) The execution, delivery and performance of this Agreement by Buyer
     and  Parent  do not and  will  not  require  any  Approval  or Order of any
     Governmental Entity.

     4.3  Financial  Statements.  Parent has delivered to the  Shareholders  the
Parent Financial Statements.  The Parent Financial Statements have been prepared
in  conformity  with GAAP  applied on a  consistent  basis.  The  statements  of
operations and cash flow of Parent  present fairly in all material  respects the
respective  results of  operations  and cash flows of Parent for the  respective
periods covered, and the balance sheets of Parent present fairly in all material
respects the  respective  financial  condition of Parent as of their  respective
dates.  Since the date of the Parent Interim  Balance  Sheet,  there has been no
change in any of the significant accounting policies, practices or procedures of
Parent.

     4.4 No  Brokers  or  Finders.  Except  as  may  arise  out  of the  Cloyses
Agreement,  no agent,  broker,  finder,  or investment or commercial  banker, or
other Person or firm  engaged by or acting on behalf of any of Buyer,  Parent or
any of their  Affiliates,  in  connection  with the  negotiation,  execution  or
performance  of  this  Agreement  or  the  transactions   contemplated  by  this
Agreement, is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement or such transactions.

     4.5 Parent SEC Documents.

          (a) Parent has made available to the  Shareholders a true and complete
     copy of each report, schedule,  registration statement and definitive proxy
     statement  filed by Parent with the SEC since  January 1, 2004 (the "Parent
     SEC  Documents"),  including  Parent's  2005 Form  10-K,  which are all the
     documents  (other than  preliminary  documents) that Parent was required to
     file with the SEC since January 1, 2004. As of their respective  dates, the
     Parent  SEC   Documents   complied  in  all  material   respects  with  the
     requirements of the Securities Act or the Exchange Act, as the case may be,
     and the rules and  regulations  of the SEC  thereunder  applicable  to such
     Parent SEC Documents,  and none of the Parent SEC Documents contained as of
     their  respective  dates any untrue statement of a material fact or omitted
     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.

          (b) The  financial  statements  of Parent  included  in the Parent SEC
     Documents,  including the notes and schedules thereto,  complied as to form
     in all material  respects  with the rules and  regulations  of the SEC with
     respect  thereto,  were  prepared  in  accordance  with GAAP  applied  on a
     consistent basis during the periods involved (except as may be indicated in
     the notes thereto or, in the case of the unaudited statements, as permitted
     by Rule  10-01  of  Regulations  S-X of the  SEC) and  fairly  present  the
     consolidated financial position of Parent and its consolidated Subsidiaries
     as of their respective dates and the consolidated results of operations and
     the consolidated cash flows of Parent and its consolidated Subsidiaries for
     the periods presented therein in accordance with applicable requirements of
     GAAP  (subject,  in  the  case  of the  unaudited  statements,  to  normal,
     recurring adjustments,  none of which are material) applied on a consistent
     basis during the periods presented.

          (c) No Material  Adverse  Effect with  respect to Parent has  occurred
     since the date of Parent's  Form 10-Q for the three (3) month  period ended
     March 31, 2006.

                                       35
<PAGE>

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS
                              ---------------------

     5.1 Notices and Consents.  Each of the  Shareholders and Parent agree that,
in the event any Approval  necessary to preserve for the Business or the Company
or any of its Subsidiaries any right or benefit under any Contract, to which the
Company or any of its  Subsidiaries  is a party,  is not  obtained  prior to the
Closing,  the Shareholders will,  subsequent to the Closing,  cooperate with the
Surviving  Entity,  Parent and their  Subsidiaries in attempting to obtain such,
Approval as promptly thereafter as practicable.

     5.2 Taking of Necessary Action;  Further Action.  If, at any time after the
Closing  Date,  any further  action is  necessary  or desirable to carry out the
purposes of this  Agreement  and to vest the  Surviving  Entity with full right,
title and possession to all assets,  property,  rights,  privileges,  powers and
franchises  of the Company and its  Subsidiaries,  the officers and directors of
the Surviving Entity are fully authorized in the name of the Surviving Entity or
otherwise  to take,  and  will  take,  all such  actions  at  Parent's  expense;
provided,  however,  if the action is necessary or desirable to cure a breach of
any  representation,  warranty  or  covenant  of  the  Shareholders  under  this
Agreement,  the  Shareholders  shall  reimburse  Parent for the expenses of such
action. The Shareholders shall also take all such other actions, and execute and
deliver all such other  instruments,  agreements  and  documents as Parent shall
reasonably request to separate from the Company any activities and operations of
the  Shareholders  and their  respective  Affiliates that are not related to the
primary business and operations of the Company.

