Document:

Unassociated Document

    EXHIBIT
      10.21

    

    Personal
      and Confidential

    

    THE
      COMMON STOCK OF GRAN TIERRA ENERGY, INC. ("GTRE") CONSTITUTES SECURITIES THAT
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
      APPLICABLE SECURITIES LAWS OF ANY STATE. THE COMMON STOCK MAY NOT, AT ANY TIME,
      BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER
      THE ACT AND STATE LAWS, OR DELIVERY TO GTRE OF AN OPINION OF LEGAL COUNSEL
      SATISFACTORY TO GTRE THAT SUCH REGISTRATION IS NOT REQUIRED. RESTRICTIONS ON
      TRANSFER WILL BE IMPRINTED ON THE DOCUMENTS EVIDENCING THE COMMON STOCK TO
      THE
      FOREGOING EFFECTS.

    

    THE
      PURCHASE OF COMMON STOCK INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED
      ONLY BY PERSONS WHO CAN BEAR THE RISK OF LOSING THEIR ENTIRE
      INVESTMENT.

    

    GRAN
      TIERRA ENERGY, INC.

    

    Units
      consisting of Common Stock, par value $.001 per share, and Common Stock Purchase
      Warrants

    

    FORM
      OF SUBSCRIPTION
      AGREEMENT

    

    Gran
      Tierra Energy Inc.

    c/o
      Sanders Morris Harris Inc.

    600
      Travis, Suite 3100

    Houston,
      Texas 77002

    

    Ladies
      and Gentlemen:

    

    This
      will
      confirm my agreement to become a stockholder of Gran Tierra Energy, Inc. ("GTRE"
      or the “Company”) and to purchase Units from GTRE consisting of one share of
      common stock, par value $.001 per share, and one Warrant to purchase 0.5 shares
      of GTRE Common Stock. I/we hereby acknowledge receipt of the Preliminary
      Confidential Private Placement Memorandum dated May 31, 2006 (together with
      the exhibits thereto, the "Memorandum"), with respect to GTRE. The Memorandum
      describes the terms under which the Units are being offered to
      subscribers.

    

    1. Subscription
      and Sale.

    

    1.1 Subscription.
      Subject
      to the terms and conditions of this Agreement and the provisions of the
      Memorandum, I/we irrevocably subscribe for, and agree to purchase the number
      of
      Units of from GTRE for the subscription price indicated on the Signature Page.
      I
      am/we are tendering to GTRE (a) a completed, signed, and dated copy of this
      Agreement, (b) a completed, signed, and dated Purchaser's Questionnaire, and
      (c)
      a certified check or bank check in the amount of the subscription price (or
      I
      am/we are concurrently wire transferring such amount to the Escrow Agent or
      authorizing the payment of such amount from my account at Sanders Morris Harris
      Inc.).

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    1.2 Acceptance
      or Rejection of Subscription.
      All
      funds tendered by me/us will be held in a segregated subscription account
      pending acceptance or rejection of this Agreement and the closing of my/our
      purchase of the Common Stock. This Agreement will either be accepted, in whole
      or in part, subject to the prior sale of the Units, or rejected, by GTRE as
      promptly as practicable. If this Agreement is accepted only in part, I/we agree
      to purchase such smaller number of shares of Units as GTRE determines to sell
      to
      me/us. If this Agreement is rejected for any reason or no reason, including,
      the
      termination of the offering of the Units by GTRE, this Agreement and all funds
      tendered with it will be promptly returned to me/us, without deduction of any
      kind, and this Agreement will be void and of no further force or effect. Deposit
      and collection of the check tendered, or receipt of funds wired or delivered
      from my/our account at Sanders Morris Harris Inc., with this Agreement will
      not
      constitute acceptance of this Agreement.

    

    1.3  Closing.
      Subscriptions will be accepted at one or more closings, as described in the
      Memorandum. On closing, the subscription evidenced hereby, if not previously
      rejected, will, in reliance on my/our representations and warranties, be
      accepted, in whole or in part, and GTRE will execute a copy of this Agreement
      and return it to me/us. If my/our subscription is accepted only in part, this
      Agreement will be marked to indicate such fact, and GTRE will return to me/us
      the portion of the funds tendered by me/us representing the unaccepted portion
      of my/our subscription, without deduction of any kind. The Units subscribed
      for
      will not be deemed to be issued to, or owned by, me/us until GTRE has accepted
      this Agreement.

    

    2. Representations,
      Warranties, and Covenants of the Purchaser.
      I/we
      represent, warrant, and covenant to GTRE that:

    

    2.1 General:

    

    (a) If
      I am a
      natural person, I have the legal capacity and all requisite authority to enter
      into, execute, and deliver the Transaction Documents, to purchase the Common
      Stock, and to perform all the obligations required to be performed by me
      thereunder. If we are a corporation, partnership, limited liability company,
      trust, estate, or other entity, we are authorized to purchase the Common Stock
      and otherwise to comply with our obligations under the Transaction Documents.
      The person signing this Agreement on behalf of such entity is duly authorized
      by
      such entity to do so. The Transaction Documents are my/our valid and binding
      agreements and enforceable against me/us in accordance with their
      terms.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (b) My/our
      principal residence is in the jurisdiction indicated herein, or if we are a
      corporation, partnership, limited liability company, trust, estate, or other
      entity, we are organized and qualified under the law of the state or foreign
      jurisdiction indicated below and I/we have no intention of becoming a resident
      or domiciliary of any jurisdiction other than the one indicated by our
      address.

    

    (c) I
      am/we
      are subscribing to purchase the Units solely for my/our own account, for
      investment, and not with a view to, or for resale in connection with, any
      distribution. I am/we are not acquiring the Units as an agent or otherwise
      for
      any other person.

    

    2.2 Information
      Concerning the Offering:

    

    (a) I/we
      have
      received, carefully read, and understood the Memorandum. I/we have not been
      furnished any offering literature other than the Memorandum and the Exhibits
      attached thereto and have relied only on the information contained therein
      and
      my/our own due diligence efforts and inquiries with respect to the Offering.
      The
      Units were not offered to me/us by any means of general solicitation or general
      advertising. 

    

    (b) 
      I/we
      understand that the offering of the Units is being made without registration
      of
      the underlying shares of Common Stock under the Securities Act of 1933, as
      amended (the "Act"), or any state securities or blue sky laws in reliance on
      exemptions from such registration, and that such reliance is based in part
      on my
      representations and warranties set forth in this Section 2 and on the
      information set forth in the Purchaser's Questionnaire tendered by me/us to
      GTRE
      with this Agreement.

    

    (c) In
      formulating a decision to invest in the Units and the underlying Common Stock,
      I/we (and my/our Purchaser Representative (as defined in Rule 501(h) of
      Regulation D under the Act for U.S. investors and Regulation S for investors
      from other jurisdictions), if any) have been given the opportunity to ask
      questions of, and to obtain any information necessary to permit me to verify
      the
      accuracy of the information set forth in the Memorandum from, representatives
      of
      GTRE and have been furnished all such information so requested. I/we have not
      relied or acted on the basis of any representations or other information
      purported to be given on behalf of GTRE except as set forth in the Memorandum
      (it being understood that no person has been authorized by GTRE to furnish
      any
      representations or other information except as set forth in the
      Memorandum).

    

    (d) I/we
      understand that the purchase of the shares of Common Stock involves various
      risks and that an investment in GTRE should be regarded as speculative and
      involving a high degree of risk. I am/we are fully aware of the nature of my
      investment in GTRE and the lack of liquidity of an investment in the Units
      and
      underlying shares and Warrants of Common Stock being offered pursuant to the
      Offering, because the shares may not be sold, transferred, or otherwise disposed
      of except pursuant to an effective registration statement under the Act or
      an
      exemption from such registration, and that in the absence of such registration
      or exemption, the shares of Common Stock must be held indefinitely.

    

    (e) I/we
      understand that no federal or state agency has passed upon the Common Stock
      of
      GTRE or made any finding or determination concerning the fairness or
      advisability of an investment in GTRE.

    

    2.3 Status
      of Subscriber, Additional Information:

    

    (a) If
      we are
      a corporation, partnership, limited liability company, trust, estate, or other
      entity, we are an "accredited investor," as that term is defined in Rule 501(a)
      of Regulation D under the Act for US investors and Regulation S for residents
      of
      other jurisdictions (see the Purchaser's Questionnaire for a list of the types
      of accredited investors) and meet the experience standards set forth in Section
      2.3(b) below. If I am a natural person, I am at least 21 years of age and am
      an
      "accredited investor" and meet the experience standards set forth in Section
      2.3(b) below.  

     

    (b) I
      (together with my Purchaser Representative, if any), or if we are a corporation,
      partnership, limited liability company, trust, estate, or other entity, we
      by
      and through our officers, directors, trustees, managers, partners, employees,
      or
      other advisors, (i) are experienced in evaluating companies such as GTRE, (ii)
      have determined that the Units are a suitable investment for me/us, and (iii)
      have such knowledge, skill, and experience in business, financial, and
      investment matters so that I am/we are capable of evaluating the merits and
      risks of an investment in the Common Stock. To the extent necessary, I/we have
      retained, at my/our expense, and relied upon, appropriate professional advice
      regarding the investment, tax, and legal merits and consequences of this
      Agreement and owning the Units, and I/we and my/our advisers or representatives
      have investigated my/our investment in GTRE to the extent I/we and they have
      deemed advisable. I/we have the financial ability to bear the economic risks
      of
      our entire investment for an indefinite period and no need for liquidity with
      respect to our investment in GTRE, and, if I am a natural person, I have
      adequate means for providing for my current needs and personal
      contingencies.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (c) I/we
      agree to furnish any additional information requested to assure compliance
      with
      the Act and state securities laws in connection with the purchase and sale
      of
      the Units. If there is any material change in the information I/we are
      furnishing hereunder prior to the date this Agreement is accepted, I/we will
      immediately furnish such revised or corrected information to GTRE.

    

    2.4 Restrictions
      on Transfer or Sale of the Common Stock:

    

    (a) I
      /we
      will not sell, assign, pledge, give, transfer, or otherwise dispose of any
      the
      Common Stock or any interest therein, or make any offer or attempt to do any
      of
      the foregoing, except pursuant to a registration of the Common Stock under
      the
      Act and applicable state securities laws or in a transaction that is exempt
      from
      the registration provisions of the Act and any applicable state securities
      laws.
      I/we understand that GTRE will not be under any obligation to register the
      Common Stock under the Act or any state securities law (except as provided
      in
      the Registration Rights Agreement (as hereinafter defined)) or to comply with
      the terms of any exemption provided under the Act or any state securities law
      with respect to the Common Stock.

    

    (b) I/we
      have
      not offered or sold any portion of my/our Common Stock and have no present
      intention of dividing my/our Common Stock with others or of reselling or
      otherwise disposing of any portion of my/our shares of Common Stock either
      currently or after the passage of a fixed or determinable period of time or
      upon
      the occurrence or nonoccurrence of any predetermined event or
      circumstance.

    

    2.5 Independent
      Nature of Investor's Obligations and Rights.
      My/our
      obligations under this Agreement, the Registration Rights Agreement, and any
      other documents delivered in connection herewith and therewith (collectively,
      the "Transaction Documents") are several and not joint with the obligations
      of
      any other purchaser of Common Stock, and I/we shall not be responsible in any
      way for the performance of the obligations of any other purchaser of Common
      Stock under any Transaction Document. My/our decision to purchase Common Stock
      pursuant to the Transaction Documents has been made by me/us independently
      of
      any other purchaser of Common Stock. Nothing contained herein or in any
      Transaction Document, and no action taken by any purchaser of Common Stock
      pursuant thereto, shall be deemed to constitute such purchasers as a
      partnership, an association, a joint venture, or any other kind of entity,
      or
      create a presumption that the purchasers of Common Stock are in any way acting
      in concert or as a group with respect to such obligations or the transactions
      contemplated by the Transaction Document. I/we acknowledge that no other
      purchaser of Common Stock has acted as agent for me/us in connection with making
      my/our investment hereunder and that no other purchaser of Common Stock will
      be
      acting as my/our agent in connection with monitoring my/our investment in the
      Common Stock or enforcing my/our rights under the Transaction Documents. I/we
      shall be entitled to independently protect and enforce my/our rights, including
      without limitation the rights arising out of this Agreement or out of the other
      Transaction Documents, and it shall not be necessary for any other purchaser
      of
      Common Stock to be joined as an additional party in any proceeding for such
      purpose.

    

    2.6 Due
      Authority, Etc.
      If we
      are a corporation, partnership, limited liability company, trust, estate, or
      other entity: (a) we are duly organized, validly existing, and in good standing
      under the laws of the jurisdiction of our formation and have all requisite
      power
      and authority to own our properties and assets and to carry on our business,
      and
      at GTRE's request, will furnish it with copies of our organizational documents,
      (b) we have the requisite power and authority to execute the Transaction
      Documents and to carry out the transactions contemplated hereby, (c) our
      execution and performance of the Transaction Documents do not and will not
      result in any violation of, or conflict with, any term of our charter, bylaws,
      partnership agreement, operating agreement or regulations, or indenture of
      trust, as the case may be, or any instrument to which we are a party or by
      which
      we are bound or any law or regulation applicable to us, (d) our execution and
      performance of the Transaction Documents has been duly authorized by all
      necessary corporate, partnership, or other action, (e) we were not specifically
      formed to invest in GTRE, and (f) the individual who has executed the
      Transaction Documents on our behalf was duly authorized to do so by all
      requisite corporate, partnership, or other action and, on request of GTRE,
      we
      will furnish appropriate evidence of the authority of such individual to act
      on
      our behalf.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    2.7 Valid
      Obligation.
      This
      Agreement has been duly executed and delivered me/us or on our behalf and,
      if
      and when accepted by GTRE, in whole or in part, will constitute my/our legal,
      valid, and binding obligation, enforceable in accordance with its terms (except
      as limited by principles of equity or bankruptcy, insolvency, or other similar
      laws affecting enforcement of creditors' rights generally).

    

    2.8 ERISA
      Matters.
      If we
      are an employee benefit plan within the meaning of the Employee Retirement
      Income Security Act of 1974, as amended ("ERISA"):

    

    (a) We
      and
      our plan fiduciaries are not affiliated with, and are independent of GTRE,
      and
      are informed of and understand GTRE's investment objectives, policies, and
      strategies.

