Document:

Exhibit
10.20

    Yeqing
Building Lease Agreement

    
 

    Part A:
Beijing Yeshi Enterprise Group Co., Ltd

    Part B:
Lakeland (Beijing) SafetyProducts Limited

    
 

    June 2,
2009

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Lessor:
Beijing Yeshi Enterprise Group Co., Ltd (Hereinafter referred to as Part
A)

    Lessee:
Lakeland (Beijing) Safety Products Limited (Hereinafter to as Part
B)

    

    Beijing
Yeshi Enterprise Group Co., Ltd (Hereinafter referred to as Part A), which is a
company established in accordance with Laws of the People’s Republic of China
with the registered address of NO.9  Wangjing Bei Lu Chaoyang
District, Beijing , China  having independent property rights of
Yeqing Building totally A,B,C,D four buildings( Hereinafter referred to as
Building) and Lakeland (Beijing) Safety Products Limited hereby reach the
Agreement as follows and sign the contract on June 2,
2009.

     

    Article 1
Room to Lease
 

    1.
 The Lessor agree to lease Room 412 on four floor of building C totally 107
m2
architectural space (room location is red highlighted in the Appendix
1)

    2. 
The room leased to Lessee shall only be utilized for office of company and shall
not be used as residence or workshop. Part B agrees to lease the room in the
current situation.

    

    Article 2
Lease, Rent and other Expense

    
      	
              1.

            	
              the
      lease period of this contract is from June 11,2009 to June 30,
      2011

            

    

    
      	
              2.

            	
              Rent:
      the rent of this contract includes lease of room and management fees
      (RMB1.5/day/ architectural m2
      )

            

    

    
      	
              3.

            	
              The
      rent of the room to lease of building A, B and C is RMB4.5/ architectural
      m2
      during the lease period.

            

    

    
      	
              4.

            	
              Part
      A agrees that lease Part B the room at favorable price during the
      favorable duration. The favorable price is RMB3.1/ architectural m2
      totally RMB245351. the favorable rent-free period is 20 days(
      the rent-free period refer to Article 4. paragraph one
    )

            

    

    
      	
              5.

            	
              The
      rent should be calculated according to the foreign exchange rate middle
      rate of the State Administration of Exchange Control when Part B pays the
      rent by foreign currency.

            

    

    
      	
              6.

            	
              Electricity
      fee: Part B pays Part A the electricity fee within five work days from 25
      of every month according to the actual use of electricity (the number of
      the ammeter). It starts from the day when Part B moves in as the first
      time to charge the electricity. The current electricity price is RMB1 per
      kilowatt hour which is subject to the price adjustment of the power supply
      section.

            

    

    
      	
              7.

            	
              Water
      fee: Part B pays Part A within five work days from 25 of each month
      according to the actual use of water, and it starts from the day when Part
      B move in as the first time to charge the water. The current water price
      is RMB6.1 per ton which is subject to the price of the water supply
      section.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              Parking
      fee: monthly parking fee for each seven and less than seven seats car
      includes RMB250 (RMB150 as monthly flat rate and RMB100 as overhead
      expense of Contractor), fixed parking lot RMB500 (RMB210 as monthly flat
      rate and RMB290 as overhead expense of Contractor) and underground parking
      lot RMB800; monthly parking fee for each more than seven seats car is RMB
      500 (RMB210 as monthly flat rate and RMB290 as overhead expense of
      Contractor). Part B pays the parking fee of next month within five work
      day. Charge the parking fee according to the actual days if park less than
      one month. Parking lot number is one. Part A offer the parking place of
      bicycle but have no responsibility of
  management.

            

    

    

    Article 3
Security Deposit

    

    
      	
              1.

            	
              Part
      B pays Part A three months rent totally RMB29853 as the guarantee to
      perform the contract when the two parties sign the contract. The security
      deposit has no interest.

            

    

    
      	
              2.

            	
              When
      the contract expires, Part A refund the full amount security deposit to
      Part B without any interest or compensate within one month after Part B
      change its registered address to be not Yeqing Building, provided the
      latter performs all the obligation stipulated in the contract and pay off
      all the payable expense. If Part B needs not change its registered address
      Part A refund the full amount security deposit to Part B within one month
      after Part B pay off all the expense provided the latter performs all the
      obligation stipulated in the
contract.

            

    

    
      	
              3.

            	
              It
      applies to Article 10 paragraph ten if Part B terminates the contract
      without the consent of Part A during the lease
  period.

            

    

    
      	
              4.

            	
              Part
      B should not use the security deposit to countervail the rent or the other
      expense.

            

    

    
      	
              5.

            	
              Part
      B should not transfer the creditor’s right to the third part or pledge for
      the others and should not use the security deposit as the other expense
      except the performance of the
contract.

            

    

    
      	
              6.

            	
              The
      contract terminated automatically if the security deposit of Part B do not
      arrive the account of Part A within three days after the contract
      signed.

            

    

    

    Article 4
Payment of Rent

    

    
      	
              1.

            	
              The
      rent-free period of Part B is from 11 June, 2009 to 30 June, 2009. Part B
      need no pay Part A the lease of the room, but should pay the management
      fee stipulated in the contract (RMB1.5/day/architectural m2),
      public service fee (include electricity rate and water rate) and the other
      expense. The management fee should pay with the security deposit during
      the rent-free period. During the rent-free period, Part B should perform
      the entire obligation and abide all the regulation stipulated in the
      contract except need not pay lease of room. Part B should pay the
      telephone bill and internet fee to China
  Telecom.

            

    

    
      	
              2.

            	
              Part
      B pays Part A the rent every one month. The first time to pay the rent is
      before 01 July and the total amount is RMB10282.7. The
      second time to pay the rent is within five work days from 25 July, 2009
      and from then on the date to pay the rent is within five work days from 25
      of every month according the actual number of days of each
      month.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              3.

            	
              Payment
      of Part B shall be made in check or cash or remit to the bank appointed by
      Part A if pay by bill of exchange. The date of remitting the bill of
      exchange shall be the date of
payment.

            

    

    
      	
              4.

            	
              Part
      B should pay the rent according to the date stipulated in the
      contract.

            

    

    
      	
              5.

            	
              When
      receive the rent and the other expense Part A should make legal equal
      amount invoice to Part B with Part A as the issuer of the
      invoice.

            

    

    

    Article 5
Decoration and Remedy

    

    
      	
              1.

            	
              Part
      B should abide the regulation established by Part A and the agreement
      signed by the two parties.

            

    

    
      	
              2.

            	
              Part
      B should not rebuild or decorate any public area or public part, should
      not mark, scrawl or drill on the public part, and should not change the
      appearance of the building without the written consent of Part
      A.

            

    

    
      	
              3.

            	
              After
      getting the decoration permit, Part B should paste the decorate permit on
      the door or the other conspicuous place of the lease room so Part A can
      inspect the decoration.

            

    

    
      	
              4.

            	
              Part
      B should insure the decoration have no damage to the instruction and
      facility of the lease room and the building and have no effect on the
      other lessee to use the building and the room they
  lease.

            

    

    
      	
              5.

            	
              During
      the lease period, Part B should support Part A when the latter need remedy
      or rebuild the building and should not restrict or disturb the builder
      employed by Part A. But Part A should give written notice to Part B and
      made the utmost possible efforts to insure Part B can work
      normally.

            

    

    
      	
              6.

            	
              Part
      A can enter the lease room of Part B to inspect and maintain after giving
      logical notice in advance. Part A can enter the lease room of Part B
      without notice in an emergency and take down the window and door to get in
      when necessary and inform Part B within 24 hours after the
      fact.

            

    

    
      	
              7.

            	
              Part
      B should keep the lease room and the facility of the room in good, clear,
      tenantable and maintained condition (not include natural abrasion). Part B
      should not repair any damage or flaw of the room, but should inform Part A
      of that. Part B must assume the responsibility of any personal injury or
      property lose to Part B or anyone others caused by the lease of the room
      and the disrepair or damage of the
facility.

            

    

    
      	
              8.

            	
              Part
      B should take all reasonable precaution to protect the interior of the
      room against damages from fire, water, wind and the like, and ensure close
      all the windows under the threaten of atrocious
  weather.

            

    

    
      	
              9.

            	
              Part
      B should not claim for compensation to Part A when remedy or rebuild of
      the lease room or the whole building which make Part B cannot use the room
      normally are caused by Force
Majeure.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
 

    

    Article 6
Entry and Exit of the Lease Room

    

    
      	
              1.

            	
              Part
      B should presents the basic information of the company and the employ to
      the administrative personnel of Part A and should equip its stuff Security
      Access Control card (detail refer to Appendix Four Article 3 paragraph
      five). Stuff of Part B should not stay in the room overnight. Part A stops
      the normal property and personal service after 18:00 on work
      day.

            

    

    
      	
              2.

            	
              Part
      A or the worker hired by Part A should inform Part B in advance when they
      need enter the lease room because of the reason of maintain, inspect,
      security, fireproofing, installation and the like. Part A can enter the
      room directly in emergency when Part A is not able to inform Part B in
      advance, but get in touch with Part B within 24 hours after the
      fact.

            

    

    

    Article 7
Rights and Obligation of Part A

    

    
      	
              1.

            	
              Part
      A should not announce unilaterally raise the rent without the consent of
      Part B. but the rent price should be readjusted when renew the expired
      contract, otherwise the contract cannot be
  extended.

            

    

    
      	
              2.

            	
              Part
      A should provide Part B the use of central
    air-conditioning:

            

    

    
      	
            	
              1)

            	
              Free
      of charge cooling time and standard: 8:00-18: from Monday to Friday. No
      heating on legal holiday.

            

    

    
      	
            	
              2)

            	
              Free
      of charge heating time and standard: heating period is 15 November every
      year to 15 March of the next year. During this period 8:00 to 18:00 is
      normal heating time and 18:00 to 8:00 is low temperature heating
      time.

            

    

    
      	
            	
              3)

            	
              It
      charges 930 per hour (limited to D building) outside the time stipulated
      above from Monday to Friday. If the central air-conditioning is used for
      heating or cooling on the other holidays the using time of should not less
      (it should be a mistake of the contract which should be “more” I think)
      than 4 hour, and the excess time will be charged according to the above
      charge regulation.

            

    

    
      	
              3.

            	
              To
      be responsible for the security, fireproofing, environmental hygiene and
      the like of the public area and public
facility.

            

    

    
      	
              4.

            	
              Inspect
      and maintain the public area and facilities to ensure them in good usable
      condition and repair in time in the event of any damage malfunction or
      receiving the written notice from Part B of damage and
      malfunction.

            

    

    
      	
              5.

            	
              Part
      A provide Part B with the other paid service (details refers to Appendix
      Four Article 3 Paragraph four)

            

    

    
      	
              6.

            	
              Part
      A can amend the Appendixes of the contract Property Management Agreement,
      Fire Control Safety Responsibility Pledge and Security Responsibility
      Pledge according to the relevant government document and regulation and
      the actual position of the company. The amended version should be sent to
      Part B in time and come to force upon the arrival to Part
    B.

            

    

    
      	
              7.

            	
              Part
      A should keep the circuitry, equipment, water pipe, drainage system and
      the other public facilities in good and rentable condition. Part A have no
      responsibility for the failure to function normally of the public
      facilities or the intermission of the water, air-condition and the like
      caused by emergent maintaining, Force Majeure, or have notified Part B in
      advance.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
  

    

    Article 8
Rights and Obligation of Part B

    

    
      	
            	
              1.

            	
              Part
      B should be a legal company registered in China, or legal office in
      Beijing of foreign company registered legally, or legal entity, operating
      unit, the other social organization registered in the relevant
      administrative organ. Part B should submit the duplicate of Corporate
      Business License (with the seal of the company) to Part A as the appendix
      of the contract. If Part B is a newly established company, the appointed
      corporate executive of Part B sign the contract with Part A, and submit
      the relevant legal document to Part A within 10 days after the
      establishment of the company. The two parties should change the contract
      in the form of complementary
agreement.

            

    

    
      	
            	
              2.

            	
              Part
      B has the right to use the lease room but have not the ownership. No
      sublease, relet, transfer, pledge or borrow are allowed. The above
      regulation applied to the entire article in the lease room provided by
      Part A.

            

    

    
      	
            	
              3.

            	
              The
      room leased to Lessee shall only be utilized for office of company. Part B
      should not use the lease room as other application, should not change the
      room or any part of the room to broadcasting studio, should not hold any
      religion ritual or any other rite and should not use the room for
      gambling, prostitution, or any other illegal and immoral purpose. Part B
      should not use the lease room for any activity that endanger State
      security, should not perform or allow any auction or sale activity of any
      article or any property, should not lease the room by any way that may
      that will harm or endanger Part A or the other lessee such as noise,
      disarrangement smell and the like.

            

    

    
      	
            	
              4.

            	
              Part
      B should not operate business under the name of Part
  A.

            

    

    
      	
            	
              5.

            	
              Part
      B should not jam, incise, damage, change or disarrange any public area or
      fixed equipment of the building and should not influence the supply and
      usage of the water, electricity, gas and the like of the
      building.

            

    

    
      	
            	
              6.

            	
              Part
      B should not move or change the facilities of the lease room during the
      decoration without the consent of Part A; otherwise, Part B should assume
      total responsibility.

            

    

    
      	
            	
              7.

            	
              Part
      B should restore the lease room to the original state or bear the expense
      to restore the lease room, except otherwise agreed by the
      parties.

            

    

    
      	
            	
              8.

            	
              Part
      B should abide the contract and the management system of Part
      A.

            

    

    
      	
            	
              9.

            	
              Part
      B is liable to the security,anti-epidemic and the
      fireproofing of the lease room. Office and business activities should
      confirm to the regulation of Beijing fire and health and anti-epidemic
      department and the Fire Control Safety Responsibility Pledge (refer to
      Appendix Two).

            

    

    
      	
            	
              10.

            	
              Part
      B should report the power load condition of the lease room to Part A
      before decoration for the later to audit in advance. Register and file the
      number and power load of the large and irregular electric equipment to
      Part A and obtain the consent of Part A before increasing new large and
      irregular electric equipment. Equipment inside the room such as computer
      should be equipped with UPS.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              11.

            	
              Part
      B should not put any article that beyond the design load of the lease room
      floor in the room. Part A reserves the right to stipulate the weight and
      location of the coffer of Part B.

            

    

    
      	
            	
              12.

            	
              Part
      B should not move any heavy machine and large equipment into the building.
      Notifying Part A in advance before move out large number of office
      electricity equipment and establishment, and move out with the consent of
      Part A and out certificate. It’s considered as breach of the contract and
      Part A have the right to penalize Part B if Part B moving our without
      consent of Part A seriously badly. Part B should follow the direction of
      Part A people.

            

    

    
      	
            	
              13.

            	
              Part
      B should not use the lease room as manufacture and storage purpose except
      sample and item for display. Prohibit any flammable, explosive, virulent,
      radioactive dangerous article.

            

    

    
      	
            	
              14.

            	
              Part
      B should not place article or garbage in the lobby, corridor or the other
      public area of the building.

            

    

    
      	
            	
              15.

            	
              Part
      B should pay the agreed rent of the contract, the water and electricity
      fee and the other relevant fee, and should not delay the payment by any
      reason or refuse the payment.

            

    

    
      	
            	
              16.

            	
              Part
      B should keep the inside of the lease room clean and in good condition,
      including but not limited to floor, wall, floor board, ceiling and the
      estate like window, door, line of power and gas. Keeping the facilities,
      furniture and sanitary utensils clean and in good condition. Part B pays
      the expense to when Part A remedy the damage of the lease room, the damage
      of the public area caused by Part B or the guest of Part
  B.

            

    

    
      	
            	
              17.

            	
              Except
      the sign and nameplate provided by Part A, Part B should not put any
      advertise sign, light box, signboard, decoration, flag, poster or the
      other articles inside or outside of the lease and the public area which is
      visible from outside of the
building.

            

    

    
      	
            	
              18.

            	
              During
      the lease period, Part B should submit the duplicate of its Corporate
      Business License (with seal of the company) which passed the annual audit
      to Part A to keep in a file.

            

    

    

    Article 9
Renewal

    

    
      	
               
      

            	
              1.

            	
              Part
      B should negotiate the new rent and the other terms with Part A within two
      month before the contract becomes expire if Part B desire a renewal, and
      sign the official Lease Agreement with Part A within one month before the
      contract becomes expires. If the two parties do not sign official Lease
      Agreement within one month before the contract becomes to expires, Part A
      have the rights to take potential lessee to the lease room and show them
      around provided not disturb the normal work of Part
  B.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
10 Liability for Breach of Agreement

    

    
      	
              1.

            	
              The
      parties should strictly comply with provisions hereof. In case of any
      breach of the Lease Agreement the not-defaulting party has the right to
      seek the liability for breaching the agreement according to what the two
      parties agreed and require the defaulting party bear all the economic lose
      and pay penalty. The economic loss includes but not limited to the direct
      lose and the foreseeable indirect lose, court fee, attorney fee and other
      expenses incurred.

            

    

    
      	
              2.

            	
              When
      Part B violates Article 5 paragraph one of the Lease Agreement, Part A has
      the right to requires Part B stop the instruction immediately and punish
      Part B according to the Decoration
Agreement.

            

    

    
      	
              3.

            	
              Part
      B should bear all the remedy cost and the loss of Part A, when Part B
      violate Article 5 paragraph two and Article 8 paragraph five, and damage
      the reflection glass curtain wall, inside instruction or the central
      air-condition system due to the behavior and
  misfeasance.

            

    

    
      	
              4.

            	
              Part
      B should bear all the loss and compensation when Part violates any
      paragraph of Article 5 paragraph three, paragraph four, paragraph seven,
      paragraph eight and paragraph
sixteen.

            

    

    
      	
              5.

            	
              Part
      B should bear all the maintenance cost when Part B violates Article 5
      paragraph eight and is liable to the damage of the lease room or the
      inside of the building entirely or partly caused by the breach which
      includes the damage to the decoration, the fixed facilities and
      equipment.

            

    

    
      	
              6.

            	
              Part
      A will finish the work substitute Part B with all the cost charge to the
      latter, when the latter violates Article 8 paragraph seven or paragraph
      fourteen.

            

    

    
      	
              7.

            	
              Part
      B is liable to all the loss and compensation in case of breach of Article
      8 paragraph nine or paragraph thirteen or Appendix Two Fire Control Safety
      Responsibility Pledge. Responsibility person of the fire accident is
      liable to compensate the economic loss and the one cause serious
      consequences should be investigated for criminal responsibility by the
      justice department.

            

    

    
      	
              8.

            	
              Part
      B is liable to the compensation for the loss which includes the damage of
      the building, elevator and personal injury caused by the activity of Part
      B in case of the breach of Article 8 paragraph twelve. If Part B moves out
      large number of article without the consent of Part A, the latter have the
      right to increase equal amount of security deposit according to Article 3
      paragraph one. It applies to Article 10 paragraph one in case of the
      breach of the agreement.

            

    

    
      	
              9.

            	
              Part
      A have the right to require Part B pay penalty due to breach of contract
      which is one percent of the total expense when the latter violate Article
      8 paragraph fifteen and fail to pay the rent including electricity fee,
      parking fee, cleaning fee and the like. The penalty calculation starts
      from 1st
      of each month. Part A have the right to intermit the supply of water,
      electricity until Part B pay off all the payable expense when the latter
      delay the payment up to ten days. Part A have the right to terminate the
      Lease Agreement unilaterally assuming Part B breach the Lease Agreement
      when the latter delay the rent more than one month or delay the
      electricity fee more than three months. Part B should move out
      unconditionally after receive the notice of Part A and pay the rent,
      electricity fee, cleaning fee, parking fee and the like according to the
      actually number of days till retrocede the lease room, at the same time
      Part A have the right to claim for penalty which is two times of the rent.
      In addition, Part B should bear all the expense when Part A obtains the
      rent and penalty through litigant means of course (including but not
      limited to legal fare, appraisal cost and retaining fee and the
      like).

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              10.

            	
              If
      Part B terminates the Lease Agreement before the prescribed time, Part B
      should pay off the rent of the number of the days during the lease period
      and the cost to restore the lease room and get the security deposit back
      or waive the security deposit and the favorable polices which includes
      rent-free period, favorable rent.

            

    

    
      	
              11.

            	
              Part
      A have the right to dismantle the advertise, light box, signboard,
      decoration, flag, poster or the other articles Part B installed or
      exhibited against Article 8 paragraph seventeen with all the cost borne by
      Part B.

            

    

    
      	
              12.

            	
              if
      Part B breach the Lease Agreement and cost loss to Part A, the latter have
      the right to require correct according to the breach and the consequence
      or put forward the termination of the Lease Agreement. In case of
      termination of Part A, Part B should move out of the lease room within one
      month after receiving the notice of Part A and pay the rent till the date
      retroceding the room. In case of deferred payment, Part A is entitled of
      the double of rent as compensation besides the rent and will not return
      the security deposit.

            

    

    
      	
              13.

            	
              It
      breaches the Lease Agreement if Part A fails to hand the lease room to
      Part B on schedule and is liable to one percent of the month rent penalty
      per day beyond the time limit.

            

    

    
      	
              14.

            	
              If
      Part A is liable to all the cost caused by the breach of Article 7
      paragraph one of Part A and return full amount of the security deposit to
      Part B.

            

    

    

    Article
11 Rescission and Termination of the Lease Agreement

    

    
      	
              1.

            	
              Part
      A is entitled to terminate the Lease Agreement unilaterally in case of the
      illegal operation identified by relevant government
  bodies.

            

    

    
      	
              2.

            	
              Part
      A is entitled to terminate the contract and do not return the security
      deposit in case of the breach of Article 8 paragraph two or three or
      paragraph two of Security and Safety Responsibility Pledge with all the
      loss and compensation borne by Part
B.

            

    

    
      	
              3.

            	
              The
      contract terminates automatically when the building is entirely or partly
      unavailable or the lease room is unavailable or not allowed to use because
      of the Force Majeure, and two parties should not claim compensation to
      each other.

            

    

    
      	
              4.

            	
              Part
      A have the right to terminate the contract unilaterally when Part B
      violate the Property Management Agreement or the relevant accidental
      contract and appendix, fail to correct immediately after receiving the
      notice of Part A and cause loss to Part A with serious circumstance and
      consequence. Part A do not refund the security deposit in case of this
      kind of termination of the
contract.

            

    

    
      	
              5.

            	
              Part
      B should notify Part A 60 days in advance if Part B need terminate the
      contract before the expiration of the contract. The contract can be
      terminated with the consent of Part A, and the security is not refunded.
      It is deemed to breach the contract if Part B consist terminate the
      contract without the consent of Part A and  Article 10 paragraph
      ten is execute at the same time.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

      

      	
              6.

            	
              Part
      A should notify Part B three month in advance if Part A have to terminate
      the contract to rebuild, overhaul renovate the building because of Force
      Majeure. The Contract terminates automatically after three
      month.

            

    

    
      	
              7.

            	
              Part
      B should not claim any expense such as transfer fee, remove fee, business
      compensation fee, decoration fee and the like when the contract expire or
      terminated with the consent of the two parties or recriminated because of
      default of Part B.

            

    

    
      	
              8.

            	
              Part
      B should retrocede the lease room to Part A in due time. Part B should
      obtain the consent of Part A to delay the restoration of the lease room
      and be responsible for the liability for breach of contract. The penalty
      is double rent of breach of contract period. If Part B delay the
      restoration without the consent of Part A, the latter is entitled to
      execute Article 10 paragraph ten which stipulate Part B has no access to
      the rent-free period and favorable
rent.

            

    

    

    Article
12 Major Change

    

    
      	
              1.

            	
              Part
      B should notify Part A in writing immediately if there is any change of
      the company name, address, seat of head office, legal representative and
      major representative, or the other significant issue of Part B. the notice
      sent by Part A according to the address and name before changed is valid
      if Part A does not receive the written
notice.

            

    

    
      	
              2.

            	
              Part
      B should notify Part A when Part B change the legal representative, the
      assignee to sign the contract and the liaison person to Part A. Part A is
      entitled to require Part B to provide relevant documentation when Part A
      think the changes are detrimental for Part A to exercise the rights and
      obligations stipulated in the contract. Part A has the right to terminate
      the contract unilaterally in case of the failure of Part B in providing
      the documentation.

            

    

    
      	
              3.

            	
              during
      the lease period, Part A is entitled to change the name of the entire or
      part of the building and is not responsible for the cost of Part B caused
      by the change. Part A should notify Part B one month before the change of
      the name become effective.

            

    

    

    Article
13 Dispute Resolution

    

    The
contract applies to the laws of China, and any part can bring a suit before the
law court where the lease room is located in case of any dissension that cannot
solved through consultations when the two parts execute the
contract.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
14 Other Terms

     

    
      	
              1.

            	
              Before
      Part A signs the contract, Part B should present the relevant procedure
      and the authorization letter that authorize the tenant representative to
      sign the contract, and the documentations mentioned above are the
      appendixes of the contract.

            

    

    
      	
              2.

            	
              According
      to the contract, the two parties should sign for all the announcement and
      documentation present to each other by people of the two parties. If the
      announcement and document are not present to each other by people of the
      two parties, it’s deemed to be presented when they are sent out by
      MES.

            

    

    
      	
              3.

            	
              Part
      A authorizes           (signature)
      to be the assignee in charge of the management of the building and the
      lease room stipulated in the contract, especially the execution of the
      contract including collect the rent and the other relevant
      expenses.

            

    

    
      	
              4.

            	
              Part
      B authorizes _____(signature) to be the assignee in charge of sign the
      contract and sign for the document such as regulations and announcements
      from Part A which come into force upon
  signature.

            

    

    
      	
              5.

            	
              Letter
      of Authorization from the legal representative should be presented if the
      Lease Agreement is signed by the
assignees.

            

    

    
      	
              6.

            	
              The
      appendixes of the contract are components of the contract which have the
      same validity with this contract.

            

    

    
      	
              7.

            	
              The
      contract takes effect when the parties sign and stamp on it hereunto. The
      contract is made in quadruplicate, two for each
  party.

            

    

    

    Part B should accomplish the
enterprise business license within one month from the date leasing the
room.

    Appendix
One: Plan of the Lease Room and the Storey the Lease room Located

    Appendix
Two: Fire Control Safety Responsibility Pledge

    Appendix
Three: Security and Safety Responsibility Pledge

    Appendix
Four: Property Management Agreement

    Appendix
Five: Duplication of the enterprise business license counterpart

     

    PART A:
BEIJING YESHI ENTERPRISE GROUP CO.,LTD

    LEAGAL
REPRESENTATICE OR ASSIGNEE (SIGNATURE AND LEAL)

     

    PART B:
LAKELAND (BEIJING) SAFETY PRODUCTS LIMITED

    LEAGAL
REPRESENTATICE OR ASSIGNEE (SIGNATURE AND LEAL)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
  

    

    APPENDIX
TWO:

     

    Fire
Control Safety Responsibility Pledge

    

    Part A: Beijing Yeshi
Enterprise Group Co., Ltd

    Part B: Lakeland (Beijing)
Safety Products Limited

    

    The Fire
Control Safety Responsibility Pledge is signed in the purpose of executing the
policy of devoting major efforts into prevention and combining fire prevention
with fire fighting of Fire Control Law of the People’s Republic of China,
ensuring the safety of the building and protecting the rights of Part
B.

    
      	
              1.

            	
              Part
      B should establish fire control safety management and assign the fire
      control principal to ensure no fire accident occurs in the lease
      place.

            

    

    
      	
              2.

            	
              Part
      B should strictly enforce the regulation and requirement of the electrical
      appliances usage to eliminate hidden fire
  danger.

            

    

    
      	
              3.

            	
              Part
      B should not hold dangerous articles such as those are virulent,
      flammable, and explosive to prevent
accident.

            

    

    
      	
              4.

            	
              Part
      B should furnish the fire control equipment ( 2 fire extinguishers for
      less than 200m2; 3
      fire extinguishers for 200-500 m2; 6
      fire extinguishers for 500-1000m2
      and 10 fire extinguishers fore 1000 and up) and be acquainted with the use
      and location of the equipment and the Fire Control Evacuation Road Map of
      the Building.

            

    

    
      	
              5.

            	
              The
      independent rooms of Part B such as warehouse and facility house should be
      equipped with fire control devices.

            

    

    
      	
              6.

            	
              Control
      the kindling strictly. Smoking in the room, corridor, service area is
      strictly forbidden. Stub should not be littered. Smoking should be in the
      smoking section. Open-flame is forbidden. The use of electric cooker and
      dangerous electric heater is strictly
  prohibited.

            

    

    
      	
              7.

            	
              Part
      B should presents decoration scheme to Part B if decoration is necessary
      before moving in and construct after obtaining the consent of Part A. Part
      B should pay attention to the safety of electric appliance, should not use
      open-flame and comply with the management of the fire control safety
      personnel of the building. Part B should be punished in case of breach of
      the decoration agreement.

            

    

    
      	
              8.

            	
              Part
      B should not install temporary electrical wire. if electrical wire is to
      be installed, Part B should submit the application the property project
      department and install the electrical wire with the approval, abide the
      relevant fire control regulation and ensure turn off the power after
      worker.

            

    

    
      	
              9.

            	
              Part
      B should check the fire extinguisher frequently to ensure the validity.
      It’s forbidden to stack sundries in front of fire control equipment and
      fireplug. Reasonable precaution should be taking to ensure the fire
      control equipment in good condition. Remove and damage to the fire control
      equipment are prohibited.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              10.

            	
              Responsibility
      person of the fire accident caused by breach of the above regulation is
      liable to compensate the economic loss and the one cause serious
      consequences should be investigated for criminal responsibility by the
      justice department.

            

    

     

    Beijing
Yeshi Enterprise Group Co., Ltd

    Signature
of Representative and Company Seal __________

    2 June,
2009

    
 

    Manager
of Part B

    Signature
and Seal of Company Seal __________

    2 June,
2009

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
THREE:

     

    Security
and Safety Responsibility Pledge

    

    Part A: Beijing Yeshi
Enterprise Group Co., Ltd

    Part B: Lakeland (Beijing)
Safety Products Limited

    

    Security
and Safety Responsibility Pledge is signed in the purpose of executing Beijing
Enterprise Security Responsibility System, Law of the People’s Republic of China
on Control of the Entry and Exit of Aliens, further clarifying the inside safety
responsibility, maintain the normal office order and protect the right s Part
B.

    
      	
              1.

            	
              Tenant
      should abide all the laws and regulations of China and register the
      company and the staff of the company legally to the relevant
      organizations.

            

    

    
      	
              2.

            	
              Part
      B should no engaging in illegal activities such as gambling, prostitution,
      Falun Gong, rabble, fight and affects the office order of the
      building.

            

    

    
      	
              3.

            	
              Staying
      in the building overnight is not allowed and those who breach the
      regulation should be pursued the responsibility according to the relevant
      security regulation.

            

    

    
      	
              4.

            	
              The
      staff of Part B should go the business center of the building to handle
      Door Access Control card by valid document (foreign personnel use passport
      and Chinese personnel use ID card and employee form) and letter of
      instruction from the company. The Security Access Control card is the
      valid certificate to enter the
building.

            

    

    
      	
              5.

            	
              Establish
      and improve all kinds of safety and security regulations and reinforce the
      security and law-abiding education to the
staff.

            

    

    
      	
              6.

            	
              Part
      B should take reasonable preventative measurements, abide the financial
      management regulations, properly keep the property of the company and the
      money of the staff to prevent theft
case.

            

    

    
      	
              7.

            	
              Part
      B should abide the receipt system and conform to the property management
      of Part A.

            

    

    

    Beijing
Yeshi Enterprise Group Co., Ltd

    Signature
of Representative and Company Seal _____________

    2 June,
2009

    

    Manager
of Part B

    Signature
and Seal of Company Seal ____________

    2 June,
2009

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
FOUR:

     

    Property
Management Agreement

       

    Part A: Beijing Yeshi
Enterprise Group Co., Ltd

    Part B: Lakeland (Beijing)
Safety Products Limited

    

    Article 1
Use, Management and Maintenance of the Lease Room

    

    
      	
              1.

            	
              Part
      B should observe the relevant laws, statutes and regulations and handle
      the relation properly between the water supply, pollution discharge,
      traffic, ventilation,  lighting, maintenance, decoration,
      environment sanitation and environment protection in light of helping
      maintain the appearance and safety for use of the
  property.

            

    

    
      	
              2.

            	
              following
      acts are prohibited in property management
area:

            

    

    
      	
            	
              2.1

            	
              Changing
      the instruction, appearance and use of the room without authorization of
      relevant government departments and consent of Part
  A.

            

    

    
      	
            	
              2.2

            	
              Encroaching
      the public area such as public staircase, banister, corridor, basement,
      platform and roof or removing public
equipment.

            

    

    
      	
            	
              2.3

            	
              Setting
      up building or stacking articles in the courtyard, platform, green land,
      road and the other public area.

            

    

    
      	
            	
              2.4

            	
              Encroaching
      or damaging road, green land, flowers and trees, art landscape,
      recreational and sports facilities.

            

    

    
      	
            	
              2.5

            	
              Dumping
      or littering garbage randomly.

            

    

    
      	
            	
              2.6

            	
              Holding
      flammable, explosive, virulent, radioactive dangerous articles in the
      room, discharging deleterious substance and making noise beyond standard
      level are strictly prohibited.

            

    

    
      	
            	
              2.7

            	
              Constructing
      windows or doors in the building without permit and hanging, posting,
      scrawling and carving in the building
  arbitrarily.

            

    

    
      	
            	
              2.8

            	
              Using
      the property for activities that jeopardizing public
      interests.

            

    

    
      	
            	
              2.9

            	
              The
      other activities forbidden by laws, statutes and
    regulations

            

    

    
      	
              3.

            	
              Part
      B should presents decoration scheme to Part A in advance, decorate the
      room with the consent of Part A and sign decoration agreement with Part
      A.

            

    

    
      	
              4.

            	
              Part
      B is strictly prohibited to bring pets into the
  building.

