Document:

Exhibit
      10.1 

    

     FIRST
      AMENDMENT TO COMMON STOCK PURCHASE AGREEMENT

    

    THIS
      FIRST AMENDMENT TO COMMON STOCK PURCHASE AGREEMENT
      (the
“Amendment”), dated as of July 23, 2008, by and between HEMISPHERX
      BIOPHARMA, INC.,
      a
      Delaware corporation (the “Company”), and FUSION
      CAPITAL FUND II, LLC,
      an
      Illinois limited liability company (the “Buyer”). Capitalized terms used herein
      and not otherwise defined herein shall have the meanings given to them in the
      Common Stock Purchase Agreement.

    

    WHEREAS,
      the
      parties hereto are parties to a Common Stock Purchase Agreement dated as of
      July
      2, 2008 (the “Common Stock Purchase Agreement”) pursuant to which the Buyer has
      agreed to purchase, and the Company has agreed to sell up to $30,000,000 of
      the
      Common Stock;

    

    WHEREAS,
      the
      parties desire to amend the Common Stock Purchase Agreement; 

    

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

    

    
      	 	
              1.

            	
              Amendments.
                

            

    

    

    Section
      1(g) is hereby amended and restated in its entirety as follows:

    

    (g) Compliance
      with Principal Market Rules.
      Notwithstanding any other provision of this Agreement, the Company shall not
      effect any sale under this Agreement or be obligated to register under the
      1933
      Act Purchase Shares under this Agreement and the Buyer shall not have the right
      or the obligation to purchase shares of Common Stock under this Agreement to
      the
      extent that after giving effect to such purchase the "Exchange Cap" shall be
      deemed to be reached. The "Exchange Cap" shall be deemed to have been reached
      if, at any time prior to the shareholders of the Company approving the
      transaction contemplated by this Agreement, upon a purchase under this
      Agreement, the Purchase Shares and Commitment Shares issuable pursuant to such
      purchase would, together with all Purchase Shares and Commitment Shares
      previously issued under this Agreement, and any Common Stock previously issued
      to Fusion that would be aggregated by the American Stock Exchange exceed
      14,823,651 shares of Common Stock (19.99% of the 74,155,334 outstanding shares
      of Common Stock as of the date of this Agreement). The Company may, but shall
      be
      under no obligation to, request its shareholders to approve the transaction
      contemplated by this Agreement. The Company shall not be required to issue
      any
      shares of Common Stock or register any shares of Common Stock under this
      Agreement if such issuance or registration would breach the Company's
      obligations under the rules or regulations of the Principal Market.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      3(c) is hereby amended and restated in its
      entirety as follows:

     

    (c) Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company consists of (i)
      200,000,000 shares of Common Stock, of which as of the date hereof, 74,155,334
      shares are issued and outstanding, none are held as treasury shares, 16,446,992
      shares are reserved for issuance pursuant to the Company's stock option plans
      of
      which only approximately 8,883,524 shares remain available for future grants
      and
      9,731,275 shares are issuable and reserved for issuance pursuant to securities
      (other than stock options issued pursuant to the Company's stock option plans)
      exercisable or exchangeable for, or convertible into, shares of Common Stock
      and
      (ii) 5,000,000 shares of blank check Preferred Stock, $0.01 par value, of which
      as of the date hereof no shares are issued and outstanding . All of such
      outstanding shares have been, or upon issuance will be, validly issued and
      are
      fully paid and nonassessable. Except as disclosed in Schedule 3(c), (i) no
      shares of the Company's capital stock are subject to preemptive rights or any
      other similar rights or any liens or encumbrances suffered or permitted by
      the
      Company, (ii) there are no outstanding debt securities, (iii) there are no
      outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      Subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its Subsidiaries is or may become bound to issue
      additional shares of capital stock of the Company or any of its Subsidiaries
      or
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      any
      shares of capital stock of the Company or any of its Subsidiaries, (iv) there
      are no agreements or arrangements under which the Company or any of its
      Subsidiaries is obligated to register the sale of any of their securities under
      the 1933 Act (except the Registration Rights Agreement), (v) there are no
      outstanding securities or instruments of the Company or any of its Subsidiaries
      which contain any redemption or similar provisions, and there are no contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      Subsidiaries is or may become bound to redeem a security of the Company or
      any
      of its Subsidiaries, (vi) there are no securities or instruments containing
      anti-dilution or similar provisions that will be triggered by the issuance
      of
      the Securities as described in this Agreement and (vii) the Company does not
      have any stock appreciation rights or "phantom stock" plans or agreements or
      any
      similar plan or agreement. The Company has furnished to the Buyer true and
      correct copies of the Company's Certificate of Incorporation, as amended and
      as
      in effect on the date hereof (the "Certificate of Incorporation"), and the
      Company's By-laws, as amended and as in effect on the date hereof (the
      "By-laws"), and summaries of the terms of all securities convertible into or
      exercisable for Common Stock, if any, and copies of any documents containing
      the
      material rights of the holders thereof in respect thereto.

    

    
      	 	
              2.

            	
              Effect
                of Amendment/Incorporation of Certain Provisions.
                Except as amended as set forth above, the Common Stock Purchase Agreement
                shall continue in full force and effect. The provisions set forth
                in
                Section 11 of the Common Stock Purchase Agreement are hereby expressly
                incorporated by reference into this
                Amendment.

            

    

     

    *
      * * * *

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Buyer and the Company have caused this First Amendment to Common Stock Purchase
      Agreement to be duly executed as of the date first written
      above.

    

    
      	 	
              THE
                COMPANY:

            
	 	 
	 	
              HEMISPHERX
                BIOPHARMA, INC.

            
	 	 
	 	
              By: 
                /s/ William
                A.
                Carter                                    

            
	 	
              Name:
                William A. Carter

            
	 	
              Title:
                Chief Executive Officer

            
	 	 
	 	
              BUYER:

            
	 	 
	 	
              FUSION
                CAPITAL FUND II, LLC

            
	 	
              BY:
                FUSION CAPITAL PARTNERS, LLC

            
	 	
              BY:
                ROCKLEDGE CAPITAL CORPORATION

            
	 	 
	 	
              By:
                /s/
                Josh
                Scheinfeld                                       

            
	 	
              Name:
                Josh Scheinfeld

            
	 	
              Title:
                  President

            

    

     

    
      
        
        

      

      
        3Exhibit
      10.55

     

    COLOMBIAN
      PARTICIPATION AGREEMENT

     

    BY
      AND AMONG

     

    ARGOSY
      ENERGY INTERNATIONAL,

     

    GRAN
      TIERRA ENERGY INC.

     

    AND

     

    CROSBY
      CAPITAL, LLC

     

    DATED

     

    AS
      OF JUNE 22, 2006

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    
      	
              1.
                Definitions.

            	
              1

            
	
              1.1.

            	
              “AAA
                Rules” 

            	
              1

            
	
              1.1A.

            	
              “Acceptable
                Credit Rating”

            	
              1

            
	
              1.2.

            	
              “Adjusted
                Net Revenue Interest” 

            	
              2

            
	
              1.3.

            	
              “Adjusted
                New Commercial Field Capital Expenditures” 

            	
              2

            
	
              1.4.

            	
              “AFE”
                

            	
              2

            
	
              1.5.

            	
              “Affiliate”
                

            	
              2

            
	
              1.6.

            	
              “Allowed
                Adjustment Factors” 

            	
              2

            
	
              1.7.

            	
              “ANH”
                

            	
              2

            
	
              1.8.

            	
              “Base
                Net Revenue Interest” 

            	
              2

            
	
              1.9.

            	
              “Base
                Overriding Royalty Interest” 

            	
              3

            
	
              1.10.

            	
              “Capital
                Expenditure Commitment” 

            	
              3

            
	
              1.11.

            	
              “Capital
                Expenditure Period” 

            	
              3

            
	
              1.12.

            	
              “Colombia”
                

            	
              3

            
	
              1.13.

            	
              “Colombian
                Ad Valorem Taxes” 

            	
              3

            
	
              1.14.

            	
              “Colombian
                Association Contracts” 

            	
              3

            
	
              1.15.

            	
              “Colombian
                Governmental Authorities” 

            	
              3

            
	
              1.16.

            	
              “Colombian
                Source Taxes” 

            	
              3

            
	
              1.17.

            	
              “Confidential
                Information” 

            	
              4

            
	
              1.18.

            	
              “Conversion
                Precondition” 

            	
              4

            
	
              1.19.

            	
              “Conditional
                Overriding Royalty” 

            	
              4

            
	
              1.20.

            	
              “Crosby
                Arbitration Award” 

            	
              4

            
	
              1.21.

            	
              “Crosby
                Escrow Account” 

            	
              4

            
	
              1.22.

            	
              “Crosby
                Escrow Agreement” 

            	
              4

            
	
              1.23.

            	
              “Crosby
                Escrow Bank” 

            	
              4

            
	
              1.24.

            	
              “Crosby
                Final Determination” 

            	
              4

            
	
              1.25.

            	
              “Crosby
                Members” 

            	
              4

            
	
              1.26.

            	
              “Crosby
                Net Profits Interest” 

            	
              4

            
	
              1.27.

            	
              “Crosby
                Net Profits Interest Percentage” 

            	
              4

            
	
              1.28.

            	
              “Cure
                Period” 

            	
              4

            
	
              1.29.

            	
              “Demand”
                

            	
              4

            
	
              1.30.

            	
              “Ecopetrol”
                

            	
              4

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    
      	
              1.31.

            	
              “Effective
                Date” 

            	
              5

            
	
              1.32.

            	
              [INTENTIONALLY
                DELETED]

            	
              5

            
	
              1.33.

            	
              “Historical
                Properties” 

            	
              5

            
	
              1.34.

            	
              “Hydrocarbons”
                

            	
              5

            
	
              1.35.

            	
              “Initial
                Letter of Credit” 

            	
              5

            
	
              1.36.

            	
              “Initial
                Term” 

            	
              5

            
	
              1.37.

            	
              “Issuer
                Acceptable Credit Rating” 

            	
              5

            
	
              1.38.

            	
              “Issuer
                Bank” 

            	
              5

            
	
              1.39.

            	
              “Letter
                of Credit” 

            	
              5

            
	
              1.40.

            	
              “Letter
                of Credit Default” 

            	
              5

            
	
              1.41.

            	
              “Material
                Underpayment” 

            	
              5

            
	
              1.42.

            	
              “Net
                Revenue Interest” 

            	
              5

            
	
              1.43.

            	
              “New
                Commercial Field” 

            	
              6

            
	
              1.44.

            	
              “New
                Commercial Field Capital Expenditures” 

            	
              6

            
	
              1.45.

            	
              “New
                Letter of Credit” 

            	
              6

            
	
              1.46.

            	
              “Operating
                Expenses” 

            	
              6

            
	
              1.47.

            	
              “Operator
                Overhead Costs” 

            	
              7

            
	
              1.48.

            	
              “Panel”
                

            	
              7

            
	
              1.49.

            	
              “Participation
                Agreement Dispute” 

            	
              7

            
	
              1.50.

            	
              “Participation
                Rights” 

            	
              7

            
	
              1.51.

            	
              “Payment
                Default” 

            	
              7

            
	
              1.52.

            	
              “Person”
                

            	
              7

            
	
              1.53.

            	
              “POPA
                Prospect Area” 

            	
              7

            
	
              1.54.

            	
              “Pre-Existing
                Fields” 

            	
              8

            
	
              1.55.

            	
              “Prevailing
                party” 

            	
              8

            
	
              1.56.

            	
              “Release
                Covenants” 

            	
              8

            
	
              1.57.

            	
              “Sales
                Proceeds” 

            	
              8

            
	
              1.58.

            	
              “Subsequent
                Argosy Sale” 

            	
              8

            
	
              1.59.

            	
              “Subsequent
                Transfer” 

            	
              8

            
	
              1.60.

            	
              “U.S.
                GAAP” 

            	
              8

            
	
              1.61.

            	
              “Working
                Interest” 

            	
              8

            
	
              2.
                Payment
                Obligation for Base Overriding Royalty.

            	
              8

            
	
              2.1.

            	
              Calculation
                of Base Overriding Royalty.

            	
              8

            

    

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

     

    
      	
              2.2.

            	
              Post-Effective
                Date Transfers.

            	
              9

            
	
              2.3.

            	
              Unitization.

            	
              9

            
	
              3.
                Conversion
                Rights and Payment Obligation for Crosby Net Profits
                Interest.

            	
              9

            
	
              3.1.

            	
              Right
                to Convert.

            	
              9

            
	
              3.2.

            	
              Calculation
                of Recovery of Adjusted New Commercial Field Capital
                Expenditures.

            	
              9

            
	
              3.3.

            	
              Calculation
                of Crosby Net Profits Interest.

            	
              9

            
	
              3.4.

            	
              Net
                Profits Amount and Adjustment.

            	
              10

            
	
              3.5.

            	
              Conversion
                Notice.

            	
              10

            
	
              3.6.

            	
              Post-Effective
                Date Transfers.

            	
              10

            
	
              3.7.

            	
              Unitization.

            	
              10

            
	
              3.8.