    

    (b) We
      represent that the purchase of the Common Stock will not involve any transaction
      that is subject to the prohibition of Section 406 of ERISA or in connection
      with
      which a penalty could be imposed under Section 502(i) of ERISA or a tax could
      be
      imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as
      amended (the "Code").

    

    (c)
       The
      trustee or other plan fiduciary directing the investment:

    

    (i) in
      making
      the proposed investment, is aware of and has taken into consideration the
      diversification requirements of Section 404(a)(1)(C) of ERISA; and

    

    (ii) has
      concluded that the proposed investment in GTRE is prudent and is consistent
      with
      the other applicable fiduciary responsibilities under ERISA.

    

    (d) This
      Agreement has been duly executed on our behalf by a duly designated Named
      Fiduciary (within the meaning of Section 402(a)(2) of ERISA).

    

    (e) If
      we are
      an individual retirement account (IRA) or employee benefit plan not subject
      to
      Title I of ERISA, such as a governmental or church plan, the owner of the
      individual retirement account or other fiduciary directing the investment of
      the
      plan has concluded that the proposed investment in Common Stock of Common Stock
      is prudent and consistent with its fiduciary responsibilities, if
      any.

    

    2.9 Fees
      and Commissions.
      No fees
      or commissions have been paid or are payable by me/us in connection with this
      Agreement and the issuance of shares of Common Stock to me/us.

    

    3. Registration
      Rights Agreement; Power of Attorney.
      I/we
      further agree to be bound by the terms of and hereby execute the Registration
      Rights Agreement among GTRE and the purchasers of the Units and Common Stock
      of
      GTRE being offered pursuant to the Offering (the "Registration Rights
      Agreement"). By signing below, I/we irrevocably constitute and appoint Sanders
      Morris Harris Inc., a Texas corporation ("SMH"), as my/our true and lawful
      agent
      and attorney-in-fact with full power of substitution and full power and
      authority in my/our name, place, and stead to execute and deliver the
      Registration Rights Agreement and to take such actions as may be necessary
      or
      appropriate to carry out the terms of the Registration Rights Agreement. The
      power of attorney hereby granted will be deemed coupled with an interest, will
      be irrevocable, and will survive and not be affected by my/our subsequent death,
      incapacity, dissolution, insolvency, or termination or any delivery by me/us
      of
      an assignment in whole or in part of my/our shares of Common Stock. The
      foregoing power of attorney may be exercised by SMH either by signing separately
      or jointly as attorney-in-fact for each or all of the subscribers for the Common
      Stock or by a single signature of SMH acting as attorney-in-fact for all of
      them. GTRE may rely and act upon any writing believed in good faith to be signed
      by SMH or any authorized representative of SMH, and may assume that all actions
      of SMH and any authorized representative of SMH have been duly authorized by
      me/us.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    4. Securities
      Purchase Agreement; Power of Attorney.
      I/we
      further agree to be bound by the terms of and hereby execute the Securities
      Purchase Agreement among GTRE and the purchasers of the Units and Common Stock
      of GTRE being offered pursuant to the Offering (the "Purchase Agreement").
      By
      signing below, I/we irrevocably constitute and appoint Sanders Morris Harris
      Inc., a Texas corporation ("SMH"), as my/our true and lawful agent and
      attorney-in-fact with full power of substitution and full power and authority
      in
      my/our name, place, and stead to execute and deliver the Purchase Agreement
      and
      to take such actions as may be necessary or appropriate to carry out the terms
      of the Purchase Agreement. The power of attorney hereby granted will be deemed
      coupled with an interest, will be irrevocable, and will survive and not be
      affected by my/our subsequent death, incapacity, dissolution, insolvency, or
      termination or any delivery by me/us of an assignment in whole or in part of
      my/our shares of Common Stock. The foregoing power of attorney may be exercised
      by SMH either by signing separately or jointly as attorney-in-fact for each
      or
      all of the subscribers for the Common Stock or by a single signature of SMH
      acting as attorney-in-fact for all of them. GTRE may rely and act upon any
      writing believed in good faith to be signed by SMH or any authorized
      representative of SMH, and may assume that all actions of SMH and any authorized
      representative of SMH have been duly authorized by me/us.

    

    5. Form
      of Warrant Agreement; Power of Attorney.
      I/we
      further agree to be bound by the terms of and hereby execute the Form of Warrant
      Agreement among GTRE and the purchasers of the Units and Common Stock of GTRE
      being offered pursuant to the Offering (the "Warrant Agreement"). By signing
      below, I/we irrevocably constitute and appoint Sanders Morris Harris Inc.,
      a
      Texas corporation ("SMH"), as my/our true and lawful agent and attorney-in-fact
      with full power of substitution and full power and authority in my/our name,
      place, and stead to execute and deliver the Warrant Agreement and to take such
      actions as may be necessary or appropriate to carry out the terms of the Warrant
      Agreement. The power of attorney hereby granted will be deemed coupled with
      an
      interest, will be irrevocable, and will survive and not be affected by my/our
      subsequent death, incapacity, dissolution, insolvency, or termination or any
      delivery by me/us of an assignment in whole or in part of my/our shares of
      Common Stock. The foregoing power of attorney may be exercised by SMH either
      by
      signing separately or jointly as attorney-in-fact for each or all of the
      subscribers for the Common Stock or by a single signature of SMH acting as
      attorney-in-fact for all of them. GTRE may rely and act upon any writing
      believed in good faith to be signed by SMH or any authorized representative
      of
      SMH, and may assume that all actions of SMH and any authorized representative
      of
      SMH have been duly authorized by me/us.

    

    6.  Waiver,
      Amendment, Binding Effect.
      Neither
      this Agreement nor any provisions hereof shall be modified, changed, discharged,
      or terminated except by an instrument in writing, signed by the party against
      whom any waiver, change, discharge, or termination is sought. The provisions
      of
      this Agreement shall be binding upon and accrue to the benefit of the parties
      hereto and their respective heirs, legal representatives, successors, and
      assigns.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    7.  Assignability.
      Neither
      this Agreement nor any right, remedy, obligation, or liability arising hereunder
      or by reason hereof shall be assignable by GTRE or me/us without the prior
      written consent of the other.

    

    8. Applicable
      Law.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
      TEXAS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
      THEREOF.

    

    9. 
      Counterparts.
      This
      Agreement may be executed in any number of counterparts and by facsimile, each
      of which when so executed and delivered shall be deemed to be an original and
      all of which together shall be deemed to be one and the same
      agreement.

    

    10. Notices.
      All
      notices and other communications provided for herein shall be in writing and
      shall be deemed to have been duly given if delivered personally or sent by
      registered or certified mail, return receipt requested, postage
      prepaid:

    

    (a) If
      to
      GTRE, to it at the following address:

    

    Gran
      Tierra Energy, Inc.

    300,
      611-10th Avenue S.W.

    Calgary,
      Alberta, Canada, T2R 0B2

    Attn:
      James Hart

    

    
      
        (b)
          If
          to
          me/us at the address

      

    

    set
      forth
      on the signature page hereto; 

    

    or
      at
      such other address as either party shall have specified by notice in writing
      to
      the other.

    

    11. Survival.
      All
      representations, warranties, and covenants contained in this Agreement shall
      survive (i) the acceptance of the Subscription by GTRE, (ii) changes in the
      transactions, documents and instruments described in the Memorandum, and (iii)
      my death or disability.

    

    12. Notification
      of Changes.
      I/we
      hereby covenant and agree to notify GTRE upon the occurrence of any event prior
      to the closing of the purchase of the shares of Common Stock pursuant to this
      Agreement, which would cause any representation, warranty, or covenant by me/us
      contained in this Agreement to be false or incorrect.

    

    13. Purchase
      Payment.
      The
      purchase price is being paid herewith by delivery of either a certified check
      or
      bank check payable to "GTRE
      -
      Escrow
      Account-Retail” or alternatively, by wire transfer or authorization of Sanders
      Morris Harris Inc. to pay from my account. All payments made as provided in
      this
      Paragraph 11 shall be deposited as soon as practicable and held in a segregated
      escrow account until the earlier to occur of (a) the sale of all of the
      securities in this Offering or (b) the termination of this
      Offering.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    GRAN
      TIERRA ENERGY, INC.

    Subscription
      Agreement

    Signature
      Page

    

    IN
      WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on
      _____________, 2006.

    

      
        	 	 	 
	
                NUMBER
                  OF UNITS SUBSCRIBED FOR:

              	 	
                _________________________________

              
	
                AMOUNT
                  OF SUBSCRIPTION ($1.50 PER UNIT): 

              	 	
                $_________________________________

              
	 	 	
                 

              
	
                NAME
                  OF SUBSCRIBER(S):

              	 	 
	 	 	 
	
                (1)___________________________________

              	
                Signature:

              	
                _________________________________

              
	
                                
                  (Please print name)

              	
                Date:

              	
                _________________________________

              
	 	
                Name:

              	
                _________________________________

              
	 	
                Title:

              	
                _________________________________

              
	 	 	 
	
                Joint
                  Tenant/Tenant in Common (if applicable):

              	 	 
	 	 	 
	
                (2)___________________________________

              	
                Signature:

              	
                _________________________________

              
	
                                  (Please
                  print name)

              	
                Date:
                  

              	
                 _________________________________

              
	 	 	 
	
                ADDRESS
                  (including mailing address, if applicable):

              	 	 
	 	 	 
	
                _______________________________

              	 	
                _________________________________

              
	
                _______________________________

              	 	
                _________________________________

              
	
                _______________________________

              	 	
                _________________________________

              
	 	 	 
	
                TAXPAYER
                  I.D. NUMBER OR SOCIAL SECURITY

              	 	 
	
                NUMBER
                  OF EACH SUBSCRIBER:

              	 	
                ________________________________

              
	 	 	
                ________________________________

              

      

    TYPE
      OF
      OWNERSHIP:

    

    
      	 	
              ( 
                )

            	
              Individual

            

    

    
      	 	
              ( 
                )

            	
              Tenants
                in common

            

    

    
      	 	
              ( 
                )

            	
              Joint
                tenants with right of survivorship

            

    

    
      	 	
              (
                 )

            	
              Community
                property (check only if resident of community property
                state)

            

    

    
      	 	
              (
                 )

            	
              Partnership
                (1)

            

    

    
      	 	
              (
                 )

            	
              Corporation
                (2)

            

    

    
      	 	
              (
                 )

            	
              Trust
                (3)

            

    

    
      	 	
              ( 
                )

            	
              Limited
                Liability Company (4)

            

    

    
      	 	
              (
                 )

            	
              Employee
                Benefit Plan under ERISA

            

    

    
      	 	
              ( 
                )

            	
              Other
                (please
                specify:____________________)

            

    

    ________________

    
      	
              1.

            	
              Please
                enclose a copy of the partnership agreement and a current list of
                all
                partners.

            

    

    
      	
              2.

            	
              Please
                enclose a copy of the articles or certificate of incorporation, bylaws,
                and a resolution authorizing this investment and indicating the authority
                of the signatory hereto.

            

    

    
      	
              3.

            	
              Please
                enclose a copy of the trust
                instrument.

            

    

    
      	
              4.

            	
              Please
                enclose a copy of the articles of formation and members' agreement
                or
                regulations.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    GRAN
      TIERRA ENERGY, INC.

    Acceptance
      of Subscription

    

     

    
      	Agreed
              and accepted as to $____________________________	Dated: 	_________________________________________
	 	 	 
	 	 	 
	 	GRAN
              TIERRA ENERGY, INC.
	 
 	 
 	 
 
	 	By:  	_________________________________________
	 	Name:	_________________________________________ 
	 	Its:	_________________________________________
	 	 	 
	 	
            
	 	 

    

     

    
      
        
        

      

      
        9Unassociated Document

    
      EXHIBIT
        10.22

    

     

    GRAN
      TIERRA ENERGY INC.

    

    SECURITIES
      PURCHASE AGREEMENT

    

    This
      SECURITIES PURCHASE AGREEMENT (this “Agreement”)
      is
      dated as of June 20, 2006 and is by and between GRAN TIERRA ENERGY INC., a
      Nevada corporation, with its principal office at 300, 611-10th Avenue S.W.
      Floor, 610-8th Avenue S.W., Calgary, Alberta CANADA (the “Company”),
      and
      CD Investment Partners, Ltd. (the “Purchaser”).
      

    

    WHEREAS,
      the Company desires to issue and sell to the Purchaser, and the Purchaser
      desires to purchase from the Company, units of its securities at a purchase
      price of $1.50 per Unit, each “Unit”
      comprising one share of its authorized but unissued shares of common stock,
      $0.001 par value per share, of the Company (including any securities into which
      or for which such shares may be exchanged for, or converted into, pursuant
      to
      any stock dividend, stock split, stock combination, recapitalization,
      reclassification, reorganization or other similar event the “Common
      Stock”),
      and a
      warrant to purchase one-half of a share of Common Stock at an exercise price
      equal to $0.875, in the form attached hereto as Exhibit
      A,
      for an
      aggregate purchase price of $1,000,000.50 payable by wire transfer of
      immediately available funds to an account designated by the Company (the
“Aggregate
      Proceeds”)
      on the
      terms and subject to the conditions set forth in this Agreement;
      and

    

    WHEREAS,
      simultaneously with or prior to entering into this Agreement, the Company,
      each
      of the Placement Agents (as defined below) and Sterling Bank, as Escrow Agent
      (the “Escrow
      Agent”),
      are
      entering into an Escrow Agreement dated the date hereof and attached as
Exhibit
      B
      (the
“Escrow
      Agreement”),
      pursuant to which the Company will deposit the Aggregate Proceeds paid into
      an
      escrow account (the “Escrow
      Account”)
      for
      release to the Company subject to the closing of the Argosy Acquisition;
      and

    

    WHEREAS,
      simultaneously with entering into this Agreement, the Company and the Purchaser
      are entering into that certain Registration Rights Agreement, dated as of the
      date hereof and attached as Exhibit
      C
      hereto
      (the “Registration
      Rights Agreement”),
      pursuant to which the Company shall register for resale the Shares and Warrant
      Shares (each as defined below) on the terms set forth therein. 

    

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

    

    1. Definitions.
      As used
      in this Agreement, the following terms shall have the following respective
      meanings: 

    

    (a) “Acquisitions”
means
      the Argosy Acquisition and the acquisition of oil and gas interests and related
      assets from Golden Oil Corporation pursuant to the Farm In Agreement dated
      as of
      May 15, 2006.