            

    

    

    Article 2
Instructions for Yeqing Building

    

    
      	
              1.

            	
              Conformation
      of the Room

            

    

    
      	
              1.1

            	
              All
      the building of Part B is case-in-place reinforced concrete frame concrete
      wall structure. The seismic fortification intensity of the building is 8
      and the anti-seismic rating is 2.

            

    

    
      	
              1.2

            	
              Load
      capacity per unit area: 250kg/m2

            

    

    
      	
              1.3

            	
              Height
      of the floors: 2.5-2.8m

            

    

    

    
      	
              2.

            	
              Instruction
      of Equipment and Facilities

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              2.1

            	
              Elevator:
      it’s Hitachi elevator for the first phase and Mitsubishi elevator for the
      second phase.

            

    

    
      	
              2.2

            	
              Fire
      control system: the public area of each floor is furnished with fire alarm
      and emergency broadcast system. There are emergency lighting system in all
      public area and fire control
passageway.

            

    

    
      	
              2.3

            	
              Security
      service: the public area of each floor is furnished with fire alarm and
      emergency broadcast system. There are emergency lighting system in all
      public area and fire control
passageway.

            

    

    
      	
              2.4

            	
              Central
      air-conditioning system: Shuangliang central air-conditioning
      system

            

    

    
      	
              2.5

            	
              Building:
      the building has various kinds of services such as catering, post office
      and business center.

            

    

    
      	
              2.6

            	
              Parking
      place: underground garage and parking place in the courtyard. One parking
      place per 150m2.

            

    

    
      	
              2.7

            	
              Postal
      system: there are stainless steel individual big capacity letterboxes for
      each tenant. The post office staff distribute the newspapers and
      periodicals to all the customers. There are two keys for the letterbox,
      one for the customer and one for the post office
  person.

            

    

    

    
      	
              3.

            	
              Power
      Supply and Distribution System

            

    

    
      	
              3.1

            	
              Instruction
      of Power Distribution and Lighting
System

            

    

    
      	
              3.1.1

            	
              Customer
      Ammeter

            

    

        
That to secure the physical and property safety of the customer, the socket
branch inside of the ammeter are equipped with electric leakage switch which
will cut off the branch power in case of electric leakage.

        
There are special ammeters in the lease area of the customers. The property
management personnel read the ammeter every 20th and
send the electricity bill to the room of the customer every 25th.

    
      	
              3.1.2

            	
              Lighting
      System

            

    

        
The lighting system is composed of three BV wires of different colors which lead
the electricity to the lamps from the power distribution box by several loops,
and the three wires are control line, neutral line, earth line. It’s prohibited
to install electric wire without permit because the pressure of the lamps is non
safety pressure. Notify the property people in case of electric wire
requirement.

    

    
      	
              4.

            	
              Instruction
      of the Intellectualized System

            

    

    
      	
              4.1

            	
              Visible
      Interphone System

            

    

    4.1.1 The
visitor of Part B can call Part B by the outdoor interphone. Part B can talk
with the visitor through the indoor interphone and see the picture of the
visitor.

    4.1.2
Part B can press the relevant button to open the door when Part B allow the
visitor to enter.

    4.1.3
Part B can notify Part A for help in case of indoor accident.

    

    
      	
              4.2

            	
              Door
      Access Management Subsystem

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              4.3

            	
              The
      entry of Building A, C, D and the elevator entry of each building from the
      garage are all equipped with door bans. Put the Door Access Control card
      close to the card reader to enter, otherwise the entry will be denied. The
      visitor can input the room number to visit and get enter with the consent
      of the one to be visited.

            

    

    

    Article 3
Management System

    

    
      	
              1.

            	
              Decoration
      Process and Requirement

            

    

    
      	
              1.1

            	
              Declaration

            

    

    
      	
              1.1.1

            	
              When
      Part B need decorate the lease room, Part B should present a written
      application to Part A which includes the
  following:

            

    

    1.1.1.1
The design plan including the reconstruct of the original room. Part B should
obtain the consent of Part A in case of reconstruct of the wires. Part B should
obtain the inspect report of the electricity inspect department (state-certified
and appointed by Part B) after finishing the reconstruction before moving in the
room.

    1.1.1.2
the duplication of the corporate business license (with company seal),
qualification certificate, letter of attorney (with company seal), professional
certificate for electricity, fire control and electric welding
operation.

    1.1.1.3
Construction drawing, smoking detecting system location drawing (original
location and reconstructive location), list of the material used in the
construction (environment friendly) and construction period.

    1.1.1.4
number of construction people, liaison person and contact method.

    1.1.2
Part B should re-declare and get examination and approval newly in case of
change of the design and construct with the relevant consent. The project will
not be inspected and accepted if Part B does not declare the
change.

    1.1.3
Part A audit the construction plan and decide whether grant the approval or not
within 3 days from the date of receiving the declaration.

    1.1.4
with the approval of the construction plan, Part A organize a meeting before the
decoration to handle related procedures and sign Decoration Agreement, Safe
Decoration Guarantee with the customer.

    

    1.2
Expense Standard

    1.2.1
Construction Deposit: RMB30/M2,
charging according to the construction area of the room leased by Part
B

    1.2.2 One
time construction management fee: charging according to the number of
construction days stipulated by the Decoration Construction Agreement, 12 hours
as a construction period, RMB120 within 8 hours (including 8 hours), RMB15
during 8-12 hours, what beyond 12 hours will be calculated in next construction
period, less than one hour will be calculated as one hour.

    1.2.3
Second time construction management fee: the management fee is RMB120 per day,
less than one day will be calculated as one day.

    1.2.4
Calculation of number of construction days: it calculates starts from record
time when the security persons open the door and stop to record the time when
the security persons lock the door. The two parties Settle accounts every day
and the construction people sign for confirmation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              1.3

            	
              Construction

            

    

    
      	
              1.3.1

            	
              Construction
      time: during 18:00-7:00 of Monday to Friday, Saturday and Sunday can
      construct with noise, and construct without noise during the other time.
      Constructions with stimulating odour such as painting, gluing, pasting
      wallpaper, laying carpet, paving floor are allowed to construct during
      18:00-6:00 of Friday to Sunday.

            

    

    
      	
              1.3.2

            	
              Part
      B should protect the equipment and facilities inside the room and equip
      with fire extinguisher.

            

    

    
      	
              1.3.3

            	
              The
      construction people should not stay in the construction site overnight,
      and should not

            

    

    
      	
              1.3.4

            	
              The
      decoration garbage and the construction material should be bought into the
      site after 18:00 every day. The garbage should be packed by garbage bags
      and dispose by the customer. Stacking and dumping randomly are not
      allowed.

            

    

    
      	
              1.3.5

            	
              Decoration
      company should assign one responsible person to supervise the
      construction, manage the workers, contact with Part A in time and ensure
      the management of the construction site comply with the regulation of Part
      A.

            

    

    
      	
              1.3.6

            	
              The
      construction should within the room and should not impropriate or block
      public passage.

            

    

    
      	
              1.3.7

            	
              The
      construction unit should ensure the neatness of the construction site
      without any pollution during the construction
  period.

            

    

    
      	
              1.3.8

            	
              The
      following are considered as noise and should conduct during the assigned
      time, otherwise, Part A have the right to expropriate the tools and stop
      the construction:

            

    

    
      	
            	
              (1)

            	
              drilling
      wall

            

    

    
      	
            	
              (2)

            	
              drilling
      or cutting metal

            

    

    
      	
            	
              (3)

            	
              construction
      with power saw

            

    

    
      	
            	
              (4)

            	
              the
      other construction with noise

            

    

    
      	
              1.3.9

            	
              Part
      B is not allowed to use carpet adhesive. Part B should declare for
      approval to Part A and use the assigned product by Part A if Part B have
      to use carpet adhesive.

            

    

    
      	
              1.3.10

            	
              The
      other relevant matters refer to Decoration Construction Agreement and
      Construction Decoration Fire Control Safe Agreement for
      detail.

            

    

    

    
      	
              1.4

            	
              Inspection
      and Approval

            

    

    
      	
              1.4.1

            	
              In
      case of violation behavior of Part B during the decoration, Part A will
      not inspect and approve before Part B correct
  it.

            

    

    
      	
              1.4.2

            	
              The
      decoration is inspected and approved by phrase. It should be applied for
      inspecting and approving in advance in case of secluded
      project.

            

    

    
      	
              1.4.3

            	
              Part
      B should notify Part A for inspection and approval immediately after the
      decoration of the room finished. Part B should correct the unqualified
      decoration within allotted time.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              1.4.4

            	
              Part
      A handles the lease procedures for Part B according to the qualified sheet
      of inspection and approval.

            

    

     

    
      	
              2.

            	
              Vehicle
      Management System

            

    

    
      	
              2.1

            	
              Handling
      long-distance identity induction parking card to park in the courtyard.
      The deposit is RMB50 per card.

            

    

    
      	
              2.2

            	
              Each
      company handles the ID card and parking permit uniformly and registers the
      number and style of the car. Copy of vehicle license must be provided when
      handle the parking permit.

            

    

    
      	
              2.3

            	
              Put
      the new ID card and parking card behind the front windshield of the
      vehicle and keep the “Activate the Window” forward to ensure the sensitive
      effect of the induction.

            

    

    
      	
              2.4

            	
              The
      vehicle should move lowly when enter or exit the park and move normally
      after the barrier of the induction system raising
      automatically

            

    

    
      	
              2.5

            	
              Driving
      in and out of the park in order. The next car should move in (or out)
      after the preceding car moving in (or out) and the barrier lowering
      completely. More than one vehicle move in (or out) of the park is
      prohibited. The vehicle will be declined to move in the park in case of
      rushing through the barrier.

            

    

    
      	
              2.6

            	
              Vehicle
      should enter the park once again after one entry and one
    exit.

            

    

    
      	
              2.7

            	
              The
      term of validity of the ID card is based on the payment period. It’s
      required to go and pay the parking fee in time to the business center. The
      ultimate activate time of the next month is with the ending date of the
      payment period in the payment notification of each month. The vehicle will
      be declined to enter when the payment is
  overdue.

            

    

    
      	
              2.8

            	
              Please
      go to the business center report the loss and handle the card again in
      case of the loss of the ID card.

            

    

    
      	
              2.9

            	
              Company
      certificate and ID card number of the vehicle are required when report the
      loss of the ID card and handle the new
card.

            

    

    
      	
              2.10

            	
                  
      Deposit will not be refunded in case of loss and damage of the
      card.

            

    

    
      	
              2.11

            	
                  
      Each company should have a copy of the ID card number of all the vehicle
      of the company for the affairs such as payment and
    activation.

            

    

    
      	
              2.12

            	
                  
      The ID card is allowed for subtenancy of the ID card is allowed, but
      limited to the same models (between compact cars or full-sized cars).
      Sbutenancy is not allowed between different models, and parding place will
      be canceled in case of subtenancy between different
  models.

            

    

    
      	
              2.13

            	
                  
      System do not allowed overground parking user drive into underground
      parking garage, therefore, subtenancy is not allowed between overground ID
      card and underground ID card.

            

    

    
      	
              2.14

            	
                  
      When the vehicles that transfer people or goods for Part B enter the
      courtyard for short time, Part A distribute temporary charging IC card to
      the vehicle, withdraw the IC card when the vehicle leave and charge the
      vehicle according to the parking charging standard of Beijing
      city.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              2.15

            	
                  
      Vehicle of Part B should obey the direction of Part A people when enter or
      leave the building, and blocking the door hostilely is strictly
      prohibited. Vehicle inside of the park should move following the traffic
      sign strictly, and going in a direction not allowed by traffic regulation
      is strictly prohibited. Parking the vehicle according to the management
      system of the park, taking care of the park equipment, paying attention to
      the vehicle around. Part A have the right to disqualify those who breach
      preceding regulation deliberately or hostilely from parking and even
      terminate the contract.

            

    

    
      	
              2.16

            	
                  
      Taking flammable and explosive article to the park, refilling, repairing
      cars, washing cars and littering inside of the park is strictly
      prohibited.

            

    

    
      	
              2.17

            	
                   Please
      not hold valuables in the vehicles. Part B is responsible for the loss in
      case of miss.

            

    

    
      	
              2.18

            	
                 
      Part A has no responsibility for the management of bicycle. If Part B
      should put the bicycles in the bicycle parking place in west of Yeqing
      Building, building C. put the bicycle in order and lock it after parking.
      Part B is responsible for the losing in case of loss. The bicycle should
      be wheeled in or out of the building and riding bicycle is not allowed
      inside the courtyard.

            

    

    

    
      	
              3.

            	
              Management
      System for Moving and conveying Article of
  Customer

            

    

    
      	
              3.1

            	
              Part
      B should notify Part A one week in advance before moving out and move out
      after obtain the consent of Part A. Part A has to right to forbid the
      moving of Part B in case of the non-conformance of Part B and Part B is
      responsible for the loss arising therefrom. The moving time is after 18:00
      from Monday to Friday, Saturday and Sunday the whole day. The customer of
      building D can move article by cargo-lifts in other time excepting moving
      out or moving a large amount of
articles.

            

    

    
      	
              3.2

            	
              Part
      B is responsible for all the loss in case of problems such as crash and
      damage during the course of moving.

            

    

    
      	
              3.3

            	
              Part
      B should notify Part A by person assigned by Part B and move out the
      articles with the out certificate.

            

    

    

    
      	
              4.

            	
              External
      Cleaning Management System

            

    

    
      	
              4.1

            	
              The
      property department decides one day of the first week of every month to
      hold the cleaning people meeting which all the cleaning people are
      supposed to attend. The customer assigns one person to attend the meeting
      for those who are off duty at the day and convey the spirit of the meeting
      to the cleaning people timely.

            

    

    
      	
              4.2

            	
              The
      two parties should communicate in time and deal with it properly in case
      of problem during of the routine.

            

    

    
      	
              4.3

            	
              Abide
      the management of the building and study the management system of the
      building.

            

    

    
      	
              4.4

            	
              Dress
      neatly and ensure no unpleasant smell of the clothing. It’s suggested to
      use perfume regularly.

            

    

    
      	
              4.5

            	
              Showering
      and washing hair regularly, and ensure no unpleasant smell of the
      body.

            

    

    
      	
              4.6

            	
              Workplace
      is limited to the inside of the room of each customer. boiled water room
      should be used as the place to wash cleaning appliance merely. It’s not
      allowed to rest and stroll there.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              4.7

            	
              Yield
      to the customer when walking in public area and being civilized and
      polite.

            

    

    
      	
              4.8

            	
              It’s
      not allowed to take guest elevator, go to the other floor and enter the
      room of the other customer
casualty.

            

    

    
      	
              4.9

            	
              Use
      the cleaning appliance and article properly. Economized
    water.

            

    

    
      	
              4.10

            	
                  
      It’s not allowed to use the cleaning appliance and easy-consumable
      articles of the building.

            

    

    
      	
              4.11

            	
                  
      It should be cleaned timely in case of pollution to
    cleanness.

            

    

    
      	
              4.12

            	
                  
      The everyday small garbage should be packed by bags and sealed properly
      and put into the garbage can in the toilet for building A, B,C and put
      into the garbage can in the water room. It’s not allowed to drop garbage
      when dump it. It’s supposed to go through the east stair and put the
      garbage into the external garbage room for building A, B, C and carry by
      cargo-lifts or go through the west stair and put the garbage into the
      external garbage room for building
D.

            

    

    
      	
              4.13

            	
                  
      The remains of meal should be sent to the garbage room immediately after
      being packed by bag and sealed properly. It’s not allowed to dump into the
      internal garbage can of the
building.

            

    

    
      	
              4.14

            	
                  
      Washing the cleaning appliance in the mob sink, economize water and avoid
      water splash down to the floor.

            

    

    
      	
              4.15

            	
                  
      It’s not allowed to wash appliance such as cups, canteen in the face
      basin. Put above mentioned appliance into the basin to wash them when it’s
      necessary. Clean the stage after
washing.

            

    

    
      	
              4.16

            	
                  
      Washing the mob in the mob sink. Washing mob in urinal is not
      allowed.

            

    

    
      	
              4.17

            	
                  
      Dumping of tea-leaf: dump the tea-leaf into the tea box in the toilet for
      building A, B, C and tea box in the boiled water room for building
      D.

            

    

    
      	
              4.18

            	
                  
      Breaching any one of the terms mention above will be fine RMB 20. The
      building has the right to forbid those who violate more than three times
      (including three times) or repeat the same
  mistake.

            

    

    
      	
              4.19

            	
                  
      Those who damage public facility and equipment or the other damage to the
      building caused by improper use of the cleaning appliance should
      compensate according to the actual
price.

            

    

    

    5. Other
Management Regulations

    

    5.1. All
those, who are permitted to go into the building, should wear neatly and
decently.

    5.2 When
Party B retrocedes the rented house, things left can be seen as deserted. Party
A has all the rights to handle them and expense arising from handling those
things should be on Party B.

    5.3 When
damages, floods, ripoff, etc. occur, Party B should inform Party A immediately
and assist Party A handle these accidents.

    5.4  Part
B has no right to install more locks on the door or change the original lock,
except it gets Party A’s approval. Keys of every working area in the house
should have spare keys supervised by Party A. Damages caused by failing to give
spare keys to Party A should be on Party B’s responsibility and Party B have to
pay repair fees and make compensation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.5 The
post station is located in the building C hall of the Yeqing Building, dealing
in internal and international letters, Expresses, and parcels, etc. business.
Party B may subscribe to the post station for newspapers and magazines. If you
have already subscribed to other organizations, please give the post officers
your copies of the orders.

    5.6
Repair Requirements: If Party B needs Repair service, please dial the phone
number of the engineering department: 6439 2966-8061 or 6439 2966-8062, or
contact the Floor Supervisor. Please try to tell in details of the trouble to
help the engineers make correct decision and solve the problems in
time.

    5.7 Part
B should not speak aloud, quarrel, argue in the office area and in working time
to help maintain the business in order.

    5.8. If
the salesman enters your company and disturbs your work, please notify Party A
in time:

    Security
Department: 6439 2966-8069  the property server: 6439
2966-8052/8.53

    5.9.
Please close the windows and doors after work to protect your property from
being destroyed by the weather changes. Party A has no responsibility for the
loss caused by your failure in closing the windows and doors.

    5.10.
Party A has no duty to open or lock doors for Party B. Please make sure that
Party B takes keys and FR cards to enter and come out the building.

    5.11.
Party B should inform Party A to wash the in-house carpets and pay for the
cleaning at the business center.

    5.12.
Party A can provide paid service:

    In-house
cleaning: RMB3/m2 construction area each month and please refer to the cleaning
agreement for more details:

    Cleaning
chemical fibre carpets: RMB4/m2 (construction area)

    House
renewing: RMB80/ m2 construction area for decorated or rebuilt
houses

                                 RMB70/
m2 construction area for not decorated or rebuilt houses

    5.13. To
install metal security doors to inside door or change the outer windows and
doors are not permitted.

    5.14.
Every floor of the building has wastebins. Party B should put the work or life
wastes into bags sealed properly to throw them into the wastebins. Please inform
Party A for big wastes to avoid polluting the air of each floor.

    5.15.
Party B should assist Party A during epidemic situations and execute according
to the Sanitation and anti-epidemic regulations.

    5.16.
Party B should install roll curtains, which are light green, on its own fees to
make sure the unified appearance of the building.

    

    6.
All-in-one Card Instruction

    
      	
              6.1

            	
              This
      is a kind of “RF card” having an integrated function of allowing people go
      in and out the building, having dinner and
  consuming.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              6.2

            	
              This
      is a kind of pre-paid Card, which can not be overdrawed and should be
      pre-paid timely when its remaining money is not enough. When pre-paid for
      the first time, Party B should buy them by unit. Thereafter pre-paid
      should be made by the company or it’s owner, bringing the card and cash,
      going to the Business Center to pre-pay for it. After paid, please check
      the amount to the clerk’s face. Any mistake afterwards should be on the
      owner’s own responsibility.

            

    

    
      	
              6.3

            	
              To
      assure the accuracy of reporting the loss or eliminating the card, the
      provided name when opening the account should be the same with the owner’s
      ID card, or any reporting of it’s loss will not be
    accepted.

            

    

    
      	
              6.4

            	
              Please
      remember your card number. If lose the card, please report the loss or buy
      a new card from the Business Center. Any losing before reporting loss
      should be on the owner’s responsibility and please buy the new card after
      14:30 pm. of the same day.

            

    

    
      	
              6.5

            	
              This
      card can be used in “Coffee House” and the “Qingqing Xiaomei Noshery” of
      the building.

            

    

    
      	
              6.6

            	
              This
      card has the function of “door access”. Please take this card along with
      you. Any inconvenience caused by failing to take the card should be on the
      owner’s responsibility.

            

    

    
      	
              6.7

            	
              Please
      do not bend the card or make it contact the high
    temperature.

            

    

    
      	
              6.8

            	
              This
      card can only be used by the owner and should not transfer to the others,
      otherwise, the consequence should be on the owner’s
      responsibility.

            

    

    
      	
              6.9

            	
              The
      cost of this card is high, and the deposit of each card is 50 RMB. The
      deposit will not be refunded in case of loss or damage of the
      card.

            

    

    
      	
              6.10

            	
                  
      Buying the RF Card or pre-paid it with Check, the check can be retroceded
      when withdraw the card. Buying the RF Card or pre-paid it with cash, the
      owner will get the cash back when withdraw the
  card.

            

    

    

    Beijing
Yeshi Enterprise Group Co., Ltd

    Signature
of Representative and Company Seal __________

    2 June,
2009

    

    Manager
of Part B

    Signature
and Seal of Company Seal __________

    2 June,
2009Execution
Version

     

    STOCK
PURCHASE AGREEMENT

     

    dated
as of March 2, 2010

     

    between

     

    La
Cortez Energy, Inc.

     

    and

     

    Avante
Petroleum S.A.

     

    relating
to the purchase and sale

     

    of

     

    100%
of the Common Stock

     

    of

     

    Avante
Colombia S.à r.l.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Table
of Contents

    

    
      
        
          	
                  ARTICLE
      I. DEFINITIONS

                	
                  1

                
	
                  1.1

                	
                  Definitions

                	
                  1

                
	
                  1.2

                	
                  Other
      Defined Terms

                	
                  6

                
	 
      	 
      	 
      
	
                  ARTICLE
      II. PURCHASE AND SALE

                	
                  8

                
	
                  2.1

                	
                  Purchase
      and Sale of the Acquired Shares

                	
                  8

                
	
                  2.2

                	
                  Closing
      Date

                	
                  9

                
	
                  2.3

                	
                  Transactions
      to be Effected at the Closing

                	
                  9

                
	
                  2.4

                	
                  Closing
      Cash Amount

                	
                  9

                
	
                  2.5

                	
                  Escrow

                	
                  11

                
	 
      	 
      	 
      
	
                  ARTICLE
      III. REPRESENTATIONS AND WARRANTIES OF SELLER

                	
                  11

                
	
                  3.1

                	
                  Organization
      and Good Standing

                	
                  11

                
	
                  3.2

                	
                  Capitalization

                	
                  12

                
	
                  3.3

                	
                  Subsidiaries
      of the Acquired Company

                	
                  13

                
	
                  3.4

                	
                  Authority
      and Enforceability

                	
                  14

                
	
                  3.5

                	
                  No
      Conflicts; Authorizations

                	
                  14

                
	
                  3.6

                	
                  Financial
      Statements

                	
                  15

                
	
                  3.7

                	
                  No
      Undisclosed Liabilities

                	
                  15

                
	
                  3.8

                	
                  Inventory

                	
                  15

                
	
                  3.9

                	
                  Accounts
      Receivable

                	
                  15

                
	
                  3.10

                	
                  Taxes

                	
                  16

                
	
                  3.11

                	
                  Compliance
      with Law

                	
                  17

                
	
                  3.12

                	
                  Authorizations

                	
                  17

                
	
                  3.13

                	
                  Title
      to Personal Properties

                	
                  18

                
	
                  3.14

                	
                  Real
      Property

                	
                  19

                
	
                  3.15

                	
                  Intellectual
      Property

                	
                  19

                
	
                  3.16

                	
                  Absence
      of Certain Changes or Events

                	
                  21

                
	
                  3.17

                	
                  Contracts

                	
                  23

                
	
                  3.18

                	
                  Litigation

                	
                  25

                
	
                  3.19

                	
                  [Reserved]

                	
                  25

                
	
                  3.20

                	
                  Labor
      and Employment Matters

                	
                  26

                
	
                  3.21

                	
                  Environmental

                	
                  27

                
	
                  3.22

                	
                  Insurance

                	
                  28

                
	
                  3.23

                	
                  Product
      Warranty

                	
                  28

                
	
                  3.24

                	
                  Books
      and Records

                	
                  29

                
	
                  3.25

                	
                  Suppliers

                	
                  29

                
	
                  3.26

                	
                  Brokers
      or Finders

                	
                  29

                
	
                  3.27

                	
                  Bank
      Accounts

                	
                  29

                
	
                  3.28

                	
                  Powers
      of Attorney

                	
                  29

                
	
                  3.29

                	
                  Support
      Services

                	
                  30

                
	
                  3.30

                	
                  Hydrocarbon
      Matters

                	
                  30

                
	
                  3.31

                	
                  Representations
      Relating to Seller’s Acquisition of the Purchase Price
    Shares

                	
                  31

                
	
                  3.32

                	
                  No
      Corrupt Practices

                	
                  33

                

        

      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        
          	
                  ARTICLE
      IV. REPRESENTATIONS AND WARRANTIES OF BUYER

                	
                  34

                
	
                  4.1

                	
                  Organization
      and Good Standing

                	
                  34

                
	
                  4.2

                	
                  Capitalization

                	
                  35

                
	
                  4.3

                	
                  Subsidiaries
      of Buyer

                	
                  36

                
	
                  4.4

                	
                  Authority
      and Enforceability

                	
                  37

                
	
                  4.5

                	
                  No
      Conflicts; Authorizations

                	
                  37

                
	
                  4.6

                	
                  Financial
      Statements

                	
                  38

                
	
                  4.7

                	
                  No
      Undisclosed Liabilities

                	
                  38

                
	
                  4.8

                	
                  Buyer
      SEC Filings

                	
                  38

                
	
                  4.9

                	
                  Inventory

                	
                  38

                
	
                  4.10

                	
                  Accounts
      Receivable

                	
                  38

                
	
                  4.11

                	
                  Taxes

                	
                  39

                
	
                  4.12

                	
                  Compliance
      with Law

                	
                  40

                
	
                  4.13

                	
                  Authorizations

                	
                  40

                
	
                  4.14

                	
                  Title
      to Personal Properties

                	
                  41

                
	
                  4.15

                	
                  Real
      Property

                	
                  41

                
	
                  4.16

                	
                  Intellectual
      Property

                	
                  41

                
	
                  4.17

                	
                  Absence
      of Certain Changes or Events

                	
                  43

                
	
                  4.18

                	
                  Contracts

                	
                  44

                
	
                  4.19

                	
                  Litigation

                	
                  45

                
	
                  4.20

                	
                  [Reserved]

                	
                  45

                
	
                  4.21

                	
                  Labor
      and Employment Matters

                	
                  46

                
	
                  4.22

                	
                  Environmental

                	
                  47

                
	
                  4.23

                	
                  Insurance

                	
                  48

                
	
                  4.24

                	
                  Product
      Warranty

                	
                  48

                
	
                  4.25

                	
                  Books
      and Records

                	
                  48

                
	
                  4.26

                	
                  Suppliers

                	
                  48

                
	
                  4.27

                	
                  Brokers
      or Finders

                	
                  49

                
	
                  4.28

                	
                  Powers
      of Attorney

                	
                  49

                
	
                  4.29

                	
                  Hydrocarbon
      Matters

                	
                  49

                
	
                  4.30

                	
                  No
      Corrupt Practices

                	
                  51

                
	
                  4.31

                	
                  No
      Other Representations; No Reliance

                	
                  52

                
	 
      	 
      	 
      
	
                  ARTICLE
      V. COVENANTS OF SELLER

                	
                  52

                
	
                  5.1

                	
                  Resignations

                	
                  52

                
	
                  5.2

                	
                  Employees

                	
                  52

                
	
                  5.3

                	
                  Intercompany
      Liabilities; Indebtedness; Release of Liens

                	
                  53

                
	
                  5.4

                	
                  Confidentiality

                	
                  53

                
	
                  5.5

                	
                  Restrictive
      Covenants

                	
                  53

                
	
                  5.6

                	
                  Insurance

                	
                  54

                
	
                  5.7

                	
                  Extension
      of Production Contracts

                	
                  55

                
	
                  5.8

                	
                  Maintenance
      of Bogotá Office

                	
                  55

                
	
                  5.9

                	
                  Lock-Up;
      No Shorting

                	
                  55

                
	 
      	 
      	 
      
	
                  ARTICLE
      VI. COVENANTS OF BUYER

                	
                  56

                
	
                  6.1

                	
                  Environmental
      Matters

                	
                  56

                
	
                  6.2

                	
                  Other
      Covenants

                	
                  56

                

        

      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        
          	
                  ARTICLE
      VII. COVENANTS OF BUYER AND SELLER

                	
                  56

                
	
                  7.1

                	
                  Regulatory
      Approvals

                	
                  56

                
	
                  7.2

                	
                  Public
      Announcements

                	
                  57

                
	
                  7.3

                	
                  Tax
      Matters

                	
                  57

                
	
                  7.4

                	
                  Use
      of Certain Names

                	
                  60

                
	
                  7.5

                	
                  Further
      Assurances

                	
                  60

                
	
                  7.6

                	
                  Joint
      Venture

                	
                  60

                
	 
      	 
      	 
      
	
                  ARTICLE
      VIII. CONDITIONS TO CLOSING

                	
                  60

                
	
                  8.1

                	
                  Conditions
      to Obligations of Buyer and Seller

                	
                  60

                
	
                  8.2

                	
                  Conditions
      to Obligation of Buyer

                	
                  61

                
	
                  8.3

                	
                  Conditions
      to Obligation of Seller

                	
                  62

                
	 
      	 
      	 
      
	
                  ARTICLE
      IX. [RESERVED]

                	
                  63

                
	
                  ARTICLE
      X. INDEMNIFICATION

                	
                  63

                
	
                  10.1

                	
                  Survival

                	
                  63

                
	
                  10.2

                	
                  Indemnification
      by Seller

                	
                  64

                
	
                  10.3

                	
                  Indemnification
      by Buyer

                	
                  65

                
	
                  10.4

                	
                  Indemnification
      Procedures for Third Party Claims

                	
                  66

                
	
                  10.5

                	
                  Indemnification
      Procedures for Non-Third Party Claims

                	
                  69

                
	
                  10.6

                	
                  Payment
      of Claims

                	
                  69

                
	
                  10.7

                	
                  No
      Contribution

                	
                  69

                
	
                  10.8

                	
                  No
      Consequential Damages

                	
                  70

                
	
                  10.9

                	
                  Tax
      Treatment of Indemnification Payments

                	
                  70

                
	
                  10.10

                	
                  Mitigation

                	
                  70

                
	
                  10.11

                	
                  Exclusive
      Remedy

                	
                  70

                
	 
      	 
      	 
      
	
                  ARTICLE
      XI. MISCELLANEOUS

                	
                  70

                
	
                  11.1

                	
                  Notices

                	
                  70

                
	
                  11.2

                	
                  Amendments
      and Waivers

                	
                  72

                
	
                  11.3

                	
                  Expenses

                	
                  72

                
	
                  11.4

                	
                  Successors
      and Assigns

                	
                  72

                
	
                  11.5

                	
                  Governing
      Law

                	
                  72

                
	
                  11.6

                	
                  Consent
      to Jurisdiction

                	
                  73

                
	
                  11.7

                	
                  Dispute
      Resolution

                	
                  73

                
	
                  11.8

                	
                  Counterparts

                	
                  75

                
	
                  11.9

                	
                  Third
      Party Beneficiaries

                	
                  75

                
	
                  11.10

                	
                  Entire
      Agreement

                	
                  75

                
	
                  11.11

                	
                  Captions

                	
                  75

                
	
                  11.12

                	
                  Severability

                	
                  75

                
	
                  11.13

                	
                  Specific
      Performance

                	
                  75

                
	
                  11.14

                	
                  Interpretation

                	
                  75

                

        

      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    Execution
Version

    STOCK
PURCHASE AGREEMENT

     

    STOCK
PURCHASE AGREEMENT, dated as of March 2, 2010 (the “Agreement”), between La Cortez
Energy, Inc., a Nevada corporation (“Buyer”), and Avante Petroleum
S.A., a Luxembourg corporation (“Seller”).

     

    WHEREAS,
Seller is the record and beneficial owner of all of the issued and outstanding
shares of Common Stock, €100 par value (the “Acquired Shares”), of Avante
Colombia S.à r.l., a Luxembourg limited liability company (the “Acquired Company”);
and

     

    WHEREAS,
Seller desires to sell the Acquired Shares to Buyer, and Buyer desires to
purchase the Acquired Shares from Seller, upon the terms and subject to the
conditions set forth in this Agreement.

     

    NOW,
THEREFORE, in consideration of the foregoing premises and the respective
representations and warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

     

    ARTICLE I.

    DEFINITIONS

     

    1.1           Definitions.  When
used in this Agreement, the following terms shall have the meanings assigned to
them in this Section 1.1, or in the applicable Section of this Agreement to
which reference is made in this Section 1.1.

     

    “Affiliate” means, with respect
to any specified Person, any other Person directly or indirectly controlling,
controlled by or under common control with such specified Person.

     

     “Authorization” means any
authorization, approval, consent, certificate, license, permit or franchise of
or from any Governmental Entity or pursuant to any Law.

     

    “Business Day” means a day
other than a Saturday, Sunday or other day on which banks located in Bogotá, New
York or Luxembourg are authorized or required by Law to close.

     

    “Buyer Company” means Buyer,
and each of Buyer’s domestic and foreign Subsidiaries, and “Buyer Companies” means,
collectively, Buyer and all such Subsidiaries.