            	
              Pre-Existing
                Fields.

            	
              10

            
	
              4.
                Payment
                Obligation for Conditional Overriding
                Royalty

            	
              10

            
	
              4.1.

            	
              Conditional
                Overriding Royalty Obligations.

            	
              10

            
	
              4.2.

            	
              Conditional
                Overriding Royalty Calculation.

            	
              10

            
	
              4.3.

            	
              Post-Effective
                Date Transfers.

            	
              11

            
	
              4.4.

            	
              Unitization.

            	
              11

            
	
              4.5.

            	
              Pre-Existing
                Fields.

            	
              11

            
	
              5.
                Capital
                Expenditure Commitment.

            	
              11

            
	
              5.1.

            	
              5
                Year Expenditure Requirement.

            	
              11

            
	
              5.2.

            	
              Underinvestment
                payment.

            	
              12

            
	
              6.
                Letter
                of Credit.

            	
              12

            
	
              6.1.

            	
              Interim
                Terms Prior To Letter of Credit

            	
              12

            
	
              6.2.

            	
              Initial
                Term for Letter of Credit

            	
              12

            
	
              6.3.

            	
              Post-Initial
                Term

            	
              13

            
	
              6.4.

            	
              Replacement
                Letters of Credit.

            	
              15

            
	
              6.5.

            	
              Disbursement
                of Crosby Escrow Funds.

            	
              15

            
	
              6.6.

            	
              Delivery
                of Old or Replaced Letters of Credit.

            	
              16

            
	
              6.7.

            	
              Termination
                of Section 6.

            	
              16

            
	
              7.
                Payments;
                Reports; Audit Rights.

            	
              16

            
	
              7.1.

            	
              Payments
                and Reports Regarding Payments.

            	
              16

            
	
              7.2.

            	
              Calculation
                of Payments During First Calendar Year.

            	
              18

            
	
              7.3.

            	
              Additional
                Information Regarding Historical Properties.

            	
              19

            
	
              7.4.

            	
              Books
                and Records.

            	
              20

            

    

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

    
      	
              7.5.

            	
              Audit.

            	
              20

            
	
              7.6.

            	
              Confidentiality.

            	
              21

            
	
              8.
                Assignment,
                Sale or Transfer of Historical Properties by Argosy and/or Sale of
                Argosy.

            	
              21

            
	
              8.1.

            	
              Subsequent
                Transfers of Historical Properties.

            	
              21

            
	
              8.2.

            	
              Subsequent
                Sale of Argosy or its Successors.

            	
              21

            
	
              8.3.

            	
              Assignment
                of this Agreement By Argosy or Gran Tierra.

            	
              21

            
	
              8.4.

            	
              Prohibited
                Transfers and Assignments.

            	
              23

            
	
              8.5.

            	
              Effect
                of Transfers and Assignments.

            	
              23

            
	
              8.6.

            	
              Release
                of Gran Tierra, Argosy or Permitted Transferees.

            	
              23

            
	
              9.
                Assignment
                by Crosby.

            	
              23

            
	
              9.1.

            	
              Crosby
                Members.

            	
              23

            
	
              9.2.

            	
              Assignment
                by Crosby to Non-Members.

            	
              24

            
	
              10.
                Term;
                Termination.

            	
              24

            
	
              10.1.

            	
              Base
                Term; Survival.

            	
              24

            
	
              10.2.

            	
              Early
                Termination.

            	
              24

            
	
              11.
                Dispute
                Resolution.

            	
              25

            
	
              11.1.

            	
              Negotiation.

            	
              25

            
	
              11.2.

            	
              Arbitration.

            	
              25

            
	
              11.3.

            	
              Injunctive
                Relief.

            	
              26

            
	
              11.4.

            	
              Place
                of Arbitration.

            	
              26

            
	
              11.5.

            	
              Legal
                Fees and Expenses.

            	
              26

            
	
              11.6.

            	
              Jurisdiction;
                Venue.

            	
              26

            
	
              12.
                Representations
                and Warranties.

            	
              26

            
	
              12.1.

            	
              Argosy
                and Gran Tierra.

            	
              26

            
	
              12.2.

            	
              Crosby.

            	
              27

            
	
              13.
                Miscellaneous.

            	
              28

            
	
              13.1.

            	
              Notices.

            	
              28

            
	
              13.2.

            	
              Inurement.

            	
              29

            
	
              13.3.

            	
              No
                Other Representations or Warranties.

            	
              29

            
	
              13.4.

            	
              Modification;
                Waiver.

            	
              29

            
	
              13.5.

            	
              Entire
                Agreement.

            	
              29

            
	
              13.6.

            	
              Headings.

            	
              29

            
	
              13.7.

            	
              Interpretation.

            	
              29

            

    

     

    
      
        
        

      

      
        -iv-

        
          

        

      

      
        
        

      

    

     

    
      	
              13.8.

            	
              Further
                Assurances.

            	
              29

            
	
              13.9.

            	
              Governing
                Law.

            	
              30

            
	
              13.10.

            	
              No
                Liability.

            	
              30

            
	
              13.11.

            	
              Force
                Majeure.

            	
              30

            
	
              13.12.

            	
              Survival.

            	
              30

            
	
              13.13.

            	
              Counterparts.

            	
              30

            
	
              13.14.

            	
              Severability.

            	
              30

            
	
              13.15.

            	
              Payments
                in U.S. Dollars.

            	
              30

            
	
              13.16.

            	
              Purchase
                Agreement.

            	
              30

            

    

    
      
        
        

      

      
        -v-

        
          

        

      

      
        
        

      

    

    Exhibits

     

    Exhibit
      A – Terms of Letter of Credit Draws

     

    
      	
              Schedules

            	 	 
	 	 	 
	
              Schedule
                1.8

            	 	
              Base
                Net Revenue Interests

            
	
              Schedule
                1.14

            	 	
              Colombian
                Association Contracts

            
	
              Schedule
                1.33

            	 	
              Historical
                Properties

            
	
              Schedule
                1.53

            	 	
              POPA
                Prospect Area Map

            
	
              Schedule
                1.54

            	 	
              Pre-Existing
                Fields

            
	
              Schedule
                9.1

            	 	
              Crosby
                Members

            

    

     

    
      
        
        

      

      
        -vi-

        
          

        

      

      
        
        

      

    

    COLOMBIAN
      PARTICIPATION AGREEMENT

     

    This
      Colombian Participation Agreement (this “Agreement”)
      is
      effective as of the Effective Date (as defined below) by and among Argosy Energy
      International, a Utah limited partnership (“Argosy”),
      Gran
      Tierra Energy Inc., a Nevada corporation whose federal tax id number is
      98-0479924 (“Gran
      Tierra”),
      and
      Crosby Capital, LLC, a Texas limited liability company (“Crosby”).
      Argosy and Gran Tierra are referred to herein collectively as the “Co-Obligors.”
      Argosy, Gran Tierra and Crosby are each individually referred to herein as
      a
“Party,”
and
      collectively as the “Parties.”

     

    RECITALS

     

    
      	A.	
              WHEREAS,
                Argosy is an oil and gas exploration and production firm with operations
                and an office in the Republic of Colombia, South America (“Colombia”).

            

    

    
      	B.	
              WHEREAS,
                Gran Tierra is an oil and gas exploration and production company
                based in
                Calgary, Canada with a highly experienced management team with extensive
                international experience.

            

    

    
      	C.	
              WHEREAS,
                Gran Tierra and Crosby have entered into a Securities Purchase Agreement
                dated as of May 25, 2006, as amended on June 20, 2006 (the “Purchase
                Agreement”),
                pursuant to which Gran Tierra purchased from Crosby all of its partnership
                interests in Argosy and all of the capital stock the general partner
                of
                Argosy;

            

    

    
      	D.	
              WHEREAS,
                as part of the consideration for the transactions contemplated by
                the
                Purchase Agreement, Gran Tierra and Argosy agree to pay Crosby, after
                the
                Effective Date, certain amounts based on the future performance of
                Argosy’s exploration and production initiatives, future oil and gas prices
                and Argosy’s future investment in exploration initiatives, all in
                accordance with the terms and conditions of this
                Agreement.

            

    

    
      	E.	
              WHEREAS,
                as part of the consideration contemplated by this Agreement, Gran
                Tierra
                will cause investment in and commit its experienced staff to Argosy’s
                exploration and production initiatives through which Argosy shall
                derive
                direct and indirect benefits.

            

    

    
      	F.	
              WHEREAS,
                in conjunction with the Purchase Agreement and other capital initiatives
                Gran Tierra is arranging for a credit facility to fund its operations,
                including the operations of Argosy.

            

    

    
      	G.	
              WHEREAS,
                this Agreement is executed as a post-closing requirement of the Purchase
                Agreement.

            

    

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the covenants and promises herein, and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Parties hereto agree as follows:

     

    1. Definitions.

     

    As
      used
      in this Agreement, the following capitalized terms shall have the following
      meanings:

     

    1.1. “AAA
      Rules”
      has the
      meaning set forth in Section
      11.2.

     

    1.1A. “Acceptable
      Credit Rating” has
      the
      meaning set forth in Section
      6.3.1.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    1.2. “Adjusted
      Net Revenue Interest”
      means
      the Base Net Revenue Interest adjusted for the Allowed Adjustment
      Factors.

     

    1.3. “Adjusted
      New Commercial Field Capital Expenditures”
      means
      for any New Commercial Field, New Commercial Field Capital Expenditures for
      such
      New Commercial Field reduced
      by any portion of such expenditures paid or reimbursed by any Person other
      than
      the
      Co-Obligors and their Affiliates, including but not limited to any of the
      Colombian Governmental Authorities or other Working Interest participant in
      such
      New Commercial Field.

     

    1.4. “AFE”
      has the
      meaning set forth in Section
      7.3.

     

    1.5. “Affiliate”
      means,
      with respect to the first Person, any other Person that, directly or indirectly
      through one or more intermediaries, controls, or is controlled by, or is under
      common control with, such first Person. The term “control”
      means
      the possession, directly or indirectly, of the power, whether or not exercised,
      (i) to vote 5% or more of the securities having voting power for the election
      of
      directors (or Persons performing similar functions) of such Person or (ii)
      to
      direct or cause the direction of the management or policies of a Person, whether
      through the ownership of voting securities, by contract or otherwise, and the
      terms “controlled”
      and
“common
      control”
      have
      correlative meanings. In addition, Persons with officers and/or directors in
      common with either of the Co-Obligors shall be deemed Affiliates of the
      Co-Obligors. Notwithstanding the foregoing, in no event shall Crosby or any
      of
      its members, or any of their Affiliates, be deemed to be an Affiliate of Gran
      Tierra or Argosy.

     

    1.6. “Allowed
      Adjustment Factors”
      means
      (a) any change (increase or decrease) in royalty obligations of Argosy under
      the
      Colombian Association Contracts pursuant to applicable Colombian laws, rules
      or
      regulations, (b) any change (increase or decrease) in Ecopetrol participation
      pursuant to the Colombian Association Contracts, and (c) any increase in
      Argosy’s Working Interest in any of the Historical Properties. As a
      non-exclusive example of how Argosy’s Working Interest in any of the Historical
      Properties could increase, Argosy’s Working Interest would increase due any of
      the following events: (a) if other Working Interest owners in the Historical
      Properties do not participate in a new discovery pursuant to a joint operating
      agreement; (b) any increase in Argosy’s Working Interest or rights as a matter
      of law relating to the Historical Properties, arising from any legal
      proceedings, actions or remedies; and (c) direct or indirect acquisition of
      another party’s interest or rights in the Historical Properties whether through
      an assignment, partnership or otherwise.

     

    1.7. “ANH”
      means
      the Agencia Nacional de Hidrocarburos of Columbia.

     

    1.8. “Base
      Net Revenue Interest”
      means
      Argosy’s Net Revenue Interest in the Historical Properties as of the Effective
      Date as set forth on Schedule
      1.8
      in the
      sixth column entitled “Argosy
      Net Revenue Interest.”
      The Base
      Net Revenue Interest for the Historical Properties is reflected as a percentage
      on Schedule
      1.8.
      Schedule
      1.8
      reflects
      the Base Net Revenue Interest by property, field and formation. The Base Net
      Revenue Interest percentages were calculated in the following manner: a
      percentage obtained as the product of multiplying (a) 100 by (b) one minus
      the
      share of production owed as a royalty to Colombian Governmental Authorities
      expressed in a percentage multiplied by (c) the Working Interest owned by Argosy
      expressed in a percentage.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    1.9. “Base
      Overriding Royalty Interest”
      has the
      meaning provided in Section
      2.1.

     

    1.10. “Capital
      Expenditure Commitment”
      has the
      meaning set forth in Section
      5.1.

     

    1.11. “Capital
      Expenditure Period”
      means
      the period beginning on the Effective Date hereof and ending 12:01 AM of the
      fifth anniversary of the Effective Date.

     

    1.12. “Colombia”
      has the
      meaning set forth in the Recitals.