    

    (b) “Affiliate”
means
      any Person that, directly or indirectly, through one or more intermediaries,
      controls, is controlled by, or is under common control with, a Person, as such
      terms are used and construed under Rule 144 (as defined below). 

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

      
         

         

      

    

    (c) “Argosy
      Acquisition”
means
      the acquisition of (i)
      all
      of the limited partnership interests of Argosy Energy International, a Utah
      limited partnership (“Argosy”),
      (ii)
      all of the outstanding capital stock of Argosy Energy Corp., a Delaware
      corporation (“AEC”)
      and
      (iii) all of Crosby’s rights with respect to Crosby’s original purchase of
      interests in Argosy (collectively the “Argosy
      Interests”)
      pursuant
      to the Securities Purchase Agreement dated as of May 25, 2006 by and among
      the
      Company and Crosby Capital, L.L.C., a Texas limited liability
      company.

    

    (d) “Board”
means
      the board of directors of the Company. 

    

    (e) “Closing
      Date”
means
      the date hereof. 

    

    (f) “Engineer”
has
      the
      meaning set forth in Section 3.17.

    

    (g) “Environmental
      Laws”
has
      the
      meaning set forth in Section 3.14.

    

    (h) “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and all of the rules and
      regulations promulgated thereunder. 

    

    (i) “Exchangeable
      Shares”
means
      the shares of Gran Tierra Goldstrike Inc., a subsidiary of the Company, which
      are exchangeable into shares of Common Stock of the Company.

    

    (j) “GAAP” means
      generally accepted accounting principles as in effect from time to time in
      the
      United States of America.

    

    (k) “Material
      Adverse Effect”
means
      any event, occurrence or development that has had, or that could reasonably
      be
      expected to have, individually or in the aggregate with other events,
      occurrences or developments, a material adverse effect on the assets,
      liabilities (contingent or otherwise), business, affairs, operations, prospects
      or condition (financial or otherwise) of the Company.

    

    (l) “Person”
      (whether or not capitalized) means an individual, entity, partnership, limited
      liability company, corporation, association, trust, joint venture,
      unincorporated organization, and any government, governmental department or
      agency or political subdivision thereof. 

    

    (m) “Placement
      Agent”
means
      each of Deutsche Bank Securities, Inc. and Sanders Morris Harris Inc., and
      together they are collectively referred to as the “Placement
      Agents.”

    

    (n) “Reserve
      Reports”
has
      the
      meaning set forth in Section 3.17.

    

    (o) “Rule
      144”
means
      Rule 144 promulgated under the Securities Act and any successor or substitute
      rule, law or provision. 

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

      
         

      

    

    (p) “SEC”
means
      the Securities and Exchange Commission.

    

    (q) “SEC
      Documents”
has
      the
      meaning set forth in Section 3.7.

    

    (r) “Securities”
means
      the Shares, the Warrant and Warrant Shares.

    

    (s) “Securities
      Act”
means
      the Securities Act of 1933, as amended, and all of the rules and regulations
      promulgated thereunder. 

    

    (t) “Shares”
means
      the 666,667 shares of Common Stock issued and sold by the Company to the
      Purchaser hereunder.

    

    (u) “Trading
      Market”
means
      whichever of the New York Stock Exchange, the American Stock Exchange, the
      NASDAQ SmallCap Market or the NASD OTC Bulletin Board, on which the Common
      Stock
      is or will be listed or quoted for trading on the date in question. 

    

    (v) “Transaction
      Documents”
means,
      collectively, this Agreement, the Registration Rights Agreement and the
      Warrant.

    

    (w) “Transfer
      Agent Instructions”
means
      the Irrevocable Transfer Agent Instructions, in substantially the form of
Exhibit
      D,
      executed by the Company and delivered to and acknowledged in writing by the
      Company’s transfer agent.

    

       
      (x) “Unit”
has
      the
      meaning set forth in the recitals to this Agreement.

    

    (y) “Unit
      Price”
means
      $1.50 per Unit.

    

    (z) “Warrant”
means
      the warrant issued to the Purchaser pursuant to this Agreement to purchase
      333,334 shares of Common Stock.

    

    (aa) “Warrant
      Shares”
means
      the 333,334 shares of Common Stock issuable upon exercise of, or otherwise
      pursuant to, the Warrant.

     

    2. Purchase
      and Sale of Shares and Warrant.
      

    

    2.1 Purchase
      and Sale of Shares and Warrant.
      Subject
      to and upon the terms and conditions set forth in this Agreement, the Company
      agrees to issue and sell to the Purchaser, and the Purchaser hereby agrees
      (i)
      to purchase from the Company, at the Closing, the number of Units representing
      the Shares and the Warrant to acquire the Warrant Shares at the Unit Price
      and
      (ii) to pay the purchase price set forth in the Recitals in this Agreement,
      which are incorporated herein.

    

    2.2 Closing.
      Subject
      to and upon the terms and conditions set forth in this Agreement, the closing
      of
      the transactions contemplated under this Agreement (the “Closing”)
      shall
      take place at 10:00 am (Eastern Time) at the offices of Andrews Kurth LLP,
      450
      Lexington Avenue, New York, NY 10017, on the Closing Date, or on such other
      date
      and at such time as may be agreed upon between the Purchaser, on the one hand,
      and the Company, on the other hand. At the Closing, the Company shall deliver
      to
      the Purchaser, a stock certificate and a Warrant (or more, if reasonably
      requested by the Purchaser), registered in the name of the Purchaser or the
      Purchaser’s designee, representing the Shares and Warrant purchased by the
      Purchaser against payment of the purchase price by wire transfer of immediately
      available funds to the Escrow Account designated by the Escrow Agent, or with
      the Company’s consent, directly to the Company.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

      
        
           

           

        

      

    

    2.3 Placement
      Agents’ Fee.
      Upon
      the release of funds from the Escrow Account in accordance with the Escrow
      Agreement, the Company shall pay to the Placement Agents placement agent fees
      in
      connection with the transactions contemplated hereunder in the amount of seven
      percent (7%) of the Aggregate Proceeds, by wire transfer in accordance with
      the
      engagement letter by and among the Company and the Placement Agents.

    

    3. Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Purchaser, as of the date hereof
      and as of the Closing Date, as follows, and additionally covenants with respect
      to Section 3.39: 

    

    3.1 Incorporation.
      Each of
      the Company and the Subsidiaries (as defined in Section 3.20 below) is a
      corporation or other entity duly organized, validly existing and in good
      standing under the laws of the State of Nevada (or such other applicable
      jurisdiction of incorporation or formation as is indicated on Schedule 3.20),
      and is in good standing as a foreign corporation or other entity in each
      jurisdiction in which the nature of the business conducted or the character
      of
      the property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, would not
      result in a Material Adverse Effect. Each of the Company and the Subsidiaries
      has all requisite corporate power and authority to own its properties, to carry
      on its business as now conducted, to enter into the Transaction Documents to
      which it is a party and to carry out the transactions contemplated hereby and
      thereby. Neither the Company nor any of the Subsidiaries is in violation of
      any
      of the provisions of its Certificate of Incorporation (or other charter
      document) or By-laws. 

    

    3.2 Capitalization.
      Immediately prior to the consummation of the transactions to be effected at
      the
      Closing, the authorized capital stock of the Company consists of (a) 300,000,000
      shares of Common Stock, of which 27,600,985 shares were issued and outstanding
      as of the date hereof and 16,984,124 shares of Common Stock are reserved for
      issuance upon the exercise of Exchangeable Shares, and (b) 1 share of special
      voting stock through which the holders of Exchangeable Shares may exercise
      their
      voting rights through a trustee and (c) 25,000,000 shares of Preferred Stock,
      of
      which no shares are issued and outstanding as of the date hereof. Immediately
      after the consummation of the transactions contemplated hereby, the authorized
      and outstanding capital stock of the Company shall be as set forth in the
      preceding sentence except that there shall be 77,600,985 shares of Common Stock
      issued and outstanding (assuming there is no exercise of outstanding
      Exchangeable Shares, the Warrant issued to the Purchaser or any warrants issued
      by the Company to third party purchasers of the Company’s securities as
      contemplated by Section 5.1(n) below). After giving effect to the transactions
      contemplated hereby, all shares of the Company’s issued and outstanding capital
      stock have been duly authorized, are validly issued and outstanding, are fully
      paid and nonassessable, have been issued in compliance with all applicable
      securities laws, were not issued in violation of or subject to any preemptive
      rights or other rights to subscribe for or purchase securities, and conform
      in
      all material respects to the description thereof contained in the SEC Documents
      (as defined in Section 3.7). Except as set forth in Schedule
      3.2
      to the
      Disclosure Schedule, there are no existing options, warrants, calls, puts,
      preemptive (or similar) rights, subscriptions or other rights, agreements,
      arrangements or commitments of any character obligating the Company to issue,
      transfer or sell, or cause to be issued, transferred or sold, any shares of
      the
      capital stock of the Company or other equity interests in the Company or any
      securities convertible into or exchangeable for such shares of capital stock
      or
      other equity interests, including the Securities, and there are no outstanding
      contractual obligations of the Company to repurchase, redeem or otherwise
      acquire any shares of its capital stock or other equity interests. The issue
      and
      sale of the Securities will not obligate the Company to issue or sell, pursuant
      to any pre-emptive right or otherwise, shares of Common Stock or other
      securities to any Person (other than the Purchaser) and will not result in
      a
      right of any holder of Company securities to adjust the exercise, conversion,
      exchange or reset price under such securities. With respect to each Subsidiary,
      (i) all of the issued and outstanding shares of such Subsidiary’s capital stock
      have been duly authorized, are validly issued and outstanding, are fully paid
      and nonassessable, have been issued in compliance with applicable securities
      laws, were not issued in violation of or subject to any preemptive rights or
      other rights to subscribe for or purchase securities, and (ii) there are no
      outstanding options to purchase, or any preemptive rights or other rights to
      subscribe for or to purchase, any securities or obligations convertible into,
      or
      any contracts or commitments to issue or sell, shares of such Subsidiary’s
      capital stock or any such options, rights, convertible securities or
      obligations. There are no agreements of which the Company is aware, other than
      the Transaction Documents, relating to the voting of the Company’s voting
      securities or restrictions on the transfer of the Company’s capital stock.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

      
         

         

      

    

    3.3 Registration
      Rights.
      Except
      as set forth on Schedule
      3.3
      to the
      Disclosure Schedule, the Company has not granted or agreed to grant to any
      Person any right (including “piggy-back” and demand registration rights) to have
      any capital stock or other securities of the Company registered with the SEC
      or
      any other government authority. 

    

    3.4 Authorization.
      All
      corporate action on the part of the Company, its officers and directors and
      its
      stockholders necessary for the authorization, execution, delivery and
      performance of the Transaction Documents and the consummation of the
      transactions (including without limitation, the sale and delivery of the Shares
      and Warrant and upon exercise of the Warrants, the issuance of the Warrant
      Shares) contemplated herein and therein has been taken. When executed and
      delivered by the Company, each of the Transaction Documents shall constitute
      a
      legal, valid and binding obligation of the Company, enforceable against the
      Company in accordance with its terms, except as such may be limited by
      bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights
      generally and by general equitable principles. The Company has all requisite
      corporate power and authority to enter into the Transaction Documents and to
      carry out and perform its obligations under their respective terms.

    

    3.5 Valid
      Issuance of the Shares and the Warrant Shares.
      The
      Shares and the Warrants have been duly authorized and will be validly issued,
      fully paid and nonassessable and not subject to any encumbrances, preemptive
      rights or any other similar contractual rights of the stockholders of the
      Company or any other Person. The Warrant Shares have been duly authorized and
      when issued and paid for in accordance with its terms will be validly issued,
      fully-paid and non-assessable and not subject to any encumbrances, preemptive
      rights or any other similar contractual rights of the stockholders of the
      Company or any other Person. The Company has reserved from its duly authorized
      capital stock the number of shares of Common Stock issuable upon execution
      of
      this Agreement and upon proper exercise of the Warrant.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

      
         

      

    

    3.6 Financial
      Statements.
      The
      Company has made available to the Purchaser true and complete copies of the
      audited consolidated balance sheet of the Company and the Subsidiaries as of
      December 31, 2005 (the “Balance
      Sheet”)
      and
      the related consolidated income statement, consolidated statement of cash flows
      and consolidated statement of stockholders’ equity of the Company for the twelve
      (12) months then ended. All of the financial statements described above are
      hereinafter referred to, collectively, as the “Financial
      Statements”.
      The
      Financial Statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods covered thereby, subject, to normal year-end adjustments (which
      individually and in the aggregate are not material) and to the absence of
      footnotes thereto, and present fairly, in all material respects, the financial
      position of the Company and the Subsidiaries and the results of operations
      and
      cash flows as of the date and for the periods indicated therein. The firm of
      Deloitte & Touche LLP, which has expressed its opinion with respect to the
      consolidated financial statements included in the Company’s Annual Report on
      Form 10-KSB/A for the fiscal year ended December 31, 2005, is an independent
      accountant as required by the Securities Act and the rules and regulations
      promulgated thereunder. 

    

    3.7 SEC
      Documents.  The
      Company has filed all reports (the “SEC
      Documents”)
      required to be filed by it under the Securities Act and the Exchange Act,
      including pursuant to Section 13(a) or 15(d) thereof and the Form 10-KSB, as
      amended, for the year ended December 31, 2005 and the Form 10-QSB for the three
      months ended March 31, 2006 on a timely basis or has timely filed for a valid
      extension of such time of filing and has filed any such SEC Documents prior
      to
      the expiration of any such extension. As of their respective dates, the SEC
      Documents complied in all material respects with the requirements of the
      Securities Act and the Exchange Act and the rules and regulations of the SEC
      promulgated thereunder, and none of the SEC Documents, when filed, contained
      any
      untrue statement of a material fact or omitted to state a material fact required
      to be stated therein or necessary in order to make the statements therein,
      in
      light of the circumstances under which they were made, not misleading; provided,
      the Company has not received a final determination with respect to comments
      from
      the SEC to the Company’s 10-KSB/A for the year ended December 31, 2005 relating
      to the extent of financial disclosure required by Item 310(a) of Regulation
      S-B
      regarding the Company’s predecessor financial statements, but the Company and
      its independent auditor believe in good faith that the disclosure provided
      to
      date conforms with the requirements of the Exchange Act. The financial
      statements of the Company included in the SEC Documents comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the SEC with thereto as in effect at the time of filing. Such financial
      statements have been prepared in accordance with GAAP applied on a consistent
      basis during the periods involved, except as may be otherwise specified in
      such
      financial statements or the notes thereto, and fairly present in all material
      respects the financial position of the Company and its Subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments. 