     

    “Capital Stock” means (a) in
the case of a corporation, its shares of capital stock, (b) in the case of a
partnership or limited liability company, its partnership or membership
interests or units (whether general or limited), and (c) any other interest that
confers on a Person the right to receive a share of the profits and losses, or
distribution of assets, of the issuing entity.

     

    “Charter Documents” means, with
respect to any entity, the certificate of incorporation, the articles of
incorporation, by-laws, articles of organization, limited liability company
agreement, partnership agreement, formation agreement, joint venture agreement
or other similar organizational documents of such entity (in each case, as
amended).

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    “Claim” means any (i) Lien,
interest arising in connection with community property laws or other laws
relating to the rights of spouses, claim, preferential purchase right, option,
right of first refusal, indenture, production payment, restriction, burden,
right of purchase or right of a vendor under any title retention or conditional
sale agreement, or (ii) arrangement, contract, commitment, understanding or
obligation of any nature whatsoever which serves to restrict or impair the value
of a property or security.

     

    “Code” means the Internal
Revenue Code of 1986, as amended.

     

    “Contract” means any agreement,
contract, service order, license, lease, commitment, arrangement or
understanding, written or oral, including any sales order or purchase
order.

     

    “Environment” means all indoor
or outdoor air, surface water, groundwater, surface or subsurface land,
including all fish, wildlife, biota and all other natural
resources.

     

    “Environmental Action” means
any claim, proceeding or other Action brought or threatened under any
Environmental Law, otherwise asserting that any Pre-Closing Environmental
Liability has occurred.

     

     “Environmental Laws” means any
and all applicable Laws and Authorizations issued, promulgated or entered into
by any Governmental Entity relating to the Environment, preservation or
reclamation of natural resources, or to the management, handling, use,
generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling, Release or threatened Release of
Hazardous Substances.

     

    “Environmental Permits” means
any Authorization under Environmental Law, and includes any and all Orders
issued or entered into by a Governmental Entity under Environmental
Law.

     

    “Equity Securities” means (a)
shares of Capital Stock, and (b) options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other Contracts that,
directly or indirectly, could require the issuer thereof to issue, sell or
otherwise cause to become outstanding shares of Capital Stock.

     

    “Government Official” means any
officer or employee of a government or any department, agency, or
instrumentality thereof, or of a public international organization, or any
Person acting in an official capacity for or on behalf of any such government or
department, agency, or instrumentality, or for or on behalf of any such public
international organization.

     

    “Governmental Entity” means any
entity or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any national, federal, state,
local, or municipal government, international, multinational or other
government, including any department, commission, board, agency, bureau,
subdivision, instrumentality, official or other regulatory, administrative or
judicial authority thereof, and any non-governmental regulatory body to the
extent that the rules and regulations or orders of such body have the force of
Law.

     

    “Hazardous Substances” means
all explosive materials, radioactive materials, hazardous materials, toxic
materials, wastes, chemicals, petroleum, petroleum by-products and petroleum
products (including crude oil or any fraction thereof), asbestos and asbestos
containing materials, and all other materials, chemicals and substances that are
regulated by, form the basis of liability or are defined as hazardous, extremely
hazardous, toxic or words of similar import, under any Environmental
Law.

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    “Hydrocarbon Interests” means
all presently existing interests, direct and indirect, of a Person (including
working, royalty and overriding royalty interests, leasehold interests,
production payments, operating rights, net profits interests, reversionary
interests, after payout interests, participation rights or interests, other
non-working interests and non-operating interests) in: (i) the Production
Contracts; (ii) interests in and rights with respect to Hydrocarbons or revenues
therefrom and Contracts in connection therewith and claims and rights thereto;
(iii) oil and gas unitization, pooling, and communitization agreements,
declarations and orders (including all amendments or modifications thereto)
relating to the Production Contracts (including all units formed under orders,
regulations, rules, or other official acts of any governmental agency having
jurisdiction, and including participating interests created under operating or
similar agreements); (iv) all surface leases, farmout and farmin agreements,
division orders, transfer orders, gas sales or purchase contracts, operating
agreements, contracts, and other agreements and instruments (including all
amendments thereto and any agreements settling claims asserted hereunder); (v)
all easements, rights of way, licenses, permits, saltwater disposal facilities,
fresh water facilities, injection facilities, inventory, yards and field
offices; (vi) all Wells; and (vii) interests in equipment and machinery
(including well equipment and machinery), oil and gas production, gathering,
transmission, compression, treating, processing and storage facilities
(including tanks, tank batteries, pipelines and gathering systems), pumps, water
plants, electric facilities, gasoline and gas processing plants, refineries and
other tangible personal property and fixtures associated with, appurtenant to,
or necessary for the operation of any of the foregoing and all other personal
property, equipment and fixtures owned or leased in connection therewith. For
the avoidance of doubt, with respect to the Acquired Company and its
Subsidiaries, the term “Hydrocarbon Interests” does NOT include any cash and/or
cash equivalents related to the Production Contracts or the operation of the
Production Contracts or the Operating Joint Venture, whether held in accounts of
Seller, accounts of the Acquired Company, or accounts of the Operating joint
Venture.

     

    “Hydrocarbons” means oil,
condensate, gas, casinghead gas and other hydrocarbons produced or processed in
association therewith.

     

    “Indebtedness” means any of the
following: (a) any indebtedness for borrowed money, (b) any obligations
evidenced by bonds, debentures, notes or other similar instruments, (c) any
obligations to pay the deferred purchase price of property or services, except
trade accounts payable and other current Liabilities arising in the ordinary
course of business, (d) any obligations as lessee under capitalized leases, (e)
any indebtedness created or arising under any conditional sale or other title
retention agreement with respect to acquired property, (f) any obligations,
contingent or otherwise, under acceptance credit, letters of credit or similar
facilities, and (g) any guaranty of any of the foregoing.

     

    “Indemnitee” means any Person
that is seeking indemnification from an Indemnitor pursuant to the provisions of
this Agreement.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    “Indemnitor” means any party
hereto from which any Indemnitee is seeking indemnification pursuant to the
provisions of this Agreement.

     

    “Joint Venture Account” is the
account nr. 00741166-3 at Helm Bank, in Bogotá, Colombia, held by Acquired
Company on behalf of the Operating Joint Venture, with the purpose of financing
the re-development and operations of the Production Contracts and any other cost
related to the Operating Joint Venture.

     

    “Knowledge” of a Person or any
similar phrase means, with respect to any fact or matter, the actual knowledge
of the directors and executive officers (including the chief executive officer,
the chief financial officer, the financial controller and the directors or
managers of production, operations and exploration (or their equivalents)) of
the Person or its Subsidiaries.

     

    “Law” means any statute, law
(including common law), constitution, treaty, ordinance, code, order, decree,
judgment, rule, regulation and any other binding requirement or determination of
any Governmental Entity.

     

    “Lien” means, with respect to
any property or asset, any mortgage, lien, pledge, charge, security interest,
adverse claim or other encumbrance in respect of such property or
asset.

     

    “Material Adverse Effect” on a
Person means a material adverse effect on the condition (financial or
otherwise), operations or results of operations of that Person and its
Subsidiaries taken as a whole.

     

    “Operating Joint Venture” means
the Joint Venture as defined in the joint operating agreement dated April 28,
2006, between Avante Colombia Ltd. Sucursal en Colombia and Vetra Exploración y
Producción S.A. (formerly known as Petrotesting Colombia S.A.), for the purpose
of operating the Production Contracts.

     

    “Order” means any award,
injunction, judgment, decree, order, ruling, subpoena or verdict or other
decision issued, promulgated or entered by or with any Governmental Entity of
competent jurisdiction.

     

    “Permitted Liens” means (a)
Liens for current real or personal property taxes not yet due and payable and
with respect to which adequate reserves are maintained, (b) workers’, carriers’
and mechanics’ or other like liens incurred in the ordinary course of business
with respect to which payment is not due and that do not impair the conduct of
the businesses or the present or proposed use of the affected property and (c)
liens that are immaterial in character, amount, and extent and which do not
detract from the value or interfere with the present or proposed use of the
properties they affect.

     

    “Person” means an individual, a
corporation, a partnership, a limited liability company, a trust, an
unincorporated association, a Governmental Entity or any agency, instrumentality
or political subdivision of a Governmental Entity, or any other entity or
body.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    “Pre-Closing Environmental
Liabilities” of a Person means Liabilities based upon or arising out of
(a) the ownership or operation of the businesses or Contracts of a Person and
its Subsidiaries on or prior to the Closing, or (b) the ownership, operation or
condition of any real property currently or formerly owned, operated or leased
by the Acquired Company or any of its Subsidiaries at any time on or prior to
the Closing, in each case to the extent based upon or arising out of (i)
Environmental Law, (ii) a failure or omission to maintain, modify or comply with
any Environmental Permit or regulation, (iii) the presence or Release of any
Hazardous Substance at, on or under any real property currently or formerly
owned, operated or leased by the Person or any of its Subsidiaries at any time
on or prior to the Closing, but excluding any naturally occurring Hydrocarbons,
or (iv) the use, generation, storage, transportation, treatment, sale or other
off-site disposal of Hazardous Substances generated by or otherwise used in the
businesses of the Person and its Subsidiaries.

     

    “Production Contracts” means
any oil and gas leases, contracts, agreements and other rights giving a Person
the right to own or acquire oil and gas interests and to explore for and develop
Hydrocarbons.

     

    “Registration Rights Agreement”
means the Registration Rights Agreement by and between Buyer and Seller, in the
form attached to the Subscription Agreement. 

     

    “Release” means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing of Hazardous Substances into the Environment
that does not occur naturally.

     

     “Relevant Group” means, with
respect to Buyer or Seller as the context indicates, any affiliated, combined,
consolidated, unitary or similar group of which any the Buyer Company or the
Seller Company, as the case may be, is or was a member.

     

    “Reserve Report” means the
reserve report provided to Seller by Collarini Associates, Houston, USA, in
2008.

     

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

     

    “Seller Company” means Seller,
and each of Seller’s domestic and foreign Subsidiaries, including, prior to the
Closing, the Acquired Company and its Subsidiaries, and “Seller Companies” means,
collectively, Seller and all such Subsidiaries.

     

    “Stockholder Agreement” means
the Stockholder Agreement by and between Buyer and Seller, in the form attached
to this Agreement as Exhibit
A.

     

    “Subscription Agreement” means
the Subscription Agreement by and between Buyer and Seller, in the form attached
to this Agreement as Exhibit
B.

     

    “Subsidiary” or “Subsidiaries” means, with
respect to any party, any Person, of which (a) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any Subsidiary of
such party do not have a majority of the voting interest in such partnership),
or (b) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the board of directors or
others performing similar functions with respect to such Person is directly or
indirectly owned or controlled by such party and/or by any one or more of its
Subsidiaries.  The term “Subsidiary” shall also include any branch of
a Person or any Subsidiary of a Person, whether or not incorporated and whether
or not having separate legal existence.

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    “Tax” or “Taxes” means any and all
federal, state, local, or foreign net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, deed, stamp, alternative or
add-on minimum, environmental, profits, windfall profits, transaction, Colombian
foreign exchange regime, license, lease, service, service use, occupation,
severance, energy, unemployment, social security, workers’ compensation,
capital, premium, and other taxes, whether disputed or not, together with any
interest, penalties, additions to tax, or additional amounts with respect
thereto.

     

    “Tax Returns” means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.

     

    “Taxing Authority” means any
Governmental Entity having jurisdiction with respect to any Tax.

     

    “Transaction Documents” means this Agreement and
all other agreements, instruments, schedules and other documents entered into or
to be entered into or furnished or to be furnished  pursuant hereto,
or in connection with the execution or performance of this
Agreement.

     

    “Transfer Taxes” means sales,
use, transfer, real property transfer, recording, documentary, stamp,
registration and stock transfer taxes and fees.

     

    “Wells” means all Hydrocarbon
wells existing under or pursuant to the Production Contracts.

     

    “$” means United States
dollars.

     

    1.2           Other Defined
Terms.  The following terms have the meanings assigned to such
terms in the Sections of the Agreement set forth below:

     

    
      
        
          	
                  Acquired Audited Financial
    Statements

                	
                  3.6

                
	
                  Acquired
      Balance Sheet

                	
                  3.6

                
	
                  Acquired
      Balance Sheet Date

                	
                  3.6

                
	
                  Acquired
      Company

                	
                  Recitals

                
	
                  Acquired
      Company Intellectual Property

                	
                  3.15(e)

                
	
                  Acquired
      Financial Statements

                	
                  3.6

                
	
                  Acquired
      Interim Financial Statements

                	
                  3.6

                
	
                  Acquired
      Shares

                	
                  Recitals

                
	
                  Acquired
      Subsidiary Shares

                	
                  3.3(b)

                
	
                  Acquisition

                	
                  2.1

                
	
                  Action

                	
                  3.18(a)

                
	
                  Agreement

                	
                  Preamble

                
	
                  Applicable
      Survival Period

                	
                  10.1(d)

                
	
                  Avante
      Marks

                	
                  3.15(b)

                
	
                  Bogotá
      Office

                	
                  5.8

                
	
                  Buyer

                	
                  Preamble

                

        

      

    

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    
      
        
          	
                  Buyer
      Audited Financial Statements

                	
                  4.6

                
	
                  Buyer
      Balance Sheet

                	
                  4.6

                
	
                  Buyer
      Balance Sheet Date

                	
                  4.6

                
	
                  Buyer
      Common Stock

                	
                  2.1

                
	
                  Buyer
      Disclosure Schedule

                	
                  Preamble to Article IV

                
	
                  Buyer
      Financial Statements

                	
                  4.6

                
	
                  Buyer
      Indemnitees

                	
                  10.2(a)

                
	
                  Buyer
      Intellectual Property

                	
                  4.16(d)

                
	
                  Buyer
      Interim Balance Sheet

                	
                  4.6

                
	
                  Buyer
      Interim Balance Sheet Date

                	
                  4.6

                
	
                  Buyer
      Interim Financial Statements

                	
                  4.6

                
	
                  Buyer
      Leased Personal Property

                	
                  4.14(c)

                
	
                  Buyer
      Leased Real Property

                	
                  4.15

                
	
                  Buyer
      Marks

                	
                  4.16(a)

                
	
                  Buyer
      Material Contract

                	
                  4.18(b)

                
	
                  Buyer
      Minor Contract

                	
                  4.18(e)

                
	
                  Buyer
      Nondisclosure Agreements

                	
                  4.16(g)

                
	
                  Buyer
      Owned Real Property

                	
                  4.15

                
	
                  Buyer
      Policies

                	
                  4.23(a)

                
	
                  Buyer
      Real Property

                	
                  4.15

                
	
                  Buyer
      SEC Reports

                	
                  4.8

                
	
                  Buyer
      Subsidiary Shares

                	
                  4.3(b)

                
	
                  Buyer
      Tax Losses

                	
                  10.2(d)

                
	
                  Closing

                	
                  2.2

                
	
                  Closing
      Cash Amount

                	
                  2.4(a)

                
	
                  Closing
      Date

                	
                  2.2

                
	
                  Closing
      Statement

                	
                  2.4(b)

                
	
                  Consents

                	
                  3.5(a)

                
	
                  Copyrights

                	
                  3.15(a)

                
	
                  Dispute

                	
                  11.7(a)

                
	
                  Environmental
      Losses

                	
                  10.2(c)

                
	
                  Escrow
      Agent

                	
                  2.3(c)

                
	
                  Escrow
      Agreement

                	
                  2.3(c)

                
	
                  Escrow
      Purchase Price Shares

                	
                  2.3(a)

                
	
                  Estimated
      Closing Cash Amount

                	
                  2.4(a)

                
	
                  Exchange
      Act

                	
                  3.31(h)

                
	
                  Final
      Closing Cash Amount

                	
                  2.4(e)

                
	
                  Generic
      Buyer Warranty Losses

                	
                  10.2(b)

                
	
                  In-Bound
      Licenses

                	
                  3.15(c)

                
	
                  Independent
      Expert

                	
                  2.4(d)

                
	
                  Initial
      Purchase Price Shares

                	
                  2.3(a)

                
	
                  Intellectual
      Property

                	
                  3.15(a)

                
	
                  Intellectual
      Property Rights

                	
                  3.15(a)

                
	
                  Liabilities

                	
                  3.7

                
	
                  Locked-up
      Securities

                	
                  5.9(a)

                
	
                  Lock-Up
      Period

                	
                  5.9(a)

                

        

      

    

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    
      
        
          	
                  Losses

                	
                  10.2(a)

                
	
                  Lux
      GAAP

                	
                  3.6

                
	
                  Marks

                	
                  3.15(a)

                
	
                  Material
      Contracts

                	
                  3.17(b)

                
	
                  Medical
      Plan

                	
                  3.20(d)

                
	
                  Minor
      Contracts

                	
                  3.17(e)

                
	
                  Notice
      of Claim

                	
                  10.4(a)

                
	
                  Notice
      of Dispute

                	
                  11.7(a)

                
	
                  Notice
      of Objection

                	
                  2.4(c)

                
	
                  Out-Bound
      Licenses

                	
                  3.15(d)

                
	
                  Patents

                	
                  3.15(a)

                
	
                  Policies

                	
                  3.22(a)

                
	
                  Post-Cutoff
      Period

                	
                  7.3(c)(ii)

                
	
                  Pre-Cutoff
      Period

                	
                  7.3(c)(ii)

                
	
                  Products

                	
                  3.23

                
	
                  Prohibited
      Seller

                	
                  3.31(e)

                
	
                  Proprietary
      Information

                	
                  3.15(a)

                
	
                  Purchase
      Price Shares

                	
                  2.1

                
	
                  Remedial
      Work

                	
                  10.4(d)

                
	
                  Representatives

                	
                  5.4(a)

                
	
                  Review
      Period

                	
                  2.4(c)

                
	
                  Rules

                	
                  11.7(c)(i)

                
	
                  Seller

                	
                  Preamble

                
	
                  Seller
      Disclosure Schedule

                	
                  Preamble to Article III

                
	
                  Seller
      Indemnitees

                	
                  10.3(a)

                
	
                  Seller
      Leased Personal Property

                	
                  3.13(c)

                
	
                  Seller
      Leased Real Property

                	
                  3.14

                
	
                  Seller
      Nondisclosure Agreements

                	
                  3.15(h)

                
	
                  Seller
      Owned Real Property

                	
                  3.14

                
	
                  Seller
      Party

                	
                  7.3(d)(ii)

                
	
                  Seller
      Real Property

                	
                  3.14

                
	
                  Seller
      Warranty Losses

                	
                  10.3(b)

                
	
                  Share
      Value

                	
                  10.6

                
	
                  Software

                	
                  3.15(a)

                
	
                  Third
      Party Claim

                	
                  10.4(a)

                
	
                  Third
      Party Defense

                	
                  10.4(b)

                
	
                  US
      GAAP

                	
                  4.6

                

        

      

    

    

    ARTICLE II.

    PURCHASE
AND SALE

     

    2.1          Purchase and Sale of the
Acquired Shares.  Upon
the terms and subject to the conditions of this Agreement, at the Closing,
Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Acquired
Shares free and clear of all Liens. The aggregate purchase price for the
Acquired Shares is 10,285,819 newly issued shares (the “Purchase Price Shares”) of the
common stock, par value $0.001 per share, of Buyer (“Buyer Common Stock”). The
Purchase Price Shares shall be delivered as provided in Section 2.3. The
purchase and sale of the Acquired Shares is referred to in this Agreement as the
“Acquisition”.

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    2.2          Closing
Date.  The
closing of the Acquisition (the “Closing”) shall take place at
the offices of Gottbetter & Partners, LLP, in New York, New York, at 10:00
a.m. on a date to be specified by the parties which shall be no later than two
Business Days after satisfaction (or waiver as provided herein) of the
conditions set forth in ARTICLE VIII (other than those conditions that
by their nature will be satisfied at the Closing), unless another time, date
and/or place is agreed to in writing by the parties. The date upon which the
Closing occurs is herein referred to as the “Closing Date.”

    

    2.3          Transactions to be Effected
at the Closing.

    

    (a)           Seller
shall be entitled to receive immediately 8,785,819 of the
Purchase Price Shares (the “Initial Purchase Price
Shares”); the remaining 1,500,000 of the Purchase Price
Shares (the “Escrow Purchase
Price Shares”), shall be deposited in escrow pursuant to Section 2.3(d)
and shall be held and disposed of in accordance with the terms of the Escrow
Agreement.

     

    (b)           At
the Closing, Buyer shall deliver to Seller (i) an original certificate or
certificates representing the Initial Purchase Price Shares, (ii) all other
documents, instruments or certificates required to be delivered by Buyer at or
prior to the Closing pursuant to this Agreement, and (iii) the Estimated Closing
Cash Amount, to be paid by wire transfer of immediately available funds to an
account designated in writing by Seller.

     

    (c)           At
the Closing, Buyer, Seller and Robert Jan Jozef Lijdsman, civil law notary in
Amsterdam, the Netherlands (the “Escrow Agent”) shall execute
and deliver the Escrow Agreement in substantially the form attached hereto as
Exhibit C (the
“Escrow
Agreement”).

     

    (d)           At
the Closing, Seller shall deliver to Buyer (or if Buyer so elects, to a
Subsidiary of Buyer) (i) certificates for the Acquired Shares duly endorsed or
accompanied by stock powers duly endorsed in blank (or if the Acquired Shares
are not certificated, (ii) a duly executed instrument of assignment thereof in
proper form under the laws of Luxembourg, (iii) a certified copy of the share
register of the Acquired Company), with any required transfer stamps affixed
thereto, (iv) all other documents and instruments necessary to vest in Buyer (or
its Subsidiary) all of Seller’s right, title and interest in and to the Acquired
Shares, free and clear of all Liens, and (v) all other documents, instruments or
certificates required to be delivered by Seller at or prior to the Closing
pursuant to this Agreement.

     

    (e)           At
the Closing, Buyer and Seller shall also close on the transactions specified in
the Subscription Agreement.

     

    2.4          Closing Cash
Amount.

     

    (a)           The
estimated amount (the “Estimated Closing Cash
Amount”), as of the Closing Date, of the Acquired Company’s share of the
cash balance in the Joint Venture Account maintained by the Acquired Company as
operator of the Operating Joint Venture (the “Closing Cash Amount”) is nil
($0).

     

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    (b)           Within
60 days after the Closing Date, Buyer will prepare, or cause to be prepared, and
deliver to Seller an unaudited statement, which shall set forth Buyer’s
calculation of the Closing Cash Amount as of the Closing Date (the “Closing Statement”), together
with documentation supporting such calculation.  If Buyer fails to
deliver a Closing Statement within the sixty-day period described above, the
Estimated Closing Cash Amount will be deemed to be the Closing Cash Amount and
no payments or adjustments will be made under this Section 2.4.

     

    (c)           Upon
receipt from Buyer, Seller shall have 15 days to review the Closing Statement
(the “Review Period”).
If Seller disagrees with Buyer’s calculation of the Closing Cash Amount, Seller
may, on or prior to the last day of the Review Period, deliver a notice to Buyer
(the “Notice of
Objection”), which sets forth its objections to Buyer’s calculation of
the Closing Cash Amount. Any Notice of Objection shall include a detailed
written explanation of the reasons for disagreement with the Closing Statement,
and shall set forth Seller’s calculation of the Closing Cash Amount based on
such objections.

     

    (d)           Unless
Seller delivers the Notice of Objection to Buyer within the Review Period,
Seller shall be deemed to have accepted Buyer’s calculation of the Closing Cash
Amount and the amount specified by Buyer shall be final, conclusive and binding.
If Seller delivers the Notice of Objection to Buyer within the Review Period,
Buyer and Seller shall, during the 30 days following such delivery or any
mutually agreed extension thereof, use their commercially reasonable efforts to
reach agreement on the disputed items and amounts in order to determine the
Closing Cash Amount. If, at the end of such period or any mutually agreed
extension thereof, Buyer and Seller are unable to resolve their disagreements,
they shall jointly retain and refer their disagreements to Ernst & Young
(or, if such firm shall decline or is unable to act, or has a conflict of
interest with Buyer or Seller or any of their respective Affiliates another
nationally recognized independent accounting firm mutually acceptable to Buyer
and Seller (the “Independent
Expert”)). The parties shall instruct the Independent Expert promptly to
review this Section  and to determine solely with respect to the
disputed items and amounts so submitted whether and to what extent, if any, the
Closing Cash Amount calculated by Buyer requires adjustment. The Independent
Expert shall base its determination solely on written submissions by Buyer and
Seller and not on an independent review. Buyer and Seller shall make available
to the Independent Expert all relevant books and records and other items
reasonably requested by the Independent Expert. The parties shall request that
the Independent Expert deliver to Buyer and Seller, as promptly as practicable
but in no event later than 45 days after its retention, a report which sets
forth its resolution of the disputed items and its calculation of the Closing
Cash Amount; provided that in no event shall the Closing Cash Amount as
determined by the Independent Expert be less than Buyer’s calculation of the
Closing Cash Amount nor more than Seller’s calculation of the Closing Cash
Amount set forth in the Notice of Objection. The decision of the Independent
Expert shall be final, conclusive and binding on the parties. The costs and
expenses of the Independent Expert shall be allocated between the parties based
upon the percentage which the portion of the contested amount not awarded to
each party bears to the amount actually contested by such party. Each party
agrees to execute, if requested by the Independent Expert, a reasonable
engagement letter, including customary indemnities in favor of the Independent
Expert.

    

    
      
        
           

        

        
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    (e)           The
“Final Closing Cash
Amount” means (i) the Estimated Closing Cash Amount if Buyer does not
timely deliver a Closing Statement to Seller, (ii) the amount shown in the
Closing Statement, if Seller does not timely deliver a Notice of Objection to
Buyer, or (iii) if a Notice of Objection is so delivered, (A) as agreed by Buyer
and Seller pursuant to Section 2.4(d) or (B) in the absence of such agreement,
as shown in the Independent Expert’s calculation delivered pursuant to Section
2.4(d).  If the Final Closing Cash Amount is less than the Estimated
Closing Cash Amount, Seller shall pay to Buyer, as an adjustment to the Purchase
Price, an amount of cash equal to the difference between the Estimated Closing
Cash Amount and the Final Closing Cash Amount.  If the Final Closing
Cash Amount is more than the Estimated Closing Cash Amount, Buyer shall pay to
Seller, as an adjustment to the Purchase Price, an amount of cash equal to the
difference between the Estimated Closing Cash Amount and the Final Closing Cash
Amount.  Any payment required under this section shall be made within
three Business Days after the Final Closing Cash Amount has been finally
determined and shall be made by wire transfer of immediately available funds to
an account designated in writing by Buyer or Seller, as the case may be, at
least one Business Day prior to such transfer.

     

    2.5          Escrow.  On
the Closing Date, Buyer shall deliver to the Escrow Agent a certificate (issued
in the name of Seller or its nominee) representing the Escrow Purchase Price
Shares, as described in Section 2.3(a), for the purpose of securing the
indemnification obligations of Seller set forth in this
Agreement.  The Escrow Shares shall be held by the Escrow Agent
pursuant to the Escrow Agreement.  The Escrow Shares shall be held as
a trust fund and shall not be subject to any lien, attachment, trustee process
or any other judicial process of any creditor of any party, and shall be held
and disbursed solely for the purposes and in accordance with the terms of the
Escrow Agreement.

     

    ARTICLE III.

    REPRESENTATIONS
AND WARRANTIES OF SELLER

     

    Seller
represents and warrants to Buyer as of the date hereof that the statements
contained in this ARTICLE III are true and correct, except as set
forth in the disclosure schedule dated and delivered as of the date hereof by
Seller to Buyer (the “Seller
Disclosure Schedule”), which is attached to this Agreement and is
designated therein as being the Seller Disclosure Schedule. The Seller
Disclosure Schedule shall be arranged in sections corresponding to each Section
of this ARTICLE III. Each exception to a representation and warranty set forth
in the Seller Disclosure Schedule shall qualify the specific representation and
warranty which is referenced in the applicable section of the Seller Disclosure
Schedule, and shall also qualify each other representation or warranty as to
which the relevance of such item is reasonably apparent.

     

    3.1          Organization and Good
Standing.

    

    (a)           Each
of Seller and the Acquired Company is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation, has all requisite power to own, lease and operate its properties
and to carry on its business as currently conducted and as proposed to be
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which it owns or leases property or
conducts any business so as to require such qualification. The Seller Disclosure
Schedule contains a complete and accurate list of each jurisdiction in which the
Acquired Company is qualified to do business.

    

    
      
        
           

        

        
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    (b)           Neither
Seller nor the Acquired Company is in default under its Charter Documents. The
Charter Documents of the Acquired Company in the forms attached to the Seller
Disclosure Schedule are the Charter Documents of the Acquired Company as now in
effect.

     

    3.2          Capitalization.

    

    (a)           The
authorized Capital Stock of the Acquired Company consists of 66,759 shares of,
par value €100.00 per share, for a total of €6,675,900.00. All of the Acquired
Shares are duly authorized, validly issued, fully paid and nonassessable and are
owned of record and beneficially by Seller free and clear of all Liens. Upon
transfer of the Acquired Shares to Buyer in accordance with the terms of ARTICLE
II, Buyer will receive valid title to the Acquired Shares, free and clear of all
Liens.

     

    (b)           All
of the Acquired Shares were issued in compliance with applicable Laws. None of
the Acquired Shares was issued in violation of any Contract to which Seller or
the Acquired Company is a party or is subject or in violation of any preemptive
or similar rights of any Person.

     

    (c)           Other
than the Acquired Shares, the Acquired Company does not have outstanding any
Equity Securities or any other securities. The Acquired Company is not a party
or subject to any Contract obligating the Acquired Company to issue any Equity
Securities or any other securities and there is no circumstance or condition
that may give rise to a claim by any Person that such Person is entitled to
acquire any securities of the Acquired Company. The Acquired Company does not
have outstanding any bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any
matter.

     

    (d)           The
Acquired Company is not a party to any joint venture, partnership, consortium or
other similar agreement or arrangement.

     

    (e)           The
Acquired Company does not have outstanding or authorized any stock appreciation,
phantom stock, profit participation, or similar rights.

     

    (f)           Other
than as set forth in this Agreement or any other Transaction Document, neither
Seller nor the Acquired Company is a party or subject to any stockholder
agreement, voting agreement, voting trust or any other similar arrangement which
has the effect of restricting or limiting the transfer, voting or other rights
associated with the Acquired Shares.

     

    (g)           There
are no obligations, contingent or otherwise, of the Acquired Company to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any Person, other than funds or investments related to the
Operating Joint Venture or the Production Contracts.

    

    
      
        
           

        

        
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    3.3          Subsidiaries of the Acquired
Company.

    

    (a)           Each
Subsidiary of the Acquired Company is validly existing and in good standing
under the Laws of the jurisdiction of its formation, has all requisite power to
own, lease and operate its properties and to carry on its business as currently
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which it owns or leases property
or conducts any business so as to require such
qualification.   The Ministry of Mines has issued the
correspondent Executive Resolution to grant authorization to Avante Colombia
Ltd. to develop oil and gas activities in Colombia.

     

    (b)           The
Seller Disclosure Schedule contains a true and complete list of the Subsidiaries
of the Acquired Company and sets forth with respect to each such Subsidiary the
jurisdiction of formation, the authorized and outstanding Capital Stock of such
Subsidiary and the owner(s) of record of such outstanding Capital Stock. The
outstanding shares of Capital Stock of each Subsidiary of the Acquired Company
(collectively, the “Acquired Subsidiary Shares”) are duly
authorized, validly issued, fully paid and nonassessable, and are owned by the
Acquired Company or another Subsidiary of the Acquired Company free and clear of
all Liens.  The assigned capital of any Subsidiary incorporated or
established in Colombia and its respective supplementary capital investment have
been credited with the Superintendency of Corporations and is duly registered
with Banco de la República as a foreign investment.

     

    (c)           All
of the Acquired Subsidiary Shares were issued in compliance with applicable
Laws. None of the Acquired Subsidiary Shares was issued in violation of any
Contract to which Seller, the Acquired Company or any of its Subsidiaries is a
party or is subject.

     

    (d)           Other
than the Acquired Subsidiary Shares set forth in the Seller Disclosure Schedule,
no Subsidiary of the Acquired Company has outstanding any Equity Securities or
any other securities. No Subsidiary of the Acquired Company is a party or
subject to any Contract obligating such Subsidiary to issue any Equity
Securities or any other securities and, to Seller’s Knowledge, there is no
circumstance or condition that may give rise to a claim by any Person that such
Person is entitled to acquire any securities of any Subsidiary of the Acquired
Company. No Subsidiary of the Acquired Company has outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into, or exercisable or exchangeable for, securities having
the right to vote) on any matter.

     

    (e)           No
Subsidiary of the Acquired Company has outstanding or authorized any stock
appreciation, phantom stock, profit participation, or similar
rights.

     

    (f)           Other
than the Subsidiaries set forth in the Seller Disclosure Schedule, neither the
Acquired Company nor any of its Subsidiaries directly or indirectly owns any
Equity Securities or other securities in any Person.

     

    (g)           No
Subsidiary of the Acquired Company is a party to any joint venture, partnership,
consortium or other similar agreement or arrangement, other than the Operating
Joint Venture or related to the Production Contracts.

    

    
      
        
           

        

        
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    (h)           Other
than as set forth in this Agreement or any other Transaction Document, none of
Seller, the Acquired Company or any Subsidiary of the Acquired Company is a
party or subject to any stockholder agreement, voting agreement, voting trust or
any other similar arrangement which has the effect of restricting or limiting
the transfer, voting or other rights associated with the Acquired Subsidiary
Shares.

     

    (i)           There
are no obligations, contingent or otherwise, of any Subsidiary of the Acquired
Company to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any Person other than funds or investments
related to the Operating Joint Venture or the Production Contracts.