     5.3 Directors and Officers.  Parent agrees to use  commercially  reasonable
efforts to cause the Board of  Directors  of Parent to increase  the size of the
Board of Directors of Parent by two (2) members and to elect or appoint Larry M.
Wright and Robert G. Wonish to the Board of Directors of Parent.  Parent  agrees
to use  commercially  reasonable  efforts to cause the Surviving  Entity and its
Subsidiaries to elect or appoint the officers,  directors and/or managers as set
forth on Schedule 5.3 attached hereto.

     5.4  Directors and  Officers.  Parent agrees to issue  warrants to purchase
Parent Shares, substantially in the form of Exhibit H, to the Persons and in the
amounts set forth on Schedule 5.4.


                                   ARTICLE VI

                                   TAX MATTERS
                                   -----------

     6.1 Conveyance Taxes. Each of the Shareholders  shall pay any real property
transfer or gains, sales, use, transfer,  value added, stock transfer, and stamp
taxes, any transfer,  recording,  registration,  and other fees, and any similar
Taxes which become payable in connection with the  transactions  contemplated by
this Agreement,  and shall file such  applications and documents as shall permit
any  such  Tax to be  assessed  and  paid on or  prior  to the  Closing  Date in
accordance with any available pre-sale filing procedure. Each party hereto shall
execute and deliver all  instruments  and  certificates  necessary to enable the
other party or parties to comply with the foregoing.

                                       36
<PAGE>

     6.2 Miscellaneous.

          (a) Each of the  Shareholders  and Parent  agree to treat all payments
     made by any of  them to or for the  benefit  of the  other  (including  any
     payments  to the  Company)  under this  Article VI,  under other  indemnity
     provisions of this Agreement and for any  misrepresentations or breaches of
     warranties or covenants as adjustments to the Merger  Consideration for Tax
     purposes and that such treatment shall govern for purposes hereof.

          (b) All amounts payable under any tax sharing agreement or arrangement
     between the  Shareholders and the Company or any Subsidiary for any taxable
     period  ending on or prior to the  Closing  Date shall be  calculated  on a
     basis consistent with that used to date.

          (c) For purposes of this Article VI, "Parent" and "the  Shareholders",
     respectively,  shall  include  each  member  of  the  affiliated  group  of
     corporations  of which it is or becomes a member  (other than the  Company,
     except to the extent expressly referenced).


                                   ARTICLE VII

                                 INDEMNIFICATION
                                 ---------------

     7.1 Obligations of Shareholders.

The Shareholders (each a "Shareholder Indemnifying Party" and collectively,  the
"Shareholder Indemnifying Parties"),  jointly and severally,  agree to indemnify
and hold harmless Parent,  the Surviving Entity and their respective  directors,
officers, agents, managers, employees,  representatives and Affiliates and their
successors and assigns (each a "Parent  Indemnified Party") from and against any
and all Losses of the Parent Indemnified Parties,  directly or indirectly,  as a
result of, or based upon or arising from:

          (a) the breach of any  representation  or warranty  made by any of the
     Shareholders contained in this Agreement;

          (b)  the  breach  of any  covenant  or  agreement  by any  Shareholder
     contained in this Agreement;

          (c) the ownership of the Shares prior to the Closing Date; and

          (d) the  ownership,  management or use of the Assets and the operation
     of the Business, all as prior to the Closing Date.