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

      
         

      

    

    All
      material agreements to which the Company is a party or to which the property
      or
      assets of the Company are subject are included as part of or specifically
      identified in the SEC Documents to the extent required by the rules and
      regulations of the SEC as in effect at the time of filing. The Company has
      prepared and filed with the SEC all filings and reports required by the
      Securities Act and the Exchange Act to make the Company’s filings and reports
      current in all respects. 

    

    3.8 Consents.
      Except
      for (a) the filing and effectiveness of any registration statement required
      to
      be filed by the Company under the Securities Act pursuant to the terms of the
      Registration Rights Agreement and (b) any required state “blue sky” law filings
      in connection with the transactions contemplated under the Transaction
      Documents, all consents, approvals, orders and authorizations required on the
      part of the Company in connection with the execution or delivery of, or the
      performance of the obligations under the Transaction Documents, and the
      consummation of the transactions contemplated herein and therein, have been
      obtained and will be effective as of the date hereof. The execution and delivery
      by the Company of the Transaction Documents, the consummation of the
      transactions contemplated herein and therein, and the issuance of the
      Securities, do not require the consent or approval of the stockholders of,
      or
      any lender to, the Company. 

    

    3.9 No
      Conflict; Compliance With Laws.
      

    

    (a) The
      execution, delivery and performance by the Company of the Transaction Documents,
      and the consummation of the transactions contemplated hereby and thereby,
      including the issuance of the Securities do not and will not (i) conflict with
      or violate any provision of the Certificate of Incorporation (or other charter
      documents) or By-laws of the Company or any of the Subsidiaries, (ii) breach,
      conflict with or result in any violation of or default (or an event that with
      notice or lapse of time or both would become a default) or cause the creation
      of
      any lien or encumbrance upon any assets of the Company under, or give rise
      to a
      right of termination, amendment, acceleration or cancellation (with or without
      notice or lapse of time, or both) of any obligation, contract, commitment,
      lease, agreement, mortgage, note, bond, indenture or other instrument or
      obligation to which the Company or any of the Subsidiaries is a party or by
      which they or any of their properties or assets are bound, except in each case
      to the extent such breach, conflict, violation, default, termination, amendment,
      acceleration or cancellation does not, and could not reasonably be expected
      to
      have, individually or in the aggregate, a Material Adverse Effect, (iii) breach,
      conflict with or result in any violation of or default (or an event that with
      notice or lapse of time or both could become a default) of any statute, law,
      rule, regulation, order, ordinance or restriction applicable to the Company,
      the
      Subsidiaries or any of their properties or assets, or any judgment, writ,
      injunction or decree of any court, judicial or quasi-judicial tribunal
      applicable to the Company, the Subsidiaries or any of their properties or
      assets, or (iv) require from the Company any notice to, declaration or filing
      with, or consent or approval of any governmental authority or other third party
      other than pursuant to federal or state securities or blue sky laws.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

      
         

         

      

    

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

    

    (c) Neither
      the Company nor its Subsidiaries is conducting its business in violation of
      any
      applicable law, rule or regulation of the jurisdictions in which it is
      conducting its business, including, without limitation, any applicable
      Environmental Laws or regulations, except any violations which would not have
      a
      Material Adverse Effect. 

    

    3.10 Brokers
      or Finders.
      Except
      as provided in Section 2.3, neither the Company nor any of the Subsidiaries
      owes
      any fee to any broker or finder in connection with the transactions contemplated
      by the Transaction Documents, and neither the Company nor any of the
      Subsidiaries has incurred, or shall incur, directly or indirectly, any liability
      for any brokerage or finders’ fees or agents’ commissions or any similar charges
      in connection with the Transaction Documents, or any transaction contemplated
      hereby or thereby. 

    

    3.11 OTC
      Bulletin Board.
      The
      Company’s Common Stock is currently quoted on the OTC Bulletin Board.

    

    3.12 No
      Actions.
      Except
      as described in the SEC Documents, there are no legal or governmental actions,
      suits or proceedings pending and, to the Company’s knowledge, there are no
      governmental or regulatory inquiries or investigations, nor are there any legal
      or governmental threatened actions, suits, claims, proceedings or investigations
      against or involving the Company or any of the Subsidiaries. 

    

    3.13 No
      Undisclosed Liabilities; Indebtedness.
      Since
      the date of the Balance Sheet, the Company and the Subsidiaries have incurred
      no
      liabilities or obligations, whether known or unknown, asserted or unasserted,
      fixed or contingent, accrued or unaccrued, matured or unmatured, liquidated
      or
      unliquidated, or otherwise, except for liabilities or obligations that,
      individually or in the aggregate, do not or would not reasonably be expected
      to
      have a Material Adverse Effect and other than liabilities and obligations
      arising in the ordinary course of business. Except for indebtedness reflected
      in
      the Balance Sheet, the Company has no indebtedness outstanding as of the date
      hereof. The Company is not in default with respect to any outstanding
      indebtedness or any instrument relating thereto. 

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

      
         

         

      

    

    3.14 Environmental.
      Except
      as disclosed in Schedule
      3.14
      of the
      Disclosure Schedule, neither the Company nor any of its Subsidiaries is in
      violation of any statute, rule, regulation, decision or order of any
      governmental agency or body or any court, domestic or foreign, relating to
      the
      use, disposal or release of hazardous or toxic substances or relating to the
      protection or restoration of the environment or human exposure to hazardous
      or
      toxic substances (collectively, “Environmental
      Laws”),
      owns
      or operates any real property contaminated with any substance that is subject
      to
      any Environmental Laws, is liable for any off-site disposal or contamination
      pursuant to any Environmental Laws, or is subject to any claim relating to
      any
      Environmental Laws, which violation, contamination, liability or claim would
      individually or in the aggregate have a Material Adverse Effect; and the Company
      is not aware of any pending investigation which might lead to such a
      claim.

    

    3.15 Contracts.
      There
      is no material contract or agreement required by the Exchange Act and the rules
      or regulations promulgated thereunder to be described in or filed as an exhibit
      to the SEC Documents that the Company was required to file with the SEC pursuant
      to the reporting requirements which is not described or filed therein as
      required. All contracts, agreements, instruments and other documents filed
      as an
      exhibit to the SEC Documents are legal, valid, and binding obligations and
      in
      full force and effect and are enforceable by the Company in accordance with
      their respective terms as of the date hereof, except as such may be limited
      by
      bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights
      generally and by general equitable principles. To the Company’s knowledge, as of
      the date hereof, neither the Company nor any other party is in breach of or
      default under any of such contracts, agreements, instruments or documents,
      except for such failures to be in full force and effect and such breaches or
      defaults that would not reasonably be expected to have a Material Adverse
      Effect.

    

    3.16 Title
      to Assets.
      The
      Company and its Subsidiaries have (1) good and indefeasible title to all of
      their owned interests in the oil and gas properties described in the SEC
      Documents, (2) good and indefeasible title in fee simple to all other real
      property owned by the Company or any of its Subsidiaries and (3) good title
      to
      all personal property owned by the Company or any of its Subsidiaries, in each
      case, free and clear of all liens, encumbrances and defects, except (i) as
      described in Schedule
      3.16
      to the
      Disclosure Schedule, (ii) liens securing taxes and other governmental charges
      not at the time delinquent or thereafter payable without penalty or being
      diligently contested in good faith by appropriate proceedings and for which
      adequate reserves in accordance with GAAP shall have been set aside on its
      books, or inchoate and unperfected liens securing claims of materialmen,
      mechanics and similar persons arising in the ordinary course of business for
      amounts not overdue or being diligently contested in good faith by appropriate
      proceedings, (iii) liens and encumbrances under oil and gas leases, options
      to
      lease, operating agreements, utilization and pooling agreements, participation
      and drilling concessions agreements and gas sales contracts, securing payment
      of
      amounts not yet due and payable and of a scope and nature customary in the
      oil
      and gas industry, (iv) liens, encumbrances and defects that do not, individually
      or in the aggregate, materially affect the value of such properties, taken
      as a
      whole, or materially interfere with the use made or proposed to be made of
      such
      properties, taken as a whole, by the Company or its Subsidiaries; except as
      described in Schedule
      3.16
      in the
      Disclosure Schedule, the leases, options to lease, drilling concessions or
      other
      arrangements held by the Company and its Subsidiaries reflect in all material
      respects the right of the Company and its Subsidiaries to explore the unexplored
      and undeveloped acreage described in the SEC Documents, and the care taken
      by
      the Company and its Subsidiaries with respect to acquiring or otherwise
      procuring such leases, options to lease, drilling concessions and other
      arrangements was generally consistent with standard industry practices for
      acquiring or procuring leases to explore acreage for hydrocarbons; and any
      real
      property and buildings held under lease by the Company and its Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases with such exceptions
      as are not material and do not interfere with the use made or proposed to be
      made of such real property and buildings by the Company or its Subsidiaries
      with
      which the Company and the Subsidiaries are in compliance in all material
      respects.

    

    
      
        
        

      

      
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    3.17 Reserves.
      Gaffney, Cline and Associates (the “Engineer”),
      whose
      reserve evaluations are referenced or appear, as the case may be, in the SEC
      Documents were, as of December 31, 2005, and are, as of the date hereof,
      independent engineers with respect to the Company and its Subsidiaries; and
      the
      historical information underlying the estimates of the reserves of the Company
      and its Subsidiaries supplied by the Company to the Engineer for the purposes
      of
      preparing the reserve reports of the Company referenced in the SEC Documents
      (the “Reserve
      Reports”),
      including, without limitation, production volumes, sales prices for production,
      contractual pricing provisions under oil or gas sales or marketing contracts
      or
      under hedging arrangements, costs of operations and development, and working
      interest and net revenue information relating to the Company’s ownership
      interests in properties, was true and correct on the date that each such Reserve
      Reports was prepared in all material respects in accordance with customary
      industry practices.

    

    3.18 Labor
      Relations.
      No
      labor or employment dispute exists or, to the knowledge of the Company, is
      imminent or threatened, with respect to any of the employees or consultants
      of
      the Company that has, or could reasonably be expected to have, individually
      or
      in the aggregate, a Material Adverse Effect. 

    

    3.19 Intellectual
      Property.
      The
      Company is the sole and exclusive owner of, or has the exclusive right to use,
      all right, title and interest in and to all material foreign and domestic
      patents, patent rights, trademarks, service marks, trade names, brands,
      copyrights (whether or not registered and, if applicable, including pending
      applications for registration) and other proprietary rights or information,
      owned or used by the Company (collectively, the “Rights”),
      and
      in and to each material invention, software, trade secret, and technology used
      by the Company or any of the Subsidiaries (the Rights and such other items,
      the
“Intellectual
      Property”),
      and,
      the Company owns and has the right to use the same, free and clear of any claim
      or conflict with the rights of others (subject to the provisions of any
      applicable license agreement). Except as set forth on Schedule
      3.19
      to the
      Disclosure Schedule, there have been no written claims made against the Company
      or any of the Subsidiaries asserting the invalidity, abuse, misuse, or
      unenforceability of any of the Intellectual Property, and, to the Company’s
      knowledge, there are no reasonable grounds for any such claims. 

    

    3.20 Subsidiaries;
      Joint Ventures.
      Except
      for the subsidiaries listed on Schedule
      3.20
      to the
      Disclosure Schedule (the “Subsidiaries”),
      the
      Company has no subsidiaries and (i) does not otherwise own or control, directly
      or indirectly, any other Person and (ii) does not hold equity interests,
      directly or indirectly, in any other Person. Except as described in the SEC
      Documents or on Schedule
      3.20,
      the
      Company is not a participant in any joint venture, partnership, or similar
      arrangement material to its business. 

    

    
      
        
        

      

      
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    3.21 Taxes.
      The
      Company and each of the Subsidiaries has filed (or has had filed on its behalf),
      will timely file or will cause to be timely filed, or has timely filed for
      an
      extension of the time to file, all material Tax Returns (as defined below)
      required by applicable law to be filed by it or them prior to or as of the
      date
      hereof, and such Tax Returns are, or will be at the time of filing, true,
      correct and complete in all material respects. Each of the Company and the
      Subsidiaries has paid (or has had paid on its behalf) or, where payment is
      not
      yet due, has established (or has had established on its behalf and for its
      sole
      benefit and recourse) or will establish or cause to be established in accordance
      with United States generally accepted accounting principles on or before the
      date hereof an adequate accrual for the payment of, all material Taxes (as
      defined below) due with respect to any period ending prior to or as of the
      date
      hereof. “Taxes”
shall
      mean any and all taxes, charges, fees, levies or other assessments, including
      income, gross receipts, excise, real or personal property, sales, withholding,
      social security, retirement, unemployment, occupation, use, goods and services,
      license, value added, capital, net worth, payroll, profits, franchise, transfer
      and recording taxes, fees and charges, and any other taxes, assessment or
      similar charges imposed by the Internal Revenue Service or any taxing authority
      (whether state, county, local or foreign) (each, a “Taxing
      Authority”),
      including any interest, fines, penalties or additional amounts attributable
      to
      or imposed upon any such taxes or other assessments. “Tax
      Return”
shall
      mean any report, return, document, declaration or other information or filing
      required to be supplied to any Taxing Authority, including information returns,
      any documents with respect to accompanying payments of estimated Taxes, or
      with
      respect to or accompanying requests for extensions of time in which to file
      any
      such return, report, document, declaration or other information. There are
      no
      claims or assessments pending against the Company or any of the Subsidiaries
      for
      any material alleged deficiency in any Tax, and neither the Company nor any
      of
      the Subsidiaries has been notified of any material proposed Tax claims or
      assessments against the Company or any of the Subsidiaries. No Tax Return of
      the
      Company or any of the Subsidiaries is or has been the subject of an examination
      by a Taxing Authority. Each of the Company and the Subsidiaries has withheld
      from each payment made to any of its past or present employees, officers and
      directors, and any other person, the amount of all material Taxes and other
      deductions required to be withheld therefrom and paid the same to the proper
      Taxing Authority within the time required by law. 

    

    3.22 Transfer
      Taxes.
      On the
      Closing Date, all stock transfer or other Taxes (other than income taxes) which
      are required to be paid in connection with the sale and transfer of the Shares
      and Warrant to the Purchaser hereunder, will be, or will have been, fully paid
      or provided for by the Company and all laws imposing such taxes will be or
      will
      have been complied with.