     

    3.4          Authority and
Enforceability.  Seller
has the requisite power and authority to enter into this Agreement and to
consummate the Acquisition. The execution and delivery of this Agreement and the
consummation of the Acquisition have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement has been duly executed
and delivered by Seller and, assuming due authorization, execution and delivery
by Buyer, constitutes the valid and binding obligation of Seller, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to creditors’ rights generally, and (b) the
availability of injunctive relief and other equitable remedies.

    

    3.5          No Conflicts;
Authorizations.

    

    (a)           The
execution and delivery of this Agreement by Seller do not, and the performance
by Seller of its obligations hereunder and the consummation by Seller of the
transactions contemplated hereby (in each case, with or without the giving of
notice or lapse of time, or both) will not, directly or indirectly, (i) violate
the provisions of any of the Charter Documents of Seller, the Acquired Company
or any of its Subsidiaries, (ii) violate or constitute a default, an event of
default or an event creating rights of acceleration, termination, cancellation,
imposition of additional obligations or loss of rights, or require a consent to
assignment, under any Contract (A) to which Seller, the Acquired Company or any
of its Subsidiaries is a party, (B) of which Seller, the Acquired Company or any
of its Subsidiaries is a beneficiary or (C) by which Seller, the Acquired
Company or any of its Subsidiaries or any of their respective assets is bound,
(iii) violate or conflict with any Law, Authorization or Order applicable to
Seller, the Acquired Company or any of its Subsidiaries, or give any
Governmental Entity or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy, obtain
any relief under or revoke or otherwise modify any rights held under, any such
Law, Authorization or Order, or (iv) result in the creation of any Liens upon
any of the assets owned or used by Seller, the Acquired Company or any of its
Subsidiaries. Section 3.5(a) of the Seller Disclosure Schedule sets forth
all consents, waivers, assignments and other approvals that are required in
connection with the transactions contemplated by this Agreement under any
Contract to which the Acquired Company or any of its Subsidiaries is a party
(collectively, “Consents”) in order to
preserve all rights of, and benefits to, the Acquired Company and its
Subsidiaries thereunder.

    

    
      
        
           

        

        
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    (b)           No
Authorization or Order of, registration, declaration or filing with, or notice
to, any Governmental Entity or other Person is required by or with respect to
Seller, the Acquired Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and the consummation of the
Acquisition, except for any such Authorization, Order, registration,
declaration, filing or notice, that the failure to comply with would not result
in a Material Adverse Effect on the Acquired Company or prevent, enjoin or
otherwise delay the transactions contemplated by this Agreement.

     

    3.6          Financial
Statements. True
and complete copies of the Acquired Company’s audited consolidated financial
statements consisting of the consolidated balance sheet of the Acquired Company
and its Subsidiaries as at December 31, 2007 and the related statements of
income and retained earnings, stockholders’ equity and cash flow, for the year
then ended (the “Acquired Audited Financial
Statements”), and unaudited (but reviewed by the Acquired Company’s
independent auditor) consolidated financial statements consisting of the balance
sheet of the Acquired Company and its Subsidiaries as at December 31 in each of
the years 2008 and  2009, and the related statements of income and
retained earnings, stockholders’ equity and cash flow for the years then ended
(the “Acquired Interim Financial Statements”
and together with the Acquired Audited Financial Statements, the “Acquired Financial Statements”), are
included in the Seller Disclosure Schedule. The Acquired Financial Statements
are true, complete and correct and have been prepared in accordance with
Luxembourg generally accepted accounting principles (“Lux GAAP”) applied on a
consistent basis throughout the periods involved, subject, in the case of the
Acquired Interim Financial Statements, to normal and recurring year-end
adjustments (the effect of which will not be materially adverse) and the absence
of notes (that, if presented, would not differ materially from those presented
in the Acquired Audited Financial Statements). The Acquired Financial Statements
are based on the books and records of the Acquired Company and its Subsidiaries,
and fairly present the financial condition of the Acquired Company and its
Subsidiaries as of the respective dates they were prepared and the results of
the operations of the Acquired Company and its Subsidiaries for the periods
indicated. The consolidated balance sheet of the Acquired Company and its
Subsidiaries as of December 31, 2009, is referred to herein as the “Acquired Balance Sheet” and the date
thereof as the “Acquired
Balance Sheet Date.”
Each of the Acquired Company and its Subsidiaries maintains a standard system of
accounting established and administered in accordance with Lux
GAAP.

    

    3.7          No Undisclosed
Liabilities. The
Acquired Company and its Subsidiaries have no liabilities, obligations or
commitments of any nature whatsoever, asserted or unasserted, known or unknown,
absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise
(“Liabilities”), except
(a) those which are adequately reflected or reserved against in the Acquired
Balance Sheet as of the Acquired Balance Sheet Date, and (b) those which have
been incurred in the ordinary course of business and consistent with past
practice since the Acquired Balance Sheet Date and which are not, individually
or in the aggregate, material in amount.

     

    3.8          Inventory.  The
Acquired Company and its Subsidiaries have no inventory (materials, supplies,
parts, work-in-process or finished goods).

    

    3.9          Accounts
Receivable.  The
accounts receivable of the Acquired Company and its Subsidiaries as set forth on
the Acquired Balance Sheet or arising since the date thereof have arisen solely
out of bona fide sales and deliveries of goods, performance of services and
other business transactions in the ordinary course of business consistent with
past practice.

    

    
      
        
           

        

        
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    3.10        Taxes.

    

    (a)           All
Tax Returns required to have been filed by each Seller Company or a Relevant
Group in respect of any material Taxes payable or asserted to be payable by or
in respect of the Acquired Company or any of its Subsidiaries have been duly and
timely filed (or, if due between the date hereof and the Closing Date, will be
duly and timely filed), and each such Tax Return correctly and completely
reflects, in all material respects, liability for Taxes and all other
information required to be reported thereon. All Taxes owed by any Seller
Company or any member of a Relevant Group in respect of any Taxes payable or
asserted to be payable by or in respect of the Acquired Company or any of its
Subsidiaries (whether or not shown on any Tax Return) have been timely paid. The
Seller Companies have adequately provided for, in their books of account and
related records, liability for all unpaid Taxes, being current Taxes not yet due
and payable.

     

    (b)           There
is no action or audit currently pending or, to the Knowledge of Seller, proposed
or threatened against, or with respect to, the Seller Companies in respect of
any Taxes payable or asserted to be payable by or in respect of the Acquired
Company or any of its Subsidiaries. No Seller Company is the beneficiary of any
extension of time within which to file any Tax Return of or relating to the
Acquired Company or any of its Subsidiaries, nor have any of the Seller
Companies made (or had made on their behalf) any requests for such extensions.
To the Knowledge of Seller, no claim has ever been made by an authority in a
jurisdiction where any of the Seller Companies do not file Tax Returns that any
of them is or may be subject to taxation by that jurisdiction or that any of
them must file Tax Returns in relation to the Acquired Company or any of its
Subsidiaries. There are no Liens (other than Liens arising by operation of Law
for Taxes not yet due) on any of the stock or assets of the Acquired Company or
any of its Subsidiaries with respect to Taxes; nor are there any Liens on any of
the stock or assets of any other Seller Company with respect to Taxes payable or
asserted to be payable by or in respect of the Acquired Company or any of its
Subsidiaries.

     

    (c)           The
Seller Companies have withheld and timely paid all Taxes required to have been
withheld and paid by or in respect of the Acquired Company or any of its
Subsidiaries and have complied with all information reporting and withholding
requirements, including maintenance of required records with respect
thereto.

     

    (d)           There
is no dispute or claim concerning any liability for Taxes payable or asserted to
be payable by or in respect of the Acquired Company or any of its Subsidiaries
for which notice has been provided, or which, to the Knowledge of Seller, is
asserted or threatened.  The Seller Disclosure Schedule (i) lists all
national, state, local, and foreign income Tax Returns filed by any Seller
Company with respect to the Acquired Company or any of its Subsidiaries for
taxable periods ended on or after December 31, 2007, (ii) indicates those Tax
Returns that have been audited, and (iii) indicates those Tax Returns that
currently are the subject of audit. Seller has delivered to Buyer correct and
complete copies of all income Tax Returns, examination reports, and statements
of deficiencies assessed against or agreed to by any Seller Company with respect
to Taxes payable or asserted to be payable by or in respect of the Acquired
Company or any of its Subsidiaries since January 1, 2006. No Seller Company has
waived (or is subject to a waiver of) any statute of limitations in respect of
Taxes payable or asserted to be payable by or in respect of the Acquired Company
or any of its Subsidiaries or has agreed to (or is subject to) any extension of
time with respect to such a Tax assessment or deficiency.

     

    
      
        
        

      

      
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      (e)      Neither
the Acquired Company nor any of its Subsidiaries is, or has ever been, included
in a U.S. consolidated tax return.  No affiliate of the Acquired
Company has ever claimed losses in the United States on account of the Acquired
Company or any of its Subsidiaries, or made any elections (by filing Form 8832
or otherwise) in the United States regarding the U.S. tax treatment of the
Acquired Company or any of its Subsidiaries. Neither the Acquired Company nor
any of its Subsidiaries is or has been (i) a “United States person” under
Section 7701(a)(30) of the Code, (ii) engaged in the conduct of a trade or
business in the United States under Section 882 of the Code, or (iii) a
“controlled foreign corporation” under Section 957(a) of the Code.

       

      (f)      Neither
the Acquired Company nor any of its Subsidiaries has ever held a “United States
real property interest” within the meaning of Section 897(c)(1) of the
Code.

       

      (g)      The
representations and warranties set forth in this Section 3.10 are the sole and
exclusive representations and warranties of Seller under this Agreement that
address or relate in any way to any and all Tax matters.

       

      3.11        Compliance with
Law.

      

      (a)      Each
of the Acquired Company and its Subsidiaries has complied with each, and is not
in violation of any, applicable Law to which the Acquired Company or any such
Subsidiary or its respective business, operations, assets or properties is or
has been subject, except for such noncompliance or violations that have not
resulted and would not result in a Material Adverse Effect on the Acquired
Company; provided, however, no representation or warranty in this Section 3.11
is made with respect to Environmental Laws, which are covered exclusively in
Section 3.21, or Tax matters, which are covered exclusively in Section
3.10.

       

      (b)      No
event has occurred and no circumstances exist that with the passage of time or
the giving of notice may reasonably be expected to result in a violation of,
conflict with or failure on the part of the Acquired Company or any of its
Subsidiaries to comply with, any existing Law, except for such noncompliance or
violations that have not resulted and would not result in a Material Adverse
Effect on the Acquired Company. To Seller’s Knowledge, neither the Acquired
Company nor any of its Subsidiaries has received notice regarding any violation
of, conflict with, or failure to comply with, any Law.

       

      3.12        Authorizations.

      

      (a)      Each
of the Acquired Company and its Subsidiaries owns, holds or lawfully uses in the
operation of its business all Authorizations which are necessary for it to
conduct its business as currently conducted or as proposed to be conducted or
for the ownership and use of the assets owned or used by the Acquired Company or
any such Subsidiary in the conduct of its business free and clear of all Liens,
except for such Authorizations as to which the failure of the Acquired Company
or its Subsidiaries to own, hold or lawfully use has not resulted and would not
result in a Material Adverse Effect on the Acquired Company; provided, however,
no representation or warranty in this Section 3.12 is made with respect to
Environmental Permits, which are covered exclusively in Section 3.21. Such
Authorizations are valid and in full force and effect and none of such
Authorizations will be terminated or impaired or become terminable as a result
of the transactions contemplated by this Agreement. All such Authorizations are
listed in the Seller Disclosure Schedule.

      
        
           

        

        
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      (b)      No
event has occurred and no circumstances exist that with the passage of time or
the giving of notice may reasonably be expected to result in a violation of,
conflict with, failure on the part of the Acquired Company or any of its
Subsidiaries to comply with the terms of, or the revocation, withdrawal,
termination, cancellation, suspension or modification of any Authorization,
except for such events that have not resulted and would not result in a Material
Adverse Effect on the Acquired Company. To Seller’s Knowledge, neither the
Acquired Company nor any of its Subsidiaries has received notice regarding any
violation of, conflict with, failure to comply with the terms of, or any
revocation, withdrawal, termination, cancellation, suspension or modification
of, any Authorization. Neither the Acquired Company nor any of its Subsidiaries
is in default, nor, to Seller’s Knowledge, has the Acquired Company or any of
its Subsidiaries received notice of any claim of default, with respect to any
Authorization.

       

      (c)      No
Person other than the Acquired Company or one of its Subsidiaries owns or has
any proprietary, financial or other interest (direct or indirect) in any
Authorization which the Acquired Company or such Subsidiary owns or uses in the
operation of its business as currently conducted or as proposed to be conducted,
other than related to the Production Contracts.

       

      3.13        Title to Personal
Properties.

      

      (a)      The
Seller Disclosure Schedule sets forth a complete and accurate list of all the
personal properties and assets owned, leased or used by the Acquired Company or
any of its Subsidiaries as of the date of this Agreement, with a fair market
value as of December 31, 2009 in excess of $10,000, specifying whether such
property is owned or leased and the owner of such property and, in the case of
leased assets, indicating the parties to, execution dates of and annual payments
under, the lease.

       

      (b)      With
respect to personal properties and assets that are owned including all
properties and assets reflected as owned on the Acquired Balance Sheet (other
than inventory sold in the ordinary course of business since the date thereof),
the Acquired Company or one of its Subsidiaries has good and valid title to all
of such properties and assets, free and clear of all Liens except for Permitted
Liens.

       

      (c)      With
respect to personal properties and assets that are leased (“Seller Leased Personal Property”),
the Acquired Company or one of its Subsidiaries has a valid leasehold interest
in such Leased Personal Property and all such leases are in full force and
effect and constitute valid and binding obligations of the Acquired Company and,
to the Knowledge of Seller, the other party(ies) thereto. None of the Acquired
Company, any of its Subsidiaries or, to the Knowledge of Seller, any other party
thereto is in breach of any of the terms of any such lease.

      
        
           

        

        
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      (d)      Other
than the Acquired Company, its Subsidiaries, holders of Permitted Liens (solely
to the extent of such Permitted Liens) and lessors of Seller Leased Personal
Property (solely to the extent of their interest in such Seller Leased Personal
Property), no Person has any interest in any equipment or other tangible assets
or properties used by the Acquired Company or any of its Subsidiaries. Without
limiting the foregoing, neither Seller nor any of its Subsidiaries (other than
the Acquired Company and its Subsidiaries) has any interest in any equipment or
other tangible assets or properties used in the businesses of the Acquired
Company and its Subsidiaries.

       

      3.14        Real
Property.  There
is no (i) real property or interests in real property owned in fee by the
Acquired Company or any of its Subsidiaries (the “Seller Owned Real Property”), or (ii)
real property or interests in real property leased by the Acquired Company or
any of its Subsidiaries (other than under the terms of the Production Contracts)
(the “Seller Leased Real Property” and
together with the Seller Owned Real Property, the “Seller Real Property”).

      

      3.15        Intellectual
Property.

      

      (a)      As
used in this Agreement, “Intellectual Property” means:
(i) inventions (whether or not patentable), trade secrets, technical data,
databases, customer lists, designs, tools, methods, processes, technology,
ideas, know-how, source code, product road maps and other proprietary
information and materials (“Proprietary Information”);
(ii) trademarks and service marks (whether or not registered), trade names,
logos, trade dress and other proprietary indicia and all goodwill associated
therewith; (iii) documentation, advertising copy, marketing materials,
web-sites, specifications, mask works, drawings, graphics, databases, recordings
and other works of authorship, whether or not protected by Copyright; (iv)
computer programs, including any and all software implementations of algorithms,
models and methodologies, whether in source code or object code, design
documents, flow-charts, user manuals and training materials relating thereto and
any translations thereof (collectively, “Software”); and (v) all forms
of legal rights and protections that may be obtained for, or may pertain to, the
Intellectual Property set forth in clauses (i) through (iv) in any country of
the world (“Intellectual
Property Rights”), including all letters patent, patent applications,
provisional patents, design patents, PCT filings, invention disclosures and
other rights to inventions or designs (“Patents”), all registered and
unregistered copyrights in both published and unpublished works (“Copyrights”), all trademarks,
service marks and other proprietary indicia (whether or not registered) (“Marks”), trade secret rights,
mask works, moral rights or other literary property or authors rights, and all
applications, registrations, issuances, divisions, continuations, renewals,
reissuances and extensions of the foregoing.

       

      (b)      Neither
the Acquired Company nor any of its Subsidiaries owns any right, title or
interest in or to any Software (other than as described below), Patents,
Copyrights or Marks (other than the names “Avante” and “Avante Colombia” (the
“Avante
Marks”)).

       

      (c)      The
Seller Disclosure Schedule lists all licenses, sublicenses and other agreements
(“In-Bound Licenses”)
pursuant to which a third party authorizes the Acquired Company or any of its
Subsidiaries to use, practice any rights under, or grant sublicenses with
respect to, any Intellectual Property owned by such third party other than
In-Bound Licenses that consist solely of “shrink-wrap” and similar commercially
available end-user licenses, including the incorporation of any such
Intellectual Property into the Company’s or any of its Subsidiaries’ products
and, with respect to each In-Bound License, whether the In-Bound License is
exclusive or non-exclusive.

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      (d)      There
are no licenses, sublicenses or other agreements (“Out-Bound Licenses”) pursuant
to which the Acquired Company or any of its Subsidiaries authorizes a third
party to use, practice any rights under, or grant sublicenses with respect to,
any Acquired Company Owned Intellectual Property or pursuant to which the
Acquired Company or any of its Subsidiaries grants rights to use or practice any
rights under any Intellectual Property owned by a third party and, with respect
to each Out-Bound License, whether the Out-Bound License is exclusive or
non-exclusive.

       

      (e)      The
Acquired Company and/or one or more of its Subsidiaries exclusively own the
entire right, interest and title to all Intellectual Property that is used in or
necessary for the businesses of the Acquired Company and its Subsidiaries as
they are currently conducted or proposed to be conducted, free and clear of
Liens, or (ii) otherwise rightfully use or otherwise enjoy such Intellectual
Property pursuant to the terms of a valid and enforceable In-Bound License that
is listed in the Seller Disclosure Schedule or that is a “shrink-wrap” or
similar commercially available end-user license. The Avante Marks, together with
the Proprietary Information and the Acquired Company’s and its Subsidiaries’
rights under the In-Bound Licenses listed in the Seller Disclosure Schedule or
that are “shrink-wrap” or similar commercially available end-user licenses
(collectively, the “Acquired
Company Intellectual Property”), constitutes all the Intellectual
Property used in or necessary for the operation of the Acquired Company’s and
its Subsidiaries’ businesses as they are currently conducted and as proposed to
be conducted.

       

      (f)      Seller
has no Knowledge of any challenges (or any basis therefor) with respect to the
validity or enforceability of any Acquired Company Intellectual Property.
Neither Seller, the Acquired Company nor any of its Subsidiaries has taken any
action or failed to take any action that could reasonably be expected to result
in the abandonment, cancellation, forfeiture, relinquishment, invalidation,
waiver or unenforceability of any Acquired Company Intellectual
Property.

       

      (g)      To
Seller’s Knowledge, neither the Acquired Company nor any of its Subsidiaries, by
conducting its business as currently conducted or as proposed to be conducted,
has infringed or infringes upon, or otherwise unlawfully used or uses, any
Intellectual Property Rights of a third party. None of Seller, the Acquired
Company or any of its Subsidiaries has received any communication alleging that
the Acquired Company or any of its Subsidiaries or any of their respective
products, services, activities or operations infringe upon or otherwise
unlawfully use any Intellectual Property Rights of a third party nor, to
Seller’s Knowledge, is there any basis therefor. No Action has been instituted,
or, to Seller’s Knowledge, threatened, relating to any Intellectual Property
formerly or currently used by the Acquired Company or any of its Subsidiaries
and none of the Acquired Company Intellectual Property is subject to any
outstanding Order. To Seller’s Knowledge, no Person has infringed or is
infringing any Intellectual Property Rights of the Acquired Company or any of
its Subsidiaries or has otherwise misappropriated or is otherwise
misappropriating any Acquired Company Intellectual Property.

      
        
           

        

        
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      (h)      With
respect to the Acquired Company’s or any of its Subsidiaries’ Proprietary
Information, the documentation relating thereto is current, accurate and
sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the special knowledge or memory of
others. The Acquired Company and its Subsidiaries have taken commercially
reasonable steps to protect and preserve the confidentiality of all Proprietary
Information owned by the Acquired Company or any of its Subsidiaries that is not
covered by an issued Patent. Without limiting the generality of the foregoing,
the Proprietary Information of the Acquired Company and its Subsidiaries (other
than Proprietary Information that is covered by an issued Patent) is not part of
the public knowledge and has not been used or divulged for the benefit of any
Person other than the Acquired Company and its Subsidiaries. Any receipt or use
by, or disclosure to, a third party of Proprietary Information owned by the
Acquired Company or any of its Subsidiaries has been pursuant to the terms of
binding written confidentiality agreement between the Acquired Company or such
Subsidiary and such third party (“Seller Nondisclosure Agreements”).
True and complete copies of Seller Nondisclosure Agreements, and any amendments
thereto, have been provided to Buyer. The Acquired Company and its Subsidiaries
are, and to Seller’s Knowledge, all other parties thereto are, in compliance
with the provisions of the Seller Nondisclosure Agreements. The Acquired Company
and its Subsidiaries are in compliance with the terms of all Contracts pursuant
to which a third party has disclosed to, or authorized the Acquired Company or
any of its Subsidiaries to use, Proprietary Information owned by such third
party.

       

      (i)      The
execution and delivery of this Agreement by Seller does not, and the
consummation of the Acquisition (in each case, with or without the giving of
notice or lapse of time, or both), will not, directly or indirectly, result in
the loss or impairment of any Acquired Company Intellectual Property, or give
rise to any right of any third party to terminate or reprice or otherwise
renegotiate any of the Acquired Company’s or any of its Subsidiaries’ rights to
own any of its Intellectual Property or their respective rights under any
In-Bound License, nor require the consent of any Governmental Entity or other
third party in respect of any such Intellectual Property. 

       

      3.16  
     Absence of Certain Changes
or Events.  Since
the Acquired Balance Sheet Date to the date of this Agreement (with respect to
the representation and warranty made as of the date of this Agreement) and to
the Closing Date (with respect to the representation and warranty made as of the
Closing Date):

      

      (a)      there
has not been any material adverse change in the condition (financial or
otherwise), operations, prospects or results of operations of the Acquired
Company and its Subsidiaries taken as a whole;

       

      (b)      neither
the Acquired Company nor any of its Subsidiaries has amended or changed its
Charter Documents;

       

      (c)      neither
the Acquired Company nor any of its Subsidiaries has declared, set aside or paid
any dividend or other distribution (whether in cash, stock or property) with
respect to any Equity Security or any other security;

      
        
           

        

        
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      (d)      neither
the Acquired Company nor any of its Subsidiaries has split, combined or
reclassified any Equity Security or other security, or issued, or authorized for
issuance, any Equity Security or other security;

       

      (e)      neither
the Acquired Company nor any of its Subsidiaries has altered any term of any
outstanding Equity Security or other security;

       

      (f)      neither
the Acquired Company nor any of its Subsidiaries has (i) except in the ordinary
course of business, increased or modified the compensation or benefits payable
or to become payable by the Acquired Company or any of its Subsidiaries to any
of its current or former directors, employees, contractors or consultants, (ii)
except as provided for in this Agreement, increased or modified any bonus,
severance, termination, pension, insurance or other employee benefit plan,
payment or arrangement made to, for or with any current or former directors,
employees, contractors or consultants of the Acquired Company or any of its
Subsidiaries, or (iii) entered into any employment, severance or termination
agreement;

       

      (g)      other
than the sale of inventory in the ordinary course of business, neither the
Acquired Company nor any of its Subsidiaries has sold, leased, transferred or
assigned any property or assets of the Acquired Company or any such
Subsidiary;

       

      (h)      neither
the Acquired Company nor any of its Subsidiaries has incurred, assumed or
guaranteed any Indebtedness;

       

      (i)   
   neither the Acquired Company nor any of its Subsidiaries has
created or assumed any Lien on any asset, except for Liens arising under lease
financing arrangements existing as of the Acquired Balance Sheet Date and
Permitted Liens;

       

      (j)     
 neither the Acquired Company nor any of its Subsidiaries has made any
loan, advance or capital contribution to, or investment in, any Person other
than travel loans or advances in the ordinary course of business consistent with
past practice;

       

      (k)      there
has not been any labor dispute, other than individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Acquired Company or any of its Subsidiaries;

       

      (l)    
  none of Seller, the Acquired Company or the Subsidiaries of the
Acquired Company has agreed or entered into any arrangement to take any action
which, if taken prior to the date hereof, would have made any representation or
warranty set forth in this ARTICLE III untrue or incorrect;

       

      (m)     there
has not been any material damage, destruction or loss with respect to the
property and assets of the Acquired Company or any of its Subsidiaries, whether
or not covered by insurance;

       

      (n)      none
of Seller, the Acquired Company or any of its Subsidiaries has made any change
in accounting practices;

      
        
           

        

        
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      (o)      none
of Seller, the Acquired Company or any of its Subsidiaries has made any Tax
election, changed its method of Tax accounting or settled any claim for Taxes;
or

       

      (p)      none
of Seller, the Acquired Company or any of its Subsidiaries has agreed, whether
in writing or otherwise, to do any of the foregoing.

       

      3.17  
     Contracts.

      

      (a)      The
Seller Disclosure Schedule contains a complete and accurate list of each
Contract or series of related Contracts to which the Acquired Company or any of
its Subsidiaries is a party or is subject, or by which any of their respective
assets are bound:

       

      (i)       
 that concern the purchase and sale, gathering, transportation, compression
or processing of Hydrocarbons or similar Contracts and that are (x) not
terminable without penalty on ninety or less days notice or (y) can be
reasonably expected to result in aggregate monthly revenues to the Acquired
Company of more than $25,000 (based solely on the terms thereof and without
regard to any expected increase in volumes or revenues) during the current or
any subsequent calendar year;

       

      (ii)      
 for the purchase of materials, supplies, goods, services, equipment or
other assets and that involves or would reasonably be expected to involve (A)
annual payments by the Acquired Company or any of its Subsidiaries of $25,000 or
more, or (B) aggregate payments by the Acquired Company or any of its
Subsidiaries of $25,000 or more;

       

      (iii)     
 (A) for the sale by the Acquired Company or any of its Subsidiaries of
materials, supplies, goods, services, equipment or other assets, and that
involves a specified annual minimum dollar sales amount by the Acquired Company
or any of its Subsidiaries of $25,000 or more, or (B) pursuant to which the
Acquired Company or any of its Subsidiaries received payments of more than
$25,000 in the year ended December 31, 2009, or expects to receive payments of
more than $25,000 in the year ending December 31, 2010;

       

      (iv)     
 that requires the Acquired Company or any of its Subsidiaries to purchase
its total requirements of any product or service from a third party or that
contains “take or pay” provisions;

       

      (v)   
    that (A) continues over a period of more than six months
from the date hereof or (B) involves payments to or by the Acquired Company or
any of its Subsidiaries exceeding $25,000, other than arrangements disclosed
pursuant to the preceding subsections (i) and (iii);

       

      (vi)     
 that is an employment, consulting, termination or severance Contract,
other than any such Contract that is terminable at-will by the Acquired Company
or any of its Subsidiaries without liability to the Acquired Company or such
Subsidiary;

       

      (vii)     
that is a partnership, joint venture or similar Contract;

      
        
           

        

        
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      (viii)   
 that is a distribution, dealer, representative or sales agency
Contract;

       

      (ix)     
 that is a (A) Lease or (B) Contract for the lease of personal property, in
either case which provides for payments to or by the Acquired Company or any of
its Subsidiaries in any one case of $25,000 or more annually or $75,000 or more
over the term of the lease;

       

      (x)      
 that provides for the indemnification by the Acquired Company or any of
its Subsidiaries of any Person, the undertaking by the Acquired Company or any
of its Subsidiaries to be responsible for consequential damages, or the
assumption by the Acquired Company or any of its Subsidiaries of any Tax,
environmental or other Liability;

       

      (xi)      
 with any Governmental Entity;

       

      (xii)    
 that is a note, debenture, bond, equipment trust, letter of credit, loan
or other Contract for Indebtedness or lending of money (other than to employees
for travel expenses in the ordinary course of business) or Contract for a line
of credit or guarantee, pledge or undertaking of the Indebtedness of any other
Person;

       

      (xiii)     
for a charitable or political contribution in any one case in excess of $2,000
or in the aggregate greater than $5,000;

       

      (xiv)    
 for any capital expenditure or leasehold improvement in any one case in
excess of $25,000 or in the aggregate greater than $25,000;

       

      (xv)  
    that restricts or purports to restrict the right of the
Company or any of its Subsidiaries to engage in any business, acquire any
property, develop or distribute any product or provide any service (including
geographic restrictions) or to compete with any Person or granting any exclusive
distribution rights, in any market, field or territory, in each case, with
respect to Hydrocarbon Interests;

       

      (xvi)   
  that is an Out-Bound License or an In-Bound License;

       

      (xvii)   
 that relates to the acquisition or disposition of any material business
(whether by merger, sale of stock, sale of assets or otherwise);

       

      (xviii)   
that is a collective bargaining Contract or other Contract with any labor
organization, union or association;

       

      (xix)    
  that is otherwise material to the Acquired Company and its Subsidiaries
as a whole and not previously disclosed pursuant to this Section
3.17.

       

      (b)      Each
Contract required to be listed in the Seller Disclosure Schedule (collectively,
the “Material
Contracts”) is in full force and effect and valid and enforceable in
accordance with its terms.

      
        
           

        

        
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      (c)      Neither
the Acquired Company nor any of its Subsidiaries is, and to Seller’s Knowledge
after reasonable inquiry, no other party thereto is, in default in the
performance, observance or fulfillment of any obligation, covenant, condition or
other term contained in any Material Contract, and neither the Acquired Company
nor any of its Subsidiaries has given or received notice to or from any Person
relating to any such alleged or potential default that has not been cured. To
Seller’s Knowledge after reasonable inquiry, no event has occurred which with or
without the giving of notice or lapse of time, or both, may conflict with or
result in a violation or breach of, or give any Person the right to exercise any
remedy under or accelerate the maturity or performance of, or cancel, terminate
or modify, any Material Contract.

       

      (d)      Seller
has delivered or made available in its data room accurate and complete copies of
each Material Contract to Buyer.

       

      (e)      All
Contracts other than Material Contracts to which the Acquired Company or any of
its Subsidiaries is a party or is subject, or by which any of their respective
assets are bound (collectively, the “Minor Contracts”), are in all
material respects valid and enforceable in accordance with their terms, except
where any such failure to be valid and enforceable individually or in the
aggregate would not reasonably be expected have a Material Adverse Effect on the
Acquired Company. Neither the Acquired Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any obligation,
covenant or condition contained therein, and no event has occurred which with or
without the giving of notice or lapse of time, or both, would constitute a
default thereunder by the Acquired Company or any of its Subsidiaries, except in
either case where such default individually or in the aggregate would not
reasonably be expected have a Material Adverse Effect on the Acquired
Company.

       

      3.18    
   Litigation.

      

      (a)      There
is no action, suit or proceeding, claim, arbitration, litigation or
investigation (each, an “Action”) (i) pending or, to
Seller’s Knowledge, threatened against or affecting the Acquired Company or any
of its Subsidiaries, or (ii) that challenges or seeks to prevent, enjoin or
otherwise delay the transactions contemplated by this Agreement. There is no
Action against any current or, to Seller’s Knowledge, former director or
employee of the Acquired Company or any of its Subsidiaries with respect to
which the Acquired Company or any such Subsidiary has or is reasonably likely to
have an indemnification obligation.

       

      (b)      There
is no unsatisfied judgment, penalty or award against or affecting the Acquired
Company or any of its Subsidiaries or any of their respective properties or
assets. There is no Order to which the Acquired Company or any of its
Subsidiaries or any of their respective properties or assets are
subject.  Each of the Acquired Company and its Subsidiaries is in
compliance with the terms of each Order required to be set forth on the Seller
Disclosure Schedule. To Seller’s Knowledge, no event has occurred or
circumstances exist that may constitute or result in (with or without notice or
lapse of time) a violation of any such Order.

       

      3.19   
    [Reserved].

      
        
           

        

        
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      3.20   
    Labor and Employment
Matters.

      

      (a)      The
Seller Disclosure Schedule sets forth (i) (A) a list of all directors,
employees, contractors and consultants of the Acquired Company and its
Subsidiaries (including title and position) as of the date hereof, and (B) the
base compensation and benefits of each such director, employee, contractor and
consultant, and (ii) a list of all former directors, employees, contractors and
consultants of the Acquired Company and its Subsidiaries who are receiving
benefits or scheduled to receive benefits in the future, and the pension
benefit, medical insurance coverage and other benefits of each such former
director, employee, contractor and consultant.

       

      (b)      Neither
the Acquired Company nor any of its Subsidiaries is a party or subject to any
labor union or collective bargaining agreement. There have not been since
January 1, 2007, and there are not pending or threatened any labor disputes,
work stoppages, requests for representation, pickets, work slow-downs due to
labor disagreements or any actions or arbitrations which involve the labor or
employment relations of the Acquired Company or any of its Subsidiaries. There
is no unfair labor practice, charge or complaint pending, unresolved or, to
Seller’s Knowledge, threatened. No event has occurred or circumstance exist that
may provide the basis of any work stoppage or other labor dispute.

       

      (c)      Each
of the Acquired Company and its Subsidiaries has complied in all material
respects with each, and is not in violation of any, Law relating to
anti-discrimination and equal employment opportunities and there are, and have
been, no material violations of any other Law respecting the hiring, hours,
wages, occupational safety and health, employment, promotion, termination or
benefits of any employee or other Person. The Acquired Company and its
Subsidiaries have (i) complied with requirements of Colombian Law relating to
the enrollment of their personnel in the General Integral Social Security System
in health, pensions and professional risks and have properly and timely paid the
monthly installments accrued in favor of the social security system; (ii)
enrolled their employees in a Colombian Family Compensation Fund as required by
Colombian Law; (iii) timely paid the salaries, legal and voluntary benefits,
overtime, rest and holiday pay, social benefits, personal equipment, vacations,
severances and other applicable labor benefits, to which their personnel were
entitled in accordance with Colombian Law; and (iv) complied with the
obligations stipulated in Law 100 of 1993 covering labor risks and accidents of
their employees. The amounts referred to in Section 5.2 have been accounted for
in the financial statements of the Acquired Company and its
Subsidiaries.