     7.2 Obligations of Parent.  Parent (the "Parent Indemnifying Party") agrees
to indemnify  and hold harmless each of the  Shareholders  and their  respective
agents,  representatives and Affiliates and their successors and assigns (each a
"Shareholder  Indemnified  Party")  from and  against  any and all Losses of the
Shareholder  Indemnified  Parties,  directly or  indirectly,  as a result of, or
based upon or arising from:

          (a) the  breach  of any  representation  or  warranty  made by  Parent
     contained in this Agreement;

                                       37
<PAGE>

          (b) the breach of any  covenant or  agreement  by Parent  contained in
     this Agreement; and

          (c) the  ownership,  management or use of the Assets and the operation
     of the Business,  all as after the Closing  Date,  unless and to the extent
     that  such  Losses  arise  solely  from  any  action  or  inaction  of  any
     Shareholder or  Shareholders or any of their  Affiliates  after the Closing
     Date.

     7.3  Procedure.  A Shareholder  Indemnified  Party or a Parent  Indemnified
Party (each, an "Indemnified Party") shall give the Parent Indemnifying Party or
Shareholder  Indemnifying Party (each, an "Indemnifying  Party"), as applicable,
notice  (a  "Claim  Notice")  of any  matter  which  an  Indemnified  Party  has
determined has given or could give rise to a right of indemnification under this
Agreement (a "Claim"),  within sixty (60) days of such determination;  provided,
however,  that any failure of the Indemnified Party to provide such Claim Notice
shall not release the Indemnifying  Party from any of its obligations under this
Article VII except to the extent the Indemnifying Party is materially prejudiced
by such  failure  and shall not relieve  the  Indemnifying  Party from any other
obligation or liability that it may have to any Indemnified Party otherwise than
under this Article VII. Upon receipt of the Claim Notice, the Indemnifying Party
shall be entitled to assume and control the defense of such Claim at its expense
if it gives  notice of its  intention to do so to the  Indemnified  Party within
five (5) Business Days of the receipt of such Claim Notice from the  Indemnified
Party;  provided,  however,  that (i)  Indemnified  Party  must  approve  of the
selection of legal counsel by  Indemnifying  Party,  which approval shall not be
unreasonably  withheld  or  delayed  and (ii) if there  exists or is  reasonably
likely to exist a conflict of interest that would make it  inappropriate  in the
judgment of the Indemnified Party, in its sole and absolute discretion,  for the
same counsel to represent both the Indemnified Party and the Indemnifying Party,
then the Indemnified Party shall be entitled to retain its own counsel,  in each
jurisdiction for which the Indemnified Party determines counsel is required,  at
the  expense of the  Indemnifying  Party.  In the event the  Indemnifying  Party
exercises  the right to  undertake  any such  defense  against any such Claim as
provided  above,  the Indemnified  Party shall  cooperate with the  Indemnifying
Party in such  defense and make  available  to the  Indemnifying  Party,  at the
Indemnifying  Party's expense, all witnesses,  pertinent records,  materials and
information  in the  Indemnified  Party's  possession  or under the  Indemnified
Party's control relating  thereto as is reasonably  required by the Indemnifying
Party. Similarly, in the event the Indemnified Party is, directly or indirectly,
conducting  the defense  against any such Claim,  the  Indemnifying  Party shall
cooperate with the  Indemnified  Party in such defense and make available to the
Indemnified  Party, at the  Indemnifying  Party's  expense,  all such witnesses,
records,  materials and information in the  Indemnifying  Party's  possession or
under  the  Indemnifying  Party's  control  relating  thereto  as is  reasonably
required  by  the  Indemnified  Party.  No  such  Claim  may be  settled  by the
Indemnifying  Party without the prior written consent of the Indemnified  Party,
which  consent  shall not be  unreasonably  withheld  so long as (a) there is no
payment or other  consideration  required of the Indemnified  Party and (b) such
settlement does not require or otherwise involve any restrictions on the conduct
of business by the Indemnified Party.

                                       38
<PAGE>

     7.4 Survival.

          (a) The  representations and warranties of the Shareholders and Parent
     contained in this  Agreement,  including  the Exhibits and the Schedules to
     this Agreement, shall survive the Closing until the third (3rd) anniversary
     of the  Closing  Date;  provided,  however,  that the  representations  and
     warranties in Section 3.3,  Section 3.17 and the second sentence of Section
     4.1(a) shall survive the Closing  indefinitely;  provided  further that the
     representations  and  warranties  in  Section  3.9  and the  covenants  and
     agreements  in Article  VI shall  survive  until  sixty (60) days after the
     expiration  of  the  statute  of  limitations  period  or  periods  legally
     applicable to them. Neither the period of survival nor the liability of the
     Shareholders  or Parent  with  respect  to the  Shareholders'  or  Parent's
     representations  and warranties shall be reduced by any investigation  made
     at any time by or on behalf of Parent or the Shareholders, respectively. An
     Indemnifying  Party is not  required  to make any  indemnification  payment
     hereunder  unless a Claim is initiated  prior to expiration of the survival
     period set forth in this  Section  7.4(a),  except  with  respect to claims
     based on fraud committed by the Indemnifying Party.