     

    1.13. “Colombian
      Ad Valorem Taxes”
      shall
      mean any taxes required by applicable Colombian governmental authorities to
      be
      paid by Argosy (and/or any operator of New Commercial Fields) to any taxing
      authority (national, provincial, municipal and/or any governmental entity within
      Colombia) based on the value of owned real property, improvements and/or fixed
      equipment situated on the Historical Properties. As of the Effective Date,
      such
      Colombia Ad Valorem Taxes include:

     

    

    
      	
              Type
                of Tax

            	 	
              Spanish
                Name

            	 	
              Colombian
                income tax treatment

            
	
              Real
                Estate tax

            	 	
              Impuesto
                Predial

            	 	
              Applicable
                on real estate. Tax based on destination of the property and appraisal.
                80% of the tax paid, deductible for income tax
                purposes.

            

    

    

    1.14. “Colombian
      Association Contracts”
      means
      (i) the agreements listed on Schedule
      1.14
      by and
      between Argosy and any Colombian Governmental Authorities, (ii) any and all
      renewals, amendments or modifications to any of the foregoing, and (iii) any
      other agreements by Argosy or its Affiliates or Gran Tierra or its Affiliates
      with any Person, including without limitation any Colombian Governmental
      Authority, related to or affecting the Historical Properties.

     

    1.15. “Colombian
      Governmental Authorities”
      means
      Ecopetrol, ANH, and the Colombian Ministry of Mines, or any successors to any
      of
      the foregoing as applicable.

     

    1.16. “Colombian
      Source Taxes”
      shall
      mean any taxes required by applicable Colombian law, rule or regulation to
      be
      withheld by a first purchaser of Hydrocarbons and deposited by such first
      purchaser on the account of Argosy (and/or any operator on the Historical
      Properties who is delivering Hydrocarbons on the behalf of Agrosy) with a
      national, provincial, municipal, and/or any other governmental entity in
      Colombia. As of the Effective Date, such Colombian Source Taxes
      include:

     

    
      	
              Type
                of Tax

            	 	
              Rate

            	 	
              Spanish
                Name

            	 	
              Colombian
                income

              tax
                treatment

            	 
	
              Income
                Tax Withholding Tax

            	 	 	
              3.5

            	
              %

            	 	
              retencion
                en la fuente

            	 	 	
              Set
                off against final income tax

            	 
	
              Remittance
                Tax

            	 	 	
              1

            	
              %

            	 	
              impuesto
                de remesas

            	 	 	
              Set
                off against final

            	 
	
              Withholding*

            	 	 	 	 	 	 	 	 	
              income
                tax/remittance tax liability for year

            	 
	
              Stamp
                Tax

            	 	 	
              1.5

            	
              %

            	 	
              impuesto
                de timbre

            	 	 	
              Not
                deductible. No tax setoff

            	 

    

    

    *applicable
      to sales payable U.S. dollars and not applicable to sales with pesos
      payments

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    Colombian
      Source Taxes shall not include, among others: (a) any “enterprise
      taxes”
      including, but not limited to (i) actual amounts of income taxes, (ii) actual
      amounts of remittance taxes, (iii) any equity taxes (Spanish name: impuesto
      al
      patrimonio), and (iv) franchise taxes; (b) Colombian Ad Valorem Taxes; (c)
      any
      royalties payable under applicable Colombian law, rule or regulation; (d) any
      value added tax; and (e) any other taxes or charges similar to those described
      in paragraphs (a) through (d) of this Section
      1.16.

     

    1.17. “Confidential
      Information”
      has the
      meaning provided in Section
      7.6.

     

    1.18. “Conversion
      Precondition”
      has the
      meaning set forth in Section
      3.1.

     

    1.19. “Conditional
      Overriding Royalty”
      has the
      meaning set forth in Section
      4.

     

    1.20. “Crosby
      Arbitration Award”
      has the
      meaning set forth in Exhibit
      A.

     

    1.21. “Crosby
      Escrow Account”
      has the
      meaning set forth in Section
      6.5.1.

     

    1.22. “Crosby
      Escrow Agreement”
      has the
      meaning set forth in Section
      63.1.

     

    1.23. “Crosby
      Escrow Bank”
      has the
      meaning set forth in Section
      6.5.1.

     

    1.24. “Crosby
      Final Determination”
      has the
      meaning set forth in Exhibit
      A.

     

    1.25. “Crosby
      Members”
      has the
      meaning set forth in Section
      8.1.

     

    1.26. “Crosby
      Net Profits Interest”
      has the
      meaning set forth in Section
      3.

     

    1.27. “Crosby
      Net Profits Interest Percentage”
      has the
      meaning set forth in Section
      3.4

     

    1.28. “Cure
      Period”
      has the
      meaning set forth in Section
      11.

     

    1.29. “Demand”
      has the
      meaning set forth in Section
      11.2.

     

    1.30. “Ecopetrol”
      means
      Ecopetrol, S.A., formerly known as Empresa Colombian de Petroleos.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    1.31. “Effective
      Date”
      means
      12:01 a.m. Bogota, Colombia time on the first day following closing of the
      transactions contemplated by the Purchase Agreement. All further time references
      shall be to Bogota, Colombia time.

     

    1.32. [INTENTIONALLY
      DELETED]

     

    1.33. “Historical
      Properties”
      means
      the properties described on Schedule
      1.33
      attached
      hereto, and any interests in the Colombian Association Contracts.

     

    1.34. “Hydrocarbons”
      means
      any of the following minerals or substances that are produced from the
      Historical Properties:

     

    1.34.1 crude
      oil;

     

    1.34.2 natural
      gas;

     

    1.34.3 casinghead
      gas;

     

    1.34.4 condensate;

     

    1.34.5 other
      hydrocarbons and minerals as may be produced incidental
      to and
      as a part of or mixed with such crude oil or natural gas; or

     

    1.34.6 any
      other
      minerals or substances which the Colombian Association Contracts allow to be
      extracted and sold.

     

    1.35. “Initial
      Letter of Credit”
      has the
      meaning set forth in Section
      6.2.1.

     

    1.36. “Initial
      Term”
      has the
      meaning set forth in Section
      6.2.1.

     

    1.37. “Issuer
      Acceptable Credit Rating”
      has the
      meaning set forth in Section
      6.2.1.

     

    1.38. “Issuer
      Bank”
      has the
      meaning set forth in Exhibit
      A.

     

    1.39. “Letter
      of Credit”
      has the
      meaning set forth in Exhibit
      A.

     

    1.40. “Letter
      of Credit Default”
      has the
      meaning set forth in Exhibit
      A.

     

    1.41. “Material
      Underpayment” means
      the
      greater of 5% of the amount due to Crosby
      pursuant
      to Section
      7.1
      or
      $10,000.

     

    1.42. “Net
      Revenue Interest”
      means an
      interest expressed by a decimal number reflecting a revenue stream, net of
      all
      other interests burdening such revenue stream.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    1.43. “New
      Commercial Field”
      means
      any new discovery of Hydrocarbons on the Historical Properties in the 10 years
      after the Effective Date. A new discovery may consist of one producing reservoir
      or a group of producing reservoirs which is worthy of being developed
      commercially. Argosy or any successor operator shall use reasonably prudent
      standards to determine whether such discovery is worthy of being developed
      commercially, taking into consideration
      the recoverable reserves, production, pipeline and terminal facilities required,
      estimated Hydrocarbon prices, and all other relevant technical and economic
      factors. A New Commercial Field shall include but not be limited to any of
      the
      following: (i) the drilling vertically or horizontally of a new well bore
      outside a Pre-Existing Field, (ii) the drilling vertically or horizontally
      of a
      new well bore within a Pre-Existing Field into a formation not referenced on
      Schedule
      1.54,
      or
      (iii) extending an existing well bore producing Hydrocarbons or recompleting
      an
      existing well bore into a formation not referenced on Schedule
      1.54.
      The
      POPA field on the Historical Properties related to the Rio Magdalena Colombian
      Association Contract shall be deemed a New Commercial Field regardless of the
      timing of testing or completion of the POPA #1 well.

     

    1.44. “New
      Commercial Field Capital Expenditures”
      means
      the direct tangible or intangible capital expenditures associated with the
      discovery of New Commercial Fields. Such capital expenditures shall include
      only
      capital expenditures for the following:

     

    1.44.1 successful
      drilling expenditures;

     

    1.44.2 any
      dry
      hole exploration expenditures affiliated with a successful New Commercial
      Field;

     

    1.44.3 allocable
      gathering lines expenditure; or

     

    1.44.4 allocable
      capital expenditures related to compressing, dehydrating, treating, separating,
      marketing and transporting Hydrocarbons.

     

    Such
      capital expenditures shall not include (i) any expenditures for geological,
      geophysical or other related survey expenditures, (ii) any Operator Overhead
      Costs or (iii) any expenditures related to facilities for storage of
      Hydrocarbons from New Commercial Fields.

     

    1.45. “New
      Letter of Credit”
      has the
      meaning set forth in Section
      6.3.4.

     

    1.46. “Operating
      Expenses”
      means
      the costs and expenses incurred in the operation and maintenance of the wells
      for the production of Hydrocarbons on the New Commercial Fields listed in this
      Section
      1.46.
      Such
      items of cost shall be limited to the following exclusively:

     

    1.46.1 all
      costs
      of complying with legal requirements, meaning any law, statute, ordinance,
      decree, requirement, order, judgment, rule or regulation of, including the
      terms
      of any license, permit or concession issued by, any Colombian Governmental
      Authority;

     

    1.46.2 all
      costs
      of lifting and producing Hydrocarbons from the wells on the New Commercial
      Fields, including all costs of (A) labor, (B) fuel, (C) repairs, (D) hauling,
      (E) materials, (F) supplies, (G) utility charges, (H) workover and other
      remedial well servicing operations and (1) other costs incident to any of the
      foregoing (provided, however, such amounts shall be limited to amounts payable
      under contracts for the providing of such services or goods negotiated in good
      faith between non-affiliated parties);

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    1.46.3 non-capital
      expenditure costs incurred in compressing, gathering, treating, separating,
      transporting and marketing the Hydrocarbons produced from the wells on the
      New
      Commercial Fields;

     

    1.46.4 Colombian
      Ad Valorem Taxes; and

     

    1.46.5 Operator
      Overhead Costs, limited to the lesser of (i) actual applicable Operator Overhead
      Costs as allocated consistently across all Argosy oil and gas activities, (ii)
      $2.50 per net barrel, or (iii) if there is an operating agreement applicable
      to
      a Historical Property, the applicable overhead charge pursuant to such operating
      agreement.

     

    provided,
      however,
      that
      notwithstanding the foregoing, “Operating
      Expenses”
      shall
      not include any of the following: (a) expenditures which are capitalized under
      U.S. GAAP, (a) depreciation, (c) depletion, (d) amortization, (e) abandonment
      expenditures or accruals, (f) royalties, overriding royalties or other like
      payments out of production produced or producible from the wells on the New
      Commercial Fields, (g) New Commercial Field Capital Expenditures, (h) any tax
      other than Colombian Ad Valorem Taxes, and (i) charges similar to those listed
      in the foregoing (a) through (h) associated with the Historical Properties
      or
      the production and sale of Hydrocarbons therefrom.

     

    1.47. “Operator
      Overhead Costs”
      shall
      mean overhead costs provided in the applicable 2005 COPAS Accounting Procedure,
      as approved by the Council of Petroleum Accountant Societies and any amendments
      or revisions thereto approved by the Council of Petroleum Accountant Societies
      or any successor organization.

     

    1.48. “Panel”
      has the
      meaning set forth in Section
      11.2.

     

    1.49. “Participation
      Agreement Dispute”
      has the
      meaning set forth in Section
      11.

     

    1.50. “Participation
      Rights”
      means
      the Overriding Royalty, the Crosby Net Profits Interest, the Conditional
      Overriding Royalty and the Capital Expenditure Commitment.

     

    1.51. “Payment
      Default”
      has the
      meaning set forth in Exhibit
      A.

     

    1.52. “Person”
      means an
      individual, a corporation, a partnership, a limited liability company, a trust,
      an unincorporated organization or any other entity or organization, including
      a
      government or any agency or political subdivision thereof.

     

    1.53. “POPA
      Prospect Area”
      means
      all acreage of the Rio Magdalena Association Contract area that lies south
      of
      the northern most point of (i) an east west line defined by Bogotá east/west
      coordinate 1,020,000, or (ii) an east west line intersecting the Ambalema-1
      well
      bore, as set forth in the map attached as Schedule
      1.53.
      The Rio
      Magdalena Association Contract area includes all the acreage, including any
      productive Hydrocarbons intervals which are found beneath such acreage, provided
      for in that certain Colombian Association Contract, dated February 8, 2002,
      by
      and between Argosy and Ecopetrol located in the Cundinamarca and Tolima
      Provinces of Colombia, as further described in Schedule
      1.33
      attached
      hereto, pages 40 and 79.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    1.54. “Pre-Existing
      Fields”
      are
      described in Schedule
      1.54
      attached
      hereto.

     

    1.55. “Prevailing
      party”
      has the
      meaning set forth in Section
      11.5.

     

    1.56. “Release
      Covenants”
      has the
      meaning set forth in Section
      6.3.1.