       

      (d)      The
Acquired Company and its Subsidiaries have not established or provided employee
benefits to its current or former employees or contractors under any employee
benefit plans other than (i) plans and benefits required by Law and (ii) payment
of 90% of medical insurance premiums (the “Medical Plan”).  The
Medical Plan has been operated in compliance in all material respects with
Colombian Law, and the Acquired Company and its Subsidiaries have satisfied
their statutory and contractual obligations with respect to the Medical Plan in
all material respects.

      
        
           

        

        
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      (e)      None
of Seller, the Acquired Company or any its Subsidiaries is a party to any
Contract which restricts the Acquired Company or any of its Subsidiaries from
relocating, closing or terminating any of its operations or facilities or any
portion thereof.

       

      (f)      The
Acquired Company and its Subsidiaries have complied and are in compliance with
the requirements of all applicable immigration Laws.

       

      (g)      Buyer
and its Subsidiaries will have no severance, salary, bonus or other Liabilities
with respect to the Employees of the Acquired Company to be terminated under
Section 5.2 for any periods (except with respect to any such employees hired by
Buyer, and then only with respect to periods from their respective hire
dates).

       

      3.21 
      Environmental.  

      

      (a)      Each
of the Acquired Company and its Subsidiaries has obtained, and is in compliance
with, all Environmental Permits required in connection with its operations and
the Seller Real Property. Each Environmental Permit, together with the name of
the Governmental Entity issuing such Environmental Permit, is set forth in the
Seller Disclosure Schedule. All such Environmental Permits are valid and in full
force and effect and all renewal applications for such Environmental Permits
have been timely filed with the appropriate Governmental Entity. None of such
Environmental Permits will be terminated or impaired or become terminable as a
result of the Acquisition. Each of the Acquired Company and its Subsidiaries has
been, and is currently, in compliance with all Environmental
Laws.  None of Seller, the Acquired Company or any of its Subsidiaries
has received notice alleging that the Acquired Company or any of its
Subsidiaries is not in such compliance in all material respects with
Environmental Laws.  To the Knowledge of Seller, no operator of
Seller’s Hydrocarbon Interests has received notice alleging that, with respect
to Seller’s Hydrocarbon Interests, such operator is not in compliance in all
material respects with Environmental Laws.

       

      (b)      There
are no past, pending or, to Seller’s Knowledge, threatened Environmental Actions
against the Acquired Company or any of its Subsidiaries, or to Seller’s
Knowledge against any operator of the Acquired Company’s Hydrocarbon Interests
relating to such Hydrocarbon Interests.  To Seller’s Knowledge, there
are no past, pending or threatened Environmental Actions affecting the Acquired
Company or any of its Subsidiaries or affecting any of the Acquired Company’s
Hydrocarbon Interests.

       

      (c)      Neither
the Acquired Company nor any of its Subsidiaries, nor to Seller’s Knowledge any
operator of the Acquired Company’s Hydrocarbon Interests (to the extent relating
to such Hydrocarbon Interests), has entered into or agreed to any Order, and
neither the Acquired Company nor any of its Subsidiaries is subject to any
Order, relating to compliance with any Environmental Law or to investigation or
cleanup of a Hazardous Substance under any Environmental Law.

       

      (d)      Neither
the Acquired Company nor any of its Subsidiaries, nor to Seller’s Knowledge any
operator of the Acquired Company’s Hydrocarbon Interests (to the extent relating
to such Hydrocarbon Interests), has received an information request from any
Governmental Entity under any Environmental Law.

      
        
           

        

        
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      (e)      Seller
has provided to Buyer true and complete copies of, or access to, all written
environmental assessments, materials, reports, data, analyses and compliance
audits that have been prepared by or on behalf of the Acquired Company, any
Subsidiary of the Acquired Company or Seller (solely with respect to the Seller
Real Property or any other real property formerly owned, operated or leased by
the Acquired Company or any of its Subsidiaries) or that are in the possession
of Seller or the Acquired Company and relate to any of the Acquired Company’s
Hydrocarbon Interests.

       

      (f)      The
representations and warranties set forth in this Section 3.21 are the sole and
exclusive representations and warranties of Seller under this Agreement that
address or relate in any way to any and all environmental matters, including any
Release or threatened Release of a Hazardous Substance or compliance with or
liabilities under any Environmental Law or any Environmental
Permit.

       

      3.22  
     Insurance.

      

      (a)      The
Seller Disclosure Schedule sets forth (i) an accurate and complete list of each
insurance policy and fidelity bond which covers the Acquired Company or any of
its Subsidiaries or their respective businesses, properties, assets, directors
or employees (the “Policies”) and (ii) a list of
all pending claims and the claims history for the Acquired Company and its
Subsidiaries during the current year and the preceding three years (including
with respect to insurance obtained but not currently maintained). There are no
pending claims under any of such Policies as to which coverage has been
questioned, denied or disputed by the insurer or in respect of which the insurer
has reserved its rights.

       

      (b)      The
Seller Disclosure Schedule describes any self-insurance arrangement by or
affecting the Acquired Company or any of its Subsidiaries, including any
reserves thereunder, and describes the loss experience for all claims that were
self-insured in the current year and the preceding three years.

       

      (c)      All
Policies are enforceable in accordance with their terms and will continue in
full force and effect with respect to the Acquired Company and its Subsidiaries
following the Acquisition.

       

      (d)      All
premiums due under the Policies have been paid in full or, with respect to
premiums not yet due, accrued. Neither the Acquired Company nor any of its
Subsidiaries has received a notice of cancellation of any Policy or of any
material changes that are required in the conduct of the businesses of the
Acquired Company and its Subsidiaries as a condition to the continuation of
coverage under, or renewal of, any such Policy. There is no existing default or
event which, with the giving of notice or lapse of time or both, would
constitute a default under any Policy or entitle any insurer to terminate or
cancel any Policy. Seller has no Knowledge of any threatened termination of, or
material premium increase with respect to, any Policy and none of such Policies
provides for retroactive premium adjustments.

       

      3.23  
     Product
Warranty.  Neither
the Acquired Company nor any of its Subsidiaries has ever manufactured, sold,
distributed, provided, shipped or licensed any products (“Products”) other than
Hydrocarbons.

      
        
           

        

        
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      3.24   
    Books and
Records.  The
minute books (containing the records of the meetings, or written consents in
lieu of such meetings, of the stockholders, the board of directors and any
committees of the board of directors), the stock certificate books, and the
stock record books of the Acquired Company and its Subsidiaries are correct and
complete, and have been maintained in accordance with applicable Laws and
commercial regulations and sound business practices. The minute books of the
Acquired Company and its Subsidiaries contain accurate and complete records of
all meetings, or actions taken by written consent, of the stockholders, the
board of directors and any committees of the board of directors, of the Acquired
Company and its Subsidiaries, and no meeting, or action by written consent in
lieu of such meeting, of any such stockholders, board of directors or committee
of such board of directors, has been held for which minutes have not been
prepared and not contained in the minute books. At the Closing, all of the books
and records of the Acquired Company and its Subsidiaries (including those
pertaining to the Real Properties and Hydrocarbon Interests and the other assets
of the Acquired Company, those pertaining to the production, gathering,
transportation and sale of Hydrocarbons, and corporate, accounting, financial
and employee records) will be in the possession of the Acquired Company. At the
Closing, Seller will deliver, or cause to be delivered, to Buyer or its designee
all of the minute books and other books and records of the Acquired Company and
its Subsidiaries.

      

      3.25  
     Suppliers.  The
Seller Disclosure Schedule sets forth with respect to each of the Acquired
Company and its Subsidiaries (a) each supplier from whom purchases exceeded
$10,000 in the year ended December 31, 2009, and (b) each supplier who
constitutes a sole source of supply to the Acquired Company or any of its
Subsidiaries. The relationships of each of the Acquired Company and its
Subsidiaries with each such supplier are good commercial working relationships.
No such supplier has canceled or otherwise terminated, or threatened to cancel
or otherwise terminate, its relationship with the Acquired Company or any of its
Subsidiaries. None of Seller, the Acquired Company or the Subsidiaries of the
Acquired Company has received notice that any such supplier may cancel or
otherwise materially and adversely modify its relationship with the Acquired
Company or any of its Subsidiaries or limit its services, supplies or materials
to the Acquired Company or any of its Subsidiaries, either as a result of the
Acquisition or otherwise.

      

      3.26    
   Brokers or
Finders.  Except
for fees and commissions of $50,000 in cash and/or Buyer securities to Tucker
Link, which Buyer has agreed to pay within five business days of Closing, no
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Seller or the Acquired
Company or any of its Subsidiaries.

      

      3.27     
  Bank
Accounts.  The
Seller Disclosure Schedule sets forth the name of each bank, safe deposit
company or other financial institution in which the Acquired Company or any of
its Subsidiaries has an account, lock box or safe deposit box and the names of
all Persons authorized to draw thereon or have access thereto.

      

      3.28     
  Powers of
Attorney.  There
are no outstanding powers of attorney executed by or on behalf of the Acquired
Company or any of its Subsidiaries in favor of any Person.

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

      

      3.29       Support
Services.  Seller
provides no support or other services to the Acquired Company and its
Subsidiaries other than those set forth in the Seller Disclosure
Schedule.

      

      3.30       Hydrocarbon
Matters.  Without
limiting the generality of any of the foregoing representations and
warranties:

      

      (a)      The
Seller Disclosure Schedule contains a list of all Hydrocarbon Interests that
were included in the Reserve Report that have been disposed of prior to the date
hereof.

       

      (b)      Each
Hydrocarbon Interest entitles the Acquired Company or its Subsidiary to receive
not less than the undivided interest set forth in (or derived from) the Reserve
Report or the Seller Disclosure Schedule of all of the Hydrocarbons produced,
saved and sold from or attributable to such Hydrocarbon Interest.

       

      (c)      The
Acquired Company or its Subsidiary has good and defensible title to all
Hydrocarbon Interests free and clear of any Liens except (i) Liens reflected in
the Reserve Report or in the Acquired Financial Statements, and (ii) Permitted
Liens.

       

      (d)      None
of Seller or the Acquired Company or its Subsidiaries has received a written
order from any Governmental Entity requiring, requesting or demanding, that any
Well (i) be plugged and abandoned, or (ii) that has been plugged and abandoned
has not been plugged and abandoned in accordance with applicable Contracts and
the requirements of each Governmental Entity having jurisdiction over the
subject Well.

       

      (e)      None
of the Acquired Company or its Subsidiaries has produced Hydrocarbons from its
Hydrocarbon Interests in excess of regulatory allowances or other applicable
limits imposed by any Laws or Governmental Entity on production, and Seller has
no Knowledge of any impending change in production allowables imposed by any
Laws or Governmental Entity that may be applicable to any of the wells in which
it holds an interest, other than changes of general application in the
jurisdiction in which such wells are situated.

       

      (f)      None
of  the Acquired Company or its Subsidiaries has received notice of
any production penalty or similar production restriction of any nature imposed
or to be imposed on or in respect of any wells included in the Hydrocarbon
Interests by any Governmental Entity, including gas-oil ratio, off-target and
overproduction penalties imposed by any Governmental Body that may be
applicable, and, to Seller’s Knowledge, none of the wells in which it holds an
interest is subject to any such penalty or restriction.

       

      (g)      The
Production Contracts and other Contracts pursuant to which the Acquired Company
or its Subsidiary leases or otherwise acquires or obtains operating rights
affecting any Real Property or Personal Property given value in the Reserve
Report are in good standing, valid and effective, and the rentals due by the
Acquired Company or its Subsidiary to any lessor of any such Hydrocarbon
Interests have been properly paid.

      
        
           

        

        
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      (h)        The
Acquired Company and its Subsidiaries have timely and properly paid in
accordance with the applicable Contract all royalties, overriding royalties and
other burdens on production due by the Acquired Company and its Subsidiaries
with respect to the Hydrocarbon Interests. All expenses relating to the
ownership or operations of the Hydrocarbon Interests have been timely and
properly paid or are pending payment and are within the payment terms set forth
in the applicable operating agreement or other Contract concerning the
Hydrocarbon Interest. All revenue received by the Acquired Company and its
Subsidiaries, in their capacity as operator of the Hydrocarbon Interests, for
the sale of Hydrocarbons, that is attributable to any joint working interest
owner’s interest in the Hydrocarbon Interest, have been paid or are being held
in suspense or will be timely and properly paid.

       

      (i)        
 None of the Hydrocarbon Interests is subject to any preferential purchase,
consent or similar right which would become operative as a result of the
transactions contemplated by this Agreement.

       

      (j)        
 None of the Hydrocarbon Interests are subject to any Tax partnership
agreement or provisions requiring a partnership income Tax return to be filed
under Subchapter K of Chapter 1 of Subtitle A of the Code.

       

      3.31   
    Representations Relating to
Seller’s Acquisition of the Purchase Price Shares.

      

      (a)        
 Seller is acquiring the Purchase Price Shares for investment for its own
account and not with the view to, or for resale in connection with, any
distribution thereof.  Seller understands and acknowledges that the
Purchase Price Shares have not been registered under the Securities Act or any
state or foreign securities laws, by reason of a specific exemption from the
registration provisions of the Securities Act and applicable state and foreign
securities laws, which depends upon, among other things, the bona fide nature of
the investment intent as expressed herein.  Seller further represents
that it does not have any contract, undertaking, agreement or arrangement with
any Person to sell, transfer or grant participation to any third person with
respect to any of the Purchase Price Shares.

       

      (b)        
 Seller understands that an active public market for Buyer Common Stock may
not now exist and that there may never be an active public market for the
Purchase Price Shares acquired under this Agreement.

       

      (c)        
 Seller either (i) is an “accredited investor” as defined in Rule 501 of
Regulation D as promulgated by the Securities and Exchange Commission under the
Securities Act or (ii) is not a “U.S. Person” as defined in Regulation S as
promulgated by the Securities and Exchange Commission under the Securities Act,
and, in each case, shall submit to Buyer such further assurances of such status
as may be reasonably requested by Buyer.

       

      (d)        
 Seller, if a non-U.S. Person, agrees that it is acquiring the Shares in an
offshore transaction pursuant to Regulation S and hereby represents to Buyer as
follows:

       

      (i)      Seller
is outside the United States when receiving and executing this
Agreement;

      
        
           

        

        
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      (ii)     Seller
has not acquired the Shares as a result of, and will not itself engage in, any
“directed selling efforts” (as defined in Regulation S) in the United States in
respect of the Shares which would include any activities undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of the Shares;
provided, however, that Seller may sell or otherwise dispose of the Shares
pursuant to registration of the Shares under the Securities Act and any
applicable state and provincial securities laws or under an exemption from such
registration requirements and as otherwise provided herein;

       

      (iii)    Seller
understands and agrees that offers and sales of any of the Shares prior to the
expiration of a period of one year after the Closing Date (the “Distribution
Compliance Period”), shall only be made in compliance with the safe harbor
provisions set forth in Regulation S, pursuant to the registration provisions of
the Securities Act or an exemption therefrom, and that all offers and sales
after the Distribution Compliance Period shall be made only in compliance with
the registration provisions of the Securities Act or an exemption therefrom, and
in each case only in accordance with all applicable securities laws;
and

       

      (iv)    Seller
understands and agrees not to engage in any hedging transactions involving the
Shares prior to the end of the Distribution Compliance Period unless such
transactions are in compliance with the Securities Act.

       

      (v)     Seller
hereby represents that it has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Shares or any use of this Subscription Agreement, including: (a) any applicable
legal requirements incumbent upon Seller within its jurisdiction for the
purchase of the Shares; (b) any foreign exchange restrictions applicable to such
purchase; (c) any governmental or other consents that Seller may need to obtain;
and (d) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Shares. Such
Seller’s subscription and payment for, and its continued beneficial ownership of
the Shares, will not violate any applicable securities or other Laws of Seller’s
jurisdiction.

       

      (e)      Seller
represents that neither it nor, to its knowledge, any Person or entity
controlling, controlled by or under common control with it, nor any Person
having a beneficial interest in it, nor any Person on whose behalf Seller is
acting: (i) is a Person listed in the Annex to Executive Order No. 13224 (2001)
issued by the President of the United States (Executive Order Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism); (ii) is named on the List of Specially Designated Nationals
and Blocked Persons maintained by the U.S. Office of Foreign Assets Control;
(iii) is a non-U.S. shell bank or is providing banking services indirectly to a
non-U.S. shell bank; (iv) is a senior non-U.S. political figure or an immediate
family member or close associate of such figure; or (v) is otherwise prohibited
from investing in Buyer pursuant to applicable U.S. anti-money laundering,
anti-terrorist and asset control laws, regulations, rules or orders (categories
(i) through (v), each a “Prohibited Seller”). Seller
agrees to provide Buyer, promptly upon request, all information that is
reasonably necessary or appropriate to comply with applicable U.S. anti-money
laundering, anti-terrorist and asset control laws, regulations, rules and
orders. Seller consents to the disclosure to U.S. regulators and law enforcement
authorities by Buyer and its affiliates and agents of such information about
Seller as is reasonably necessary or appropriate to comply with applicable U.S.
anti-money-laundering, anti-terrorist and asset control laws, regulations, rules
and orders. Seller acknowledges that if, following its investment in Buyer,
Buyer reasonably believes that Seller is a Prohibited Seller or is otherwise
engaged in suspicious activity or refuses to promptly provide information that
Buyer requests, Buyer has the right or may be obligated to prohibit additional
investments, and take any other actions required by Law. 

      
        
           

        

        
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      (f)      Seller
or its duly authorized representative realizes that because of the inherently
speculative nature of business activities and investments of the kind
contemplated by Buyer, Buyer’s financial position and results of operations may
be expected to fluctuate from period to period and will, generally, involve a
high degree of financial and market risk that can result in substantial or, at
times, even total loss of the value of the Purchase Price Shares.

       

      (g)      Seller
acknowledges and agrees that Buyer was, at one time, a “shell company” as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”).  Pursuant to Rule 144(i) under the Securities Act,
securities issued by a current or former shell company (such as the Purchase
Price Shares) that otherwise meet the holding period and other requirements of
Rule 144 nevertheless cannot be sold in reliance on Rule 144 until one year
after April 10,2009 (the date on which Buyer filed current “Form 10 information”
(as defined in Rule 144(i)) with the SEC reflecting that it ceased being a shell
company), and provided that at the time of a proposed sale pursuant to Rule 144,
the issuer is subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act and has filed all reports and other materials required to be
filed by section 13 or 15(d) of the Exchange Act, as applicable, during the
preceding 12 months (or for such shorter period that the issuer was required to
file such reports and materials), other than Form 8-K reports.  As a
result, the restrictive legends on certificates for the Purchase Price Shares
set forth below cannot be removed except in connection with an actual sale
meeting the foregoing requirements.

       

      3.32   
     No Corrupt
Practices.

      

                  
(a) None of Seller, the Acquired Company nor any of its Subsidiaries, nor any
officer, director, employee, or agent of any of them, nor any stockholder of any
of them acting on their behalf, has made any offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift, promise to give, or
authorization of the giving of anything of value to:

      

      (i)      any
Government Official for purposes of (A) (1) influencing any act or decision of
such Government Official in his official capacity, (2) inducing such Government
Official to do or omit to do any act in violation of the lawful duty of such
official, or (3) securing any improper advantage; or (B) inducing such
Government Official to use his influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Seller, the
Acquired Company or any of its Subsidiaries in obtaining or retaining business
for or with, or directing business to, any Person; or

       

      (ii)      any
foreign political party or official thereof or any candidate for foreign
political office for purposes of (A) (1) influencing any act or decision of such
party, official, or candidate in its or his official capacity, (2) inducing such
party, official, or candidate to do or omit to do an act in violation of the
lawful duty of such party, official, or candidate, or (3) securing any improper
advantage; or (B) inducing such party, official, or candidate to use its or his
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality. in each
case in order to assist Seller, the Acquired Company or any of its Subsidiaries
in obtaining or retaining business for or with, or directing business to, any
Person; or

      
        
           

        

        
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      (iii)      
any Person, while knowing that all or a portion of such money or thing of value
will be offered, given, or promised, directly or indirectly, to any Government
Official, to any foreign political party or official thereof, or to any
candidate for foreign political office, for purposes of (A) (1) influencing any
act or decision of such Government Official, political party, party official, or
candidate in his or its official capacity, (2) inducing such Government
Official, political party, party official, or candidate to do or omit to do any
act in violation of the lawful duty of such Government Official, political
party, party official, or candidate, or (3) securing any improper advantage; or
(B) inducing such Government Official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Seller, the
Acquired Company or any of its Subsidiaries in obtaining or retaining business
for or with, or directing business to, any Person.

       

      (b)      The
representations in Section 3.32(a) shall not apply to any facilitating or
expediting payment to a Government Official, political party, or party official
the purpose of which is to expedite or to secure the performance of a routine
governmental action by a Government Official, political party, or party
official.

      

      ARTICLE
IV.

      REPRESENTATIONS
AND WARRANTIES OF BUYER

       

      Buyer
represents and warrants to Seller as of the date hereof that the statements
contained in this ARTICLE IV are true and correct, except as set forth in the
disclosure schedule dated and delivered as of the date hereof by Buyer to Seller
(the “Buyer Disclosure
Schedule”), which is attached to this Agreement and is designated therein
as being the Buyer Disclosure Schedule. The Buyer Disclosure Schedule shall be
arranged in sections corresponding to each Section of this ARTICLE IV. Each
exception to a representation and warranty set forth in the Buyer Disclosure
Schedule shall qualify the specific representation and warranty which is
referenced in the applicable section of the Buyer Disclosure Schedule, and shall
also qualify each other representation or warranty as to which the relevance of
such item is reasonably apparent.

       

      4.1    
      Organization and Good
Standing.

      

      (a)      Buyer
is a corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation, has all requisite power to own,
lease and operate its properties and to carry on its business as currently
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
it owns or leases property or conducts any business so as to require such
qualification. The Buyer Disclosure Schedule contains a complete and accurate
list of each jurisdiction in which Buyer is qualified to do
business.

      
        
           

        

        
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      (b)      Buyer
is not in default under its Charter Documents. The Charter Documents of Buyer in
the forms attached to the Buyer Disclosure Schedule are the Charter Documents of
Buyer now in effect.

       

      4.2     
     Capitalization.

      

      (a)      The
authorized Capital Stock of Buyer consists of 300,000,000 shares of Buyer Common
Stock and 10,000,000 shares of preferred stock, par value $0.001 per share. As
of the date of this Agreement, 26,000,243 shares of Buyer Common Stock are
issued and outstanding, and no shares of preferred stock are issued or
outstanding (not including shares of Buyer Common Stock to be issued pursuant to
this Agreement, the Subscription Agreement or upon the closing of any Covered
Offering that occurs on such date).  All of the outstanding shares of
Buyer Common Stock were duly authorized, validly issued and fully paid and are
nonassessable.

       

      (b)      The
Purchase Price Shares are duly authorized, and upon transfer of the Purchase
Price Shares to Seller in accordance with the terms of ARTICLE II, will be
validly issued, fully paid and nonassessable.  The Purchase Price
Shares will be issued in compliance with applicable Laws. The Purchase Price
Shares will not be issued in violation of any Contract to which Buyer is a party
or is subject or in violation of any preemptive or similar rights of any
Person.

       

      (c)      Other
than the shares of Buyer Common Stock referred to in Section 4.2(a) and as set
forth in the Buyer Disclosure Schedule, Buyer does not have outstanding any
Equity Securities or any other securities. Other than as set forth in the Buyer
Disclosure Schedule, Buyer is not a party or subject to any Contract obligating
Buyer to issue any Equity Securities or any other securities, and there is no
circumstance or condition that may give rise to a claim by any Person that such
Person is entitled to acquire any securities of Buyer. Buyer does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any
matter.

       

      (d)      Buyer
is not a party to any joint venture, partnership, consortium or other similar
agreement or arrangement.

       

      (e)      Buyer
does not have outstanding or authorized any stock appreciation, phantom stock,
profit participation, or similar rights.

       

      (f)      Buyer
is not a party or subject to any stockholder agreement, voting agreement, voting
trust or any other similar arrangement which has the effect of restricting or
limiting the transfer, voting or other rights associated with Buyer Common
Stock.

       

      (g)      There
are no obligations, contingent or otherwise, of Buyer to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any Person.

      
        
           

        

        
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      4.3      
    Subsidiaries of
Buyer.

      

      (a)      Each
Subsidiary of Buyer is validly existing and in good standing under the Laws of
the jurisdiction of its formation, has all requisite power to own, lease and
operate its properties and to carry on its business as currently conducted and
as proposed to be conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which it owns or leases property or conducts
any business so as to require such qualification.

       

      (b)      The
Buyer Disclosure Schedule contains a true and complete list of the Subsidiaries
of Buyer and sets forth with respect to each such Subsidiary the jurisdiction of
formation, the authorized and outstanding Capital Stock of such Subsidiary and
the owner(s) of record of such outstanding Capital Stock. The outstanding shares
of Capital Stock of each Subsidiary of Buyer (collectively, the “Buyer Subsidiary Shares”) are duly
authorized, validly issued, fully paid and nonassessable, and are owned by Buyer
or another Subsidiary of Buyer free and clear of all Liens.  The
assigned capital of any Subsidiary incorporated or established in Colombia and
its respective supplementary capital investment have been credited with the
Superintendency of Corporations and is duly registered with Banco de la
República as a foreign investment.

       

      (c)      All
of the Buyer Subsidiary Shares were issued in compliance with applicable Laws.
None of the Buyer Subsidiary Shares was issued in violation of any Contract to
which Buyer or any of its Subsidiaries is a party or is subject.

       

      (d)      Other
than the Buyer Shares set forth in the Buyer Disclosure Schedule, no Subsidiary
of Buyer has outstanding any Equity Securities or any other securities. No
Subsidiary of Buyer is a party or subject to any Contract obligating such
Subsidiary to issue any Equity Securities or any other securities and, to
Buyer’s Knowledge, there is no circumstance or condition that may give rise to a
claim by any Person that such Person is entitled to acquire any securities of
any Subsidiary of Buyer. No Subsidiary of Buyer has outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into, or exercisable or exchangeable for, securities having
the right to vote) on any matter.

       

      (e)      No
Subsidiary of Buyer has outstanding or authorized any stock appreciation,
phantom stock, profit participation, or similar rights.

       

      (f)      Other
than the Subsidiaries set forth in the Buyer Disclosure Schedule, neither Buyer
nor any of its Subsidiaries directly or indirectly owns any Equity Securities or
other securities in any Person.

       

      (g)      No
Subsidiary of Buyer is a party to any joint venture, partnership, consortium or
other similar agreement or arrangement.

       

      (h)      Other
than as set forth in this Agreement or any other Transaction Document, neither
Buyer nor any of its Subsidiaries is a party or subject to any stockholder
agreement, voting agreement, voting trust or any other similar arrangement which
has the effect of restricting or limiting the transfer, voting or other rights
associated with the Buyer Subsidiary Shares.

      
        
           

        

        
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    (i)           There
are no obligations, contingent or otherwise, of any Subsidiary of Buyer to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any Person.

     

    4.4         Authority and
Enforceability.  Buyer
has the requisite power and authority to enter into this Agreement and to
consummate the Acquisition. The execution and delivery of this Agreement and the
consummation of the Acquisition have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and, assuming due authorization, execution and delivery by
Seller, constitutes the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to creditors’ rights generally, and (b) the
availability of injunctive relief and other equitable remedies.

    

    4.5         No Conflicts;
Authorizations.

    

    (a)           The
execution and delivery of this Agreement by Buyer do not, and the performance by
Buyer of its obligations hereunder and the consummation by Buyer of the
transactions contemplated hereby (in each case, with or without the giving of
notice or lapse of time, or both) will not, directly or indirectly, (i) violate
the provisions of any of the Charter Documents of Buyer or any of its
Subsidiaries, (ii) violate or constitute a default, an event of default or an
event creating rights of acceleration, termination, cancellation, imposition of
additional obligations or loss of rights, or require a consent to assignment,
under any Contract (A) to which Buyer or any of its Subsidiaries is a party, (B)
of which Buyer or any of its Subsidiaries is a beneficiary or (C) by which Buyer
or any of its Subsidiaries or any of their respective assets is bound, (iii)
violate or conflict with any Law, Authorization or Order applicable to Buyer or
any of its Subsidiaries, or give any Governmental Entity or other Person the
right to challenge any of the transactions contemplated by this Agreement or to
exercise any remedy, obtain any relief under or revoke or otherwise modify any
rights held under, any such Law, Authorization or Order, or (iv) result in the
creation of any Liens upon any of the assets owned or used by Buyer or any of
its Subsidiaries. There are no consents, waivers, assignments or other approvals
that are required in connection with the transactions contemplated by this
Agreement under any Contract to which Buyer or any of its Subsidiaries is a
party in order to preserve all rights of, and benefits to, Buyer and its
Subsidiaries thereunder.

     

    (b)           No
Authorization or Order of, registration, declaration or filing with, or notice
to, any Governmental Entity or other Person is required by or with respect to
Buyer or any of its Subsidiaries in connection with the execution and delivery
of this Agreement and the consummation of the Acquisition, except for any such
Authorization, Order, registration, declaration, filing or notice, that the
failure to comply with would not result in a Material Adverse Effect on Buyer or
prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement.

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    4.6         Financial
Statements.  True
and complete copies of Buyer’s audited consolidated financial statements
consisting of the consolidated balance sheet of Buyer and its Subsidiaries as at
December 31 in each of the years 2007 and 2008 and the related statements of
income and retained earnings, stockholders’ equity and cash flow, for the years
then ended (the “Buyer
Audited Financial
Statements”), and unaudited consolidated financial statements consisting
of the balance sheet of Buyer and its Subsidiaries as at September 30, 2009, and
the related statements of income and retained earnings, stockholders’ equity and
cash flow for the nine-month period then ended (the “Buyer Interim Financial
Statements” and together with Buyer Audited Financial Statements, the
“Buyer Financial
Statements”), are included in the Buyer Disclosure Schedule. Buyer
Financial Statements are true, complete and correct and have been prepared in
accordance with United States generally accepted accounting principles (“US GAAP”) applied on a
consistent basis throughout the periods involved, subject, in the case of Buyer
Interim Financial Statements, to normal and recurring year-end adjustments (the
effect of which will not be materially adverse) and the absence of notes (that,
if presented, would not differ materially from those presented in Buyer Audited
Financial Statements). Buyer Financial Statements are based on the books and
records of Buyer and its Subsidiaries, and fairly present the financial
condition of Buyer and its Subsidiaries as of the respective dates they were
prepared and the results of the operations of Buyer and its Subsidiaries for the
periods indicated. The consolidated balance sheet of Buyer and its Subsidiaries
as of December 31, 2008, is referred to herein as the “Buyer Balance Sheet” and the date
thereof as the “Buyer
Balance Sheet Date” and
the consolidated balance sheet of Buyer and its Subsidiaries as of September 30,
2009, is referred to herein as the “Buyer Interim Balance Sheet” and the
date thereof as the “Buyer Interim Balance Sheet Date.”
Each of Buyer and its Subsidiaries maintains a standard system of accounting
established and administered in accordance with US GAAP.

    

    4.7         No Undisclosed
Liabilities.  Buyer
and its Subsidiaries have no Liabilities, except (a) those which are adequately
reflected or reserved against in Buyer Balance Sheet as of Buyer Balance Sheet
Date, and (b) those which have been incurred in the ordinary course of business
and consistent with past practice since Buyer Balance Sheet Date and which are
not, individually or in the aggregate, material in amount.

    

    4.8         Buyer SEC
Filings.  Buyer
has filed all reports, schedules, registration statements, definitive proxy
statements and exhibits to the foregoing documents required to be filed by it
with the SEC since January 1, 2009 (collectively, the “Buyer SEC
Reports”).  As of their respective dates, (i) Buyer SEC Reports
complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations thereunder and (ii) none of Buyer SEC Reports contained 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, except for such
statements, if any, as have been corrected by subsequent filings with the
SEC.

    

    4.9         Inventory.  Buyer
and its Subsidiaries have no inventory (materials, supplies, parts,
work-in-process or finished goods).

    4.10       Accounts
Receivable.  The
accounts receivable of Buyer and its Subsidiaries as set forth on the Buyer
Interim Balance Sheet or arising since the date thereof have arisen solely out
of bona fide sales and deliveries of goods, performance of services and other
business transactions in the ordinary course of business consistent with past
practice.

     

    
      
        
        

      

      
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    4.11       Taxes.

    

    (a)           All
Tax Returns required to have been filed by each Buyer Company or a Relevant
Group in respect of any material Taxes payable or asserted to be payable by or
in respect of Buyer or any of its Subsidiaries have been duly and timely filed
(or, if due between the date hereof and the Closing Date, will be duly and
timely filed), and each such Tax Return correctly and completely reflects, in
all material respects, liability for Taxes and all other information required to
be reported thereon. All Taxes owed by any Buyer Company or any member of a
Relevant Group in respect of any Taxes payable or asserted to be payable by or
in respect of Buyer or any of its Subsidiaries (whether or not shown on any Tax
Return) have been timely paid (or, if due between the date hereof and the
Closing Date, will be duly and timely paid). The Buyer Companies have adequately
provided for, in their books of account and related records, liability for all
unpaid Taxes, being current Taxes not yet due and payable.