          (b) Any matter as to which a Claim has been asserted by a Claim Notice
     to the  other  party  that  is  pending  or  unresolved  at the  end of any
     applicable  limitation  period shall continue to be covered by this Article
     VII  notwithstanding  any  applicable  statute  of  limitations  (which the
     parties hereby waive) until such matter is finally  terminated or otherwise
     resolved by the parties  under this  Agreement  or by a court of  competent
     jurisdiction and any amounts payable  hereunder are finally  determined and
     paid.

     7.5 Notice by Indemnifying  Party. The Indemnifying  Party agrees to notify
the Indemnified Party of any liabilities, claims or misrepresentations, breaches
or other matters covered by this Article VII upon discovery or receipt of notice
thereof (other than such claims from the Indemnified Party).

     7.6 Indemnity Threshold and Cap.

          (a) The  Shareholders  shall  not have  any  liability  to any  Parent
     Indemnified  Party with respect to Losses arising out of any of the matters
     referred to in Section  7.1,  except with  respect to Claims based on fraud
     committed  by the  Shareholders,  until such time as the amount of all such
     liability shall collectively  exceed $150,000 (the "Threshold"),  whereupon
     the Losses  exceeding the Threshold  shall be payable by the  Shareholders.
     Also,  in no event  shall  the  Shareholders'  aggregate  liability  to any
     Indemnified Party under Section 7.1 exceed the Merger Consideration, except
     with respect to Claims based on fraud committed by any of the Shareholders.

          (b) Parent shall not have any liability to any Shareholder Indemnified
     Party with respect to Losses arising out of any of the matters  referred to
     in Section 7.2,  except with respect to Claims based on fraud  committed by
     Parent,  until  such  time  as the  amount  of  all  such  liability  shall
     collectively  exceed the  Threshold,  whereupon  the Losses  exceeding  the
     Threshold  shall be payable by Parent.  Also,  in no event  shall  Parent's
     aggregate liability under Section 7.2 exceed the Merger Consideration, less
     the Cash  Portion of Merger  Consideration,  except with  respect to Claims
     based on fraud committed by Parent.

                                       39
<PAGE>

     7.7 Exclusive  Remedy.  Other than rights to equitable relief or claims for
fraud to the extent available under applicable Law, each of the Shareholders and
Parent  acknowledge and agree that the sole and exclusive  remedy for any Losses
arising from Claims  described in Sections 7.1 and 7.2 shall be  indemnification
in accordance with this Article VII.

     7.8  Mitigation.  Prior to the resolution of any Claim for  indemnification
under this  Agreement,  the  Indemnified  Party shall  utilize all  commercially
reasonable efforts,  consistent with normal past practices and policies and good
commercial   practice,   to  mitigate  such  Losses.   All   indemnification  or
reimbursement  payments  required pursuant to this Agreement shall be made after
all insurance benefits actually received by the Indemnified Party.


                                  ARTICLE VIII

                                     GENERAL
                                     -------

     8.1  Amendments;  Waivers.  This  Agreement  and any  schedule  or  exhibit
attached  hereto may be amended only by agreement in writing of all parties.  No
waiver  of any  provision  nor  consent  to any  exception  to the terms of this
Agreement or any  agreement  contemplated  hereby  shall be effective  unless in
writing  and  signed  by the  party to be bound  and then  only to the  specific
purpose, extent and instance so provided.

     8.2 Schedules;  Exhibits;  Integration. Each schedule and exhibit delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of this Agreement,  although  schedules need not be attached to each copy
of this Agreement.  This  Agreement,  together with such schedules and exhibits,
constitutes  the entire  agreement  among the parties  pertaining to the subject
matter hereof and supersedes  all prior  agreements  and  understandings  of the
parties in connection therewith.