    

    3.23 Pensions
      and Benefits.
      

    

    (a) Schedule
      3.23(a)
      to the
      Disclosure Schedule contains a true and complete list of each “employee benefit
      plan” within the meaning of Section 3(3) of the United States Employee
      Retirement Income Security Act of 1974, as amended (“ERISA”),
      including, without limitation, multiemployer plans within the meaning of Section
      3(37) of ERISA, and all retirement, profit sharing, stock option, stock bonus,
      stock purchase, severance, fringe benefit, deferred compensation, and other
      employee benefit programs, plans, or arrangements, whether or not subject to
      ERISA, under which (i) any current or former directors, officers, employees
      or
      consultants of the Company has any present or future right to benefits and
      which
      are contributed to, sponsored by or maintained by the Company or any of the
      Subsidiaries, or (ii) the Company or any of the Subsidiaries has any present
      or
      future liability. All such programs, plans, or arrangements shall be
      collectively referred to as the “Company
      Plans.”
Each
      Company Plan is included as part of or specifically identified in the SEC
      Documents to the extent required by the rules and regulations of the SEC as
      in
      effect at the time of filing. 

    

    
      
        
        

      

      
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    (b) (i)
      Each
      Company Plan has been established and administered in all material respects
      in
      accordance with its terms and in compliance with the applicable provisions
      of
      ERISA, the Internal Revenue Code of 1986, as amended (the “Code”),
      and
      other applicable laws, rules and regulations; (ii) each Company Plan which
      is
      intended to be qualified within the meaning of Section 401(a) of the Code is
      so
      qualified and has received a favorable determination letter as to its
      qualification (or if maintained pursuant to a prototype form of instrument
      the
      sponsor thereof has received a favorable opinion letter as to its
      qualification), and to the Company’s knowledge nothing has occurred, whether by
      action or failure to act, that could reasonably be expected to cause the loss
      of
      such qualification; and (iii) no Company Plan provides retiree health or life
      insurance benefits (whether or not insured), and neither the Company nor the
      Subsidiaries have any obligations to provide any such retiree benefits other
      than as required pursuant to Section 4980B of the Code or other applicable
      law.

    

    (c) No
      Company Plan is a “multiemployer plan” as defined in Section 4001(a)(3) of
      ERISA) or a plan subject to the minimum funding requirements of Section 302
      or
      ERISA or Section 412 of the Code or Title IV of ERISA, and neither the Company,
      the Subsidiaries, nor any member of their Controlled Group has any liability
      or
      obligation in respect of, any such multiemployer plan or plan. With respect
      to
      any Company Plan and to the Company’s knowledge, (i) no actions, suits or claims
      (other than routine claims for benefits in the ordinary course) are pending
      or
      threatened, and (ii) no administrative investigation, audit or other
      administrative proceeding by the Department of Labor, the Pension Benefit
      Guaranty Corporation, the Internal Revenue Service or other governmental
      agencies are pending, threatened or in progress. 

    

    3.24 Private
      Placement; Communications with Purchaser; Press Releases.
      

    

    (a) Assuming
      the correctness of the representations and warranties of the Purchaser set
      forth
      in Section 4 hereof, the offer, issuance, sale and delivery of the Securities
      to
      the Purchaser as contemplated hereby is exempt from the registration
      requirements of the Securities Act and the qualification or registration
      provisions of applicable state securities laws. 

    

    (b) Neither
      the Company nor any person acting on the Company’s behalf has sold or offered to
      sell or solicited any offer to buy any of the Securities by means of any form
      of
      general solicitation or advertising. Neither the Company nor any of its
      Affiliates nor any person acting on the Company’s behalf has taken, directly or
      indirectly, at any time within the past six (6) months, and will not hereafter
      take, any action independent of the Placement Agents to sell, offer for sale
      or
      solicit any offers to buy any security under circumstances that would (i)
      eliminate the availability of the exemption from registration under Regulation
      D
      under the Securities Act in connection with the sale or issuance of the
      Securities, as contemplated hereby or (ii) cause the offering or issuance of
      the
      Securities pursuant to any of the Transaction Documents to be integrated with
      prior offerings by the Company for purposes of any applicable law, regulation
      or
      stockholder approval provisions. None of the Company or any of the Subsidiaries
      is a United States real property holding corporation within the meaning of
      the
      Foreign Investment in Real Property Tax Act of 1980. No consent, license,
      permit, waiver, approval or authorization of, or designation, declaration,
      registration or filing with, the SEC or any state securities regulatory
      authority is required in connection with the offer, sale, issuance or delivery
      of the Securities other than the possible filing of Form D with the SEC. The
      Company does not have any agreement or understanding with the Purchaser with
      respect to the transactions contemplated by this Agreement, the Registration
      Rights Agreement and the Escrow Agreement, other than as specified in this
      Agreement, the Registration Rights Agreement or the Escrow
      Agreement.

    

    
      
        
        

      

      
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    (c) The
      press
      releases disseminated by the Company during the twelve months preceding the
      date
      of this Agreement taken as a whole do not contain any untrue statement of
      material fact or omit to state a material fact required to be stated therein
      or
      necessary in order to make the statements therein, in light of the circumstances
      under which they were made and when made, not misleading. 

    

    3.25 Material
      Changes.
      Except
      as set forth on Schedule
      3.25
      to the
      Disclosure Schedule, since the date of the Balance Sheet, the Company has
      conducted its business only in the ordinary course, consistent with past
      practice, and since such date there has not occurred: (i) a Material Adverse
      Effect; (ii) any amendments or changes in the charter documents or by-laws
      of
      the Company or the Subsidiaries; (iii) any: (A) incurrence, assumption or
      guarantee by the Company or the Subsidiaries of any debt for borrowed money
      other than (1) equipment leases made in the ordinary course of business,
      consistent with past practice and (2) any such incurrence, assumption or
      guarantee with respect to an amount of $50,000 or more that has not been
      disclosed in the SEC Documents; (B) issuance or sale of any securities
      convertible into or exchangeable for securities of the Company other than to
      directors, employees and consultants pursuant to existing equity compensation
      or
      stock purchase plans of the Company; (C) issuance or sale of options or other
      rights to acquire from the Company or the Subsidiaries, directly or indirectly,
      securities of the Company or any securities convertible into or exchangeable
      for
      any such securities, other than options issued to directors, employees and
      consultants in the ordinary course of business, consistent with past practice;
      (D) issuance or sale of any stock, bond or other corporate security other than
      to directors, employees and consultants pursuant to existing equity compensation
      or stock purchase plans of the Company; (E) acquisition of any assets, or sale,
      assignment or transfer of any of its intangible assets except in the ordinary
      course of business, consistent with past practice, or cancellation of any debt
      or claim except in the ordinary course of business, consistent with past
      practice; (F) waiver of any right of substantial value whether or not in the
      ordinary course of business; (G) material change in officer compensation, except
      in the ordinary course of business and consistent with past practice; or (H)
      other commitment (contingent or otherwise) to do any of the foregoing; (iv)
      loss, destruction or damage to any property of the Company, whether or not
      insured; (v) any creation, sufferance or assumption by the Company or any of
      the
      Subsidiaries of any lien on any asset or any making of any loan, advance or
      capital contribution to or investment in any Person, in an aggregate amount
      which exceeds $50,000 outstanding at any time; (vi) any entry into, amendment
      of, relinquishment, termination or non-renewal by the Company or the
      Subsidiaries of any material contract, license, lease, transaction, commitment
      or other right or obligation, other than in the ordinary course of business,
      consistent with past practice; (vii) any transfer or grant of a right with
      respect to the Intellectual Property Rights owned or licensed by the Company
      or
      the Subsidiaries, except as among the Company and the Subsidiaries; or (viii)
      any commitment (contingent or otherwise) to do any of the
      foregoing.

    

    
      
        
        

      

      
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    3.26 Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, approvals, authorizations
      and permits issued by the appropriate federal, state, local or foreign
      governmental or regulatory authorities necessary to conduct their businesses
      as
      described in the SEC Documents, except where the failure to possess such permits
      does not, and could not have, individually or in the aggregate, a Material
      Adverse Effect (the “Material
      Permits”),
      and
      all such permits, licenses, orders, franchises and other rights and privileges
      are in full force and effect and, to the knowledge of the Company, no suspension
      or cancellation of any of them is threatened, and none of such permits,
      licenses, orders, franchises or other rights and privileges will be affected
      by
      the consummation of the transactions contemplated by the Transaction Documents,
      and the Company has not received any written notice of proceedings relating
      to
      the revocation or modification of any Material Permits except as described
      in
      the SEC Documents. 

    

    3.27 Transactions
      with Affiliates and Employees.
      Except
      as set forth in the SEC Documents, none of the officers or directors of the
      Company and, to the knowledge of the Company, none of the employees of the
      Company, is presently a party to any transaction or agreement with the Company
      (other than for services as employees, officers and directors) exceeding
      $60,000, including any contract, agreement or other arrangement providing for
      the furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner. There is no transaction,
      arrangement, or other relationship between the Company and an unconsolidated
      or
      other off balance sheet entity that is required to be disclosed by the Company
      in its Exchange Act filings and is not so disclosed. 

    

    3.28 Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary for the business in which the Company and the Subsidiaries are
      engaged. The Company has no reason to believe that it will not be able to renew
      existing insurance coverage for itself and the Subsidiaries as and when such
      coverage expires or to obtain similar coverage from similar insurers as may
      be
      necessary or appropriate to continue business. 

    

    3.29 Solvency.
      Based
      on the consolidated financial condition of the Company and the Subsidiaries
      as
      of the date hereof, (i) the fair saleable value of the Company’s assets exceeds
      the amount that will be required to be paid on or in respect of the Company’s
      existing debts and other liabilities (including known and contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business for the current fiscal
      year
      as now conducted and as proposed to be conducted, including its capital needs
      taking into account the particular capital requirements of the business
      conducted by the Company, projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company, together
      with the proceeds the Company would receive were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would be
      sufficient to pay all amounts on or in respect of its debts when such amounts
      are required to be paid. The Company has no present intention to incur debts
      beyond its ability to pay such debts as they mature (taking into account the
      timing and amounts of cash to be payable on or in respect of its debt).

    

    
      
        
        

      

      
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    3.30 Sarbanes-Oxley
      Act.
      The
      Company is, and at the Closing Date will be, in compliance in all material
      respects with all provisions of the Sarbanes-Oxley Act of 2002 which are
      applicable to it at such time. 

    

    3.31 Internal
      Accounting Controls.
      Except
      as disclosed in the SEC Documents, the Company maintains a system of internal
      accounting controls sufficient to provide reasonable assurance that (i)
      transactions are executed in accordance with management’s general or specific
      authorizations, (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with United States generally
      accepted accounting principles and to maintain asset accountability, (iii)
      access to assets is permitted only in accordance with management’s general or
      specific authorizations, (iv) the recorded accountability for assets is compared
      with the existing assets at reasonable intervals and appropriate action is
      taken
      with respect to any differences, and (v) the Company is otherwise in compliance
      with the Securities Act, the Exchange Act and all other rules and regulations
      promulgated by the SEC and applicable to the Company, including such rules
      and
      regulations to implement the Sarbanes-Oxley Act of 2002, as amended.

    

    3.32 Investment
      Company.
      The
      Company is not an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for an investment company, within the
      meaning of the Investment Company Act of 1940, as amended. 

    

    3.33 Questionable
      Payments.
      Neither
      the Company nor, to the Company’s knowledge, any of its Subsidiaries or current
      or former stockholders, directors, officers, employees, agents or other persons
      acting on behalf of the Company, has on behalf of the Company or in connection
      with its businesses (a) used any corporate funds for unlawful contributions,
      gifts, entertainment or other unlawful expenses relating to political activity;
      (b) made any direct or indirect unlawful payments to any governmental officials
      or employees from corporate funds; (c) established or maintained any unlawful
      or
      unrecorded fund of corporate monies or other assets; (d) made any false or
      fictitious entries on the books and records of the Company; or (e) made any
      unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
      payment of any nature. 

    

    
      
        
        

      

      
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    3.34 Changes
      in Governmental or Political Climates.
      To the
      Company’s knowledge, there have not been any changes
      in laws and regulations, including those related to taxes, royalty rates,
      permitted production rates, import, export and use of products, and
      environmental protection, expropriation or reduction of entitlements to produce
      oil and natural gas, or refusal to extend exploration, production or development
      contracts, or any proposals for the foregoing, which would have a Material
      Adverse Effect on the Company in any of the locations where the Company conducts
      its business or in which the assets relating to Acquisitions are located or
      the
      business of the Acquisitions is conducted. 

    

    3.35 Price
      of Common Stock.
      The
      Company has not taken, and will not take any action designed to cause or result
      in, or which has constituted or which might reasonably be expected to
      constitute, the stabilization or manipulation of the price of the shares of
      Common Stock to facilitate the sale or resale of the Securities.

    

    3.36 Acquisitions.
      The
      purchase agreements or other relevant transaction documents for each of the
      Acquisitions have
      been
      duly executed and are in full force and effect. No default has occurred or
      is
      continuing thereunder, and, to the best of the Company’s knowledge, all of the
      conditions precedent to the closing of the Acquisitions for each of the parties
      thereto can be satisfied promptly after the Closing Date with no material waiver
      granted. 

    

    3.37 Certain
      Registration Matters.
      Assuming the accuracy of the Purchaser’s representations and warranties set
      forth in Section 4 of this Agreement, no registration under the Securities
      Act
      is required for the offer and sale of the Securities by the Company to the
      Purchaser under the Transaction Documents. The Company is eligible to register
      its Common Stock for resale by the Purchaser under Form SB-2 promulgated under
      the Securities Act. Except as specified in Section 3.3 and except with respect
      to the Purchaser, the Company has not granted or agreed to grant to any Person
      any rights (including “piggy-back” registration rights) to have any securities
      of the Company registered with the SEC or any other governmental authority
      that
      have not been satisfied. 

    

    3.38 Listing
      Requirements.
      The
      Company is, and has no reason to believe that it will not in the foreseeable
      future continue to be, eligible for quotation of the Common Stock on a Trading
      Market. The issuance and sale of the Securities under the Transaction Documents
      does not contravene the rules and regulations of the Trading Market.