     

    1.57. “Sales
      Proceeds”
      means
      the amount determined by calculating the product obtained by multiplying (a)
      the
      units of gross production of Hydrocarbons from the Historical Properties
      measured at the wellhead minus the units of actual production of such
      Hydrocarbons reasonably necessary to operate the Historical Properties by (b)
      the Hydrocarbon unit sales price arising from
      the
      first arm’s length sales of such Hydrocarbons to Persons
      who are
      not Affiliates of Gran
      Tierra or Argosy, such product to be reduced by (i) any applicable marketing
      discounts, (ii) arms length commissions, brokerage fees and similar payments
      related to the marketing and sale of the Hydrocarbons, (iii) applicable quality
      adjustments required to be given, other than to
      Affiliates of Gran Tierra or Argosy and (iv) Colombian Source Taxes. There
      shall
      be no deduction from Sales Proceeds for any costs and expenses of development,
      operation, management and administration, including without limitation the
      Operating Expenses. In the event that unit sales price
      is
      paid and/or determined partially or totally by U.S. currency, then the U.S.
      currency value shall be used for determining Sales Proceeds. If unit sales
      price
      is in a currency other than U.S. currency then such unit sales price shall
      be
      converted to U.S. currency at the best available commercial
      exchange rate prevailing for such time period, and the unit sales price as
      converted
      shall be
      used for determining Sales Proceeds. In the event there is no first arm’s length
      sale of a given Hydrocarbon (whether because of a sale to an Affiliate, use
      of
      all such Hydrocarbons on the Historical Properties, an exchange of Hydrocarbons
      for consideration other than U.S. or foreign convertible
      currency or otherwise), the sales unit price to be used would be a unit sales
      price
      from a
      comparable sale (considering both location and quality of such Hydrocarbon)
      involving Persons who
      are
      not Affiliates of Gran Tierra or Argosy. Sales Proceeds shall not include any
      sale of
      capital
      equipment associated with a New Commercial Field.

     

    1.58. “Subsequent
      Argosy Sale”
      has the
      meaning set forth in Section
      8.2.

     

    1.59. “Subsequent
      Transfer”
      has the
      meaning set forth in Section
      8.1.

     

    1.60. “U.S.
      GAAP”
      means
      United States generally accepted accounting principles.

     

    1.61. “Working
      Interest”
      means
      the interest of any Person, reflected as a percentage, for the responsibilities
      and/or obligation to pay for the costs of exploration and production of
      Hydrocarbons on a specific property. A specific Working Interest may be
      determined by reference to (i) the Colombian Association Agreements, (ii)
      applicable joint operating agreement, and or (iii) other agreements between
      joint venture parties. Argosy’s Working Interest as of date hereof for the
      Historical Properties is reflected on Schedule
      1.8
      in the
      fifth column entitled “Argosy
      Working interest.”

     

    2. Payment
      Obligation for Base Overriding Royalty.

     

    2.1. Calculation
      of Base Overriding Royalty.
      Gran
      Tierra and Argosy shall jointly and severally pay Crosby a base overriding
      royalty calculated as two percent (2%) of the Sale Proceeds from Historical
      Properties, multiplied by the applicable Adjusted Net Revenue Interest
(the
      “Base
      Overriding Royalty”).

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    2.2. Post-Effective
      Date Transfers.
      If after
      the Effective Date Argosy, its successors or assigns, enters into an agreement
      to farmout, encumber or otherwise reduce its interest in the Historical
      Properties, or forms any type of joint venture relationship to develop
      Hydrocarbons from the Historical Properties, the Base Overriding Royalty shall
      not be reduced as a result of any of the foregoing.

     

    2.3. Unitization.
      In the
      event after the Effective Date any portion of the Historical Properties is
      pooled or unitized with any other lands that are not Historical Properties,
      the
      Base Overriding Royalty shall only apply to Argosy’s ratable share of
      Hydrocarbons produced from the pooled unit comprising such portion of the
      Historical Properties.

     

    3. Conversion
      Rights and Payment Obligation for Crosby Net Profits
      Interest.

     

    3.1. Right
      to Convert.
      On a
      field by field basis, if Argosy recovers an amount equal to 200% of its Adjusted
      New Commercial Field Capital Expenditures with respect to any New Commercial
      Field (each such recovery a “Conversion
      Precondition”),
      Crosby may convert its Base Overriding Royalty in such New Commercial Field
      to a
      Crosby Net Profits Interest. Crosby shall have the right, but not the
      obligation, to convert any or a given portion of its Base Overriding Royalties
      into a net profits interest (the “Crosby
      Net Profits Interest”)
      for
      any New Commercial Field on a field by field basis, pursuant to Section
      3.6.
      In the
      event of such conversion, Gran Tierra and Argosy hereby jointly and severally
      agree to pay to Crosby, in lieu of the Base Overriding Royalty for such New
      Commercial Field, the Crosby Net Profits Interest for such New Commercial Field
      as set forth herein. Once made, such conversion shall be unconditional and
      irrevocable and Crosby shall have no right to convert back to the Base
      Overriding Royalty for such New Commercial Field interest so
      converted.

     

    3.2. Calculation
      of Recovery of Adjusted New Commercial Field Capital
      Expenditures.
      On a
      field by field basis, the amount of Adjusted New Commercial Field Capital
      Expenditures recovered for such New Commercial Field as of any date shall be
      an
      amount equal to (a) the aggregate Sales Proceeds from such New Commercial Field
      attributable to Argosy’s Adjusted Net Revenue Interest as of such date less (b)
      aggregate Operating Expenses attributable to Argosy’s working interest for such
      New Commercial Field as of such date.

     

    3.3. Calculation
      of Crosby Net Profits Interest.
      The
      Crosby Net Profits Interest for such New Commercial Field shall equal an amount
      determined as the product of (i) the Saks Proceeds less Operating Expenses,
      multiplied by (ii) the Adjusted Net Revenue Interest for such New Commercial
      Field, multiplied by (iii) the Crosby Net Profits Interest Percentage set forth
      in Section
      3.4.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    3.4. Net
      Profits Amount and Adjustment.
      The
      initial Crosby Net Profits Interest Percentage upon satisfaction of the
      Conversion Precondition provided in Section
      3.1
      shall be
      7.5%. Upon recovery by Argosy of an additional 100% of Adjusted New Commercial
      Field Capital Expenditures for any New Commercial Field (i.e.,
      an
      aggregate of 300% of such Adjusted New Commercial Field Capital Expenditures),
      the Crosby Net Profits Interest Percentage shall automatically increase to
      10%
      without the necessity of any action, notice or election
      by Crosby. Such increase shall be effective with respect to the Production
      of
      Hydrocarbons from any field to which the conversion applies beginning with
      the
      first day of the month following the month within which Argosy recovers the
      final increment of the additional 100% of Adjusted New Commercial Field Capital
      Expenditures. Notwithstanding the foregoing, Crosby’s Net Profits Interest
      Percentage for any New Commercial Field related to the POPA Prospect Area shall
      be the following: (i) 15% for the initial Crosby Net Profits Interest Percentage
      upon satisfaction of the Conversion Precondition provided in Section
      3.1 for
      such
      New Commercial Field, and (ii) upon recovery of an additional 100% of Adjusted
      New Commercial Field Capital Expenditures with respect to such New Commercial
      Field (i.e.,
      an
      aggregate of 300% of such Adjusted New Commercial Field Capital Expenditures),
      the Crosby Net Profits Interest Percentage for such New Commercial Field shall
      automatically increase to 20% without the necessity of any action, notice or
      election by Crosby.

     

    3.5. Conversion
      Notice. Crosby
      shall give Argosy written notice of Crosby’s election to convert. Crosby may
      convert its Base Overriding Royalty for a New Commercial Field to a Crosby
      Net
      Profits Interest within thirty (30) days after receipt of the report required
      in
Section
      7
      that
      discloses such 200% recovery as set forth in Section
      3.1,
      and
      such conversion shall be effective retroactively to 12:01 a.m. on the first
      day
      of the first month following the month in which Argosy achieved such 200%
      recovery. If Crosby does not give notice to convert its Overriding Royalty
      to a
      Crosby Net Profits Interest within such thirty (30) day period, Crosby may
      do so
      at any time thereafter upon written notice thereof to Argosy, with such
      conversion having a prospective effective date of 12:01 a.m. on the first day
      of
      the first calendar quarter following the quarter in which Crosby delivers such
      notice.

     

    3.6. Post-Effective
      Date Transfers.
      If after
      the Effective Date Argosy, its successors or assigns, enters into an agreement
      to farmout, encumber or otherwise reduce its interest in the Historical
      Properties, or forms any type of joint venture relationship to develop
      Hydrocarbons from the Historical Properties, the Crosby Net Profits Interest
      shall not be reduced as a result of any of the foregoing.

     

    3.7. Unitization.
      In the
      event after the Effective Date any portion of the Historical Properties is
      pooled or unitized with any other lands that are not Historical Properties,
      the
      Crosby Net Profits Interest shall only apply to Argosy’s ratable share of
      Hydrocarbons produced from the pooled unit comprising such portion of the
      Historical Properties.

     

    3.8. Pre-Existing
      Fields.
      Crosby’s
      right to convert Base Overriding Royalties to the Crosby Net Profits Interest
      shall not apply to Pre-Existing Fields.

     

    4. Payment
      Obligation for Conditional Overriding Royalty

     

    4.1. Conditional
      Overriding Royalty Obligations.
      Gran
      Tierra and Argosy shall jointly and severally pay Crosby a conditional
      overriding royalty as set forth in this Section
      4
      (the
“Conditional
      Overriding Royalty”).
      The
      Conditional Overriding Royalty is in addition to the Base Overriding Royalty
      in
Section
      2
      and
      Crosby Net Profits Interest in Section
      3.

     

    4.2. Conditional
      Overriding Royalty Calculation. The
      Conditional Overriding Royalty shall be calculated as follows:

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    For
      each
      calendar year, the payment obligation of the Conditional Ovemding Royalty shall
      equal the product of (i) the number of barrels of crude oil and other comparable
      liquid Hydrocarbons produced from Historical Properties in such calendar year,
      multiplied by (ii) the applicable Adjusted Net Revenue Interest, multiplied
      by
      (iii) two and a half percent (2.5%) multiplied by (iv) the difference between
      (A) the average daily closing price for West Texas Intermediate Crude Oil on
      the
      New York Mercantile Exchange (if in excess of $70.00) for that calendar year
      and
      (B) $70.00. If the annual average daily closing price of West Texas Intermediate
      Crude Oil on the New York Mercantile Exchange (or any successor exchange and/or
      successor comparable crude oil benchmark) is less than $70 for any calendar
      year, then no Conditional Overriding Royalty shall be payable for such calendar
      year. As an example, if in a calendar year 1,000,000 barrels of oil are produced
      from the Historical Properties, the Adjusted Net Revenue Interest was thirty
      percent (30%) and the average annual price of West Texas Intermediate Crude
      Oil
      on the New York Mercantile Exchange for such year was $75.00, then the
      Conditional Overriding Royalty would equal $37,500 [(1,000,000 barrels x 30%)
      x
      2.5% x ($75.00-$70.00))].

     

    4.3. Post-Effective
      Date Transfers.
      If after
      the Effective Date Argosy, its successors or assigns, enters into an agreement
      to farmout, encumber or otherwise reduce its interest in the Historical
      Properties, or forms any type of joint venture relationship to develop
      Hydrocarbons from the Historical Properties, the Conditional Overriding Royalty
      shall not be reduced as a result of any of the foregoing.

     

    4.4. Unitization.
      In the
      event after the Effective Date any portion of the Historical Properties is
      pooled or unitized with any other lands that are not Historical Properties,
      the
      Conditional Overriding Royalty shall be proportionately reduced and only apply
      to Argosy’s ratable share arising from those portions of the Historical
      Properties included in the pooled unit.

     

    4.5. Pre-Existing
      Fields.
      The
      Conditional Overriding Royalty shall be applicable only to Pre-Existing
      Fields.