     

    (b)          There
is no action or audit currently pending or, to the Knowledge of Buyer, proposed
or threatened against, or with respect to, the Buyer Companies in respect of any
Taxes payable or asserted to be payable by or in respect of Buyer or any of its
Subsidiaries. No Buyer Company is the beneficiary of any extension of time
within which to file any Tax Return of or relating to Buyer or any of its
Subsidiaries, nor have any of the Buyer Companies made (or had made on their
behalf) any requests for such extensions. To the Knowledge of Buyer, no claim
has ever been made by an authority in a jurisdiction where any of the Buyer
Companies do not file Tax Returns that any of them is or may be subject to
taxation by that jurisdiction or that any of them must file Tax Returns in
relation to Buyer or any of its Subsidiaries. There are no Liens (other than
Liens arising by operation of law for Taxes not yet due) on any of the stock or
assets of Buyer or any of its Subsidiaries with respect to Taxes; nor are there
any Liens on any of the stock or assets of any other Buyer Company with respect
to Taxes payable or asserted to be payable by or in respect of Buyer or any of
its Subsidiaries.

     

    (c)          The
Buyer Companies have withheld and timely paid all Taxes required to have been
withheld and paid by or in respect of Buyer or any of its Subsidiaries and have
complied with all information reporting and withholding requirements, including
maintenance of required records with respect thereto.

     

    (d)           There
is no dispute or claim concerning any liability for Taxes payable or asserted to
be payable by or in respect of Buyer or any of its Subsidiaries for which notice
has been provided, or which, to the Knowledge of Buyer, is asserted or
threatened. The Buyer Disclosure Schedule (i) lists all national, state, local,
and foreign income Tax Returns filed by any the Buyer Company with respect to
Buyer or any of its Subsidiaries for taxable periods ended on or after December
31, 2007, (ii) indicates those Tax Returns that have been audited, and (iii)
indicates those Tax Returns that currently are the subject of audit. Buyer has
delivered to Seller correct and complete copies of all income Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by any the Buyer Company with respect to Taxes payable or asserted to be
payable by or in respect of Buyer or any of its Subsidiaries since January 1,
2006. No Buyer Company has waived (or is subject to a waiver of) any statute of
limitations in respect of Taxes payable or asserted to be payable by or in
respect of Buyer or any of its Subsidiaries or has agreed to (or is subject to)
any extension of time with respect to such a Tax assessment or
deficiency.

    
      
         

      

      
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    4.12       Compliance with
Law.

    

    (a)           Each
of Buyer and its Subsidiaries has complied with each, and is not in violation of
any, applicable Law to which Buyer or any such Subsidiary or its respective
business, operations, assets or properties is or has been subject, except for
such noncompliance or violations that have not resulted and would not result in
a Material Adverse Effect on Buyer; provided, however, no representation or
warranty in this Section 4.12 is made with respect to Environmental Laws, which
are covered exclusively in Section 4.22.

     

    (b)           No
event has occurred and no circumstances exist that with the passage of time or
the giving of notice may reasonably be expected to result in a violation of,
conflict with or failure on the part of Buyer or any of its Subsidiaries to
comply with, any existing Law, except for such noncompliance or violations that
have not resulted and would not result in a Material Adverse Effect on
Buyer.  To Buyer’s Knowledge, neither Buyer nor any of its
Subsidiaries has received notice regarding any violation of, conflict with, or
failure to comply with, any Law.

     

    4.13       Authorizations.

    

    (a)           Each
of Buyer and its Subsidiaries owns, holds or lawfully uses in the operation of
its business all Authorizations which are necessary for it to conduct its
business as currently conducted or as proposed to be conducted or for the
ownership and use of the assets owned or used by Buyer or any such Subsidiary in
the conduct of its business free and clear of all Liens, except for such
Authorizations as to which the failure of Buyer or its Subsidiaries to own, hold
or lawfully use has not resulted and would not result in a Material Adverse
Effect on Buyer; provided, however, no representation or warranty in this
Section 4.13 is made with respect to Environmental Permits, which are covered
exclusively in Section 4.22. Such Authorizations are valid and in full force and
effect and none of such Authorizations will be terminated or impaired or become
terminable as a result of the transactions contemplated by this Agreement. All
such Authorizations are listed in the Buyer Disclosure Schedule.

     

    (b)           No
event has occurred and no circumstances exist that (with or without the passage
of time or the giving of notice) may reasonably be expected to result in a
violation of, conflict with, failure on the part of Buyer or any of its
Subsidiaries to comply with the terms of, or the revocation, withdrawal,
termination, cancellation, suspension or modification of any Authorization,
except for such events that have not resulted and would not result in a Material
Adverse Effect on Buyer. To Buyer’s Knowledge, neither Buyer nor any of its
Subsidiaries has received notice regarding any violation of, conflict with,
failure to comply with the terms of, or any revocation, withdrawal, termination,
cancellation, suspension or modification of, any Authorization. Neither Buyer
nor any of its Subsidiaries is in default, nor, to Buyer’s
Knowledge,  has Buyer or any of its Subsidiaries received notice of
any claim of default, with respect to any Authorization.

     

    (c)           No
Person other than Buyer or one of its Subsidiaries owns or has any proprietary,
financial or other interest (direct or indirect) in any Authorization which
Buyer or such Subsidiary owns or uses in the operation of its business as
currently conducted or as proposed to be conducted, other than related to the
Production Contracts.

     

    
      
        
        

      

      
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    4.14       Title to Personal
Properties.

    

    (a)           The
Buyer Disclosure Schedule sets forth a complete and accurate list of all the
personal properties and assets owned, leased or used by Buyer or any of its
Subsidiaries as of the date of this Agreement, with a fair market value as of
September 30, 2009, in excess of $10,000, specifying whether such property is
owned or leased and the owner of such property and, in the case of leased
assets, indicating the parties to, execution dates of and annual payments under,
the lease.

     

    (b)          With
respect to personal properties and assets that are owned including all
properties and assets reflected as owned on the Buyer Interim Balance Sheet
(other than inventory sold in the ordinary course of business since the date
thereof), Buyer or one of its Subsidiaries has good and valid title to all of
such properties and assets, free and clear of all Liens except for Permitted
Liens.

     

    (c)           With
respect to personal properties and assets that are leased (“Buyer Leased Personal
Property”), Buyer or one of its Subsidiaries has a valid leasehold
interest in such Buyer Leased Personal Property and all such leases are in full
force and effect and constitute valid and binding obligations of Buyer and, to
the Knowledge of Buyer, the other party(ies) thereto. None of Buyer, any of its
Subsidiaries or, to the Knowledge of Buyer, any other party thereto is in breach
of any of the terms of any such lease

     

    (d)           Other
than Buyer, its Subsidiaries, holders of Permitted Liens (solely to the extent
of such Permitted Liens) and lessors of Buyer Leased Personal Property (solely
to the extent of their interest in such Buyer Leased Personal Property) no
Person has any interest in any equipment or other tangible assets or properties
used by Buyer or any of its Subsidiaries.

     

    4.15       Real
Property. There
is no (i) real property or interests in real property owned in fee by Buyer or
any of its Subsidiaries (the “Buyer Owned Real Property”),
or (ii) real property or interests in real property leased by Buyer or any of
its Subsidiaries (other than under the terms of the its Production Contracts)
(the “Buyer Leased Real
Property” and together with the Buyer Owned Real Property, the “Buyer Real
Property”).

    

    4.16       Intellectual
Property.

    

    (a)           Neither
Buyer nor any of its Subsidiaries owns any right, title or interest in or to any
Software (other than as described below), Patents, Copyrights or Marks (other
than the names “La Cortez” (the “Buyer
Marks”)).

    (b)           The
Buyer Disclosure Schedule lists all In-Bound Licenses pursuant to which a third
party authorizes Buyer or any of its Subsidiaries to use, practice any rights
under, or grant sublicenses with respect to, any Intellectual Property owned by
such third party other than In-Bound Licenses that consist solely of
“shrink-wrap” and similar commercially available end-user licenses, including
the incorporation of any such Intellectual Property into the Company’s or any of
its Subsidiaries’ products and, with respect to each In-Bound License, whether
the In-Bound License is exclusive or non-exclusive.

     

    
      
        
        

      

      
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    (c)           There
are no Out-Bound Licenses pursuant to which Buyer or any of its Subsidiaries
authorizes a third party to use, practice any rights under, or grant sublicenses
with respect to, any Buyer Owned Intellectual Property or pursuant to which
Buyer or any of its Subsidiaries grants rights to use or practice any rights
under any Intellectual Property owned by a third party and, with respect to each
Out-Bound License, whether the Out-Bound License is exclusive or
non-exclusive.

     

    (d)           Buyer
and/or one or more of its Subsidiaries exclusively own the entire right,
interest and title to all Intellectual Property that is used in or necessary for
the businesses of Buyer and its Subsidiaries as they are currently conducted or
proposed to be conducted, free and clear of Liens, or (ii) otherwise rightfully
use or otherwise enjoy such Intellectual Property pursuant to the terms of a
valid and enforceable In-Bound License that is listed in the Buyer Disclosure
Schedule or that is a “shrink-wrap” or similar commercially available end-user
license. The Buyer Marks, together with the Proprietary Information and Buyer’s
and its Subsidiaries’ rights under the In-Bound Licenses listed in the Buyer
Disclosure Schedule or that are “shrink-wrap” or similar commercially available
end-user licenses (collectively, the “Buyer Intellectual Property”),
constitutes all the Intellectual Property used in or necessary for the operation
of Buyer’s and its Subsidiaries’ businesses as they are currently conducted and
as proposed to be conducted.

     

    (e)           Buyer
has no Knowledge of any challenges (or any basis therefor) with respect to the
validity or enforceability of any Buyer Intellectual Property. Neither Buyer nor
any of its Subsidiaries has taken any action or failed to take any action that
could reasonably be expected to result in the abandonment, cancellation,
forfeiture, relinquishment, invalidation, waiver or unenforceability of any
Buyer Intellectual Property.

     

    (f)           To
Buyer’s Knowledge, neither Buyer nor any of its Subsidiaries, by conducting its
business as currently conducted or as proposed to be conducted, has infringed or
infringes upon, or otherwise unlawfully used or uses, any Intellectual Property
Rights of a third party. None of Buyer nor any of its Subsidiaries has received
any communication alleging that Buyer or any of its Subsidiaries or any of their
respective products, services, activities or operations infringe upon or
otherwise unlawfully use any Intellectual Property Rights of a third party nor,
to Buyer’s Knowledge, is there any basis therefor. No Action has been
instituted, or, to Buyer’s Knowledge, threatened, relating to any Intellectual
Property formerly or currently used by Buyer or any of its Subsidiaries and none
of Buyer Intellectual Property is subject to any outstanding Order. To Buyer’s
Knowledge, no Person has infringed or is infringing any Intellectual Property
Rights of Buyer or any of its Subsidiaries or has otherwise misappropriated or
is otherwise misappropriating any Buyer Intellectual Property.

    
      
         

      

      
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    (g)           With
respect to Buyer’s or any of its Subsidiaries’ Proprietary Information, the
documentation relating thereto is current, accurate and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the special knowledge or memory of others. Buyer and its
Subsidiaries have taken commercially reasonable steps to protect and preserve
the confidentiality of all Proprietary Information owned by Buyer or any of its
Subsidiaries that is not covered by an issued Patent. Without limiting the
generality of the foregoing, the Proprietary Information of Buyer and its
Subsidiaries (other than Proprietary Information that is covered by an issued
Patent) is not part of the public knowledge and has not been used or divulged
for the benefit of any Person other than Buyer and its Subsidiaries. Any receipt
or use by, or disclosure to, a third party of Proprietary Information owned by
Buyer or any of its Subsidiaries has been pursuant to the terms of binding
written confidentiality agreement between Buyer or such Subsidiary and such
third party (“Buyer
Nondisclosure Agreements”). Buyer and its Subsidiaries are, and to
Buyer’s Knowledge, all other parties thereto are, in compliance with the
provisions of the Buyer Nondisclosure Agreements. Buyer and its Subsidiaries are
in compliance with the terms of all Contracts pursuant to which a third party
has disclosed to, or authorized Buyer or any of its Subsidiaries to use,
Proprietary Information owned by such third party.

     

    (h)           The
execution and delivery of this Agreement by Buyer does not, and the consummation
of the Acquisition (in each case, with or without the giving of notice or lapse
of time, or both), will not, directly or indirectly, result in the loss or
impairment of any Buyer Intellectual Property, or give rise to any right of any
third party to terminate or reprice or otherwise renegotiate any of Buyer’s or
any of its Subsidiaries’ rights to own any of its Intellectual Property or their
respective rights under any In-Bound License, nor require the consent of any
Governmental Entity or other third party in respect of any such Intellectual
Property.

     

    4.17       Absence of Certain Changes
or Events.  Since
the Interim Buyer Balance Sheet Date to the date of this Agreement (with respect
to the representation and warranty made as of the date of this Agreement) and to
the Closing Date (with respect to the representation and warranty made as of the
Closing Date):

    

    (a)           there
has not been any material adverse change in the condition (financial or
otherwise), operations, prospects or results of operations of Buyer and its
Subsidiaries taken as a whole;

     

    (b)           neither
Buyer nor any of its Subsidiaries has amended or changed its Charter
Documents;

     

    (c)           neither
Buyer nor any of its Subsidiaries has declared, set aside or paid any dividend
or other distribution (whether in cash, stock or property) with respect to any
Equity Security or any other security;

     

    (d)           neither
Buyer nor any of its Subsidiaries has split, combined or reclassified any Equity
Security or other security, or issued, or authorized for issuance, any Equity
Security or other security;

     

    (e)           neither
Buyer nor any of its Subsidiaries has altered any term of any outstanding Equity
Security or other security;

     

    (f)           neither
Buyer nor any of its Subsidiaries has (i) except in the ordinary course of
business, increased or modified the compensation or benefits payable or to
become payable by Buyer or any of its Subsidiaries to any of its current or
former directors, employees, contractors or consultants, (ii) except as provided
for in this Agreement, increased or modified any bonus, severance, termination,
pension, insurance or other employee benefit plan, payment or arrangement made
to, for or with any current or former directors, employees, contractors or
consultants of Buyer or any of its Subsidiaries, or (iii) entered into any
employment, severance or termination agreement;

     

    
      
        
        

      

      
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    (g)           other
than the sale of inventory in the ordinary course of business, neither Buyer nor
any of its Subsidiaries has sold, leased, transferred or assigned any property
or assets of Buyer or any such Subsidiary;

     

    (h)           neither
Buyer nor any of its Subsidiaries has incurred, assumed or guaranteed any
Indebtedness;

     

    (i)           
neither Buyer nor any of its Subsidiaries has created or assumed any Lien on any
asset, except for Liens arising under lease financing arrangements existing as
of the Buyer Interim Balance Sheet Date and Permitted Liens;

     

    (j)           
neither Buyer nor any of its Subsidiaries has made any loan, advance or capital
contribution to, or investment in, any Person other than travel loans or
advances in the ordinary course of business consistent with past
practice;

     

    (k)           there
has not been any labor dispute, other than individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of Buyer or any of its Subsidiaries;

     

    (l)           
none of Buyer or the Subsidiaries of Buyer has agreed or entered into any
arrangement to take any action which, if taken prior to the date hereof, would
have made any representation or warranty set forth in this ARTICLE IV untrue or
incorrect;

     

    (m)          there
has not been any material damage, destruction or loss with respect to the
property and assets of Buyer or any of its Subsidiaries, whether or not covered
by insurance;

     

    (n)           neither
Buyer nor any of its Subsidiaries has made any change in accounting
practices;

     

    (o)           neither
Buyer nor any of its Subsidiaries has made any Tax election, changed its method
of Tax accounting or settled any claim for Taxes; or

     

    (p)           none
of Buyer or any of its Subsidiaries has agreed, whether in writing or otherwise,
to do any of the foregoing.

     

    4.18       Contracts.

     

    (a)           The
Buyer SEC Reports include as exhibits all material contracts that Buyer is
required to file with the SEC.  Neither Buyer nor any of its
Subsidiaries is a party or subject to, nor are any of their respective assets
bound by, any other “Material Contract” as defined in Section 3.17, mutatis
mutandis.

    
      
         

      

      
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    (b)           Each
Contract included in a Buyer SEC Reports as an exhibit (a “Buyer Material Contract”) is
in full force and effect and valid and enforceable in accordance with its
terms.

     

    (c)           Neither
Buyer nor any of its Subsidiaries is, and to Buyer’s Knowledge after reasonable
inquiry, no other party thereto is, in default in the performance, observance or
fulfillment of any obligation, covenant, condition or other term contained in
any Buyer Material Contract, and neither Buyer nor any of its Subsidiaries has
given or received notice to or from any Person relating to any such alleged or
potential default that has not been cured. To Buyer’s Knowledge after reasonable
inquiry, no event has occurred which with or without the giving of notice or
lapse of time, or both, may conflict with or result in a violation or breach of,
or give any Person the right to exercise any remedy under or accelerate the
maturity or performance of, or cancel, terminate or modify, any Buyer Material
Contract.

     

    (d)           The
Buyer SEC Reports contain accurate and complete copies of each Material
Contract.

     

    (e)           All
Contracts other than Buyer Material Contracts to which Buyer or any of its
Subsidiaries is a party or is subject, or by which any of their respective
assets are bound (collectively, the “Buyer Minor Contracts”), are in all
material respects valid and enforceable in accordance with their terms, except
where any such failure to be valid and enforceable individually or in the
aggregate would not reasonably be expected have a Material Adverse Effect on
Buyer. Neither Buyer nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained therein, and no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder by Buyer
or any of its Subsidiaries, except in either case where such default
individually or in the aggregate would not reasonably be expected have a
Material Adverse Effect on Buyer.

     

    4.19       Litigation.

    

    (a)           There
is no Action, (i) pending or, to Buyer’s Knowledge, threatened against or
affecting Buyer or any of its Subsidiaries, or (ii) that challenges or seeks to
prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement.  There is no Action against any current or, to Buyer’s
Knowledge, former director or employee of Buyer or any of its Subsidiaries with
respect to which Buyer or any such Subsidiary has or is reasonably likely to
have an indemnification obligation.

     

    (b)           There
is no unsatisfied judgment, penalty or award against or affecting Buyer or any
of its Subsidiaries or any of their respective properties or assets. There is no
Order to which Buyer or any of its Subsidiaries or any of their respective
properties or assets are subject.  Each of Buyer and its Subsidiaries
is in compliance with the terms of each Order required to be set forth on the
Buyer Disclosure Schedule. To Buyer’s Knowledge, no event has occurred or
circumstances exist that may constitute or result in (with or without notice or
lapse of time) a violation of any such Order.

     

    4.20       [Reserved]

     

    
      
        
        

      

      
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    4.21       Labor and Employment
Matters

     

    (a)           The
Buyer SEC Filings disclose in all material respects the information required to
be disclosed therein relating to compensation of the Buyer’s directors and
executive officers.

     

    (b)           Neither
Buyer nor any of its Subsidiaries is a party or subject to any labor union or
collective bargaining agreement. There have not been since January 1, 2007, and
there are not pending or threatened any labor disputes, work stoppages, requests
for representation, pickets, work slow-downs due to labor disagreements or any
actions or arbitrations which involve the labor or employment relations of Buyer
or any of its Subsidiaries. There is no unfair labor practice, charge or
complaint pending, unresolved or, to Buyer’s Knowledge, threatened. No event has
occurred or circumstance exist that may provide the basis of any work stoppage
or other labor dispute.

     

    (c)           Each
of Buyer and its Subsidiaries has complied in all material respects with each,
and is not in violation of any, Law relating to anti-discrimination and equal
employment opportunities and there are, and have been, no material violations of
any other Law respecting the hiring, hours, wages, occupational safety and
health, employment, promotion, termination or benefits of any employee or other
Person. Buyer and its Subsidiaries have (i) complied with requirements of
Colombian Law relating to the enrollment of their personnel in the General
Integral Social Security System in health, pensions and professional risks and
have properly and timely paid the monthly installments accrued in favor of the
social security system; (ii) enrolled their employees in a Colombian Family
Compensation Fund as required by Colombian Law; (iii) timely paid the salaries,
legal and voluntary benefits, overtime, rest and holiday pay, social benefits,
personal equipment, vacations, severances and other applicable labor benefits,
to which their personnel were entitled in accordance with Colombian Law; and
(iv) complied with the obligations stipulated in Law 100 of 1993 covering labor
risks and accidents of their employees.

     

    (d)           Buyer
and its Subsidiaries have paid or properly accrued in the ordinary course of
business all wages and compensation due to employees, including all vacations or
vacation pay, holidays or holiday pay, sick days or sick pay, and
bonuses.

     

    (e)           None
of Buyer or any its Subsidiaries is a party to any Contract which restricts
Buyer or any of its Subsidiaries from relocating, closing or terminating any of
its operations or facilities or any portion thereof.

     

    (f)           Buyer
and its Subsidiaries have complied and are in compliance with the requirements
of all applicable immigration Laws.

    
      
         

      

      
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    4.22       Environmental.

     

    (a)           Each
of Buyer and its Subsidiaries has obtained, and is in compliance with, all
Environmental Permits required in connection with its operations and the Buyer
Real Property. Each Environmental Permit, together with the name of the
Governmental Entity issuing such Environmental Permit, is set forth in the Buyer
Disclosure Schedule. All such Environmental Permits are valid and in full force
and effect and all renewal applications for such Environmental Permits have been
timely filed with the appropriate Governmental Entity. None of such
Environmental Permits will be terminated or impaired or become terminable as a
result of the Acquisition. Each of Buyer and its Subsidiaries has been, and is
currently, in compliance with all Environmental Laws. Neither Buyer nor any of
its Subsidiaries has received notice or to Buyer’s Knowledge neither any of the
Operators of Buyer’s Hydrocarbon Interests, alleging that Buyer or any of its
Subsidiaries is not in such compliance in all material respects with
Environmental Laws. To the Knowledge of Buyer, no operator of Buyer’s
Hydrocarbon Interests has received notice alleging that, with respect to Buyer’s
Hydrocarbon Interests, such operator is not in compliance in all material
respects with Environmental Laws.

     

    (b)           There
are no past, pending or, to Buyer’s Knowledge, threatened Environmental Actions
against Buyer or any of its Subsidiaries, or to Buyer’s Knowledge against any
operator of Buyer’s Hydrocarbon Interests relating to such Hydrocarbon
Interests.  To Buyer’s Knowledge, there are no past, pending or
threatened Environmental Actions affecting Buyer or any of its Subsidiaries or
affecting any of Buyer’s Hydrocarbon Interests.

     

    (c)           Neither
Buyer nor any of its Subsidiaries, nor to Buyer’s Knowledge any operator of
Buyer’s Hydrocarbon Interests (to the extent relating to such Hydrocarbon
Interests), has entered into or agreed to any Order, and neither Buyer nor any
of its Subsidiaries is subject to any Order, relating to compliance with any
Environmental Law or to investigation or cleanup of a Hazardous Substance under
any Environmental Law.

     

    (d)           Neither
Buyer nor any of its Subsidiaries, nor to Buyer’s Knowledge any operator of
Buyer’s Hydrocarbon Interests (to the extent relating to such Hydrocarbon
Interests),  has received an information request from any Governmental
Entity under any Environmental Law.

     

    (e)           Buyer
has provided to Seller true and complete copies of, or access to, all written
environmental assessments, materials, reports, data, analyses and compliance
audits that have been prepared by or on behalf of Buyer or any Subsidiary of
Buyer (solely with respect to the Buyer Real Property or any other real property
formerly owned, operated or leased by Buyer or any of its Subsidiaries) or that
are in the possession of Buyer and relate to any of Buyer’s Hydrocarbon
Interests.

     

    (f)           The
representations and warranties set forth in this Section 4.22 are the sole and
exclusive representations and warranties of Buyer under this Agreement that
address or relate in any way to any and all environmental matters, including any
Release or threatened Release of a Hazardous Substance or compliance with or
liabilities under any Environmental Law or any Environmental
Permit.

    
      
         

      

      
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    4.23       Insurance

     

    (a)   
..  The Buyer Disclosure Schedule sets forth (i) an accurate and
complete list of each insurance policy and fidelity bond which covers Buyer or
any of its Subsidiaries or their respective businesses, properties, assets,
directors or employees (the “Buyer Policies”) and (ii) a
list of all pending claims and the claims history for Buyer and its Subsidiaries
during the current year and the preceding three years (including with respect to
insurance obtained but not currently maintained). There are no pending claims
under any of such Buyer Policies as to which coverage has been questioned,
denied or disputed by the insurer or in respect of which the insurer has
reserved its rights.

     

    (b)           The
Buyer Disclosure Schedule describes any self-insurance arrangement by or
affecting Buyer or any of its Subsidiaries, including any reserves thereunder,
and describes the loss experience for all claims that were self-insured in the
current year and the preceding three years.

     

    (c)           All
Buyer Policies are enforceable in accordance with their terms and will continue
in full force and effect with respect to Buyer and its Subsidiaries following
the Acquisition.

     

    (d)           All
premiums due under the Buyer Policies have been paid in full or, with respect to
premiums not yet due, accrued. Neither Buyer nor any of its Subsidiaries has
received a notice of cancellation of any Buyer Policy or of any material changes
that are required in the conduct of the businesses of Buyer and its Subsidiaries
as a condition to the continuation of coverage under, or renewal of, any such
Buyer Policy. There is no existing default or event which, with the giving of
notice or lapse of time or both, would constitute a default under any Buyer
Policy or entitle any insurer to terminate or cancel any Buyer Policy. Buyer has
no Knowledge of any threatened termination of, or material premium increase with
respect to, any Buyer Policy and none of such Buyer Policies provides for
retroactive premium adjustments.

     

    4.24       Product
Warranty. Except
as set forth in the Buyer Disclosure Schedule, neither Buyer nor any of its
Subsidiaries has ever manufactured, sold, distributed, provided, shipped or
licensed any Products other than Hydrocarbons.

    

    4.25       Books and
Records.  The
minute books (containing the records of the meetings, or written consents in
lieu of such meetings, of the stockholders, the board of directors and any
committees of the board of directors), the stock certificate books, and the
stock record books of Buyer and its Subsidiaries are correct and complete, and
have been maintained in accordance with applicable Laws and commercial
regulations and sound business practices. The minute books of Buyer and its
Subsidiaries contain accurate and complete records of all meetings, or actions
taken by written consent, of the stockholders, the board of directors and any
committees of the board of directors, of Buyer and its Subsidiaries, and no
meeting, or action by written consent in lieu of such meeting, of any such
stockholders, board of directors or committee of such board of directors, has
been held for which minutes have not been prepared and not contained in the
minute books.

    

    4.26       Suppliers.  The
Buyer Disclosure Schedule sets forth with respect to each of Buyer and its
Subsidiaries (a) each supplier from whom purchases exceeded $10,000 in the year
ended December 31, 2009, and (b) each supplier who constitutes a sole source of
supply to Buyer or any of its Subsidiaries. The relationships of each of Buyer
and its Subsidiaries with each such supplier are good commercial working
relationships. No such supplier has canceled or otherwise terminated, or
threatened to cancel or otherwise terminate, its relationship with Buyer or any
of its Subsidiaries. Neither Buyer nor its Subsidiaries have received notice
that any such supplier may cancel or otherwise materially and adversely modify
its relationship with Buyer or any of its Subsidiaries or limit its services,
supplies or materials to Buyer or any of its Subsidiaries, either as a result of
the Acquisition or otherwise.

     

    
      
        
        

      

      
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    4.27       Brokers or
Finders.  Except
for fees and commissions of $50,000 in cash and/or Buyer securities to Tucker
Link, which will be paid by Buyer within five business days of Closing, no
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Buyer or any of its
Subsidiaries.

    

    4.28       Powers of
Attorney.  There
are no outstanding powers of attorney executed by or on behalf of Buyer or any
of its Subsidiaries in favor of any Person.

    

    4.29       Hydrocarbon
Matters. Without
limiting the generality of any of the foregoing representations and
warranties:

    

    (a)           Section
4.29(a) of the Buyer Disclosure Schedule contains a list of all Hydrocarbon
Interests of the Buyer.

     

    (b)           Each
Hydrocarbon Interest entitles Buyer or its Subsidiaries to receive not less than
the undivided interest set forth in (or derived from) the Buyer Disclosure
Schedule of all of the Hydrocarbons produced, saved and sold from or
attributable to such Hydrocarbon Interest.

     

    (c)           Buyer
or its Subsidiaries have good and defensible title to all Hydrocarbon Interests
free and clear of any Liens except (i) Liens reflected in the Buyer Financial
Statements, and (ii) Permitted Liens.

     

    (d)           None
of Buyer or its Subsidiaries has, nor to Buyer’s Knowledge has the operator of
any of Buyer’s Hydrocarbon Interests (to the extent relating to such Hydrocarbon
Interests), received a written order from any Governmental Entity requiring,
requesting or demanding, that any Well (i) be plugged and abandoned, or (ii)
that has been plugged and abandoned has not been plugged and abandoned in
accordance with applicable Contracts and the requirements of each Governmental
Entity having jurisdiction over the subject Well.

     

    (e)           None
of Buyer or its Subsidiaries has, nor to Buyer’s Knowledge has the operator of
any of Buyer’s Hydrocarbon Interests (to the extent relating to such Hydrocarbon
Interests), produced Hydrocarbons from its Hydrocarbon Interests in excess of
regulatory allowances or other applicable limits imposed by any Laws or
Governmental Entity on production, and Buyer has no Knowledge of any impending
change in production allowables imposed by any Laws or Governmental Entity that
may be applicable to any of the wells in which it holds an interest, other than
changes of general application in the jurisdiction in which such wells are
situated.

     

    (f)           
None Buyer or its Subsidiaries has,  nor to Buyer’s Knowledge has the
operator of any of Buyer’s Hydrocarbon Interests (to the extent relating to such
Hydrocarbon Interests), received notice of any production penalty or similar
production restriction of any nature imposed or to be imposed on or in respect
of any wells included in the Hydrocarbon Interests by any Governmental Entity,
including gas-oil ratio, off-target and overproduction penalties imposed by any
Governmental Body that may be applicable, and, to Buyer’s Knowledge, none of the
wells in which it holds an interest is subject to any such penalty or
restriction.

     

    
      
        
        

      

      
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    (g)           To
Buyer’s Knowledge, the Production Contracts and other Contracts pursuant to
which the operators of Buyer’s or its Subsidiaries’ Hydrocarbon Interests lease
or otherwise acquire or obtain operating rights affecting any Real Property or
Personal Property are in good standing, valid and effective, and the rentals due
by the operators of Buyer’s or its Subsidiaries’ Hydrocarbon Interests to any
lessor of any such Hydrocarbon Interests have been properly paid.

     

    (h)           Buyer
and its Subsidiaries,  and to Buyer’s Knowledge the operator of any of
Buyer’s Hydrocarbon Interests (to the extent relating to such Hydrocarbon
Interests), have   timely and properly paid in accordance with
the applicable Contract all royalties, overriding royalties and other burdens on
production due by Buyer and its Subsidiaries with respect to the Hydrocarbon
Interests. All expenses relating to the ownership or operations of Buyer’s
Hydrocarbon Interests have been timely and properly paid or are pending payment
and are within the payment terms set forth in the applicable operating agreement
or other Contract concerning the Hydrocarbon Interest. To Buyer’s Knowledge, all
revenue received by the operator of Buyer’s and its Subsidiaries’, Hydrocarbon
Interests, for the sale of Hydrocarbons, that is attributable to any joint
working interest owner’s interest in the Hydrocarbon Interest, have been paid or
are being held in suspense or will be timely and properly paid.

     

    (i)           
None of Buyer’s Hydrocarbon Interests is subject to any preferential purchase,
consent or similar right which would become operative as a result of the
transactions contemplated by this Agreement.

     

    (j)          
 Buyer and its Subsidiaries have fully complied with all obligations
arising from the private agreements related with the Maranta E&P Contract
and the PUT4 E&P Contract.

     

    (k)           Buyer
and its Subsidiaries hold the rights to a twenty percent (20%) undivided private
participating interest in the Maranta E&P Contract, free and clear of any
liens, claims, burdens, encumbrances, preferential rights or rights of first
refusal (other than rights provided in the Contracts listed in Section 4.29(a)
of the Buyer Disclosure Schedule), hedge contracts, futures, swaps, options or
similar derivatives, pursuant to the terms and conditions set forth in the Farm
Out Agreement for Maranta Block executed on February 5th, 2009 between its
Subsidiary in Colombia and Emerald Energy PLC Sucursal Colombia and the Maranta
Joint Operating Agreement executed between said companies.

     

    (l)           
Buyer and its Subsidiaries hold the rights to a fifty percent (50%) of undivided
private participating interest in the PUT4 E&P Contract, free and clear of
any liens, claims, burdens, encumbrances, preferential rights or rights of first
refusal (other than rights provided in the Contracts listed in Section 4.29(a)
of the Buyer Disclosure Schedule), hedge contracts, futures, swaps, options or
similar derivatives, pursuant to the terms and conditions set forth in the
Memorandum of Understanding dated December 4, 2008 executed by its Subsidiary in
Colombia and Petroleos del Norte S.A. and the Joint Operating Agreement covering
PUT4 Block executed between said companies.

     

    
      
        
        

      

      
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    (m)           To
Buyer’s knowledge, the the Maranta and PUT4 E&P Contract are in good
standing before Colombian government authorities and the parties thereto are in
compliance with all material obligations arising thereunder.