     

    3.39 Disclosure.
      Neither
      the Company nor, to the Company’s knowledge, any other Person acting on its
      behalf and at the direction of the Company, has provided to the Purchaser or
      its
      agents or counsel any information that in the Company’s reasonable judgment, at
      the time such information was furnished, constitutes material, non-public
      information. On or before 9:00 a.m., Eastern Standard Time, on the first
      business day after the date hereof, the Company shall issue a press release
      announcing the execution of the Transaction Documents and disclosing the
      material terms thereof, and on or before 5:30 p.m., Eastern Standard Time,
      on
      the first business day after the date hereof, the Company shall file a Current
      Report on Form 8-K describing the material terms of the transactions
      contemplated by the Transaction Documents, and attaching as an exhibit to such
      Form 8-K a form of this Agreement. From and after the issuance of such press
      release, which discloses the transaction contemplated hereby, the Purchaser
      will
      not have any material, non-public information regarding the Company or any
      of
      its Subsidiaries. The Company understands and confirms that the Purchaser will
      rely on the representations and covenants contained herein in effecting the
      transactions contemplated by the Transaction Documents, and in the securities
      of
      the Company after the Closing. All disclosure provided to the Purchaser
      regarding the Company, its business and the transactions contemplated hereby,
      including the Transaction Documents and the Schedules to this Agreement
      furnished by or on behalf of the Company, is true and correct and does not
      contain any untrue statement of material fact or omit to state any material
      fact
      necessary in order to make the statements made therein, in the light of the
      circumstances under which they were made, not misleading. No event or
      circumstance has occurred or information exists with respect to the Company
      or
      the Subsidiaries or its or their business, properties, prospects, operations
      or
      financial conditions, which, under applicable law, rule or regulation, requires
      public disclosure or announcement by the Company but which has not been so
      publicly announced or disclosed. The Company acknowledges and agrees that the
      Purchaser is not making and has not made any representations or warranties
      with
      respect to the transactions contemplated hereby other than those specifically
      set forth in Section 4.

    

    
      
        
        

      

      
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    4. Representations
      and Warranties of the Purchaser.
      The
      Purchaser represents and warrants to the Company as follows: 

    

    4.1 Authorization.
      All
      action on the part of the Purchaser and its officers, directors, and/or
      shareholders necessary for the authorization, execution, delivery and
      performance of this Agreement, the Registration Rights Agreement and the Escrow
      Agreement, and the consummation of the transactions contemplated herein and
      therein, have been taken. When executed and delivered, each of the Transaction
      Documents will constitute the legal, valid and binding obligation of the
      Purchaser, enforceable against the Purchaser in accordance with its terms,
      except as such may be limited by bankruptcy, insolvency, reorganization or
      other
      laws affecting creditors’ rights generally and by general equitable principles.
      The Purchaser has all requisite corporate power and authority to enter into
      each
      of the Transaction Documents, and to carry out and perform its obligations
      under
      the terms of hereof and thereof. 

    

    4.2 Purchase
      Entirely for Own Account.
      The
      Purchaser certifies and represents to the Company that the Securities to be
      received by the Purchaser hereunder will be acquired for the Purchaser’s own
      account, not as nominee or agent, and not with a view to the resale or
      distribution of any part thereof in violation of the Securities Act, and the
      Purchaser has no present intention of selling, granting any participation in
      or
      otherwise distributing the same, in violation of the Securities Act. The
      Purchaser is not a registered broker dealer or an entity engaged in the business
      of being a broker dealer. The Purchaser and the Company acknowledge that nothing
      contained in this Section 4.2 shall be construed as a restriction or other
      limitation on the Purchaser’s ability to sell or hedge the Securities purchased
      hereunder at any time following the Closing Date other than for restrictions
      or
      limitations imposed by the Securities Act or applicable state securities laws.
      

    

    4.3 Investor
      Status; Etc.
      The
      Purchaser certifies and represents to the Company that it is an “accredited
      investor” as defined in Rule 501 of Regulation D promulgated under the
      Securities Act and was not organized for the purpose of acquiring any of the
      Shares. The Purchaser’s financial condition is such that it is able to bear the
      risk of holding the Shares for an indefinite period of time and the risk of
      loss
      of its entire investment. The Purchaser has sufficient knowledge and experience
      in investing in companies similar to the Company so as to be able to evaluate
      the risks and merits of its investment in the Company. 

    

    
      
        
        

      

      
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    4.4 Securities
      Not Registered.
      The
      Purchaser understands that the Securities have not been registered under the
      Securities Act, by reason of their issuance by the Company in a transaction
      exempt from the registration requirements of the Securities Act, and that the
      Securities must continue to be held by the Purchaser unless a subsequent
      disposition thereof is registered under the Securities Act or is exempt from
      such registration. The Purchaser understands that the exemptions from
      registration afforded by Rule 144 (the provisions of which are known to it)
      promulgated under the Securities Act depend on the satisfaction of various
      conditions, and that, if applicable, Rule 144 may afford the basis for sales
      only in limited amounts. 

    

    4.5 No
      Conflict.
      The
      execution and delivery of the Transaction Documents by the Purchaser, and the
      consummation of the transactions contemplated hereby and thereby, will not
      conflict with or result in any violation of or default by the Purchaser (with
      or
      without notice or lapse of time, or both) under, or give rise to a right of
      termination, cancellation or acceleration of any obligation or to a loss of
      a
      material benefit under (i) any provision of the organizational documents of
      the
      Purchaser or (ii) any agreement or instrument, permit, franchise, license,
      judgment, order, statute, law, ordinance, rule or regulations, applicable to
      the
      Purchaser. 

    

    4.6 Brokers.
      The
      Purchaser has not retained, utilized or been represented by any broker or finder
      in connection with the transactions contemplated by this Agreement.

    

    4.7 Consents.
      All
      consents, approvals, orders and authorizations required on the part of the
      Purchaser in connection with the execution, delivery or performance of this
      Agreement and the consummation of the transactions contemplated herein by the
      Purchaser have been obtained and are effective as of the date hereof.

    

    4.8 Disclosure
      of Information.
      The
      Purchaser believes it has received all the information it considers necessary
      or
      appropriate for deciding whether to purchase the Shares. The Purchaser further
      represents that it has had an opportunity to ask questions and receive answers
      from the Company regarding the terms and conditions of the offering of the
      Shares and the business, properties, prospects and financial condition of the
      Company. 

    

    4.9 Short
      Sale.
      The
      Purchaser represents that after the date that the Purchaser learned of the
      terms
      of this transaction and prior to the date hereof, neither it nor any Person
      over
      which the Purchaser has direct control, have made any net short sales of, or
      granted any option for the purchase of or entered into any hedging or similar
      transaction with the same economic effect as a net short sale, in the Common
      Stock.

     

    5. Conditions
      Precedent.

    

    
      
        
        

      

      
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    5.1. Conditions
      to the Obligation of the Purchaser to Consummate the Closing.
      The
      obligation of the Purchaser to consummate the Closing and to purchase and pay
      for the Shares and Warrant is subject to the satisfaction (or waiver by the
      Purchaser) of the following conditions precedent: 

    

    (a) The
      representations and warranties of the Company contained herein shall be true
      and
      correct on and as of the date hereof and as of the Closing Date. The Company
      shall have performed or complied with all obligations and conditions herein
      required to be performed or complied with by the Company on or prior to the
      Closing Date.

    

    (b) There
      shall have been no material adverse change (actual or threatened) in the assets,
      liabilities (contingent or otherwise), affairs, business, operations, prospects,
      or condition (financial or otherwise) of the Company prior to the Closing
      Date.

    

    (c) No
      proceeding challenging the Transaction Documents, or the transactions
      contemplated hereby or thereby, or seeking to prohibit, alter, prevent or
      materially delay the Closing, shall have been instituted before any court,
      arbitrator or governmental body, agency or official or shall be pending against
      or involving the Company. 

    

    (d) The
      sale
      of the Securities to the Purchaser shall not be prohibited by any law, rule,
      governmental order or regulation. All necessary consents, approvals, licenses,
      permits, orders and authorizations of, or registrations, declarations and
      filings with, any governmental or administrative agency or of or with any other
      Person with respect to any of the transactions contemplated hereby or under
      any
      Transaction Document (including, without limitation, all filings and approvals,
      if any, required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
      as
      amended) shall have been duly obtained or made and shall be in full force and
      effect. 

    

    (e) All
      instruments and corporate proceedings of the Company in connection with the
      transactions contemplated by the Transaction Documents shall be satisfactory
      in
      form and substance to the Purchaser, and the Purchaser shall have received
      copies (executed or certified, as may be appropriate) of all documents which
      the
      Purchaser may have reasonably requested in connection with such transactions.
      

    

    (f) The
      Purchaser shall have received from McGuireWoods LLP, outside counsel to the
      Company, an opinion addressed to the Purchaser, dated the Closing Date and
      substantially in the form of Exhibit
      D
      hereto.

    

    (g) The
      Registration Rights Agreement shall have been duly executed and delivered to
      the
      Purchaser by the Company. Unless otherwise waived by the Company and the
      Purchaser, the Escrow Agreement shall have been duly executed and delivered
      to
      the Purchaser by the Company and the Escrow Agent. 

    

    (h) The
      Purchaser shall have received from the Company an original stock certificate
      evidencing the purchase of the Shares, and the Purchaser shall have received
      from the Company the original of the Warrant.

    

    
      
        
        

      

      
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    (i) The
      Company shall have delivered, in form and substance satisfactory to the
      Purchaser, a certificate dated the Closing Date and signed by the secretary
      or
      another appropriate executive officer of the Company, certifying (i) that
      attached copies of the Certificate of Incorporation, the By-Laws and resolutions
      of the Board approving the Transaction Documents and the transactions
      contemplated thereby, are all true, complete and correct and remain in full
      force and effect as of the date hereof and as of the Closing Date, and (ii)
      as
      to the incumbency and specimen signature of each officer of the Company
      executing the Transaction Documents and any other document delivered in
      connection herewith on behalf of the Company. 

    

    (j) The
      Company shall deliver to the Purchaser, a certificate in form and substance
      satisfactory to the Purchaser, dated the Closing Date and signed by the
      Company’s chief executive officer, certifying that (i) the representations and
      warranties of the Company contained in Section 3 hereof are true and correct
      in
      all respects on the Closing Date and (ii) the Company has performed and complied
      with all of the agreements and conditions set forth or contemplated herein
      that
      are required to be performed or complied with by the Company on or before the
      Closing Date. 

    

    (k) The
      Purchaser shall have received duly executed Transfer Agent Instructions
      acknowledged by the Company’s transfer agent.

    

    (l) The
      purchase agreement for each of the Acquisitions shall
      have been duly executed and be in full force and effect as of the Closing Date,
      and no default shall have occurred and be continuing thereunder as of the
      Closing Date, and, to the best of the Company’s knowledge, all of the conditions
      precedent to the Acquisitions for each of the parties thereto shall have been
      satisfied with no material waiver granted as of the Closing Date.

    

    (m) All
      Financial Statements of the Company and each of its Subsidiaries shall have
      been
      provided or made available to the Purchaser on or before the Closing
      Date.

    

    (n) Prior
      to
      the Closing, the Company shall have sold securities to third party purchasers,
      who are not acting in concert with the Purchaser, for an aggregate minimum
      of
      $63,000,000 and an aggregate maximum of $74,000,000. Such securities shall
      be
      sold on, and have, such terms and conditions as the Company shall determine
      in
      its sole discretion.

     

    5.2. Conditions
      to the Obligation of the Company to Consummate the Closing.
      The
      obligation of the Company to consummate the Closing and to issue and sell the
      Shares and the Warrant to the Purchaser at the Closing is subject to the
      satisfaction of the following conditions precedent: 

    

    (a) The
      representations and warranties of the Purchaser contained herein shall be true
      and correct in all respects on and as of the Closing Date. 

    

    (b) The
      Registration Rights Agreement shall have been executed and delivered by the
      Purchaser. 

    

    
      
        
        

      

      
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    (c) The
      Purchaser shall have performed all obligations and conditions herein required
      to
      be performed or complied with by the Purchaser on or prior to the Closing Date.
      

    

    (d) No
      proceeding challenging the Transaction Documents, or the transactions
      contemplated hereby or thereby, or seeking to prohibit, alter, prevent or
      materially delay the Closing, shall have been instituted before any court,
      arbitrator or governmental body, agency or official or shall be pending against
      or involving the Purchaser. 

    

    (e) The
      sale
      of the Securities by the Company shall not be prohibited by any law, rule,
      governmental order or regulation. All necessary consents, approvals, licenses,
      permits, orders and authorizations of, or registrations, declarations and
      filings with, any governmental or administrative agency or of any other Person
      with respect to any of the transactions contemplated hereby by the Purchaser
      shall have been duly obtained or made and shall be in full force and effect.
      

    

    (f) All
      instruments and corporate proceedings in connection with the transactions
      contemplated by this Agreement to be consummated by the Purchaser at the Closing
      shall be satisfactory in form and substance to the Company, and the Company
      shall have received counterpart originals, or certified or other copies of
      all
      documents, including without limitation records of corporate or other
      proceedings, with respect to the Purchaser, which it may have reasonably
      requested in connection therewith. 

    

    (g)
       Prior
      to
      the Closing, the Company shall have sold securities to third party purchasers,
      who are not acting in concert with the Purchaser, for an aggregate minimum
      of
      $63,000,000 and an aggregate maximum of $74,000,000. Such securities shall
      be
      sold on, and have, such terms and conditions as the Company shall determine
      in
      its sole discretion.

    

    6.
       Certain
      Covenants and Agreements.
      

    

    6.1. Transfer
      of Securities.
      

    

    (a) Other
      than as set forth in Section 6.1(b) below, the Purchaser agrees that it shall
      not sell, assign, pledge, transfer or otherwise dispose of or encumber any
      of
      the Shares or the Warrant Shares, except (i) pursuant to an effective
      registration statement under the Securities Act, (ii) to an Affiliate (so long
      as such Affiliate agrees to be bound by the terms and provisions of this
      Agreement as if, and to the fullest extent as, the Purchaser), or (iii) pursuant
      to an available exemption from registration under the Securities Act (including
      sales permitted pursuant to Rule 144) and applicable state securities laws
      and,
      if requested by the Company, upon delivery by the Purchaser of either an opinion
      of counsel of the Purchaser reasonably satisfactory to the Company to the effect
      that the proposed transfer is exempt from or does not require registration
      under
      the Securities Act and applicable state securities laws or a representation
      letter of the Purchaser reasonably satisfactory to the Company setting forth
      a
      factual basis for concluding that such proposed transfer is exempt from or
      does
      not require registration under the Securities Act and applicable state
      securities laws. Any transfer or purported transfer of the Shares or the Warrant
      Shares in violation of this Section 6.1 shall be void. The Company shall not
      register any transfer of the Shares or the Warrant Shares (as the case may
      be)
      in violation of this Section 6.1. The Company may, and may instruct any transfer
      agent for the Company, to place such stop transfer orders as may be required
      on
      the transfer books of the Company in order to ensure compliance with the
      provisions of this Section 6.1. 