     

    5. Capital
      Expenditure Commitment.

     

    5.1. 5
      Year Expenditure Requirement. Gran
      Tierra and Argosy jointly and severally
      covenant
      that Argosy or its Affiliates, or, without in any way intending to limit the
      generality of Section
      12.2,
      their
      permitted successors, assigns, farmees or partners or their Affiliates shall
      spend at least US$15,000,000 for total capital expenditures, as defined by
      U.S.
      GAAP, on the Historical Properties over the Capital Expenditure Period (the
      “Capital
      Expenditure Commitment”).
      The
      expenditures of parties other than Argosy to any joint operating agreement
      or
      commercial agreements related to the Historical Properties shall not count
      against the Capital Expenditure Commitment. Gran Tierra and/or Argosy shall
      have
      the right to forgo such investments and elect to make the payment provided
      in
Section
      5.2
      herein.
      By way of example and not of limitation, the following expenditures shall be
      included in calculating the Capital Expenditure Commitment:

     

    5.1.1 all
      drilling expenditures;

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    5.1.2 geological,
      geophysical or other related survey expenditures;

     

    5.1.3 any
      dry
      hole exploration expenditures;

     

    5.1.4 gathering
      lines expenditures;

     

    5.1.5 capital
      expenditures related to compressing, dehydrating, treating, separating.
      marketing and transporting Hydrocarbons; or

     

    5.1.6 any
      other
      expenditures related to facilities for transportation or storage of Hydrocarbons
      from New Commercial Fields,

     

    5.2. Underinvestment
      payment.
      In the
      event that Gran Tierra or Argosy or their respective Affiliates, or, without
      in
      any way intending to limit the generality of Section
      12.2,
      the
      permitted successors, assigns, farmees or partners of Argosy, Gran Tierra or
      their Affiliates do not spend the entire Capital Expenditure Commitment over
      the
      Capital Expenditure Period, upon the expiration of such Capital Expenditure
      Period, Gran Tierra and/or Argosy shall within thirty (30) days of such
      expiration pay to Crosby an amount in cash or other immediately available funds
      equal to twenty percent (20%) of the amount by which such New Field Capital
      Expenditures over the Capital Expenditure Period are less than US$15,000,000.
      At
      Gran Tierra’s option, Gran Tierra and/or Argosy can make the payment provided
      for in this Section 5.2
      early,
      with such payment in that event being equal to twenty percent (20%) of the
      amount by which such New Field Capital Expenditures over the period starting
      on
      the Effective Date and ending on the date of such payment are less than
      US$15,000,000.

     

    6. Letter
      of Credit.

     

    6.1. Interim
      Terms Prior To Letter of Credit

     

    6.1.1 In
      accordance with Section 1.11 of the Purchase Agreement, Gran Tierra shall have
      deposited USD$4,000,000 in cash with the Escrow Agent (as defined in the
      Purchase Agreement), to be released in conjunction with posting of the Letter
      of
      Credit provided in Section 6.2 or otherwise in accordance with the terms of
      the
      Escrow Agreement (as defined in the Purchase Agreement).

     

    6.1.2 Except
      as
      set forth in the Escrow Agreement, Gran Tierra shall not pledge the escrowed
      funds or otherwise grant a security interest or lien in such funds so long
      as
      they are subject to the escrow arrangements described herein and in the Purchase
      Agreement.

     

    6.2. Initial
      Term for Letter of Credit

     

    6.2.1 Irrevocable
      Letter Of Credit.
      Gran
      Tierra shall procure and deliver to Crosby an irrevocable standby letter of
      credit (the “Initial
      Letter of Credit”)
      within
      the time frames set forth in the Purchase Agreement with the following
      terms:

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    (a) Amount:
      The
      face amount of the initial Letter of Credit shall be USD$4,000,000.00. Draws
      from the Initial Letter of Credit must be replaced to keep the required
      USD$4,000,000 face value of the Letter of Credit in place.

     

    (b) Term:
      The
      Initial Letter of Credit shall remain outstanding for a period of three years
      from date of Closing if either (i) the Capital Expenditure Commitment has been
      fulfilled within that three year period or (ii) Gran Tierra and/or Gran Tierra
      or Argosy have paid Crosby the payment provided for in Section 5.2. If the
      Capital Expenditure Commitment has not been fulfilled within such three year
      period or Argosy and/or Gran Tierra has not made the payment provided for in
      Section
      5.2,
      the
      Initial Letter of Credit shall remain outstanding until the earlier of (i)
      the
      fulfillment of the Capital Expenditure Commitment or the receipt by Crosby
      of
      such payment, or (ii) five years from date of Closing. Such period is referred
      to herein as the “Initial
      Term.”

     

    (c) Issuer:
      The
      Initial Letter of Credit on terms consistent with this Section 6 and Exhibit
      A
      attached hereto, with such other documentary conditions as may be acceptable
      to
      Crosby shall be issued by a bank with a minimum credit rating by Standard and
      Poor’s of BBB (the “Issuer
      Acceptable Credit Rating”).
      Crosby may request and Gran Tierra shall then promptly provide a replacement
      irrevocable standby letter of credit in accordance with the terms of this
      Section 6 if the Issuer Acceptable Credit Rating declines below
      BBB.

     

    (d) Issuer
      Fees Expenses:
      Fees
      for the Initial Letter of Credit are the sole responsibility of Gran
      Tierra.

     

    (e) Draws:
      The
      conditions for draws on the Letter of Credit are set out in Exhibit A, which
      is
      incorporated into this Agreement in full.

     

    6.3. Post-Initial
      Term

     

    6.3.1 Irrevocable
      Letter Of Credit.
      After
      the Initial Term, Gran Tierra shall be released from its Letter of Credit
      obligation if: (1) all of the following conditions provided in Section 6.3.2
      (“Release
      Covenants”)
      are
      met and maintained as of the end of any quarter, or (ii) Gran Tierra maintains
      a
      minimum credit rating on its medium term debt or commercial paper of BB or
      equivalent according to Standard and Poor’s (the “Acceptable
      Credit Rating”).
      During any period that such Release Covenants are not maintained and/or Gran
      Tierra’s Acceptable Credit Rating is not maintained, Gran Tierra through the
      remaining term of this Agreement shall provide a Letter of Credit pursuant
      to
Section
      6.3.4.

     

    6.3.2 Release
      Covenants.
      The
      Release Covenants are as follows:

     

    (a) Total
      Debt To Total Debt Plus Equity Ratio: less than or equal to 30%;

     

    (b) Net
      Working Capital: Greater than or equal to $1.5 million USD; and

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    (c) Absence
      of significant claims. judgments or litigation against or affecting Gran Tierra
      or Argosy that exceeds in the aggregate $1.5 million USD.

     

    Capitalized
      terms in this Section
      6.3.2
      are to
      be defined in accordance with financial industry norms.

     

    6.3.3 Measurement
      of Release Covenants.
      The
      Release Covenants shall be measured on a quarterly basis using Gran Tierra
      financial statements and disclosure in accordance with U.S. GAAP. Gran Tierra’s
      compliance (or non-compliance) with such Release Covenants shall be reported
      quarterly to Crosby in the same manner as the information set forth in
Section
      7.3
      in the
      form of a compliance certificate executed by GTEI’s Chief Financial
      Officer.

     

    6.3.4 Non-Satisfaction
      Of Release Covenants or Acceptable Credit Rating:
      If at
      the end of such Initial Term, or in any quarter during which Gran Tierra is
      not
      already required to have a letter of credit in place pursuant to the terms
      of
      this Section
      6,
      Gran
      Tierra cannot meet one or more of the Release Covenants or has not maintained
      the Acceptable Credit Rating (measured at the end of the Initial Term or such
      quarter as applicable), Crosby may, at its sole discretion, request and receive
      from Gran Tierra a new irrevocable standby Letter of Credit (the “New
      Letter of Credit”)
      with
      the following characteristics:

     

    (a) Amount:
      The New
      Letter of Credit shall have a face value equivalent to the greater of: (a)
      the
      product of (i) the aggregate amount of the trailing 4 quarters payments earned
      by Crosby from the Colombian Participation Agreement multiplied by (ii) 4 or
      (b)
      $1 million USD. Draws from any New Letter of Credit must be replaced to keep
      the
      required face value of such Letter of Credit in place.

     

    (b) Term:
      The New
      Letter of Credit shall be maintained for successive one year terms until Gran
      Tierra can meet the Release Covenants or maintain the Acceptable Credit
      Rating.

     

    (c) Issuer:
      The New
      Letter of Credit on terms and documentary conditions acceptable to Crosby shall
      be issued by a bank with an Issuer Acceptable Credit Rating. Crosby may request
      and receive a replacement irrevocable standby letter of credit if the issuing
      bank’s credit rating declines below the Issuer Acceptable Credit
      Rating.

     

    (d) Issuer
      Fees and Expenses:
      Fees
      for the New Letter of Credit and any replacement letters of credit are the
      sole
      responsibility of Gran Tierra.

     

    (e) Draws:
      The
      conditions for draws on the New Letter of Credit
      are set
      out in Exhibit A.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    6.3.5 Re-Satisfaction
      of Release Covenants or Achievement of Acceptable Credit Rating.
      If
      during any period during which Argosy or Gran Tierra or a permitted transferee
      is required to provide New Letters) of Credit, Gran Tierra or a permitted
      transferee, as applicable, provides a certificate pursuant to Section
      6.3.3
      indicating satisfaction of the Release Covenants or provides Crosby reasonable
      evidence that Gran Tierra or the permitted transferee, as applicable, has
      maintained the Acceptable Credit Rating, Crosby shall return the applicable
      Letter of Credit in accordance with Section
      6.6

     

    6.4. Replacement
      Letters of Credit.
      At any
      time, Gran Tierra and/or Argosy and/or permitted transferee(s) pursuant to
      a
      Subsequent Transfer or a Subsequent Argosy Sale may provide one or more new
      Letters of Credit (which will replace one or more then current Letters of
      Credit) in an aggregate face value amount (including ongoing Letters of Credit)
      equal to the amount of coverage Crosby is entitled to under this Section 6.
      The
      aggregate face value of such Letters of Credit shall be allocated among Gran
      Tierra and Argosy and any permitted transferees in the manner set forth in
      Section
      8.3.3.
      Such
      replacement Letters of Credit shall have the terms required under this Section
      6
      with respect to the Initial Letter of Credit or any New Letter of Credit, as
      the
      case may be.

     

    6.5. Disbursement
      of Crosby Escrow Funds.

     

    6.5.1 If
      Crosby
      has drawn on a Letter of Credit pursuant to Sections II or III of Exhibit A,
      it
      shall place the drawn funds in an escrow account (the “Crosby
      Escrow Account”)
      with
      the Bank of New York or, if the Bank of New York will not serve as an escrow
      agent, another financial institution with a minimum credit rating from Standard
      & Poor’s of at least BBB (the “Crosby
      Escrow Bank”),
      pursuant to an escrow agreement that shall contain terms for release of such
      escrowed funds substantially similar to the draw requirements set forth in
      Exhibit A (the “Crosby
      Escrow Agreement”).
      Crosby shall be entitled to receive money it is owed hereunder from such escrow
      account for any Payment Default under the procedures set forth in Section 1
      of
      Exhibit A.

     

    6.5.2 Gran
      Tierra and/or Argosy shall receive the proceeds from such the Crosby Escrow
      Account if and only if Gran Tierra (i) has executed the Crosby Escrow Agreement,
      (ii) has agreed to pay all fees and expenses of the Crosby Escrow Bank, and
      (iii) certifies to the Crosby Escrow Bank with reasonable evidence attached
      thereto that the two following conditions are met, and then such escrowed funds
      shall be paid to Gran Tierra and/or Argosy:

     

    (a) Gran
      Tierra and/or Argosy provided to Crosby a form of Letter of Credit which
      satisfies the terms and conditions set forth in Section
      6
      and
      Exhibit A hereof; and either:

     

    (1) Crosby
      failed to initiate arbitration under Section
      11
      hereof
      (without regard to Section
      11.1)
      within
      10 business days of receipt of the form of Letter of Credit; or

     

    (2) The
      Panel
      provided in writing that the form of Letter of Credit satisfied the terms and
      conditions of Section
      6
      and
      Exhibit A hereof; and

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    (b) Gran
      Tierra and/or Argosy delivered the approved Letter of Credit to
      Crosby.

     

    6.6. Delivery
      of Old or Replaced Letters of Credit.
      If Gran
      Tierra, Argosy and/or any permitted transferee hereunder have satisfied their
      obligations under this Section
      6
      and
      either (i) Crosby is not entitled at such time to a Letter of Credit pursuant
      to
Section
      63.1,
      or (ii)
      Gran Tierra, Argosy and/or any permitted transferee deliver to Crosby
      replacement Letters of Credit that comply with the provisions of this
Section
      6
      and
Exhibit
      A
      (including without limitation the requirement as to the aggregate face amount
      of
      such Letters of Credit), then Crosby shall promptly deliver to Gran Tierra,
      Argosy or such permitted transferee, as the case may be, the original Letters
      of
      Credit that either are (i) no longer required hereunder or (ii) replaced, as
      the
      case may be.

     

    6.7. Termination
      of Section 6.
      If in
      any quarterly period after the tenth anniversary of the end of the expiration
      of
      the Initial Term, the aggregate amount of the trailing 4 quarters payments
      earned by Crosby from the Colombian Participation Agreement is less than
      $250,000, Gran Tierra and Argosy shall have the option upon written notice
      to
      Crosby to terminate the provisions of this Section 6, and upon receipt by Crosby
      of such notice such provisions shall then terminate and be of no further force
      and effect, and any Letter of Credit in place at the time shall be cancelled
      and
      released; provided, however, that (i) to the extent there is a current claim
      by
      Crosby outstanding at such time, and Crosby has initiated dispute resolution
      under Exhibit A hereto and Section
      11,
      such
      Letter of Credit shall not be cancelled and released until such claim is
      resolved pursuant to Section
      11
      and any
      draw against such Letter of Credit permitted hereunder has been made, and (ii)
      if Gran Tierra or Argosy delivers such notice of termination, Argosy shall
      simultaneously issue mortgages in favor of Crosby on the Historical Properties
      securing payment of the Participation Rights, which mortgages can and shall
      be
      subordinate to any and all prior recorded liens other than liens of Affiliates
      of Gran Tierra and/or Argosy.