     

    4.30       No Corrupt
Practices. (a)
Neither Buyer nor any of its Subsidiaries, nor any officer, director, employee,
or agent of any of them, nor any stockholder of any of them acting on their
behalf, has made any offer, payment, promise to pay, or authorization of the
payment of any money, or offer, gift, promise to give, or authorization of the
giving of anything of value to:

    

    (i)           any
Government Official for purposes of (A) (1) influencing any act or decision of
such Government Official in his official capacity, (2) inducing such Government
Official to do or omit to do any act in violation of the lawful duty of such
official, or (3) securing any improper advantage; or (B) inducing such
Government Official to use his influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Buyer or any of
its Subsidiaries in obtaining or retaining business for or with, or directing
business to, any Person; or

     

    (ii)          any
foreign political party or official thereof or any candidate for foreign
political office for purposes of (A) (1) influencing any act or decision of such
party, official, or candidate in its or his official capacity, (2) inducing such
party, official, or candidate to do or omit to do an act in violation of the
lawful duty of such party, official, or candidate, or (3) securing any improper
advantage; or (B) inducing such party, official, or candidate to use its or his
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality. in each
case in order to assist Buyer or any of its Subsidiaries in obtaining or
retaining business for or with, or directing business to, any Person;
or

     

    (iii)         any
Person, while knowing that all or a portion of such money or thing of value will
be offered, given, or promised, directly or indirectly, to any Government
Official, to any foreign political party or official thereof, or to any
candidate for foreign political office, for purposes of (A) (1) influencing any
act or decision of such Government Official, political party, party official, or
candidate in his or its official capacity, (2) inducing such Government
Official, political party, party official, or candidate to do or omit to do any
act in violation of the lawful duty of such Government Official, political
party, party official, or candidate, or (3) securing any improper advantage; or
(B) inducing such Government Official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Buyer or any of
its Subsidiaries in obtaining or retaining business for or with, or directing
business to, any Person.

     

    (b)           The
foregoing representations in Section 4.30(a) shall not apply to any facilitating
or expediting payment to a Government Official, political party, or party
official the purpose of which is to expedite or to secure the performance of a
routine governmental action by a Government Official, political party, or party
official.

     

    
      
        
        

      

      
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    4.31       No Other Representations; No
Reliance. Buyer
has conducted its own independent investigation, review and analysis of the
business, operations, assets, liabilities, results of operations and financial
condition of the Acquired Company and its Subsidiaries and of their business to
the extent Buyer has deemed necessary to enable it to fully evaluate the merits
and risks of closing the transactions contemplated by this
Agreement.  Buyer acknowledges and agrees that it and its
representatives have been provided adequate access to the personnel, properties,
premises and records of the Acquired Company and its Subsidiaries for such
purpose.  EXCEPT AS
SET FORTH IN ARTICLE III OF THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLER IS
SELLING THE ACQUIRED SHARES TO BUYER WITHOUT MAKING, AND BUYER HAS NOT RELIED
UPON, ANY EXPRESS, STATUTORY, OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND
FROM SELLER, THE ACQUIRED COMPANY, OR ANY OF THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES.

     

    ARTICLE
V.

    COVENANTS
OF SELLER

     

    5.1         Resignations.  On
the Closing Date, Seller shall cause to be delivered to Buyer duly signed
resignations, effective as of the Closing, of all members of the boards of
directors of their positions as directors (and, if requested by Buyer prior to
Closing, of officers of their positions as officers) of the Acquired Company and
its Subsidiaries.

    

    5.2         Employees. On or
before the Closing Date, Seller shall cause the Acquired Company
and its Subsidiaries (a) to enter into agreements with each of their respective
employees in which the parties agree to mutually terminate the employment
contract and the Acquired Company agrees to pay the employee an amount equal or
greater than the amount of severance the employee would have been entitled to
upon termination, and to have such agreements entered into and approved by
the Ministry of Social Protection or Labor Judge, (b) to terminate the
services of all of their respective contractors and consultants, and (c) to pay
accrued salary, bonuses at the discretion of Seller, any required severance
and/or benefits to the terminated employees.  Without limiting the
application of Section 3.20(g), to the extent that any amounts so payable by the
Acquired Company are not paid on or before the Closing Date, Seller shall cause
the Acquired Company to have cash at Closing equal to any amounts so
payable.  The forgoing is in addition to the Estimated Closing Cash Amount
and/or Final Closing Cash Amount.

     

    
      
        
        

      

      
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    5.3         Intercompany Liabilities;
Indebtedness; Release of Liens.

    

    (a)           Prior
to the Closing, Seller shall, and shall cause each of its Subsidiaries to,
settle all intercompany accounts that are unpaid as of the Closing Date between
the Acquired Company and its Subsidiaries, on the one hand, and Seller and its
Subsidiaries (other than the Acquired Company and its Subsidiaries), on the
other hand.

     

    (b)           Prior
to the Closing Date, Seller shall extinguish (i) all Indebtedness of the
Acquired Company and its Subsidiaries, and (ii) all guarantees by the Acquired
Company and its Subsidiaries of any Indebtedness of Seller and its Subsidiaries
(other than the Acquired Company and its Subsidiaries).

     

    (c)           Prior
to the Closing Date, Seller shall have caused to be released all Liens in and
upon any of the properties and assets of the Acquired Company and its
Subsidiaries.

     

    5.4         Confidentiality.

    

    (a)           From
and after the Closing, Seller will, and will cause its Affiliates to, hold, and
will use its reasonable best efforts to cause its and their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents
(“Representatives”) to
hold, in confidence any and all information, whether written or oral, concerning
the Acquired Company and its Subsidiaries, except to the extent that Seller can
show that such information (a) is in the public domain through no fault of
Seller or any of its Affiliates or (b) is lawfully acquired by Seller or any of
its Affiliates after the Closing from sources which are not prohibited from
disclosing such information by a legal, contractual or fiduciary obligation. If
Seller or any of its Affiliates or Representatives is compelled to disclose any
such information by judicial or administrative process or by other requirements
of Law, Seller shall promptly notify Buyer in writing and shall disclose only
that portion of such information which Seller is advised by its counsel in
writing is legally required to be disclosed, provided that Seller shall
exercise its reasonable best efforts to obtain an appropriate protective order
or other reasonable assurance that confidential treatment will be accorded such
information.

     

    (b)           Seller
will retain any of its books and records that relate to the Acquired Company
and/or any of its Subsidiaries in accordance with Seller’s record retention
policies as presently in effect. During the period commencing on the Closing
Date and ending on the seventh anniversary of the Closing Date, Seller shall not
dispose of or permit the disposal of any such books and records not required to
be retained under such policies without first giving 60 days’ prior written
notice to Buyer offering to surrender the same to Buyer at Buyer’s
expense.

     

    5.5         Restrictive
Covenants.

    

    (a)         
  Seller covenants that, commencing on the Closing Date, it will abide
by and observe the provisions relating to non-competition set forth in Exhibit
D.

     

    (b)           Seller
covenants that, during the period commencing on the Closing Date and ending on
the second anniversary of the Closing Date, Seller shall not, and it shall cause
its Affiliates not to, solicit the employment or engagement of services of any
person who is or was employed as an employee, contractor or consultant by Buyer
or any of its Affiliates or of the Acquired Company or any of its Subsidiaries
during such period on a full- or part-time basis.

     

    
      
        
        

      

      
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    (c)           Seller
acknowledges that the restrictions contained in this Section 5.5 are reasonable
and necessary to protect the legitimate interests of Buyer and constitute a
material inducement to Buyer to enter into this Agreement and consummate the
Acquisition. Seller acknowledges that any violation of this Section 5.5 will
result in irreparable injury to Buyer and agrees that Buyer shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of this Section 5.5, which rights
shall be cumulative and in addition to any other rights or remedies to which
Buyer may be entitled..

     

    (d)           In
the event that any covenant contained in this Section 5.5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable Law in any jurisdiction, then any court is
expressly empowered to reform such covenant, and such covenant shall be deemed
reformed, in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable Law. The covenants
contained in this Section 5.5 and each provision thereof are severable and
distinct covenants and provisions. The invalidity or unenforceability of any
such covenant or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such covenant or provision in any other
jurisdiction.

     

    5.6         Insurance.

    

    (a)           To
the extent that Seller shall be entitled under the terms and conditions of
“occurrence” based Policies in effect on the date hereof to coverage for losses
suffered by the Acquired Company or any of its Subsidiaries after the Closing
arising out of any occurrences covered by such Policies occurring prior to the
Closing, Seller shall, and shall cause its Subsidiaries to, use such efforts and
take such actions to recover such losses on behalf of the Acquired Company or
such Subsidiary of the Acquired Company pursuant to such Policies as it would
use or take in conducting its own business in the ordinary course if such losses
were suffered by Seller or any of its Subsidiaries, and shall deliver the
proceeds thereby recovered to the Acquired Company or such Subsidiary of the
Acquired Company. In the event of any dispute regarding the date of any loss or
occurrence, the terms of the applicable Policy shall govern. Seller shall
continue to maintain such Policies, to the extent they apply on the date hereof
to the Acquired Company and its Subsidiaries, in full force and effect (and
without any amendment that would be adverse, in any material respect, to the
Acquired Company or any of its Subsidiaries) with respect to occurrences prior
to and including the Closing. Seller shall continue to have the Acquired Company
and each Subsidiary of the Acquired Company as a named insured party under each
such Policy with respect to occurrences prior to and including the
Closing.

     

    (b)           Following
the Closing, Buyer shall provide, and shall cause the Acquired Company and its
Subsidiaries to provide, Seller with all records and other information necessary
for the reporting, investigation, negotiation and, if applicable, prosecution of
any claim made by Seller pursuant to this Section 5.6.

     

    
      
        
        

      

      
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    5.7         Extension of Production
Contracts.  From
and after the Closing, Seller will use its commercially reasonable efforts
(without being required to incur material amounts of expenses) to assist Buyer
in negotiating with Ecopetrol the extension of the Production Contracts and the
rights to explore and develop the exploration play in the Catatumbo region on
terms satisfactory to Buyer and Seller.

    

    5.8         Maintenance of Bogotá
Office.  During
the period from the Closing Date of this Agreement and continuing until one
month thereafter, Seller, at its sole expense (including payment of all rent,
utilities and other charges), shall cause the existing office of the Acquired
Company at Cra. 7 No. 71-52, Torre A, Oficina 404 in Bogotá, Colombia (the
“Bogotá Office”) to
remain open and in operation as on the date of this Agreement.  At the
end of such period, Seller shall cause the Bogotá Office to be closed and the
lease and the utilities and other services therefore to be terminated and shall
pay any and all expenses relating thereto, including, without limitation, lease
and utility termination fees or penalties, moving, waste disposal and the
like.

    

    5.9         Lock-Up; No
Shorting.

    

    (a)           Seller
covenants and agrees, except as provided below, not to (i) offer, sell, contract
to sell, grant any option to purchase, hypothecate, pledge or otherwise dispose
of or (ii) transfer title to any of (A) the Purchase Price Shares or (B) the
shares of Buyer Common Stock, Warrants or Warrant Shares (as defined in the
Subscription Agreement) acquired by Seller pursuant to the Subscription
Agreement (collectively, the “Locked-up Securities”), during
the period commencing on the Closing Date and ending on the expiration of 18
months after the Closing Date (the “Lock-up Period”), without the
prior written consent of Buyer.  Notwithstanding the foregoing, Seller
shall be permitted from time to time during the Lock-up Period, without the
prior written consent of Seller, to participate in any transaction in which
holders of Buyer Common Stock participate or have the opportunity to participate
pro rata, including, without limitation, a merger, consolidation or binding
share exchange involving Buyer, a disposition of Buyer Common Stock in
connection with the exercise of any rights, warrants or other securities
distributed to the Company’s stockholders, or a tender or exchange offer for
Buyer Common Stock.

     

    (b)           Seller
covenants and agrees that, for a period commencing on the date hereof and
terminating eighteen months after the Closing Date, Seller will not (and will
cause its Subsidiaries not to), directly or indirectly, effect or agree to
effect any short sale (as defined in Rule 200 under Regulation SHO of the
Exchange Act), whether or not against the box, establish any “put equivalent
position” (as defined in Rule 16a-1(h) under the Exchange Act) with respect to
Buyer Common Stock, borrow or pre-borrow any shares of Buyer Common Stock, or
grant any other right (including, without limitation, any put or call option)
with respect to Buyer Common Stock or with respect to any security that
includes, relates to or derives any significant part of its value from Buyer
Common Stock or otherwise seek to hedge its position in Buyer Common
Stock.

    
      
         

      

      
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    ARTICLE
VI.

    COVENANTS
OF BUYER

     

    6.1         Environmental
Matters.  Buyer
shall use its commercially reasonable efforts to manage all Pre-Closing
Environmental Liabilities and all Environmental Actions that may be related
thereto in a diligent manner and in a manner that minimizes the liability of
Seller with respect thereto, whether under this Agreement or
otherwise.

    

    6.2         Other
Covenants.

    

    (a)           Buyer
covenants that, commencing on the Closing Date, it will abide by and observe the
provisions relating to non-competition set forth in Exhibit
D.

     

    (b)           Buyer
covenants that it will negotiate with Seller in good faith a right of first
negotiation for technical services to be granted by the Acquired Company in
favor Oranje-Nassau Energie B.V., on such reasonable commercial terms as the
Parties shall agree.

     

    (c)           Buyer
acknowledges that the restrictions contained in this Section 6.2 are reasonable
and necessary to protect the legitimate interests of Buyer and constitute a
material inducement to Buyer to enter into this Agreement and consummate the
Acquisition. Seller acknowledges that any violation of this Section 6.2 will
result in irreparable injury to Buyer and agrees that Buyer shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of this Section 6.2 which rights shall
be cumulative and in addition to any other rights or remedies to which Buyer may
be entitled..

     

    (d)           In
the event that any covenant contained in this Section 6.2 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable Law in any jurisdiction, then any court is
expressly empowered to reform such covenant, and such covenant shall be deemed
reformed, in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable Law. The covenants
contained in this Section 6.2 and each provision thereof are severable and
distinct covenants and provisions. The invalidity or unenforceability of any
such covenant or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such covenant or provision in any other
jurisdiction.

    

    ARTICLE
VII.

    COVENANTS
OF BUYER AND SELLER

     

    7.1         Regulatory
Approvals.  Each
of Buyer and Seller shall promptly apply for, and take all reasonably necessary
actions to obtain or make, as applicable, all Authorizations, Orders,
declarations and filings with, and notices to, any Governmental Entity or other
Person required to be obtained or made by it for the consummation of the
Acquisition and the transactions contemplated by this Agreement. Each party
shall cooperate with and promptly furnish information to the other party
necessary in connection with any requirements imposed upon such other party in
connection with the consummation of the Acquisition.

    
      
         

      

      
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    7.2          Public
Announcements.  Neither
Buyer nor Seller nor any of their Subsidiaries shall, and Seller shall cause the
Acquired Company not to, issue any press releases or otherwise make any public
statements with respect to the transactions contemplated by this Agreement
without the approval of the other, which shall not be unreasonably withheld or
delayed; provided that Buyer or Seller may, without such approval, make
such press releases or other public announcement as it believes are required
pursuant to any listing agreement with any national securities exchange or stock
market or applicable securities Laws, in which case the party required to make
the release or announcement shall allow the other party reasonable time to
comment on such release or announcement in advance of such issuance; provided,
further, that each of the parties may make internal announcements to their
respective employees that are consistent with the parties’ prior public
disclosures regarding the Acquisition.

    

    7.3          Tax
Matters.

    

    (a)           Preparation and Filing of
Tax Returns.

     

    (i)           Tax Periods Ending on or
Before the Acquired Balance Sheet Date. Buyer shall prepare, or cause to
be prepared, and file, or cause to be filed, all Tax Returns of the Acquired
Company and its Subsidiaries for all periods ending on or prior to the Acquired
Balance Sheet Date which are filed after the Closing Date other than income Tax
Returns with respect to periods for which a consolidated, unitary or combined
income Tax Return of Seller will include the operations of the Acquired Company
and its Subsidiaries. Buyer shall endeavor to minimize the amount of Taxes due,
including utilizing any tax losses, credits or other attributes
available.  Buyer shall permit Seller to review and comment on each
such Tax Return described in the preceding sentence prior to filing.
Furthermore, with respect to the Colombian federal corporate income tax return
of the Acquired Company and its Subsidiaries for the 2009 fiscal year, subject
to the approval of such return by Seller, Seller shall pay to Buyer the amount
of the Taxes with respect to such Tax Return within five days following any
demand by Buyer for such payment to the extent not already reserved in the
Acquired Balance Sheet.

     

    (ii)          Tax Periods Beginning Before
and Ending After the Acquired Balance Sheet Date. Buyer shall prepare, or
cause to be prepared, and file, or cause to be filed, all Tax Returns of the
Acquired Company and its Subsidiaries for Tax periods which begin before the
Acquired Balance Sheet Date and end after the Acquired Balance Sheet Date. Buyer
shall endeavor to minimize the amount of Taxes due, including utilizing any tax
losses, credits or other attributes available.  Buyer shall permit
Seller to review and comment on each such Tax Return described in the preceding
sentence prior to filing.  

     

    (iii)     
   Buyer’s
Responsibilities. Buyer will take no position on Tax Returns that relate
to the Acquired Company or the Subsidiaries of the Acquired Company that would
adversely affect Seller.

     

    
      
        
        

      

      
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    (iv)        Seller’s
Responsibilities. Seller will include or have included in the
consolidated income Tax Return of the Seller Group in Luxembourg for all periods
or portions thereof through the Acquired Balance Sheet Date the income of the
Acquired Company and its Subsidiaries for all such periods and will pay or cause
to be paid any Luxembourg income Taxes attributable to such income. Seller will
take no position on such Tax Returns that relate to the Acquired Company or its
Subsidiaries that would adversely affect the Acquired Company or its
Subsidiaries after the Acquired Balance Sheet Date.

     

    (b)           Cooperation in Filing Tax
Returns. Buyer and Seller shall, and shall each cause its Subsidiaries
and Affiliates to, provide to the other such cooperation and information, as and
to the extent reasonably requested, in connection with the filing of any Tax
Return, amended Tax Return or claim for refund, determining liability for Taxes
or a right to refund of Taxes, or in conducting any audit, litigation or other
proceeding with respect to Taxes. Such cooperation and information shall include
providing copies of all relevant portions of relevant Tax Returns, together with
relevant accompanying schedules and relevant work papers, relevant documents
relating to rulings and other determinations by Taxing Authorities, and relevant
records concerning the ownership and Tax basis of property, which any such party
may possess. Each party will retain all Tax Returns, schedules, work papers, and
all material records and other documents relating to Tax matters, of the
Acquired Company and its Subsidiaries for the Tax periods ending on or before
the Acquired Balance Sheet Date until the later of either (i) the expiration of
the applicable statute of limitations, including that related to the utilization
of net operating loss carry-forwards (and, to the extent notice is provided with
respect thereto, any extensions thereof) for the Tax periods to which the Tax
Returns and other documents relate or (ii) eight years following the due date
(without extension) for such Tax Returns. Thereafter, the party holding such Tax
Returns or other documents may dispose of them, provided that such party shall
give to the other party the notice described in Section 11.1 prior to doing so.
Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.

     

    (c)           Allocation of Certain
Taxes.

     

    (i)           If
the Acquired Company and its Subsidiaries are permitted but not required under
applicable state, local, or foreign income tax Laws to treat the Acquired
Balance Sheet Date as the last day of a taxable period, then the parties shall
treat that day as the last day of a taxable period.

     

    (ii) 
        In the case of Taxes arising in
a taxable period of the Acquired Company or any of its Subsidiaries that
includes, but does not end on, the Acquired Balance Sheet Date, except as
provided in Section 7.3(c)(iii), the allocation of such Taxes between the
Pre-Cutoff Period and the Post-Cutoff Period shall be made on the basis of an
interim closing of the books as of the end of the Acquired Balance Sheet Date.
“Post-Cutoff Period”
means any taxable period or portion thereof beginning after the Acquired Balance
Sheet Date. If a taxable period begins on or prior to the Acquired Balance Sheet
Date and ends after the Acquired Balance Sheet Date, then the portion of the
taxable period that begins on the day following the Acquired Balance Sheet Date
shall constitute a Post-Cutoff Period. “Pre-Cutoff Period” means any
taxable period or portion thereof that is not a Post-Cutoff Period.

     

    
      
        
        

      

      
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    (iii)         In
the case of any Taxes that are imposed on a periodic basis and are payable for a
taxable period that includes, but does not end on, the Acquired Balance Sheet
Date, the portion of such Tax which relates to the portion of such taxable
period ending on the Acquired Balance Sheet Date shall (A) in the case of any
Taxes, other than Taxes based upon or related to income or receipts, or
franchise Taxes, or Taxes based on capitalization, debt or shares of stock
authorized, issued or outstanding, or ad valorem Taxes, be deemed to be the
amount of such Tax for the entire taxable period multiplied by a fraction, the
numerator of which is the number of days in the taxable period ending on the
Acquired Balance Sheet Date and the denominator of which is the number of days
in the entire taxable period, and (B) in the case of any Tax based upon or
related to income or receipts, or franchise Taxes, or Taxes based on
capitalization, debt or shares of stock authorized, issued or outstanding, or ad
valorem Taxes, be deemed equal to the amount which would be payable if the
relevant taxable period ended as of the end of the Acquired Balance Sheet Date.
All determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with the prior practice of the Acquired Company
and its Subsidiaries.

     

    (d)           Carryovers, Refunds, and
Related Matters.

     

    (i)           Refunds.  Except
as provided for in the second sentence of this Section 7.3(d)(i) and in Section
7.3(d)(ii), any refund of Taxes (including any interest thereon) that relates to
the Acquired Company or any of its Subsidiaries shall be the property of the
Acquired Company or the Subsidiary of the Acquired Company, as applicable, and
shall be retained by the Acquired Company or the Subsidiary of the Acquired
Company (or promptly paid by Seller to the Acquired Company or Subsidiary of the
Acquired Company if any such refund (or interest thereon) is received by Seller
or any of its respective Subsidiaries or Affiliates). If the Acquired Company or
any of its Subsidiaries receives a refund of any Tax paid by Seller with respect
to the Colombian federal corporate income tax return of the Acquired Company and
its Subsidiaries for the 2009 fiscal year, then the Acquired Company or the
Subsidiary of the Acquired Company, as the case may be, promptly shall pay or
cause to be paid to Seller the amount of such refund together with any interest
thereon, but net of any Taxes imposed on Buyer or any of its Subsidiaries or
Affiliates with respect thereto.

     

    (ii)          Acquired Company Refunds
Received by Seller.  Except with respect to Tax Returns
described in Section 7.3(a)(iv), if any item of loss or credit of the Acquired
Company or any of its Subsidiaries (or successor thereto) for a Post-Cutoff
Period is carried back to a Pre-Cutoff Period, is used or otherwise absorbed and
results in a refund directly to or an actually recognized reduction of Taxes
otherwise payable by a Seller Party, then Seller will, within 10 Business Days
following the receipt of any such refund or other final recognition of such Tax
benefit, pay the portion of such refund or benefit attributable to such
carryback, net of any Taxes imposed on any Seller Party with respect thereto, to
the Acquired Company or such Subsidiary of the Acquired Company, as the case may
be. Upon Buyer’s request, Seller shall take actions as are reasonably required
to obtain such refund or benefit at Buyer’s request, including through the
filing of amended Tax Returns or claims for refund, provided that Buyer shall
reimburse Seller’s costs for doing so.  “Seller Party” means Seller and
any Subsidiary or Affiliate of Seller, other than the Acquired Company or any of
its Subsidiaries.

     

    
      
        
        

      

      
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    (e)           Payment of Transfer Taxes
and Fees. Each of Buyer and Seller shall bear its own Transfer Taxes
arising out of or in connection with the transactions effected pursuant to this
Agreement.

     

    7.4          Use of Certain
Names.  Seller
agrees that, for a period of six months after the Closing Date, the Acquired
Company and its Subsidiaries may continue use the Names in the conduct of the
business of the Acquired Company and its Subsidiaries and to distribute product
literature that uses any Names and distribute products with labeling that uses
any Names, provided that Buyer has marked, or has caused the Acquired Company
and its Subsidiaries to mark, such product literature and such labeling to
indicate that the Acquired Company and its Subsidiaries have been sold to Buyer
and are independent of Seller. In no event shall Buyer, the Acquired Company or
their respective Subsidiaries use any Names after the Closing in any manner or
for any purpose different from the use of such Names by the Acquired Company and
its Subsidiaries, as the case may be, during the three-year period preceding the
Closing Date. “Names” means the Avante Marks or any name, logo or trademark that
includes “Avante,” any variation and derivatives thereof and any other logos or
trademarks of Seller or its Affiliates after the Closing.  At the
conclusion of such six-month period, Buyer may in its sole discretion give
written notice to Seller that it intends to continue the to use the Names,
literature and labeling as described in this Section 7.4, in which case Buyer’s
right under this Section will continue indefinitely.

    

    7.5          Further
Assurances.  Subject
to the terms of this Agreement, each of Buyer and Seller shall execute such
documents and other instruments and take such further actions as may be
reasonably required to carry out the provisions hereof and consummate the
Acquisition.

    

    7.6          Joint
Venture.  Buyer
and Seller shall negotiate in good faith and enter into a joint venture pursuant
to the terms outlined on Exhibit D attached hereto and
incorporated herein.

    

    ARTICLE
VIII.

    CONDITIONS
TO CLOSING

     

    8.1          Conditions to Obligations of
Buyer and Seller.  The
obligations of Buyer and Seller to consummate the Acquisition are subject to the
satisfaction on or prior to the Closing Date of the following
conditions:

    

    (a)           All
Authorizations and Orders of, declarations and filings with, and notices to any
Governmental Entity, required to permit the Acquisition shall have been obtained
or made and shall be in full force and effect.

     

    (b)           No
temporary restraining order, preliminary or permanent injunction or other Order
preventing the consummation of the Acquisition shall be in effect. No Law shall
have been enacted or shall be deemed applicable to the Acquisition which makes
the consummation of the Acquisition illegal.

     

    
      
        
        

      

      
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    (c)           Seller
and Buyer shall have executed and delivered the Subscription
Agreement.

     

    (d)           Seller
and Buyer shall have executed and delivered the Stockholder
Agreement.

     

    8.2          Conditions to Obligation of
Buyer.  The
obligation of Buyer to consummate the Acquisition is subject to the satisfaction
(or waiver by Buyer in its sole discretion) of the following further
conditions:

    

    (a)           The
representations and warranties of Seller set forth in this Agreement shall have
been true and correct at and as of the date hereof and shall be true and correct
at and as of the Closing Date as if made at and as of the Closing Date, except
to the extent that such representations and warranties refer specifically to an
earlier date, in which case such representations and warranties shall have been
true and correct as of such earlier date. 

     

    (b)           Seller
shall have performed or complied with all obligations and covenants required by
this Agreement to be performed or complied by Seller with at or prior to the
Closing Date. 

     

    (c)           No
Action shall be pending or threatened before any court or other Governmental
Entity (i) seeking to prevent consummation of any of the transactions
contemplated by this Agreement, (ii) seeking to impose any material limitation
on the right of Buyer to own the Acquired Shares and to control the Acquired
Company and its Subsidiaries or (iii) seeking to restrain or prohibit Buyer’s
ownership or operation (or that of its Subsidiaries or Affiliates) of all or any
material portion of the business or assets of the Acquired Company and its
Subsidiaries, taken as a whole, or compel Buyer or any of its Subsidiaries or
Affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Acquired Company and its Subsidiaries, taken as a
whole, or of Buyer and its Subsidiaries, taken as a whole. No such Order shall
be in effect.

     

    (d)           No
Law shall have been enacted or shall be deemed applicable to the Acquisition
which has any of the effects set forth in clauses (i) through (iii) in Section
8.2(c).

     

    (e)           Buyer
shall have received a written opinion from Thompson & Knight LLP and from
Allen & Overy, counsels to Seller, addressed to Buyer, dated as of the
Closing Date, in the forms attached hereto as Exhibit E-1 and Exhibit E-2,
respectively.

     

    (f)   
        Seller shall have obtained the
Consent of each Person whose Consent is required under the Contracts set forth
in Schedule 8.2(e) and shall have provided evidence of each such Consent in form
and substance reasonably satisfactory to Buyer.

     

    
      
        
        

      

      
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    (g)           Seller
shall have delivered to Buyer evidence of (i) the release of all Liens with
respect to the property and assets of the Acquired Company and its Subsidiaries,
(ii) the repayment of all outstanding Indebtedness of the Acquired Company and
its Subsidiaries, (iii) the repayment or other cancellation of all intercompany
accounts between Seller and its Subsidiaries (other than the Acquired Company or
any of its Subsidiaries), on the one hand, and the Acquired Company or the
Subsidiaries of the Acquired Company, on the other hand, and (iv) the release of
all guarantees by the Acquired Company or the Subsidiaries of the Acquired
Company of any Indebtedness or other obligation of any third party, including
Seller or any of its Affiliates, in each case in form and substance satisfactory
to Buyer.

     

    (h)           Seller
shall have delivered to Buyer a certificate of the director of Seller dated the
Closing Date and certifying: (A) that attached thereto are true and complete
copies of all resolutions adopted by the Board of Directors of Seller
authorizing the execution, delivery and performance of this Agreement, and that
all such resolutions are in full force and effect and are all the resolutions
adopted in connection with the Acquisition; and (B) to the incumbency and
specimen signature of each officer of Seller executing this Agreement and the
other agreements and documents delivered pursuant to this Agreement, and a
certification by another officer of Seller as to the incumbency and signature of
the director of Seller.

     

    (i) 
          Seller and Escrow
Agent shall have executed and delivered the Escrow Agreement.

     

    8.3          Conditions to Obligation of
Seller.  The
obligation of Seller to consummate the Acquisition is subject to the
satisfaction (or waiver by Seller in its sole discretion) of the following
further conditions: 

    

    (a)           The
representations and warranties of Buyer set forth in this Agreement shall have
been true and correct at and as of the date hereof and shall be true and correct
at and as of the Closing Date as if made at and as of the Closing Date, except
to the extent that such representations and warranties refer specifically to an
earlier date, in which case such representations and warranties shall have been
true and correct as of such earlier date.

     

    (b)           Buyer
shall have performed or complied with all obligations and covenants required by
this Agreement to be performed or complied with by Buyer at or prior to the
Closing Date.

     

    (c)           No
Action shall be pending or threatened before any court or other Governmental
Entity or other Person wherein an unfavorable Order would (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation. No such Order shall be in effect

     

    (d)           No
Law shall have been enacted or shall be deemed applicable to the Acquisition
which has any of the effects set forth in Section 8.3(c).

     

    (e)           Seller
shall have received a written opinion from Gottbetter & Partners, LLP,
counsel to Buyer, addressed to Seller, dated as of the Closing Date, in the form
attached hereto as Exhibit
F.

     

    
      
        
        

      

      
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    (f)           Buyer
shall have delivered to Seller a certificate of the Secretary of Buyer dated the
Closing Date and certifying: (A) that attached thereto are true and complete
copies of all resolutions adopted by the Board of Directors of Buyer authorizing
the execution, delivery and performance of this Agreement, and that all such
resolutions are in full force and effect and are all the resolutions adopted in
connection with the Acquisition; and (B) to the incumbency and specimen
signature of each officer of Buyer executing this Agreement and the other
agreements and documents delivered pursuant to this Agreement, and a
certification by another officer of Buyer as to the incumbency and signature of
the Secretary of Buyer.

     

    (g)           Buyer
shall have executed and delivered to Seller the Registration Rights
Agreement.

     

    ARTICLE IX.

    [RESERVED]

     

    ARTICLE
X.

    INDEMNIFICATION

     

    10.1        Survival.

     

    (a)           Except
as set forth in Section 10.1(b), all representations and warranties contained in
this Agreement, or in any Schedule, certificate or other document delivered
pursuant to this Agreement, shall survive the Closing for a period of 18
months.

     

    (b)           The
representations and warranties of Seller contained in Section 3.21
(Environmental) shall survive the Closing for a period of two years following
the Closing.

     

    (c)           The
covenants and agreements which by their terms do not contemplate performance
after the Closing Date shall survive the Closing for a period of 18 months. The
covenants and agreements which by their terms contemplate performance after the
Closing Date shall survive the Closing in accordance with their terms until 18
months following any breach thereof by the obligated Party.

     

    (d)           The
period for which a representation or warranty, covenant or agreement survives
the Closing is referred to herein as the “Applicable Survival Period.”
In the event a Notice of Claim for indemnification under Section 10.2 or 10.3 is
given within the Applicable Survival Period, the representation or warranty,
covenant or agreement that is the subject of such indemnification claim (whether
or not formal legal action shall have been commenced based upon such claim)
shall survive with respect to such claim until such claim is finally resolved.
The Indemnitor shall indemnify the Indemnitee for all Losses (subject to the
limitations set forth herein, if applicable) that the Indemnitee may incur in
respect of such claim, regardless of when incurred.

     

    
      
        
        

      

      
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    10.2        Indemnification by
Seller.

    

    (a)           Subject
to the limitations set forth in this ARTICLE X, Seller shall indemnify and
defend Buyer and its Affiliates (including, following the Closing, the Acquired
Company and its Subsidiaries) and their respective stockholders, members,
managers, officers, directors, employees, agents, successors and assigns (the
“Buyer Indemnitees”)
against, and shall hold them harmless from, any and all losses, damages, claims
(including third party claims), charges, interest, penalties, Taxes, costs and
expenses (including legal, consultant, accounting and other professional fees,
costs of sampling, testing, investigation, removal, treatment and remediation of
contamination and fees and costs incurred in enforcing rights under this Section
10.2) net of any insurance premiums obtained or to be obtained (collectively,
“Losses”) resulting
from, arising out of, or incurred by any Buyer Indemnitee in connection with, or
otherwise with respect to:

     

    (i)           the
failure of any representation and warranty or other statement by Seller
contained in this Agreement or in any certificate to be furnished to Buyer at
the Closing, to be true and correct in all respects as of the date of this
Agreement or as of the Closing Date;

     

    (ii)          any
breach of any covenant or agreement of Seller contained in this
Agreement;

     

    (iii)         any
fees, expenses or other payments incurred or owed by Seller, the Acquired
Company or any of its Subsidiaries to any agent, broker, investment banker or
other firm or person retained or employed by it in connection with the
transactions contemplated by this Agreement;

     

    (iv)         [reserved];

     

    (v)     
    any Pre-Closing Environmental Liabilities and any
Environmental Action arising out of or in connection therewith if the Loss
arises within two years following the Closing;

     

    (vi)         the
matters set forth on Schedule 10.2(a)(vi); and

     

    (vii)        all
other items provided in this Agreement to be at the cost, expense or liability
of Seller.