     8.3 Governing Law. This Agreement,  the legal relations between the parties
and any Action, whether contractual or non-contractual,  instituted by any party
with respect to matters arising under or growing out of or in connection with or
in respect of this  Agreement,  including  but not  limited to the  negotiation,
execution,  interpretation,  coverage, scope, performance,  breach, termination,
validity,  or  enforceability  of  this  Agreement,  shall  be  governed  by and
construed in accordance with the laws of the State of Texas.

     8.4 No  Assignment.  Neither this  Agreement nor any rights or  obligations
under it are assignable  without the express written consent of the Shareholders
and Parent,  except that Parent may assign its rights hereunder to the purchaser
of all or substantially  all of the assets or capital stock of Parent (by merger
or otherwise).

     8.5  Headings.  The  descriptive  headings of the  Articles,  Sections  and
subsections of this Agreement are for  convenience  only and do not constitute a
part of this Agreement.

     8.6  Counterparts.  This  Agreement and any  amendment  hereto or any other
agreement (or document) delivered pursuant hereto may be executed in one or more
counterparts  and by  different  parties in separate  counterparts.  All of such
counterparts shall constitute one and the same agreement (or other document) and
shall become  effective  (unless  otherwise  provided  therein) when one or more
counterparts have been signed by each party and delivered to the other party.

                                       40
<PAGE>

     8.7 Publicity and Reports. The Shareholders and Parent shall coordinate all
publicity  relating to the  transactions  contemplated  by this Agreement and no
party shall issue any press release,  publicity statement or other public notice
relating to this Agreement, or the transactions  contemplated by this Agreement,
without obtaining the prior consent of both the Shareholders and Parent.

     8.8 Parties in Interest.  This Agreement shall be binding upon and inure to
the benefit of each party, and nothing in this Agreement, express or implied, is
intended  to confer  upon any other  person any rights or remedies of any nature
whatsoever  under or by reason of this  Agreement.  Nothing in this Agreement is
intended to relieve or discharge the obligation of any third person to any party
to this Agreement.

     8.9 Notices.  Any notice or other communication  hereunder must be given in
writing and (a) delivered in person,  (b) transmitted by facsimile or (c) mailed
by certified mail, postage prepaid, return receipt requested as follows:

                  If to Parent, addressed to:

                  Tradestar Services, Inc.
                  3451 Candelaria NE
                  Albuquerque, New Mexico 87107
                  Attention:   Frederick Huttner, Chief Financial Officer
                  Facsimile:   (213) 593-8727

                  With a copy to:

                  Haynes and Boone, LLP
                  One Houston Center
                  1221 McKinney Street, Suite 2100
                  Houston, Texas 77010
                  Attention:   Bryce D. Linsenmayer, Esq. or Amy Moss, Esq.
                  Facsimile:   (713) 236-5540 or (713) 236-5550


                  If to Shareholders, addressed to:

                  Larry M. Wright
                  911 Creek Wood Way
                  Houston, Texas 77024
                  Facsimile:   (713) 464-8048

                  Franklin M. Cantrell, Jr.
                  5555 Del Monte, Suite 2305
                  Houston, Texas 77056-4121

                                       41
<PAGE>

                  Michael W. Hopkins
                  651 Bering Drive, Suite 2002
                  Houston, Texas 77057

                  Robert G. Wonish
                  17315 Klee Circle
                  Spring, Texas 77379


                  With a copy to:

                  Hirsch & Westheimer, P.C.
                  700 Louisiana Street, 25th Floor
                  Houston, Texas 77002-2728
                  Attention:   Bradley E. Rauch, Esq. and Michael S. Wilk, Esq.
                  Facsimile:   (713) 223-9319

                  and

                  Beyt & Beyt
                  700 East University Avenue
                  Lafayette, Louisiana 70503
                  Attention:  Raymond Beyt, Esq.
                  Facsimile:  (337) 233-6773

or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by facsimile, when transmitted to
the applicable number so specified in (or pursuant to) this Section 8.9 and an
appropriate answerback is received, (ii) if given by mail, three (3) days after
such communication is deposited in the mails by certified mail, return receipt
requested, with postage prepaid and addressed as aforesaid or (iii) if given by
any other means, when actually delivered at such address.