     

    7. Payments;
      Reports; Audit Rights.

     

    7.1. Payments
      and Reports Regarding Payments.

     

    7.1.1 Quarterly.
      Within
      forty-five (45) days after the end of each of the first three calendar quarters
      of each calendar year (that is, March 31, June 30 and September 30), Gran Tierra
      and Argosy shall:

     

    
      	
            	(A)	
              calculate
                (i) the amounts owed to Crosby for such quarter pursuant to Section
                2
                (Base Overriding Royalty), and (ii) 75% of the estimated amounts
                owed to
                Crosby for such quarter pursuant to Section 3
                (Net Profits Interest). No quarterly calculations of the Conditional
                Overriding Royalty (Section
                4)
                are required in any quarterly report provided under this Section
                7.1.1;

            

    

     

    
      	 	
              (B)

            	
              furnish
                such calculations to Crosby in a statement in a form reasonably
                satisfactory to Crosby, certified by responsible officers of Gran
                Tierra
                and Argosy, showing for the preceding calendar quarter the (i) Sales
                Proceeds, (ii) Operating Expenses, (iii) Production
                of Hydrocarbons, (iv) Recovery of Adjusted New Commercial Field Capital
                Expenditures, (v) the amount of Argosy’s capital expenditures as required
                by Section
                5.1,
                and (vi) the amounts payable under Sections
                2 and 3
                hereof for such quarter; and

            

    

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (C)

            	
              pay
                Crosby by wire transfer
                in
                United States Dollars, the amount shown on such quarterly
                statement.

            

    

     

    7.1.2 Annual
      Within sixty (60) days after the end of each calendar year, Gran Tierra and
      Argosy shall:

     

    
      	
            	(A)	
              calculate
                (i) the amount owed to Crosby for the quarter ended December 31 of
                each
                calendar year pursuant to Section
                2
                (Base Overriding Royalty, and (ii) the final amount owed to Crosby
                for
                such calendar year pursuant to Section
                3
                (Net Profits Interest) less any amounts previously paid with respect
                to
                such Section
                3
                for such calendar year, and (iii) the amount owed to Crosby for such
                calendar year pursuant to Section
                4
                (Conditional Overriding Royalty);

            

    

     

    
      	 	
              (B)

            	
              furnish
                such calculations to Crosby in a statement in a form reasonably
                satisfactory to Crosby, certified by responsible officers of Gran
                Tierra
                and Argosy, showing for such quarter and calendar year (i) Sales
                Proceeds,
                (ii) Operating Expenses, (iii) Production of Hydrocarbons, (iv) Recovery
                of Adjusted New Commercial Field Capital Expenditures, (v) the amount
                of
                Argosy’s capital expenditures as required by Section
                5.1,
                (vi) the amounts payable under Sections
                2, 3 and 4
                hereof for such preceding quarter and calendar year, and(vii) for
                the
                first annual report after the date hereof, whether there have been
                any
                claims prior to November 30, 2006, by a Gran Tierra Indemnified Person
                (as
                defined in the Purchase Agreement) in accordance with Section
                1.11,
                of the Purchase Agreement; and

            

    

     

    
      	 	
              (C)

            	
              pay
                Crosby by wire transfer in United States Dollars, the amount shown
                on such
                statement for such calendar year less any amounts already paid with
                respect to such calendar year.

            

    

     

    7.1.3 Ability
      to Challenge Payments.
      Payments
      made by Argosy and Gran Tierra to Crosby hereunder for a calendar year,
      including any quarterly payments made during such year, shall be deemed final
      and non-adjustable unless within thirty (30) days of Crosby’s receipt of an
      annual report as set forth in Section
      7.1.2,
      Crosby
      delivers written notice to Gran Tierra and/or Argosy of a disagreement with
      such
      annual report and a request for an audit related to such annual report. Any
      such
      audit pursuant to this Section
      7.1.3
      shall be
      in addition to Crosby’s audit rights under Section
      7.5.
      Crosby
      shall use reasonable commercial efforts to have its auditor complete such audit
      and submit
      its final written report to Crosby within 90 days of the date such audit begins.
      If such audit report indicates that such annual report is incorrect, Crosby
      must
      initiate arbitration under Section
      11
      (without
      regard to Section
      11.1)
      with
      respect to such audit report within 21 days of Crosby’s receipt of such audit
      report, or Crosby shall not be entitled to challenge such annual
      report.

     

    
      
        
        

      

      
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    7.1.4 No
      Offsets.
      THERE
      SHALL BE NO COMMERCIAL OFFSET, NET OUT, OR ANY OTHER NONJUDICIAL SUSPENSION
      OR
      SET OFF OF PAYMENTS OF ANY AMOUNTS DUE CROSBY AND ITS SUCCESSORS AND ASSIGNS
      HEREUNDER FOR ANY REASON WHATSOEVER, INCLUDING WITHOUT LIMITATION RELATING
      TO
      DISPUTES OR CLAIMS RELATING TO THE PURCHASE AGREEMENT. Notwithstanding the
      foregoing, if (i) there is bona fide uncertainty as to the ownership of the
      Participation Rights (as an example, with respect to a successor assignee of
      Crosby), (ii) there is a claim by a Gran Tierra Indemnified Person (as defined
      in the Purchase Agreement) in accordance with Section
      1.11(b)
      of the
      Purchase Agreement prior to November 30, 2006, or (iii) there is a dispute
      under
Section
      7.1.5,
      then
      Gran Tierra and Argosy or their successors may immediately commence an
      arbitration pursuant to Section
      11
      (without
      regard to the provisions of Section
      11.1)
      and to
      the extent of the amount in issue, may deposit the applicable payments due
      hereunder (but not an amount in excess of the amount claimed) with the Panel
      (or
      an escrow agent designated by the Panel) and request interpleader relief for
      such funds related to such issue.

     

    7.1.5 Tax
      Withholdings.
      There
      shall be no withholding of taxes in the United States or Colombia for any
      payments hereunder without at least 90 days prior written notice to Crosby.
      Such
      notice shall include (1) the calculation of the proposed withholding percentage,
      (2) the legal requirement for such withholding, (3) the anticipated amount
      of
      such withholding, (4) the anticipated timing of any related deposit. and (5)
      the
      governmental entities which will receive such withholding. If there is no
      disagreement regarding such notice, Gran Tierra, Argosy and Crosby shall
      cooperate to facilitate the appropriate withholding, if any, and after such
      withholding is made, Argosy shall send written confirmation to Crosby of such
      tax deposits and any other information reasonably requested by Crosby regarding
      such deposits. If there is any disagreement regarding any matters related to
      such notice, the Crosby must initiate dispute resolution pursuant to
Section
      11
      within
      such 90 day notice period. If Crosby initiates such dispute resolution, the
      amount of withholding in question shall be deposited with the Panel (or an
      escrow agent designated by the Panel) as interpleader funds. If Crosby does
      not
      initiate such dispute resolution pursuant to Section 11 within such 90 day
      notice period, it shall be deemed to have approved such
      withholding.

     

    7.1.6 Delivery
      Address and Wiring instructions.
      The
      payments and statements required under this Section
      7.1
      shall be
      sent to Crosby at the notice address set out in this Agreement, and pursuant
      to
      wiring instructions or other instructions provided by Crosby in writing to
      Gran
      Tierra and Argosy.

     

    7.2. Calculation
      of Payments During First Calendar Year.
      During
      the first calendar year in which this Agreement is effective (i.e., during
      the
      period beginning on the Effective
      Date through December 31 of the calendar year in which this Agreement is
      executed and delivered by the Parties):

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    7.2.1 The
      Base
      Overriding Royalty shall be based on the actual production of net barrels of
      crude oil and other Hydrocarbons sold from Historical Properties alter the
      Effective Date.

     

    7.2.2 The
      calculation of Adjusted New Field Capital Expenditures shall use a pro rata
      amount for the month in which the Effective Date occurs (i.e., if the Effective
      Date were May 10, the aggregate qualifying expenditures for the entire month
      would be divided by 31 and multiplied by 21).

     

    7.2.3 the
      Conditional Overriding Royalty for the first calendar year shall be based on
      the
      production of barrels of crude oil and other Hydrocarbons for the period from
      the Effective Date through December 31, 2006 and the applicable price per barrel
      for West Texas Intermediate for the period from the Effective Date through
      December 31, 2006.

     

    7.3. Additional
      Information Regarding Historical Properties.
      At the
      times Gran Tierra and Argosy are required to provide to Crosby the reports
      required under Section
      7.1,
      they
      shall also provide to Crosby the following information that was produced,
      delivered or received in the prior quarter; provided,
      however,
      that
      any information previously provided to Crosby pursuant to this Section
      7.3
      need not
      be provided again in subsequent quarters:

     

    7.3.1 Any
      and
      all reports, meeting minutes, correspondence or other information provided
      to or
      received from during the prior quarter any Colombian Governmental Authority
      relating to any of the Historical Properties.

     

    7.3.2 Any
      and
      all daily and/or monthly well by well (formation by formation if applicable)
      production data for Hydrocarbons produced from Historical
      Properties.

     

    7.3.3 Any
      and
      all geological, geophysical, aerial or other surveys or subsurface mapping
      relating to any of the Historical Properties.

     

    7.3.4 Any
      and
      all well logs, mud logs, production surveys and/or any other data gathered
      from
      well bores on the Historical Properties.

     

    7.3.5 Any
      Authorization for Expenditures (an “AFE”)
      whether internal or forwarded to any other Working Interest owner on any of
      the
      Historical Properties, and any comparison of AFE to final cost.

     

    7.3.6 Any
      new
      contracts or new amendments or other modifications or changes to contracts
      for
      the sale of Hydrocarbons from Historical Properties.

     

    7.3.7 Any
      non-privileged information regarding any pending or threatened legal
      proceedings, lawsuits, claims or other similar matters relating to or affecting
      (i) the Historical Properties, (ii) the Colombian Association Contracts, or
      (iii) Gran Tierra’s or Argosy’s ability to comply with the terms and provisions
      of this Agreement.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    7.3.8 Any
      and
      all internal or independent reserve engineering reports or estimates of
      prospective resources.

     

    7.3.9 Any
      applicable invoices regarding Sales Proceeds.

     

    7.3.10 The
      base
      documentation regarding any applicable marketing discounts, commissions,
      brokerage fees and similar payments relating to the marketing or sales of the
      Hydrocarbons.

     

    7.3.11 Applicable
      statements regarding (i) Colombian Source Taxes and (ii) Colombian Ad Valorem
      Taxes.

     

    7.3.12 The
      additional information referred to in this Section
      7.3
      shall be
      forwarded to Crosby in the form received or generated by Gran Tierra or Argosy
      (i.e. information
      in digital format shall be forwarded digitally, including all applicable seismic
      and/or accounting spreadsheets). Gran Tierra and/or Argosy may edit any portion
      of such information to exclude matters not related to Historical
      Properties.

     

    7.3.13 Nothing
      in this Section
      7.3
      shall
      require Gran Tierra or Argosy to create new information or reports. If either
      Gran Tierra or Argosy, however, has prepared (or caused to be prepared)
      translations into English of any materials listed in this Section
      7.3,
      such
      translations shall be provided with the materials required by this Section
      7.3.

     

    7.4. Books
      and Records.
      Argosy
      shall at all times maintain true and correct books and records sufficient to
      determine the amounts payable to Crosby from the Participation Interests. Such
      books and records shall be open for inspection by Crosby during normal business
      hours pursuant to Section
      7.5.