    

    
      
        
        

      

      
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    (b) The
      Company acknowledges and agrees that the Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and the Registration Rights Agreement and, if required under the terms of such
      arrangement, the Purchaser may transfer pledged or secured Securities to the
      pledgees or secured parties. Such a pledge or transfer would not be subject
      to
      approval of the Company and no legal opinion of legal counsel of the pledgee,
      secured party or pledgor shall be required in connection therewith. Further,
      no
      notice shall be required of such pledge. At the Purchaser’s expense, the Company
      will execute and deliver such reasonable documentation as a pledgee or secured
      party of Securities may reasonably request in connection with a pledge or
      transfer of the Securities, including, if the Securities are subject to
      registration pursuant to the Registration Rights Agreement, the preparation
      and
      filing of any required prospectus supplement under Rule 424(b)(3) under the
      Securities Act or other applicable provision of the Securities Act to
      appropriately amend the list of Selling Stockholders thereunder.

    

    6.2. Legends.
      

    

    (a) To
      the
      extent applicable, the certificate or other document evidencing the Shares
      and
      the Warrant Shares shall be endorsed with the legend set forth below, and the
      Purchaser covenants that, except to the extent such restrictions are waived
      by
      the Company, it shall not transfer the shares represented by any such
      certificate without complying with the restrictions on transfer described in
      this Agreement and the legends endorsed on such certificate (and a stop-transfer
      order may be placed against the Warrant): 

    

    “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE ISSUANCE TO THE HOLDER OF
      SHARES REPRESENTED BY THIS CERTIFICATE IS NOT COVERED BY A REGISTRATION
      STATEMENT UNDER THE ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
      ACQUIRED, AND SUCH SHARES MUST BE ACQUIRED, FOR INVESTMENT AND MAY NOT BE SOLD,
      TRANSFERRED OR ASSIGNED UNLESS (1) THEIR RESALE IS REGISTERED UNDER THE ACT,
      OR
      (2) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY
      IN
      FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
      REQUIRED.” 

    

    
      
        
        

      

      
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    The
      Purchaser further acknowledges and agrees that the Warrant shall bear a
      restrictive legend in substantially the following form (and a stop-transfer
      order may be placed against the Warrant):

    

    “THIS
      WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “ACT”), AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS (1) THE RESALE
      HEREOF IS REGISTERED UNDER THE ACT, OR (2) THE COMPANY HAS RECEIVED AN OPINION
      OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY
      THAT SUCH REGISTRATION IS NOT REQUIRED.”

    

    (b) The
      legends set forth in Section 6.2(a) shall be removed from the certificates
      evidencing the Securities, (i) while a registration statement providing for
      the
      resale of such Securities is effective under the Securities Act, (ii) following
      any sale of such Securities pursuant to Rule 144 (and the holder of such
      Securities has submitted a written request for removal of the legend indicating
      that the holder has complied with the applicable provisions of Rule 144), (iii)
      if such Securities are eligible for sale under Rule 144(k), or (iv) if such
      legend is not required under applicable requirements of the Securities Act
      (including judicial interpretations and pronouncements issued by the Staff
      of
      the Commission) (and the holder of such Securities has submitted a written
      request for removal of the legend indicating that such legend is not required
      under applicable requirements of the Securities Act (including such judicial
      interpretations and pronouncements). The Company shall cause its counsel to
      issue a legal opinion to the Company’s transfer agent promptly upon the
      occurrence of any of the events in clauses (i), (ii), (iii) or (iv) above to
      effect the removal of the legend on certificates evidencing the Securities
      and
      shall also cause its counsel to issue a “blanket” legal opinion to the Company’s
      transfer agent promptly after the effective date of any registration statement
      covering the resale of the Securities, if required by the Company’s transfer
      agent, to allow sales without restriction pursuant to an effective registration
      statement. The Company agrees that at such time as such legend is no longer
      required under this Section 6.2(b), it will, no later than three (3) business
      days following the delivery by the Purchaser to the Company or the Company’s
      transfer agent of a certificate representing the Securities issued with a
      restrictive legend, deliver or cause to be delivered to the Purchaser a
      certificate representing such Securities that is free from all restrictive
      and
      other legends; provided that in the case of removal of the legend for reasons
      set forth in clause (ii) above, the holder of such Securities has submitted
      a
      written request for removal of the legend indicating that the holder has
      complied with the applicable provisions of Rule 144. The Company may not make
      any notation on its records or give instructions to any transfer agent of the
      Company that enlarge the restrictions on transfer set forth in this
      Section.

    

    (c) If
      the
      Company shall fail for any reason or for no reason to remove the legends set
      forth in this Section 6.2 within three (3) Business Days following the delivery
      by a holder to the Company or the Company’s transfer agent of a certificate
      representing the Securities issued with a restrictive legend, and if on or
      after
      such Business Day the holder purchases (in an open market transaction or
      otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
      holder of shares of Common Stock issuable upon such exercise that the holder
      anticipated receiving from the Company (a “Buy-In”), then the Company shall,
      within three (3) Business Days after the holder’s request and in the holder’s
      discretion, either (i) pay cash to the holder in an amount equal to the holder’s
      total purchase price (including brokerage commissions, if any) for the shares
      of
      Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
      obligation to deliver such certificate (and to issue such shares of Common
      Stock) shall terminate, or (ii) promptly honor its obligation to deliver to
      the
      holder a certificate or certificates representing such shares of Common Stock
      and pay cash to the holder in an amount equal to the excess (if any) of the
      Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the closing bid price of the Common Stock on the date of
      exercise.

    

    
      
        
        

      

      
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    6.3 Publicity.
      Except
      to the extent required by applicable laws, rules, regulations or stock exchange
      requirements or this Agreement, neither (i) the Company, the Subsidiaries or
      any
      of their Affiliates nor (ii) the Purchaser or any of its Affiliates shall,
      without the written consent of the other, make any public announcement or issue
      any press release with respect to the transactions contemplated by this
      Agreement. Other than as provided in this Agreement, in no event will either
      (i)
      the Company, the Subsidiaries or any of their Affiliates or (ii) the Purchaser
      or any of its Affiliates make any public announcement or issue any press release
      with respect to the transactions contemplated by this Agreement without
      consulting with the other party, to the extent feasible, as to the content
      of
      such public announcement or press release. 

    

    6.4 Material,
      Nonpublic Information.
      The
      Company and its directors, officers, employees and agents shall not provide
      the
      Purchaser with any material non-public information regarding the Company or
      any
      of the Subsidiaries at any time after the Closing without the express written
      consent of the Purchaser. In the event of a breach of the foregoing covenant,
      then in addition to any other remedy provided in the Transaction Documents
      or in
      equity or at law, the Purchaser shall have the right to require, by written
      request, that the Company promptly (but in no event more than one (1) business
      day after the date of such request) publicly disclose, by press release, SEC
      filing, or otherwise, an appropriate summary of the information that, in the
      Purchaser’s reasonable judgment, constitutes the then material non-public
      information. After such one (1) business-day period, the Purchaser shall be
      automatically authorized to make a public disclosure (in the form of a press
      release, public advertisement or otherwise) of all of the information, or any
      portion thereof, without the prior approval of the Company and without incurring
      any liability to the Company, any of its Subsidiaries, or any of its or their
      respective officers, directors, employees, shareholders or agents for such
      disclosure.

    

    6.5 Filing
      of Information.
      The
      Company covenants to timely file (or obtain extensions in respect thereof and
      file within the applicable grace period) all reports required to be filed by
      the
      Company pursuant to all applicable securities laws, including the Exchange
      Act
      for the two (2) year period following the Closing Date. At any time if the
      Company is not required to file reports pursuant to such laws, it will prepare
      and furnish to the Purchaser and make publicly available in accordance with
      paragraph (c) of Rule 144 such information as is required for the Purchaser
      to
      sell the Securities under Rule 144. The Company further covenants that it will
      take such further action as any holder of the Securities may reasonably request
      to satisfy the provisions of Rule 144 applicable to the issuer of securities
      relating to transactions for the sale of securities pursuant to Rule 144.

    

    
      
        
        

      

      
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    6.6 Additional
      Issuance.
      The
      Company shall not issue any capital stock or other securities in connection
      with
      the raising of additional financing or capital until all of the Shares and
      the
      Warrant Shares have been registered for resale pursuant to an effective
      registration statement and otherwise in accordance with the terms set forth
      in
      the Registration Rights Agreement; provided; however, that the foregoing shall
      not prohibit the Company from issuing shares of Common Stock or securities
      convertible into or exercisable for Common Stock: (i) securities to third party
      purchasers as contemplated by Section 5.1(n) (for the avoidance of doubt, the
      aggregate purchase price of any and all issuances pursuant to this Section
      6.6(i) shall not exceed $75,000,000); (ii) securities issuable upon conversion
      of securities outstanding on the date hereof, (iii) to employees, consultants,
      officers or directors of the Company pursuant to stock option, stock purchase
      or
      stock bonus plans or agreements or other stock incentive plans or arrangements
      approved by the Board, which are in existence as of the date hereof,
      (iv) pursuant to the acquisitions currently contemplated by the Company as
      of the date of this Agreement, of the business entities or properties of Argosy
      Energy International, Companía General de Combustibles and Golden Oil
      Corporation, provided that any and all such issuances shall not exceed 3,000,000
      shares of capital stock or other securities, (v) pursuant to other
      acquisitions of other business entities or business segment of any such entities
      by the Company by merger, purchase of substantially all the assets or other
      reorganization or corporate partnering agreement if such issuance is approved
      by
      the Board, (vi) in connection with any stock split, stock dividend or
      recapitalization of the Company, and (vii) in connection with lease lines,
      bank loans, corporate partnering or other similar transactions, provided such
      issuances described in this clause (vii) are not primarily for the purpose
      of equity financing and are approved by the Board.

    

    6.7 Use
      of
      Proceeds.
      The
      Company covenants and agrees that all of the proceeds from the sale of the
      Shares and Warrants, which shall initially be delivered into the Escrow Account
      in accordance with the Escrow Agreement, or otherwise delivered by the Purchaser
      to the Company, on the Closing Date, shall be used by the Company to (i) fund
      each of the Acquisitions, including the Argosy Acquisition the closing of which
      shall be a condition to release of funds under the Escrow Agreement, (ii)
      potential acquisitions and (iii) for general working capital purposes.

    

    6.8 Integration.
      The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchaser.

    

    6.9 Reservation
      of Common Stock for Issuance; Listing of Shares and Warrant
      Shares.
      The
      Company agrees to reserve from its duly authorized capital stock the total
      number of shares of Common Stock issuable upon execution of this Agreement
      and
      upon the exercise of the Warrants. The Company agrees that at any time, if
      and
      when its shares of Common Stock are listed on The American Stock Exchange,
      that
      it will use reasonable efforts to promptly list and qualify the Shares and
      the
      Warrant Shares for trading on The American Stock Exchange.

    

    6.10 Required
      Approvals.
      As
      promptly as practicable after the date of this Agreement, the Company shall
      make, or cause to be made, all filings with any governmental or administrative
      agency or any other Person necessary to consummate the transactions contemplated
      hereby.

    

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    7. Indemnification.
      

    

    7.1 By
      the
      Company.
      The
      Company agrees to indemnify, defend and hold harmless the Purchaser and its
      Affiliates and their respective, officers, directors, agents, employees,
      subsidiaries, partners, members and controlling persons (collectively, the
      “Purchaser
      Indemnitees”)
      to the
      fullest extent permitted by law from and against any and all claims, losses,
      liabilities, damages, deficiencies, judgments, assessments, fines, settlements,
      costs or expenses (including interest, penalties and reasonable fees,
      disbursements and other charges of counsel) (collectively, “Losses”)
      based
      upon, arising out of or otherwise in respect of any breach by the Company of
      any
      representation, warranty, covenant or agreement of the Company contained in
      the
      Transaction Documents or for any Losses claimed by the Company’s stockholders,
      the Placement Agents or any other broker or placement agent.

    

    7.2 Claims.
      All
      claims for indemnification by a Purchaser Indemnitee pursuant to this Section
      7
      shall be made as follows: 

    

    (a) If
      a
      Purchaser Indemnitee has incurred or suffered Losses for which it is entitled
      to
      indemnification under this Section 7, then such Purchaser Indemnitee shall
      give
      prompt written notice of such claim (a “Claim
      Notice”)
      to the
      Company. Each Claim Notice shall state the amount of claimed Losses (the
“Claimed
      Amount”),
      if
      known, and the basis for such claim. 

    

    (b) Promptly
      after delivery of a Claim Notice, the Company (the “Indemnifying
      Party”)
      shall
      provide to each Purchaser Indemnitee (the “Indemnified
      Party”),
      a
      written response (the “Response
      Notice”)
      in
      which the Indemnifying Party shall: (i) agree that all of the Claimed Amount
      is
      owed to the Indemnified Party, (ii) agree that part, but not all, of the Claimed
      Amount (the “Agreed
      Amount”)
      is
      owed to the Indemnified Party, or (iii) contest that any of the Claimed Amount
      is owed to the Indemnified Party. The Indemnifying Party may contest the payment
      of all or a portion of the Claimed Amount only based upon a good faith belief
      that all or such portion of the Claimed Amount does not constitute Losses for
      which the Indemnified Party is entitled to indemnification under this Section
      7.
      If no Response Notice is delivered by the Indemnifying Party within 10 days
      after delivery of a Claim Notice, then the Indemnifying Party shall be deemed
      to
      have agreed that all of the Claimed Amount is owed to the Indemnified Party.
      