     8.10  Remedies;  Waiver.  To the extent  permitted  by Law,  all rights and
remedies  existing  under this Agreement are cumulative to and not exclusive of,
any rights or remedies  otherwise  available under applicable Law. No failure on
the part of any party to exercise  or delay in  exercising  any right  hereunder
shall be  deemed a waiver  thereof,  nor shall any  single or  partial  exercise
preclude any further or other exercise of such or any other right.

     8.11  Attorney's  Fees.  In the event of any Action by any party to enforce
against another party a right or claim,  the prevailing  party shall be entitled
to  reasonable  attorney's  fees,  costs and  expenses  incurred in such Action.
Attorney's  fees incurred in enforcing any judgment in respect of this Agreement
are recoverable as a separate item.

                                       42
<PAGE>

     8.12  Severability.  If any provision of this Agreement is determined to be
invalid,  illegal or  unenforceable by any  Governmental  Entity,  the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect;  provided  that the  essential  terms and  conditions  of this
Agreement for all parties remain valid, binding and enforceable. In event of any
such determination,  the parties agree to negotiate in good faith to modify this
Agreement to fulfill as closely as possible  the  original  intents and purposes
hereof.  To the extent  permitted by Law, the parties  hereby to the same extent
waive any  provision  of Law that renders any  provision  hereof  prohibited  or
unenforceable in any respect.

     8.13 Entire Agreement.  This Agreement constitutes and includes that entire
agreement  of the  parties  with  reference  to the  subject  matter  hereof and
supersedes  all prior  agreements  and  understandings  relating  to the subject
matter hereof.  No promise or representation of any kind has been made to any of
the parties to this Agreement by any other party or parties to this Agreement or
anyone  acting for any of such  parties,  except as is expressly  stated in this
Agreement.

     8.14 Time is of the  Essence.  Time is of the essence in  interpreting  and
enforcing this Agreement.

     8.15  Arbitration.  Any  controversy or claim arising out of or relating to
this Agreement,  or the breach thereof, shall be resolved by binding arbitration
administered  by the  American  Arbitration  Association  under  its  Commercial
Arbitration  Rules in  effect  on the date of this  Agreement  (herein  the "AAA
Rules"),  and judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitrator shall be selected pursuant
to the AAA Rules and shall be a neutral  and  impartial  lawyer  with  excellent
academic and professional  credentials (i) who is or has been practicing law for
at least fifteen (15) years,  specializing in general  commercial  litigation or
general  corporate  and  commercial  matters and (ii) who has both  training and
experience  as  an  arbitrator  and  is  generally  available  to  serve  as  an
arbitrator.  The  arbitration  shall be governed by the  arbitration  law of the
Federal Arbitration Act and shall be held in Houston, Texas.

     8.16 Expenses.  All legal and accounting fees incurred by the  Shareholders
in  connection  with  the   negotiation   and  execution  of  the   transactions
contemplated hereby will be paid by the Company.

                  [Remainder of Page Left Intentionally Blank]



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<PAGE>


     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly  authorized  officers as of the day and year first above
written.


                                 PARENT:

                                 TRADESTAR SERVICES, INC.


                                 By: /s/ Clarence J. Downs
                                     -------------------------------------------
                                         Clarence J. Downs
                                         Chairman and Chief Executive Officer


                                 COMPANY:

                                 THE CYMRI CORPORATION


                                 By: /s/ Larry M. Wright
                                    --------------------------------------------
                                 Name: Larry M. Wright
                                 Title: Chief Executive Officer and President

                                 BUYER:

                                 TRADESTAR ACQUISITION SUB, L.L.C.


                                 By: /s/ Frederick A. Huttner
                                     -------------------------------------------
                                         Frederick A. Huttner
                                         Vice President and Manager


                                 SHAREHOLDERS:

                                     /s/ Larry M. Wright
                                     -------------------------------------------
                                         LARRY M. WRIGHT

                                     /s/ Franklin M. Cantrell, Jr.
                                     -------------------------------------------
                                         FRANKLIN M. CANTRELL, JR.

                                     /s/ Robert G. Wonish
                                     -------------------------------------------
                                         ROBERT G. WONISH

                                     /s/ Michael W. Hopkins
                                     -------------------------------------------
                                         MICHAEL W. HOPKINS

                                   43