     

    7.5. Audit.
      Upon
      five (5) days’ notice to Argosy and Gran Tierra, Crosby, at its expense, shall
      have the right at any time during regular business hours, not more frequently
      than three times annually, to have a qualified accountant selected by Crosby
      audit the records of Argosy to the extent necessary to verify Argosy’s
      statements and payments of the Participation Interests hereunder. Such records
      shall be made available to Crosby’s accountant at Argosy’s office located in
      Bogota, Colombia, or at Gran Tierra’s office located at the following address:
      300, 611-10th Avenue S.W., Calgary, Alberta, Canada, T2R 0B2. Argosy and Gran
      Tierra shall cooperate with and assist Crosby’s accountant for the purpose of
      facilitating such audit. If, as a result of such audit, Crosby’s accountant
      determines that the amount of payments due pursuant to the Participation
      Interests was greater than the amount reported by Argosy in quarterly and annual
      statements furnished pursuant to this Section
      7,
      Crosby
      shall promptly furnish to Argosy a copy of the report of its accountant setting
      forth the amount of the deficiency showing, in reasonable detail, the basis
      upon
      which such deficiency was determined. if Argosy agrees with such assessment,
      Argosy shall, within 30 days of receipt of Crosby’s accountant’s report, remit
      to Crosby a sum equal to such deficiency so claimed, together with interest
      thereon at the rate of ten percent (I0%) per annum from the date such payment
      was due until the date of such remittance. In addition, if the audit reveals
      a
      Material Underpayment in any period, Argosy shall pay to Crosby an additional
      amount equal to I00% of such underpayment, plus the cost of such audit. If
      Argosy disputes the claim, the dispute shall be resolved pursuant to
Section
      11.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    7.6. Confidentiality.
      Crosby
      and its members shall keep confidential any and all information provided by
      Argosy or Gran Tierra pursuant to this Agreement (the “Confidential
      Information”),
      provided that Crosby and its members may share such information to tax, legal,
      accounting, financial and other advisors who have a duty of confidentiality
      to
      them. This Section
      7.6
      shall
      not apply to information which (i) was or becomes generally available to the
      public other than as a result of a disclosure by Crosby or its members, (ii)
      becomes available to Crosby or its members on a non-confidential basis from
      a
      source other than the Gran Tierra or Argosy, provided that such source is not
      known to Crosby or its members to be bound by a confidential arrangement with
      Gran Tierra or Argosy or otherwise prohibited from transmitting the information
      to us by a contractual, legal or fiduciary obligation, or (iii) becomes
      independently developed by Crosby or its members without violating any of our
      obligations hereunder. Notwithstanding the foregoing, Crosby and its members
      may
      disclose such Confidential Information (a) in connection with the resolution
      of
      any dispute pursuant to the procedures set forth in Section
      11,
      or (b)
      if, in the opinion of its counsel, disclosure is required by law; provided,
      however, that Crosby or its members, as applicable, will promptly notify Argosy
      or Gran Tierra of the obligation to make such disclosure in advance of the
      disclosure so that Argosy or Gran Tierra, as the case may be, will have a
      reasonable opportunity to object to such disclosure. Crosby agrees that it
      shall
      treat the information provided by Argosy and Gran Tierra hereunder with the
      same
      degree of care it accords its own confidential information of a similar nature;
      provided that in no event shall Crosby exercise less than reasonable care to
      protect the Confidential Information.

     

    
      	
              8.

            	
              Assignment,
                Sale or Transfer of Historical Properties by Argosy and/or Sale of
                Argosy.

            

    

     

    8.1. Subsequent
      Transfers of Historical Properties.
      Argosy
      shall not assign, sell, transfer or otherwise dispose of all or a part of its
      interest in any of the Historical Properties (a “Subsequent
      Transfer”)
      without first complying with the provisions of Section
      8.3.

     

    8.2. Subsequent
      Sale of Argosy or its Successors.
      Gran
      Tierra and/or its Affiliates shall not assign, sell, transfer or otherwise
      dispose of Argosy (a “Subsequent
      Argosy Sale”)
      without providing prior written notice to Crosby and without an agreement by
      the
      purchaser thereof to execute a counterpart to this Agreement and thereby be
      bound by the terms hereof, including without limitation the provisions of
Section
      6.

     

    8.3. Assignment
      of this Agreement By Argosy or Gran Tierra. Argosy
      may assign to one or more Persons all or a portion of its rights and
      responsibilities under this Agreement in connection with a Subsequent Transfer;
      provided,
      that

     

    8.3.1 Argosy,
      Gran Tierra or a subsequent transferee, as the case may be, shall give Crosby
      an
      officer’s certificate at least fifteen (15) business days prior to any such
      Subsequent Transfer and assignment, certifying as to the compliance of such
      Subsequent Transfer and assignment with this Agreement, and such certificate
      shall be accompanied by:

     

    (a) a
      copy of
      all documents related to such assignment; and

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    (b) if
      the
      proposed transferee is not delivering a Letter of Credit, one of the following:
      (i) financial statements of the proposed transferee setting forth whether such
      proposed transferee would be in compliance with the Release Covenants as of
      the
      date of such assignment or (ii) reasonable evidence that such proposed
      transferee maintains the Acceptable Credit Rating; and

     

    (c) the
      proposed allocation of rights and responsibilities pursuant to Section
      8.3.3;
      and

     

    (d) if
      such
      proposed transferee would not be in compliance with the Release Covenants or
      the
      Acceptable Credit Rating as of the date of such proposed assignment, a proposed
      Letter of Credit complying with the terms and provisions of Section
      6
      and
Exhibit
      A.

     

    8.3.2 the
      Agreement is fully assumed in writing by such transferee, including without
      limitation the obligation of such transferee to provide a Letter of Credit
      to
      the extent required by Section
      6
      and
Exhibit
      A,
      and

     

    8.3.3 in
      the
      event of a partial Subsequent Transfer and assignment, rights and
      responsibilities under this Agreement (including with respect to the obligations
      of Gran Tierra and Argosy under Section
      7)
      are
      allocated between Argosy and such transferees based on the aggregate amount
      of
      the trailing 4 quarters payments earned by Crosby from the Colombian
      Participation Agreement which is attributable to each portion of the Historical
      Properties held by Argosy and any subsequent transferees; and

     

    8.3.4 Within
      ten ( I0) business days of Crosby’s receipt of such officer’s certificate and
      accompanying documents set forth in Section 8.33, Crosby may object to such
      Subsequent Transfer and assignment and start dispute resolution under
Section
      11
      for any
      of the following reasons:

     

    (a) either:
      (i) the form of Letter of Credit (if attached) to such officer’s certificate
      does not comply with the requirements of Section 6 and Exhibit A or (ii) the
      issuer bank for such Letter of Credit (if attached) does not have an Issuer
      Acceptable Credit Rating; or

     

    (b) if
      a form
      of Letter of Credit is not attached, the proposed transferee would not satisfy
      as of the date of such proposed transfer, either (i) the Release Covenants
      or
      (ii) the Acceptable Credit Rating; or

     

    (c) the
      proposed allocation pursuant to Section
      8.3.3
      is
      incorrect; or

     

    (d) the
      proposed form of assignment and transfer documents do not comply with the
      provisions of Section
      8.3.2.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    If
      Crosby
      does not timely object to such proposed Subsequent Transfer or assignment for
      at
      least one of the foregoing reasons, then Crosby shall be deemed to have accepted
      such Subsequent Transfer and assignment. If Crosby does timely object to such
      proposed Subsequent Transfer or assignment for one or more of the foregoing
      reasons and begins dispute resolution under Section 11 hereof, then either
      (i)
      such Subsequent Transfer and assignment shall not take place unless and until
      such dispute resolutions under Section 11 is finally resolved, or (ii) the
      transferor (whether Gran Tierra and Argosy or a subsequent transferee) can
      notify Crosby in writing that it will continue to be liable for any payments
      due
      to Crosby hereunder related to the portion of the Colombian Association
      Contracts (and related rights and obligations under this Agreement) proposed
      to
      be assigned. If such transferor chooses to remain liable under this Agreement
      in
      response to Crosby’s objection, such transferor may subsequently be released
      from its ongoing obligations with respect to the Assigned Rights and Obligations
      if (i) a Panel approves the proposed transfer and such transferor complies
      with
      the conditions set by the Panel for any such transfer; or (ii) such transferor
      provides Crosby either (A) evidence satisfactory to Crosby that such transferee
      is complying with the Release Covenants or satisfies the Acceptable Credit
      Rating or (B) a Letter of Credit from such transferee in compliance with
Section
      6
      and
Exhibit
      A.

     

    8.4. Prohibited
      Transfers and Assignments.
      Except
      as expressly set forth herein, Crosby shall have the right to withhold, in
      its
      sole discretion and for any reason or no reason, its consent to any Subsequent
      Transfer, any Subsequent Argosy Sale or any assignment under Section
      8.3.
      Any
      attempted Subsequent Transfer, Subsequent Argosy Sale or assignment by Argosy
      or
      Gran Tierra of its rights and responsibilities under this Agreement that is
      not
      (i) otherwise expressly permitted hereunder and/or (ii) consented to by Crosby
      in accordance with the terms hereof (as applicable), shall be void ab initio
      and
      of no force or effect,

     

    8.5. Effect
      of Transfers and Assignments.
      If Gran
      Tierra, Argosy or a permitted transferee makes
      any
      Subsequent Transfer, any Subsequent Argosy Sale
      or any
      assignment under Section
      8.3,
      the
      written agreement by which such transferee assumes the rights and obligations
      of
      Gran Tierra and/or Argosy, as the case may be, shall provide that in each case
      references to Argosy or Gran Tierra, as the case may be, shall mean such
      transferee to the extent of such rights and obligations so assigned. The
      provisions of this Section
      8.5
      shall
      apply to subsequent permitted transferees.

     

    8.6. Release
      of Gran Tierra, Argosy or Permitted Transferees.
      If Gran
      Tierra transfers all of its interest in Argosy, or Argosy transfers all or
      a
      portion of the Historical Properties, in each case in compliance with
Section
      8.1, 8.2 or 8.3,
      as
      applicable, and there is no then current dispute under Section
      11
      hereof
      with respect to Gran Tierra or Argosy, as applicable, then Gran Tierra or
      Argosy, as the case may be, shall be released from its obligations under this
      Agreement with respect to the portion of the Historical Properties (and related
      rights and obligations under this Agreement) so assigned or transferred. The
      provisions of this Section
      8.6
      shall
      apply to subsequent permitted transferees.

     

    9. Assignment
      by Crosby.

     

    9.1. Crosby
      Members.
      After
      November 30, 2006, subject to Section
      9.3,
      Crosby
      may assign its rights and responsibilities under this Agreement, with prior
      written notice to Argosy or Gran Tierra, to any of its members who are set
      forth
      on Schedule
      9.1
      (the
“Crosby
      Members”);
      provided, that such Crosby Members expressly agrees in writing to be bound
      by
      all of the terms and provisions of this Agreement. If Crosby assigns its rights
      under this Agreement to
      any of
      the Crosby Members:

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    9.1.1 Argosy
      shall make pro rata payments of the amounts due hereunder directly to such
      Crosby Members, provided that all of the reports and additional information
      required pursuant to Section
      7
      shall be
      delivered to a single Person designated by Crosby. Such Person shall have sole
      authority to act for all holders of Participation Rights pursuant to this
      Agreement, including but not limited to (i) resolving any matters relating
      to
      the Letter of Credit, (ii) initiating audits hereunder, (iii) disputing the
      amount of such payments, (iv) amending this Agreement and (v) being the sole
      representative in any dispute resolution process.

     

    9.1.2 Each
      Crosby Member shall have the pro rata right
      to
      convert its Overriding Royalty to a Crosby Net Profits Interest for each New
      Commercial Field in accordance with the terms of this Agreement.

     

    9.2. Assignment
      by Crosby to Non-Members.
      After
      November 30, 2006, Crosby and/or each Crosby Member shall have the right to
      sell, assign, transfer or otherwise dispose of any or all of the Participation
      Rights to any Person or Persons. Any such sale, assignment, transfer or other
      disposition may be (i) on a pro rata basis or (ii) with respect to any portion
      of the Historical Properties, or (iii) any one of the Participation Rights
      separately (i.e., Base Overriding Royalty, Net Profits Interest or Conditional
      Overriding Royalty for any New Commercial Field). Any such sale, assignment,
      transfer or disposition shall be made in compliance with applicable federal
      and
      state securities laws, and any such transferee shall agree in writing
      to be bound by the terms and provisions of this Agreement. In
      addition,
      Crosby
      and/or the Crosby Members shall provide to Gran Tierra and Argosy an opinion
      of
      counsel that any such
      sale, assignment, transfer or disposition complies with applicable federal
      and
      state
      securities laws. Any such sale, assignment, transfer or other disposition
      pursuant to this Section
      9.2
      shall be
      subject to the provisions of Section 9.1.1.

     

    10. Term;
      Termination.

     

    10.1. Base
      Term; Survival.
      This
      Agreement shall commence on the Effective Date and remain in force and effect
      through December 31, 2099 unless terminated pursuant to Section
      10.2
      hereof;
      provided, however, that after such termination pursuant to this Section
      10.1
      or
Section
      10.2,
      Sections 1 and 6 through 13 shall
      remain in effect until any amounts owing Crosby under Sections
      2, 3, 4 and 5
      are
      paid, and any disputes hereunder are fully and finally resolved.

     

    10.2. Early
      Termination.
      At any
      time Argosy and Gran Tierra are not in breach of, or default under, any terms
      and condition of this Agreement, Argosy and Gran Tierra can terminate this
      agreement by providing Crosby a written certification executed by both Gran
      Tierra’s President and each of Argosy’s managing officers that the following is
      true and correct:

     

    10.2.1 There
      have been no Sales Proceeds from the Historical Properties for five successive
      years;

     

    10.2.2 Neither
      Argosy, Gran Tierra, their successors and/or assigns and/or their Affiliates
      have any continuing interest in the Colombian Association Contracts;
      or

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    10.2.3 Neither
      Argosy, Gran Tierra, their successors and/or assigns and/or their Affiliates
      have had for a period of three years any ownership in any oil and gas
      exploration or production activities within fifty (50) kilometers of any of
      the
      Historical Properties.

     

    For
      written certifications pursuant to Sections
      10.2.1
      through
10.2.3,
      such
      termination shall be effective ninety (90) days after receipt unless either
      ( I
      ) within such ninety (90) day period Crosby notifies Argosy and Gran Tierra
      in
      writing of a dispute regarding the accuracy, correctness or sufficiency of
      such
      notice and/or (2) after such ninety (90) day period Crosby demonstrates that
      such certification was materially false or inaccurate.