     

    (b)           Seller
shall not be liable for any Loss or Losses pursuant to Section 10.2(a)(i) with
respect to Losses not arising under Section 3.21 (Environmental) (“Generic Buyer Warranty
Losses”) (i) unless and until the aggregate amount of all Generic Buyer
Warranty Losses incurred by the Buyer Indemnitees exceeds $25,000, in which
event Seller shall only be liable for such Generic Buyer Warranty Losses in
excess of such amount, and (ii) to the extent that Generic Buyer Warranty Losses
exceed $1,000,000 in the aggregate.

     

    
      
        
        

      

      
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    (c)           Seller
shall not be liable for any Environmental Losses (i) unless and until the
aggregate amount of all such Environmental Losses incurred by the Buyer
Indemnitees exceeds $150,000, in which event Seller shall only be liable for
fifty percent (50%) of all Environmental Losses incurred by the Buyer
Indemnitees in excess of such amount, and (ii) to the extent that Environmental
Losses exceed $5,150,000. For purposes of this Agreement, “Environmental Losses” means
any Loss or Losses pursuant to any of (x) Section 10.2(a)(i) arising under
Section 3.21 (Environmental), (y) Section 10.2(a)(v) or (z) Section
10.7.

     

    (d)           Seller
shall not be liable for any Loss or Losses pursuant to Section 10.2(a)(vi)
(“Buyer Tax Losses”) to
the extent that Buyer Tax Losses exceed $231,000 in the aggregate or, with
respect to any specific matter listed on Schedule 10.2(a)(vi), the amount
allocated to that specific matter on Schedule 10.2(a)(vi).

     

    (e)           Notwithstanding
anything herein to the contrary, nothing contained in Sections 10.2(b), 10.2(c)
or 10.2(d) shall be deemed to limit or restrict in any manner any rights or
remedies which Buyer has, or might have, at Law, in equity or otherwise, based
on fraud or a willful misrepresentation or willful breach of warranty hereunder.

     

    (f)           The
indemnification provisions contained in this Agreement reflect the contractual
agreement of Buyer and Seller regarding risk allocation with respect to
Environmental Losses and other matters.  By agreeing to these
provisions, neither Seller, the Acquired Company nor its Subsidiaries are
acknowledging any wrongdoing or liability with respect to any matter, and these
provisions shall not act as a waiver or otherwise limit any defenses that may be
available to Seller, the Acquired Company or its Subsidiaries with respect to
any Third Party Claims.

     

    10.3        Indemnification by
Buyer.

    

    (a)           Subject
to the limitations set forth in this ARTICLE X, Buyer shall indemnify and defend
Seller and its Affiliates and their respective stockholders, members, managers,
officers, directors, employees, agents, successors and assigns (the “Seller Indemnitees”) against,
and shall hold them harmless from, any and all Losses, net of any insurance
premiums obtained or to be obtained, resulting from, arising out of, or incurred
by any Seller Indemnitee in connection with, or otherwise with respect
to:

     

    (i)           the
failure of any representation and warranty or other statement by Buyer contained
in this Agreement) or in any certificate to be furnished to Seller at the
Closing, to be true and correct in all respects as of the date of this Agreement
or as of the Closing Date; and

     

    (ii)          any
breach of any covenant or agreement of Buyer contained in this Agreement;
and

     

    (iii)         all
other items provided in this Agreement to be at the cost, expense or liability
of Buyer.

     

    (b)           Buyer
shall not be liable for any Loss or Losses pursuant to Section 10.3(a)(i)
(“Seller Warranty
Losses”) (i) unless and until the aggregate amount of all Seller Warranty
Losses incurred by the Seller Indemnitees exceeds $25,000, in which event Buyer
shall only be liable for such Seller Warranty Losses in excess of $25,000, and
(ii) to the extent that Seller Warranty Losses exceed $1,000,000 in the
aggregate; provided that nothing contained in this Sections 10.3(b) shall be
deemed to limit or restrict in any manner any rights or remedies which Seller
has, or might have, at Law, in equity or otherwise, based on fraud or a willful
misrepresentation or willful breach of warranty hereunder.

     

    
      
        
        

      

      
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    (c)           The
indemnification provisions contained in this Agreement reflect the contractual
agreement of Buyer and Seller regarding risk allocation with respect to
Environmental Losses and other matters.  By agreeing to these
provisions, neither Buyer nor its Subsidiaries are acknowledging any wrongdoing
or liability with respect to any matter, and these provisions shall not act as a
waiver or otherwise limit any defenses that may be available to Buyer or its
Subsidiaries with respect to any Third Party Claims.

     

    10.4        Indemnification Procedures
for Third Party Claims.

    

    (a)           In
the event that an Indemnitee receives notice of the assertion of any claim or
the commencement of any Action by a third party in respect of which indemnity
may be sought under the provisions of this ARTICLE X (“Third Party Claim”), the
Indemnitee shall promptly notify the Indemnitor in writing (“Notice of Claim”) of such
Third Party Claim. Failure or delay in notifying the Indemnitor will not relieve
the Indemnitor of any liability it may have to the Indemnitee, except and only
to the extent that such failure or delay causes actual harm to the Indemnitor
with respect to such Third Party Claim. The Notice of Claim shall set forth the
amount, if known, or, if not known, an estimate of the foreseeable maximum
amount of claimed Losses (which estimate shall not be conclusive of the final
amount of such Losses) and a description of the basis for such Third Party
Claim.

     

    (b)           Subject
to the further provisions of this Section 10.4, the Indemnitor will have 60 days
(or less if the nature of the Third Party Claim requires) from the date on which
the Indemnitor received the Notice of Claim to notify the Indemnitee that the
Indemnitor will assume the defense or prosecution of such Third Party Claim and
any litigation resulting therefrom with counsel of its choice (reasonably
satisfactory to the Indemnitee) and at its sole cost and expense (a “Third Party Defense”). If the
Indemnitor assumes the Third Party Defense in accordance with the preceding
sentence, the Indemnitor shall be conclusively deemed to have acknowledged that
the Third Party Claim is within the scope of its indemnity obligation hereunder
and shall hold the Indemnitee harmless from and against the full amount of any
Losses resulting therefrom (subject to the terms and conditions of this
Agreement). Any Indemnitee shall have the right to employ separate counsel in
any such Third Party Defense and to participate therein, but the fees and
expenses of such counsel shall not be at the expense of the Indemnitor unless
(A) the Indemnitor shall have failed, within the time after having been notified
by the Indemnitee of the existence of the Third Party Claim as provided in the
first sentence of this paragraph (b), to assume the defense of such Third Party
Claim, (B) the employment of such counsel has been specifically authorized in
writing by the Indemnitor or (C) under applicable standards of
professional conduct, a conflict on any significant issue exists between the
Indemnitee and the Indemnitor in respect of the Third Party
Claim.

     

    (c)           The
Indemnitor will not be entitled to assume the Third Party Defense
if:

     

    
      
        
        

      

      
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    (i)           the
Third Party Claim seeks, in addition to or in lieu of monetary damages, any
injunctive or other equitable relief (except where non-monetary relief is merely
incidental to a primary claim or claims for monetary damages;

     

    (ii)          the
Third Party Claim relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation; or

     

    (iii)         the
Third Party Claim would give rise to Losses which exceed
$2,500,000.

     

    (d)           Seller
will not be entitled to assume the Third Party Defense if the Third Party Claim
relates to or arises in connection with any Environmental Action. Buyer shall
have the right (i) to defend, conduct and control, with counsel of its choice,
any Environmental Action, and (ii) to compromise or settle any Environmental
Action, and shall, subject to the limitations contained in this Agreement, be
indemnified by Seller, provided that Buyer will not consent to the entry of any
judgment or enter into any settlement without the written consent of Seller
(such consent not unreasonably be withheld or delayed). In the event that Buyer
is required or deems it necessary to perform any Remedial Work in connection
with an Environmental Action, or to avoid the initiation of an Environmental
Action, whether or not formal proceedings have been initiated or threatened with
respect thereto, Buyer shall have the right to commence and thereafter prosecute
to completion all such Remedial Work, and shall, subject to the limitations of
this Agreement, be indemnified by Seller with respect to any and all Losses
incurred in connection therewith, provided that Buyer will not commence or
prosecute such Remedial Work without the written consent of Seller (such consent
not unreasonably be withheld or delayed). “Remedial Work” means any
response action, removal action, remedial action, closure, corrective action,
regulatory permitting, monitoring program, risk assessment, deed restriction,
sampling program, investigation or other activity required, allowed by or
consistent with Environmental Law to clean up, remove, remediate, treat, abate
or otherwise address any Hazardous Substance.

     

    (e)           If
by reason of the Third Party Claim a Lien, attachment, garnishment or execution
is placed upon any of the property or assets of the Indemnitee and not promptly
caused to be discharged by the Indemnitor, the Indemnitor, if it desires to
exercise its right to assume such Third Party Defense, must furnish a
satisfactory indemnity bond to obtain the prompt release of such Lien,
attachment, garnishment or execution.

     

    
      
        
        

      

      
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    (f)           If
the Indemnitor assumes a Third Party Defense, it will take all steps necessary
in the defense, prosecution, or settlement of such claim or litigation. The
Indemnitor will not consent to the entry of any judgment or enter into any
settlement except with the written consent of the Indemnitee; provided that
the consent of the Indemnitee shall not be required if all of the following
conditions are met: (i) the terms of the judgment or proposed settlement include
as an unconditional term thereof the giving to the Indemnitees by the third
party of a release of the Indemnitees from all liability in respect of such
Third Party Claim, (ii) there is no finding or admission of (A) any violation of
Law by the Indemnitees (or any Affiliate thereof), (B) any violation of the
rights of any Person and (C) no effect on any other Action or claims of a
similar nature that may be made against the Indemnitees (or any Affiliate
thereof), and (iii) the sole form of relief is monetary damages which are paid
in full by the Indemnitor. The Indemnitor shall conduct the defense of the Third
Party Claim actively and diligently, and the Indemnitee will provide reasonable
cooperation in the defense of the Third Party Claim. So long as the Indemnitor
is reasonably conducting the Third Party Defense in good faith, the Indemnitee
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnitor (not to be unreasonably withheld or delayed). Notwithstanding the
foregoing, the Indemnitee shall have the right to pay or settle any such Third
Party Claim, provided that in such event it shall waive any right to
indemnity therefor by the Indemnitor for such claim unless the Indemnitor shall
have consented to such payment or settlement (such consent not to be
unreasonably withheld or delayed). If the Indemnitor assumes a Third Party
Defense and is not reasonably conducting the Third Party Defense in good faith,
the Indemnitee shall have the right to consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnitor, and the Indemnitor shall reimburse the
Indemnitee promptly for all Losses incurred in connection with such judgment or
settlement.

     

    (g)           In
the event that (i) an Indemnitee gives Notice of Claim to the Indemnitor and the
Indemnitor fails or elects not to assume a Third Party Defense which the
Indemnitor had the right to assume under this Section 10.4 or (ii) the
Indemnitor is not entitled to assume the Third Party Defense pursuant to this
Section10.4, the Indemnitee shall have the right, with counsel of its choice, to
defend, conduct and control the Third Party Defense, at the sole cost and
expense of the Indemnitor (unless the Indemnitor is not entitled to assume the
Third Party Defense pursuant to Section 10.4(c)(iii), in which case the fees and
expenses of the Indemnitee’s legal counsel shall be paid by the Indemnitee). In
each case, the Indemnitee shall conduct the Third Party Defense actively and
diligently, and the Indemnitor will provide reasonable cooperation in the Third
Party Defense. If the Indemnitor fails to or is not entitled to assume the
defense of such Third Party Claim pursuant to this Section 10.4, the Indemnitor
shall have the right to employ separate counsel in any such Third Party Defense
and to participate therein, but the fees and expenses of such counsel shall be
at the expense of the Indemnitor, and the Indemnitee shall have ultimate control
of the defense (subject to the other provisions of this Section).  The
Indemnitee shall have the right to consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim on such terms as it
may deem appropriate; provided, however, that the amount of any settlement made
or entry of any judgment consented to by the Indemnitee without the consent of
the Indemnitor shall not be determinative of the validity of the claim, except
with the consent of the Indemnitor (not to be unreasonably withheld or
delayed).  If the Indemnitor does not elect to assume a Third Party
Defense which it has the right to assume hereunder, the Indemnitee shall have no
obligation to do so.

     

    (h)           Each
party to this Agreement shall use its commercially reasonable efforts to keep
the other Person fully informed of the status of any Third-Party Claim and any
related proceedings at all stages thereof where such person is not represented
by its own counsel, and to cooperate and to cause its employees to cooperate
with and assist the Indemnitee or the Indemnitor, as the case may be, in
connection with any Third Party Defense, including attending conferences,
discovery proceedings, hearings, trials and appeals and furnishing records,
information and testimony, as may reasonably be requested; provided that
each party shall use its best efforts, in respect of any Third Party Claim of
which it has assumed the defense, to preserve the confidentiality of all
confidential information and the attorney-client and work-product
privileges.

     

    
      
        
        

      

      
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    10.5         Indemnification Procedures
for Non-Third Party Claims. In the
event of a claim that does not involve a Third Party Claim being asserted
against it, the Indemnitee shall send a Notice of Claim to the Indemnitor. The
Notice of Claim shall set forth the amount, if known, or, if not known, an
estimate of the foreseeable maximum amount of claimed Losses (which estimate
shall not be conclusive of the final amount of such Losses) and a description of
the basis for such claim. The Indemnitor will have 30 days from receipt of such
Notice of Claim to dispute the claim and will reasonably cooperate and assist
the Indemnitee in determining the validity of the claim for indemnity. If the
Indemnitor does not give notice to the Indemnitee that it disputes such claim
within 30 days after its receipt of the Notice of Claim, the claim specified in
such Notice of Claim will be conclusively deemed a Loss subject to
indemnification hereunder. 

    

    10.6         Payment of
Claims.  In
lieu of paying cash to satisfy its indemnification obligations under this
Agreement, Seller, at its option, may satisfy such obligations in whole or in
part by surrender of Purchase Price Shares to Buyer or, in case of Claims for
Environmental Losses, with Escrow Purchase Price Shares; provided that, if any
indemnification obligation for Environmental Losses remains unsatisfied for more
than thirty days after the amount of the indemnification obligation is finally
determined, then Buyer, at its option, may elect to receive Escrow Purchase
Price Shares in lieu of cash to satisfy such obligations in accordance with the
terms of the Escrow Agreement.  For purposes of any such payment, the
value of a Purchase Price Share delivered in satisfaction of an indemnity claim
(the “Share Value”)
shall be the volume-weighted average sale prices of the Buyer Common Stock on
the OTC Bulletin Board or primary stock exchange on which the Common Stock is
then listed for the 60 most recent trading days on which sales have occurred
ending on the trading day prior to the relevant date of determination; provided
that, if the Buyer Common Stock is not then quoted on the OTC Bulletin Board or
any stock exchange, then the Share Value shall be determined by independent
appraisal by a mutually selected appraiser.  If Buyer and Seller are
unable to agree on the independent appraiser within five Business Days after a
notice by Seller of its intent to deliver shares in lieu of cash, or a notice by
Buyer of its intent to receive Escrow Purchase Price Shares in lieu of cash, as
the case may be, then either Buyer or Seller may request that the American
Arbitration Association appoint an arbitrator according to its rules who shall
then select an appraiser.  In all cases, the Share Value shall be
subject to equitable adjustment in the event of any stock split, stock dividend,
reverse stock split or similar event affecting the Buyer Common Stock during the
period of calculation and, thereafter, until delivery of the Buyer Common Stock
in payment of indemnification obligations pursuant to this Section 10.6.

    

    10.7         No Contribution.  Seller
acknowledges and agrees that, upon and following the Closing, neither the
Acquired Company nor any of its Subsidiaries shall have any liability or
obligation to indemnify, save or hold harmless or otherwise pay, reimburse or
make Seller whole for or on account of any indemnification or other claims made
by any Buyer Indemnitee hereunder. Seller shall have no right of contribution
against the Acquired Company or any of its Subsidiaries with respect to any such
indemnification or other claim.

     

    
      
        
        

      

      
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    10.8         No Consequential Damages.  Except
with respect to amounts actually paid by Indemnitees with respect to Third Party
Claims, Seller shall not be liable for (i) any punitive damages or any
consequential damages, or any diminution in value, regardless of the form of
action through which such damages are sought, (ii) any lost profits of any
Person, even if under applicable Law such lost profits would not be considered
consequential or special damages, or (iii) without limiting the generality of
the foregoing, any damages calculated by using or taking into account any
multiple of earnings, book value or cash flow, in each case except if such
damages arise from fraud or from willful misrepresentation or willful breach of
warranty.  For the purpose of this Section 10.8, the term
“consequential damages” shall mean damages that are not the natural, probable
and reasonably foreseeable result of the breach.

    

    10.9         Tax Treatment of
Indemnification Payments. Except
as otherwise required by applicable Law, the parties shall treat any
indemnification payment made hereunder as an adjustment to purchase
price.

    

    10.10       Mitigation.  Each
Indemnitee shall use reasonable efforts to mitigate any liabilities and damages
for which it may claim indemnification under this ARTICLE X.

    

    10.11       Exclusive
Remedy. The
indemnities provided for in this ARTICLE X shall be the sole and exclusive
remedy of the parties after the Closing with respect to, arising out of, or
resulting from this Agreement (including for any inaccuracy of any
representation or warranty or any failure or breach of any covenant, obligation,
condition or agreement contained in this Agreement); provided, however, that the
foregoing shall not (i) limit the rights of any party to seek any equitable
remedy available to enforce the rights of such party under this Agreement or
(ii) limit the right of a party to seek any available remedy for fraud or
willful misrepresentation or willful breach of warranty.  Each party
covenants and agrees that following the Closing it shall not seek or assert any
other remedy hereunder, other than any equitable remedy available to enforce the
rights of such party under this Agreement and the right of such party to seek
any available remedy for fraud or willful misrepresentation or willful breach of
warranty.

    

    ARTICLE
XI.

    MISCELLANEOUS

     

    11.1         Notices.  Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed given
(a) on the date established by the sender as having been delivered personally,
(b) on the date delivered by a private courier as established by the sender by
evidence obtained from the courier, (c) on the date sent by facsimile, with
confirmation of transmission, if sent during normal business hours of the
recipient, if not, then on the next Business Day, or (d) on the date of receipt
if mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications, to be valid, must be addressed as
follows:

     

    
      
        
        

      

      
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                  If
      to Buyer, to:

                    
      

                  La
      Cortez Energy, Inc.

                  Calle
      67 #7-35 Oficina 409

                  Bogotá,
      Colombia

                  Attention:  Andres
      Gutierrez Rivera, President & CEO

                  Office:  571-485-2020

                  Office:  941-870-5433

                  Facsimile:  571-605-6937

                  agutierrez@lacortezenergy.com

                	
                  With
      a required copy to:

                    
      

                  Gottbetter
      & Partners, LLP

                  488
      Madison Avenue, 12th Floor

                  New
      York, New York  10022

                  USA

                  Attention:  Adam
      S. Gottbetter

                  Facsimile:  212-400-6901

                  Telephone:  212-400-6900

                  asg@gottbetter.com

                    

                  -and-

                    

                  Legal
      & Business Consulting

                  Carrera
      14 No. 119 – 24

                  Bogotá,
      Colombia

                  Attention:
      Patricia Mantilla Neissa

                  Telephone:
      571-6126440

                  PatriciaMantilla@LegalBC.com

                
	  
      	  
      
	
                  If
      to Seller, to:

                    
      

                  c/o
      Oranje Nassau Energie BV

                  Rembrandt
      Tower 22 floor

                  1096
      HA Amsterdam

                  The
      Netherlands

                  Attention:  Alexander
      Berger, CEO

                  Office:  31-20-56-7166

                  Facsimile:  31-20-567-7122

                  berger@onebv.com

                	
                  With
      a required copy to:

                   
      

                  Thompson
      & Knight LLP

                  One
      Arts Plaza

                  1722
      Routh Street, Suite 1500

                  Dallas,
      TX 75201-2533

                  USA

                  Attention:
      Andrew B. Derman

                  Facsimile:
      214-969-1751

                  Telephone:
      214-969-1700

                  Andrew.Derman@tklaw.com

                   
       

                  -and-

                    
      

                  Allen
      & Overy Luxembourg

                  33
      avenue J.F. Kennedy

                  L-1855
      Luxembourg

                  PO
      Box 5017

                  L-1050
      Luxembourg

                  Attention:  Marc
      Feider

                  Telephone:
      +352-44-44-55-1

                

        

      

    

     

    or to
such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.

     

    
      
        
        

      

      
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    11.2        Amendments and
Waivers.

    

    (a)           Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.

     

    (b)           No
failure or delay by any party in exercising any right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.

     

    (c)           To
the maximum extent permitted by Law, (i) no waiver that may be given by a party
shall be applicable except in the specific instance for which it was given and
(ii) no notice to or demand on one party shall be deemed to be a waiver of any
obligation of such party or the right of the party giving such notice or demand
to take further action without notice or demand.

     

    11.3        Expenses.  Each
party shall bear its own costs and expenses in connection with this Agreement
and the transactions contemplated by this Agreement, including all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties, whether or not the Acquisition is consummated.

    

    11.4        Successors and
Assigns.  This
Agreement may not be assigned by either party hereto without the prior written
consent of the other party; provided that, without such consent, Buyer may
transfer or assign, in whole or in part or from time to time, to one or more of
its Affiliates, the right to purchase all or a portion of the Acquired Shares,
but no such transfer or assignment will relieve Buyer of its obligations
hereunder. Subject to the foregoing, all of the terms and provisions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.

    

    11.5        Governing
Law.  This
Agreement and the Exhibits and Schedules hereto shall be governed by and
interpreted and enforced in accordance with the Laws of the State of New York,
without giving effect to any choice of Law or conflict of Laws rules or
provisions (whether of the State of New York or any other jurisdiction) that
would cause the application of the Laws of any jurisdiction other than the State
of New York.

     

    
      
        
        

      

      
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    11.6        Consent to
Jurisdiction.  Each
party irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York sitting in the Borough of
Manhattan for the purposes of any Action arising out of this Agreement or any
transaction contemplated by this Agreement. Each party agrees to commence any
such Action solely in such court. Each party further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party’s
respective address set forth above shall be effective service of process for any
Action with respect to any matters to which it has submitted to jurisdiction in
this Section 11.6. Each party irrevocably and unconditionally waives any
objection to the laying of venue of any Action arising out of this Agreement or
the transactions contemplated by this Agreement in the United States District
Court for the Southern District of New York sitting in the Borough of Manhattan,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such Action brought in any such court
has been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH
PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.

    

    11.7        Dispute
Resolution.

    

    (a)           Notification.  A
party who desires to submit a controversy or claim arising out of this Agreement
or any related agreement (a “Dispute”) for resolution shall
commence the dispute resolution process by providing the other parties to the
Dispute written notice of the Dispute (“Notice of
Dispute”).  The Notice of Dispute shall identify the parties to
the Dispute and contain a brief statement of the nature of the Dispute and the
relief requested.

     

    (b)           Mediation.  Subject
to the requirements of negotiation between Senior Executives pursuant
to  the parties to the Dispute shall seek to resolve the Dispute by
mediation. Within 30 days after the date of the first negotiation meeting among
Senior Executives, any party to the Dispute may initiate such mediation pursuant
to the mediation rules of the Chamber of Commerce of New York then in effect, as
modified herein, by sending all other parties to the Dispute a written request
that the Dispute be mediated.  The parties receiving such written
request will promptly respond to the requesting party so that all parties to the
Dispute may jointly select a neutral mediator and schedule the mediation
session.  The mediator shall meet with the parties to the Dispute to
mediate the Dispute within 30 days after the date of receipt of the written
request for mediation. Notwithstanding the above, any party may initiate
arbitration proceedings such Dispute within 30 days after the date of the
Mediation proceedings have finalized.

     

    (c)           Arbitration.  Any
Dispute not finally resolved by alternative dispute resolution procedures, shall
be exclusively and definitively resolved through final and binding arbitration,
it being the intention of the parties that this is a broad form arbitration
agreement designed to encompass all possible disputes.

     

    (i)           Rules.  The
arbitration shall be conducted in accordance with the arbitration rules (as then
in effect) of the of the American Arbitration Association (the “Rules”).

     

    (ii)          Number of
Arbitrators.  The arbitration shall be conducted by three
arbitrators, unless all parties to the Dispute agree to a sole arbitrator within
30 days after the filing of the arbitration. For greater certainty, The filing
of the arbitration means the date on which the claimant’s request for
arbitration is received by the other parties to the Dispute.

     

    
      
        
        

      

      
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    (iii)         Method of Appointment of the
Arbitrators.  If the arbitration is to be conducted by a sole
arbitrator, then the arbitrator will be jointly selected by the parties to the
Dispute.  If the parties to the Dispute fail to agree on the
arbitrator within 30 days after the filing of the arbitration, then the American
Arbitration Association shall appoint the arbitrator. If the arbitration is to
be conducted by three arbitrators and there are only two parties to the Dispute,
then each party to the Dispute shall appoint one arbitrator within 30 days of
the filing of the arbitration, and the two arbitrators so appointed shall select
the presiding arbitrator within 30 days after the latter of the two arbitrators
has been appointed by the parties to the Dispute.  If a party to the
Dispute fails to appoint its party-appointed arbitrator or if the two
party-appointed arbitrators cannot reach an agreement on the presiding
arbitrator within the applicable time period, then the American Arbitration
Association shall appoint the remainder of the three arbitrators not yet
appointed.

     

    (iv)         Consolidation.  If
the parties initiate multiple arbitration proceedings, the subject matters of
which are related by common questions of law or fact and which could result in
conflicting awards or obligations, then all such proceedings may be consolidated
into a single arbitral proceeding.

     

    (v)          Place of
Arbitration.  Unless otherwise agreed by all parties to the
Dispute, the place of arbitration shall be Dallas, Texas, United
States.

     

    (vi)         Language.  The
arbitration proceedings shall be conducted in the Spanish or English language
and the arbitrator(s) shall be fluent in the English language.

     

    (vii)        Entry of
Judgment.  The award of the arbitral tribunal shall be final
and binding.  Judgment on the award of the arbitral tribunal may be
entered and enforced by any court of competent jurisdiction.

     

    (viii)       Interim Measures.
During the Arbitration proceedings, the parties shall continue with the
execution of the Contract and of the Agreement, except if the subject matter of
the arbitration makes impossible its execution.

     

    (ix)          Costs and Attorneys’
Fees.  The arbitral tribunal is authorized to award tribunal
costs and attorneys’ fees and to allocate them between the parties to the
Dispute.  The costs of the arbitration proceedings, including
attorneys’ fees, shall be borne by the non-winning party or proportionally to
each party’s success in the award, in the manner determined by the arbitral
tribunal.

     

    (x)           Interest.  The
award may include interest, as determined by the arbitral award, from the date
of any default or other breach of this Agreement until the arbitral award is
paid in full.

     

    (xi)          Currency of
Award.  The arbitral award shall be made and payable in United
States dollars, free of any tax or other deduction.

     

    
      
        
        

      

      
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    11.8        Counterparts.  This
Agreement may be executed in counterparts, and either party hereto may execute
any such counterpart, each of which when executed and delivered shall be deemed
to be an original and both of which counterparts taken together shall constitute
but one and the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other party
hereto. The parties agree that the delivery of this Agreement may be effected by
means of an exchange of signatures delivered by facsimile or electronic
transmission with original copies to follow by mail or courier
service.

    

    11.9        Third Party
Beneficiaries.  No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder; except that in the case of
ARTICLE X hereof, the other Indemnitees and their respective heirs, executors,
administrators, legal representatives, successors and assigns, are intended
third party beneficiaries of such sections and shall have the right to enforce
such sections in their own names.

    

    11.10      Entire
Agreement.  This
Agreement and the documents, instruments and other agreements specifically
referred to herein or delivered pursuant hereto set forth the entire
understanding of the parties hereto with respect to the Acquisition. All
Schedules referred to herein are intended to be and hereby are specifically made
a part of this Agreement. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement.

    

    11.11      Captions.  All
captions contained in this Agreement are for convenience of reference only, do
not form a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.

    

    11.12      Severability.  Any
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

    

    11.13      Specific
Performance.  Buyer
and Seller each agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed by them in accordance
with the terms hereof and that each party shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at Law or
equity.

    

    11.14      Interpretation.

    

    (a)           The
meaning assigned to each term defined herein shall be equally applicable to both
the singular and the plural forms of such term and vice versa, and words
denoting either gender shall include both genders as the context requires. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.

     

    (b)           The
terms “hereof”, “herein” and “herewith” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole and
not to any particular provision of this Agreement.

     

    
      
        
        

      

      
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    (c)           When
a reference is made in this Agreement to an Article, Section, paragraph, Exhibit
or Schedule, such reference is to an Article, Section, paragraph, Exhibit or
Schedule to this Agreement unless otherwise specified.

     

    (d)           The
word “include”, “includes”, and “including” when used in this Agreement shall be
deemed to be followed by the words “without limitation”, unless otherwise
specified.

     

    (e)           A
reference to any party to this Agreement or any other agreement or document
shall include such party’s predecessors, successors and permitted
assigns.

     

    (f)           Reference
to any Law means such Law as amended, modified, codified, replaced or reenacted,
and all rules and regulations promulgated thereunder.

     

    (g)           The
parties have participated jointly in the negotiation and drafting of this
Agreement. Any rule of construction or interpretation otherwise requiring this
Agreement to be construed or interpreted against any party by virtue of the
authorship of this Agreement shall not apply to the construction and
interpretation hereof.

     

    (h)           All
accounting terms used and not defined herein shall have the respective meanings
given to them under Lux GAAP or US GAAP, as the context requires.

     

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        76

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

     

    

    
      
        
          
            
              	
                      La Cortez Energy, Inc. (as
      Buyer)

                    	 
      
	 
      	 
      
	
                      By:

                    	 
      	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      
	 
      	 
      
	
                      Avante Petroleum S.A.
      (as Seller)

                    	 
      
	 
      	 
      
	
                      By:

                    	 
      	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      

            

          

        

      

    

     

    
      
        
        

      

      
        77

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
D

     

    A.           Buyer
and Seller shall enter into a joint venture to develop the exploration play in
the Rio d’Oro License Block as shown on the map attached as Annex D-1 (the “Strip”) once written
amendments to the terms of the Company’s contract with Ecopetrol satisfactory to
Buyer and Seller are granted by Ecopetrol.  Buyer will own 70% of the
joint venture and commit to pay 70% of the geological and geophysical costs, and
Seller will own 30% of the joint venture and commit to pay 30% of the geological
and geophysical costs, up to a maximum commitment by Seller of
$1,500,000.  If the total costs of the venture exceed $5,000,000
(i.e., if Seller’s 30% portion exceeds $1,500,000), then Seller may elect either
(a) not to pay any additional costs of the venture, in which case all future
payments by Buyer will dilute ownership percent in proportion to the percentage
of total venture costs paid by each party, or (b) to continue to pay additional
costs of the venture at 30% or (c) to pay a larger proportion of the costs of
the venture, in which case Seller’s ownership percent will be increased in
proportion to the percentage of total venture costs paid by each party, up to a
maximum ownership interest for Seller of 50%.

     

    B.   
        If Buyer and Seller are unable
to conclude satisfactory written amendments to the terms of the Company’s
contract with Ecopetrol relating to the exploration and development of the
Strip, each of Buyer and Seller agrees that for a period of two years after the
date of this Agreement it will not, and it will cause its Subsidiaries and its
and their respective directors, officers, employees, Affiliates and
Representatives not to, pursue the making or implementation of any exploration
and development of the Strip without first giving the other party (or, in the
case of Seller, Seller’s designee, provided such designee is an Affiliate of
Seller) the option  (the “JV Option”) to enter into a
joint venture with respect to such exploration and development in which Buyer
will own 70% of the joint venture and commit to pay 70% of the geological and
geophysical costs, and Seller will own 30% of the joint venture and commit to
pay 30% of the geological and geophysical costs, up to a maximum commitment by
Seller of $1,500,000.  If the total costs of the venture exceed
$5,000,000 (i.e., if Seller’s 30% portion exceeds $1,500,000), then Seller may
elect either (a) not to pay any additional costs of the venture, in which case
all future payments by Buyer will dilute ownership percent in proportion to the
percentage of total venture costs paid by each party, or (b) to continue to pay
additional costs of the venture at 30% or (c) to pay a larger proportion of the
costs of the venture, in which case Seller’s ownership percent will be increased
in proportion to the percentage of total venture costs paid by each party, up to
a maximum ownership interest for Seller of 50%.  If either Party does
not for any reason accept such JV Option within a reasonable time after the
other Party (the “Offeror”) has proposed in
writing to make or implement any exploration and development of the Strip, the
Offeror shall be free to undertake such proposed exploration and development of
the Strip, either by itself or with any other Person or Persons.

     

    C.      
     Except with respect to this Agreement and the
transactions contemplated hereby, each of Buyer and Seller agrees that for a
period of three years after the date of this Agreement it will not, and it will
cause its Subsidiaries and its and their respective directors, officers,
employees, Affiliates and Representatives not to, pursue any Exploration
Proposal (as defined below) in the Catatumbo Region without first giving the
other party (or, in the case of Seller, Seller’s designee, provided such
designee is an Affiliate of Seller) the option to have a 50% participation in
such Exploration Proposal, or such lower participating interest as may be
designated by the other party (or its designee).  For purposes of this
paragraph, “Exploration
Proposal” means (a) the making or implementation of any exploration and
development of Hydrocarbons in the Catatumbo area of Colombia, and (b) the
making or implementation of any exploration and development of the Strip if such
exploration and development is not otherwise addressed in clause “A” or clause
“B” above.

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