    

    (c) If
      the
      Indemnifying Party in the Response Notice agrees (or is deemed to have agreed)
      that all of the Claimed Amount is owed to the Indemnified Party, then the
      Indemnifying Party shall owe to the Indemnified Party an amount equal to the
      Claimed Amount to be paid in the manner set forth in this Section 8. If the
      Indemnifying Party in the Response Notice agrees that part, but not all, of
      the
      Claimed Amount is owed to the Indemnified Party, then the Indemnifying Party
      shall owe to the Indemnified Party an amount equal to the agreed amount set
      forth in such Response Notice to be paid in the manner set forth in this Section
      8. The parties agree that the foregoing shall not be deemed to provide that
      the
      Indemnifying Party is entitled to make a binding determination regarding any
      disputed amounts owed to an Indemnified Party, unless such Indemnified Party
      accepts and agrees to such determination, and both the Indemnified Party and
      Indemnifying Party shall retain all rights and remedies available to such party
      hereunder.

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    (d) No
      delay
      on the part of the Indemnified Party in notifying the Indemnifying Party shall
      relieve the Indemnifying Party of any liability or obligation hereunder except
      to the extent of any actual material and adverse prejudice caused by or arising
      out of such delay. 

    

    7.3. Payment
      of Claims.
      An
      Indemnifying Party shall make payment of any portion of any Claimed Amount
      that
      such Indemnifying Party has agreed in a Response Notice that it owes to an
      Indemnified Party, or that such Indemnifying Party is deemed to have agreed
      it
      owes to such Indemnifying Party, said payment to be made within ten (10) days
      after such Response Notice is delivered by such Indemnifying Party or should
      have been delivered by such Indemnifying Party, as the case may be.

    

    7.4. Limitations.
      

    

    (a) Time
      for Claims.
      No
      Indemnifying Party will be liable for any Losses hereunder arising out of a
      breach of any representation or warranty unless a written claim for
      indemnification is given by the Indemnified Party to the Indemnifying Party
      on
      or prior to the third anniversary of the date on which the registration
      statement covering the resale of the Shares and the Warrant Shares initially
      became effective unless any such Losses arose out of or are related to any
      fraud, bad faith or willful misconduct on the part of the Indemnifying
      Party.

    

    (b) Maximum
      Amount.
      Notwithstanding anything contained herein to the contrary, no Indemnifying
      Party
      will be liable for any Losses to any Purchaser Indemnitee hereunder in excess
      of
      the portion of the aggregate purchase price hereunder actually paid by the
      Purchaser unless any such Losses arose out of or are related to any fraud,
      bad
      faith or willful misconduct on the part of the Indemnifying Party. 

    

    7.5 Applicability;
      Non-Exclusivity.
      Notwithstanding any term to the contrary in this Section 7, the indemnification
      and contribution provisions of the Registration Rights Agreement shall govern
      any claim made with respect to registration statements filed pursuant thereto
      or
      sales made thereunder. The parties hereby acknowledge and agree that in addition
      to remedies of the parties hereto in respect of any and all claims relating
      to
      any breach or purported breach of any representation, warranty, covenant or
      agreement that is contained in this Agreement pursuant to the indemnification
      provisions of this Section 8, all parties shall always retain the right to
      pursue and obtain injunctive relief in addition to any other rights or remedies
      hereunder. 

    

    8. Miscellaneous
      Provisions.
      

    

    8.1 Rights
      Cumulative.
      Each
      and all of the various rights, powers and remedies of the parties shall be
      considered to be cumulative with and in addition to any other rights, powers
      and
      remedies which such parties may have at law or in equity in the event of the
      breach of any of the terms of this Agreement. The exercise or partial exercise
      of any right, power or remedy shall neither constitute the exclusive election
      thereof nor the waiver of any other right, power or remedy available to such
      party. 

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

      
        

           

        

      

    

    8.2 Pronouns.
      All
      pronouns or any variation thereof shall be deemed to refer to the masculine,
      feminine or neuter, singular or plural, as the identity of the person, persons,
      entity or entities may require. 

    

    8.3 Notices.
      

    

    (a) Any
      notices, reports or other correspondence (hereinafter collectively referred
      to
      as “correspondence”) required or permitted to be given hereunder shall be given
      in writing and shall be deemed given if sent by certified or registered mail
      (return receipt requested), overnight courier or telecopy (with confirmation
      of
      receipt), or delivered by hand to the party to whom such correspondence is
      required or permitted to be given hereunder. An electronic communication
      (“Electronic
      Notice”)
      shall
      be deemed written notice for purposes of this Section 8.3 if sent with return
      receipt requested to the electronic mail address specified by the receiving
      party in this Section 8.3. Electronic Notice shall be deemed received at the
      time the party sending Electronic Notice receives verification of receipt by
      the
      receiving party.

     

    (b) All
      correspondence to the Company shall be addressed as follows: 

    

    Gran
      Tierra Energy Inc.

    300,
      611-10th Avenue S.W. Floor,

    610-8th
      Avenue S.W.

    Calgary,
      Alberta

    CANADA

    Attention:
      James Hart, Chief Financial Officer 

    Facsimile:
      (403) 265-3242

    jameshart@grantierra.com

    

    with
      copies to:

    

    McGuireWoods
      LLP 

    3145
      Avenue of the Americas 

    New
      York,
      NY 10105

    Attention:
      Louis W. Zehil, Esq. 

    Telecopier:
      (212) 548-2175

    lzehil@mcquirewoods.com

    

    (c) All
      correspondence to the Purchaser shall be addressed as follows:

    

    CD
      Investment Partners, Ltd.

    Two
      North
      Riverside Plaza, Suite 720

    Chicago,
      Illinois 60606

    Attention:
      Investment Manager

    Facsimile:
      (312) 559-1288

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

      
        

           

           

        

      

    

    with
      copies to:

    

    Greenberg
      Traurig, LLP

    77
      West
      Wacker Drive

    Suite
      2500

    Chicago,
      Illinois 60601

    Attention:
      Peter H. Lieberman, Esq.

    Todd
      A.
      Mazur, Esq.

    Facsimile:
      (312) 456-8435

    

    (d) Any
      entity may change the address to which correspondence to it is to be addressed
      by notification as provided for herein. 

    

    8.4 Captions.
      The
      captions and paragraph headings of this Agreement are solely for the convenience
      of reference and shall not affect its interpretation. 

    

    8.5 Severability.
      Should
      any part or provision of this Agreement be held unenforceable or in conflict
      with the applicable laws or regulations of any jurisdiction, the invalid or
      unenforceable part or provisions shall be replaced with a provision which
      accomplishes, to the extent possible, the original business purpose of such
      part
      or provision in a valid and enforceable manner, and the remainder of this
      Agreement shall remain binding upon the parties hereto. 

    

    8.6 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      and
      substantive laws of the State of New York and without regard to any conflicts
      of
      laws concepts which would apply the substantive law of some other jurisdiction.
      

    

    8.7 Consent
      to Jurisdiction; Venue.
      Each
      party
      hereby irrevocably and unconditionally (i) agrees that any suit, action or
      other
      legal proceeding arising out of this Agreement shall be brought in a state
      court
      located in New York, New York; (ii) consents to the jurisdiction of any such
      court in any suit, action or proceeding; and (iii) waives any objection which
      such party may have to the laying of venue of any such suit, action or
      proceeding in any such court.

    

    8.8 [INTENTIONALLY
      OMITTED]

    

    8.9 Waiver.
      No
      waiver of any term, provision or condition of this Agreement, whether by conduct
      or otherwise, in any one or more instances, shall be deemed to be, or be
      construed as, a further or continuing waiver of any such term, provision or
      condition or as a waiver of any other term, provision or condition of this
      Agreement. 

    

    8.10 Expenses.
      The
      Company and the Purchaser shall be responsible for their respective expenses
      (including, without limitation, their respective fees and expenses of their
      counsel) incurred by them in connection with the negotiation and execution
      of,
      and closing under, this Agreement. 

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

      
        

           

           

        

      

    

    8.11 Assignment.
      The
      rights and obligations of any party hereto shall inure to the benefit of and
      shall be binding upon the successors and permitted assigns of such party. The
      Company may not assign this Agreement or any rights or obligations hereunder
      without the prior written consent of the Purchaser. The Purchaser may assign
      or
      transfer any or all of its rights under this Agreement to any Person provided
      that such assignee or transferee agrees in writing to be bound, with respect
      to
      the transferred Shares, Warrants or the Warrant Shares, by the provisions hereof
      that apply to the Purchaser; whereupon such assignee or transferee shall be
      deemed to be the “Purchaser”
for
      all
      purposes of this Agreement. 

    

    8.12 Survival.
      The
      respective representations and warranties given by the parties hereto shall
      survive the Closing Date and the consummation of the transactions contemplated
      herein, without regard to any investigation made by any party. The respective
      covenants and agreements agreed to by a party hereto shall survive the Closing
      Date and the consummation of the transactions contemplated herein in accordance
      with their respective terms and conditions. 

    

    8.13 Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the parties hereto respecting
      the subject matter hereof and supersedes all prior agreements, negotiations,
      understandings, representations and statements respecting the subject matter
      hereof, whether written or oral. 

    

    8.14 Amendments.
      Any
      amendment, supplement or modification of or to any provision of this Agreement,
      any waiver of any provisions of this Agreement shall be effective only if made
      or given in writing and signed by the Company and the Purchaser. 

    

    8.15 No
      Third Party Rights.
      This
      Agreement is intended solely for the benefit of the parties hereto and is not
      intended to confer any benefits upon, or create any rights in favor of, any
      Person (including, without limitation, any stockholder or debt holder of the
      Company) other than the parties hereto, except that each of the Purchaser
      Indemnitees that are not the Purchaser are entitled to all rights and benefits
      as third party beneficiaries of Article 7 of this Agreement. 

    

    8.16 Independent
      Nature of Purchaser’s Obligations and Rights.
      The
      obligations of the Purchaser under the Transaction Documents are several and
      not
      joint with the obligations of any third party purchaser of the Company’s
      securities, and the Purchaser shall not be responsible in any way for the
      performance of the obligations of any third party purchaser of the Company’s
      securities. Nothing contained herein or in any other Transaction Document or
      any
      agreement of any such third party purchaser, and no action taken by the
      Purchaser pursuant to any of the Transaction Documents or any such third party
      purchaser pursuant thereto, shall be deemed to constitute the Purchaser and
      any
      third party purchaser of the Company’s securities as a partnership, an
      association, a joint venture or any other kind of entity or group, or create
      a
      presumption that the Purchaser and any such third party purchaser of the
      Company’s securities are in any way acting in concert or as a group with respect
      to any matters. The Purchaser confirms that it has independently participated
      in
      the negotiation of the transaction contemplated hereby with the advice of its
      own counsel and advisors. The Purchaser and the Company each acknowledge and
      agree that (i) the decision of the Purchaser to purchase the Securities pursuant
      to this Agreement has been made by the Purchaser independently of any third
      party purchaser of the Company’s securities and (ii) no such third party
      purchaser has acted as agent for the Purchaser in connection with the Purchaser
      making its investment hereunder and that no such third party purchaser will
      be
      acting as agent of the Purchaser in connection with the Purchaser monitoring
      its
      investment in the Securities or enforcing its rights under the Transaction
      Documents. The Purchaser shall be entitled to independently protect and enforce
      its rights, (including, without limitation, the rights arising out of this
      Agreement or out of the other Transaction Documents), and it shall not be
      necessary for any third party purchaser of the Company’s securities to be joined
      as an additional party in any proceeding for such purpose. To the extent that
      any such third party purchasers purchase the same or similar securities as
      the
      Purchaser hereunder or on the same or similar terms and conditions or pursuant
      to the same or similar documents, all such matters are solely in the control
      of
      the Company, not the action or decision of the Purchaser, and would be solely
      for the convenience of the Company and not because it was required or requested
      to do so by the Purchaser or any such third party purchaser. For clarification
      purposes only and without implication that the contrary would otherwise be
      true,
      the transactions contemplated by the Transaction Documents include only the
      transaction between the Company and the Purchaser and do not include any other
      transaction between the Company and any other third party purchaser of the
      Company’s securities. The language used in this Agreement will be deemed to be
      the language chosen by the parties to express their mutual intent, and no rules
      of strict construction will be applied against any party. 

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

      
        

           

        

      

    

    8.17 Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      document. The parties hereto confirm that any facsimile copy of another party’s
      executed counterpart of this Agreement (or its signature page thereof) will
      be
      deemed to be an executed original thereof. 

    

    8.18 Delivery
      of Securities.
      Notwithstanding anything contained in this Agreement or any other Transaction
      Document to the contrary, unless otherwise directed in writing by the
      Purchaser, all of the Purchaser’s securities purchased pursuant to this
      Agreement (and all securities which are issuable to the Purchaser pursuant
      to the terms of this Agreement or any other agreement or instrument entered
      into, or delivered, in connection with execution of this Agreement or the
      consummation of the transaction contemplated hereby) shall be registered in
      the
      name of the Purchaser, and the Company shall, and shall cause its agents and
      representatives to, deliver all certificates representing such securities to
      Goldman, Sachs & Co., One New York Plaza, New York, New York 10004,
      Attention: Justin Freedland, and copies of all certificates representing such
      securities shall be sent to the Purchaser in accordance with
      Section 8.3 of this Agreement.

    

    8.19  Termination.
      Purchaser may terminate this Agreement without any obligation or liability
      hereunder or otherwise if the Closing does not occur within (5) business days
      after the date hereof.

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

      
        

           

        

      

    

    8.20  Waiver
      of Jury Trial.
      Each of
      the Company and the Purchasers hereby waives any right to a trial by jury in
      any
      action, lawsuit or proceeding to enforce or defend any right under this
      Agreement or any amendment, instrument, document or agreement delivered or
      to be
      delivered in connection with this Agreement and agrees that any action, lawsuit
      or proceeding will be tried before a court and not before a jury.

    

    [Signature
      Page Follows]

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Securities Purchase
      Agreement under seal as of the day and year first above written. 

     

    
      	 	 	 
	 	GRAN
              TIERRA ENERGY
              INC.
	 
 	 
 	 
 
	 	By:  	/s/
              Dana
              Coffield
	 	
              
Dana
              Coffield,
	 	President
              and
              Chief Executive Officer

       

      
        	 	 	 
	 	CD
                INVESTMENT
                PARTNERS, LTD.
	 
 	 
 	 
 
	 	By:  	CD
                Capital Management, LLC
	 	Its: 	Investment Manager

        
          	 	 	 
	 	 	 
	 	By:  	/s/
                  John
                  Ziegelman
	 	
                  
John
                  Ziegelman, President
	 	 

        
          
            
            

          

          
            33

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