     

    11. Dispute
      Resolution.
      The
      Parties agree not to commence any action against each other in the event of
      an
      alleged breach or default of an obligation arising under this Agreement, unless
      and until the Party alleging such breach or default has given the Party or
      Parties alleged to have breached or defaulted written notice of such breach
      or
      default, and an opportunity to cure such failure within ten (10) business days
      following the giving of such notice (in the manner provided in the Agreement)
      (the “Cure
      Period”).
      Furthermore, the Parties expressly stipulate and agree that no Party shall
      commence any action against the other Party after receipt of a notice of breach,
      failure or default from such Party, until the expiration of the Cure Period.
      In
      the event an asserted default or breach is not cured to the satisfaction of
      the
      Party asserting the same within the Cure Period, resolution of any and all
      disputes arising from or in connection with this Agreement and/or the
      negotiation and making of this Agreement, whether based in contract, tort,
      or
otherwise
      (each a “Participation
      Agreement Dispute”),
      shall
      be exclusively governed
      by and
      settled in accordance with the provisions of this Section
      11.
      The
      Parties shall not initiate any proceedings in any Court of law until the
      provisions of Sections
      11.1 and 11.2
      are
      completed (other than to enforce the provisions of such Sections
      11.1 and 11.2).

     

    11.1. Negotiation.
      The
      parties to any Participation Agreement Dispute shall have their designated
      executives meet within 30 days of written notice of any dispute in to attempt
      to
      resolve such dispute. if the disputes cannot be resolved by such meetings with
      such 30-day period, or the party being noticed is unable or unwilling to meet
      within the 30-day period, any party may pursue its remedies in accordance with
      this Agreement.

     

    11.2. Arbitration.
      If any
      Participation Agreement Dispute remains unsettled after following the procedures
      set forth in Section
      11.1,
      a party
      hereto may commence arbitration proceedings by delivering a written notice
      (the
“Demand”)
      to the
      other parties providing reasonable description of the Participation Agreement
      Dispute to the others and expressly requesting arbitration hereunder. Such
      Participation Agreement Dispute shall be submitted to arbitration under the
      terms hereof, which arbitration shall be final, conclusive and binding upon
      the
      parties, their successors and assigns. The arbitration shall be conducted by
      three neutral arbitrators who have experience in oil and gas exploration and
      production matters, acting by majority vote (the “Panel”),
      selected by agreement of the parties not later than ten (10) business days
      after
      delivery of the Demand or, failing such agreement, appointed from the Texas
      statewide panel of full-time neutral arbitrators of the American Arbitration
      Association who have experience in oil and gas exploration and production
      matters, and pursuant to the commercial arbitration rules of the American
      Arbitration Association (including the emergency procedures thereof), as amended
      from time to time (the “AAA
      Rules”).
      If an
      arbitrator so selected becomes unable
      to
      serve, his or her successors shall be similarly selected or appointed. The
      Panel
      shall have case management authority and shall fully and finally resolve the
      Participation Agreement Dispute within one hundred eighty (180) days from the
      commencement of the arbitration. The Panel shall not be entitled to award
      special, exemplary, punitive or consequential damages (including lost profit);
      provided,
      however,
      that
      such limitation shall not apply to Crosby’s rights to the interest and other
      payments due with respect to any audit conducted pursuant to Section
      75,
      including without limitation any amounts due for Material Underpayments. Any
      arbitration award shall be binding and enforceable against the Parties, and
      judgment may be entered thereon in any court of competent
      jurisdiction.

     

    
      
        
        

      

      
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    11.3. Injunctive
      Relief.
      No Party
      shall be entitled to injunctive relief other than through the emergency
      procedures set forth in the AAA Rules.

     

    11.4. Place
      of Arbitration.
      Any
      arbitration pursuant to this Agreement shall take place in Houston, Texas,
      which
      shall be the sole and exclusive jurisdiction and venue for any claims to
      adjudicate a Participation Agreement Dispute.

     

    11.5. Legal
      Fees and Expenses.
      If any
      arbitration or other legal action is brought for the resolution of a
      Participation Agreement Dispute, for the enforcement of this Agreement, or
      because of an alleged dispute, breach, default, or misrepresentation in
      connection with any of the provisions of this Agreement, the prevailing party
      or
      parties shall recover its or their actual and reasonable attorneys’ fees and
      other costs incurred in that action or proceeding (including without limitation
      the arbitrators’ fees, arbitration fees and expenses, deposition fees and
      expenses, expert witness fees and expenses, and travel expenses), in addition
      to
      any other relief to which it or they may be entitled. “Prevailing
      party”
within
      the meaning of this Section
      113
      includes, without limitation, the party who agrees to dismiss an action upon
      the
      other party’s payment of all or a portion of the sums allegedly due or
      performance of the covenants allegedly breached, or who obtains substantially
      the relief sought by it.

     

    11.6. Jurisdiction;
      Venue. EACH
      OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
      COURT
      LOCATED WITHIN THE COUNTY OF HARRIS, STATE OF TEXAS, AND IRREVOCABLY AGREES
      THAT
      ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY AGREEMENT OR
      INSTRUMENT EXECUTED HEREUNDER, OTHER THAN ANY ACTION OR PROCEEDING REQUIRED
      BY
      THIS SECTION
      11
      TO BE SUBMITTED TO ARBITRATION, SHALL BE LITIGATED IN SUCH COURTS, AND EACH
      OF
      THE PARTIES WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON PERSONAL
      JURISDICTION, IMPROPER VENUE OR FORUM
      NON CONVENIENS
      TO THE CONDUCT OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
      COURT.

     

    12. Representations
      and Warranties.

     

    12.1. Argosy
      and Gran Tierra.
      Each of
      Argosy and Gran Tierra jointly and severally represents and warrants to Crosby
      as of the date hereof that:

     

    12.1.1 its
      undersigned representative is duly authorized to execute this
      Agreement
      and the
      documents ancillary hereto:

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    12.1.2 it
      has
      all requisite power and authority to enter into this Agreement and the documents
      ancillary hereto, and to consummate the transactions contemplated
      hereby;

     

    12.1.3 this
      Agreement and all other documents ancillary thereto to be executed by it in
      connection herewith have been (or upon execution will have been) duly executed
      and delivered it, have been effectively authorized by all necessary action
      (corporate, partnership or otherwise) and constitute (or upon execution will
      constitute) its legal, valid and binding obligations, enforceable against it
      in
      accordance with their respective terms, subject to applicable bankruptcy,
      insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
      principles of equity (regardless of whether enforcement is sought in a
      proceeding at law or in equity);

     

    12.1.4 the
      execution, delivery and performance of this Agreement by it and the consummation
      of the transactions contemplated hereby will not result in a breach of any
      of
      the terms and provisions of, or constitute a default under, or conflict with
      any
      contract or any other agreement, indenture or other instrument to which it
      is a
      party or by which it is bound, its organizational documents, or any judgment,
      decree, order, award, law, rule or regulation of any United States, state,
      local, or other governmental entity or municipality or subdivision thereof
      or
      any authority, department, commission, agency, board, bureau, court or other
      instrumentality thereof; and

     

    12.1.5 it
      has
      not assigned, sold, transferred, conveyed, alienated or encumbered, in whole
      or
      in part, or agreed to assign, sell, transfer, convey, alienate or encumber,
      in
      whole or in part, any of its rights or interests in the Historical Properties
      (or the underlying Colombian Association Contracts).

     

    12.2. Crosby.
      Crosby
      represents and warrants to Argosy and Gran Tierra as of the Effective Date
      that:

     

    12.2.1 its
      undersigned
      representative is duly authorized to execute
      this
      Agreement and the documents ancillary hereto;

     

    12.2.2 it
      has
all
      requisite power and authority to enter into this Agreement
      and
      the documents ancillary hereto, and to consummate the transactions contemplated
      hereby;

     

    12.2.3 this
      Agreement
      and all other documents ancillary thereto to be executed
      by it in
      connection herewith have been (or upon execution will have been) duly executed
      and delivered it, have been effectively authorized by all necessary action
      (corporate, partnership or otherwise) and constitute (or upon execution will
      constitute) its legal, valid and binding obligations, enforceable against it
      in
      accordance with their respective terms, subject to applicable bankruptcy,
      insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
      principles of equity (regardless of whether enforcement is sought in a
      proceeding at law or in equity); and

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    12.2.4 the
      execution, delivery and performance of this Agreement by it and the consummation
      of the transactions contemplated hereby will not result in a breach of any
      of
      the terms and provisions of, or constitute a default under, or conflict with
      any
      contract or any other agreement, indenture or other instrument to which it
      is a
      party or by which it is bound, its organizational documents, or any judgment,
      decree, order, award, law, rule or regulation of any United States, state,
      local, or other governmental entity or municipality or subdivision thereof
      or
      any authority, department, commission, agency, board, bureau, court or other
      instrumentality thereof.

     

    13. Miscellaneous.

     

    13.1. Notices.

     

    All
      notices, requests, demands and other communications called for or contemplated
      hereunder shall be in writing and shall be deemed to have been duly given when
      sent to the Party to whom addressed by registered or certified mail, return
      receipt requested, postage prepaid, by overnight courier, with the fees
      therefore prepaid or billed to the sender, or by facsimile to such Party (if
      confirmed by one of the other methods described in this Section
      13.1),
      their
      successors in interest, or their assignees at the following addresses, or at
      such other addresses as the Parties may designate by written notice in the
      manner aforesaid:

     

    
      	
              If to Argosy or Gran Tierra:

            	
              Gran
                Tierra Energy Inc.

            
	 	
              300,
                611-10th Avenue S.W.

            
	 	
              Calgary,
                Alberta, Canada, T2R 0B2

            
	 	
              Attn:
                Dana Coffield

            
	 	
              Facsimile
                No. (403) 265-3242

            
	 	 
	
              With
                copies to:

            	
              McGuire
                Woods LLP

            
	 	
              1345
                Avenue of the Americas

            
	 	
              New
                York, NY 10105

            
	 	
              Attn:
                Louis W. Zehil

            
	 	
              Facsimile
                No. (212) 548-2175

            
	 	 
	
              If
                to Crosby:

            	
              Crosby
                Capital, LLC

            
	 	
              712
                Main Street, Suite 1700

            
	 	
              Houston,
                TX 77002

            
	 	
              Attn:
                Jay Allen Chaffee

            
	 	
              Facsimile
                No. (713) 223-5379

            
	 	 
	
              With
                copies to:

            	
              Glast,
                Phillips & Murray, P.C.

            
	 	
              2200
                One Galleria Tower

            
	 	
              13355
                Noel Road

            
	 	
              Dallas,
                TX 75240

            
	 	
              Attn:
                Stanton P. Eigenbrodt

            
	 	
              Facsimile
                No. (972) 419-8329

            

    

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    13.2. Inurement.
      This
      Agreement shall be binding on all Parties, their employees, agents,
      representatives, attorneys, shareholders, partners, affiliates, assigns, and
      successors in case of, but not limited to, merger, capital reorganization,
      reclassification of stock, consolidation, sale of all or substantially all
      of
      any Party’s assets, or any other change in business form by operation of law or
      contract or otherwise. The Parties agree to execute such other and further
      documentation necessary to effect this paragraph.

     

    13.3. No
      Other Representations or Warranties.
      The
      Parties hereto have entered into this Agreement in reliance solely upon the
      representations, warranties and agreements made by each to the other as
      expressly set forth in this Agreement and not upon any other representation,
      warranty or statement, whether written or oral, or express or
      implied.

     

    13.4. Modification;
      Waiver.
      Any
      modification or waiver of any provision of this Agreement, or any consent to
      any
      departure from the terms of this Agreement, shall not be binding unless the
      same
      is in writing and signed by the Party against whom such modification or waiver
      is sought to be enforced. The rights and remedies of the parties to this
      Agreement are cumulative and not alternative. Neither the failure nor any delay
      by any party in exercising any right, power, or privilege under this Agreement
      or the documents referred to in this Agreement shall operate as a waiver of
      such
      right, power, or privilege, unless there is a specific time period set forth
      herein with respect to the exercise of such right, power or privilege. No single
      or partial exercise of any such right, power,
      or
      privilege shall preclude any other or further
      exercise
      of such right,
      power, or privilege or the exercise of any other right,
      power,
      or privilege. To the maximum extent permitted by applicable law, (a) no claim
      or
      right arising out of this Agreement or the documents referred to in this
      Agreement can be discharged by one party, in whole or in part, by a waiver
      or
      renunciation of the claim or right unless in writing signed by the other party;
      (b) no waiver that may be given by a party shall be applicable except in the
      specific instance for which it is given; and (c) no notice to or demand on
      one
      party shall be deemed to be a waiver of any obligation of such party or of
      the
      right of the party giving such notice or demand to take further action without
      notice or demand as provided in this Agreement or the documents referred to
      in
      this Agreement.

     

    13.5. Entire
      Agreement.
      This
      Agreement contains the entire agreement of the Parties with respect to the
      subject matter hereof and supersede and cancel any prior understandings and
      agreements of the Parties with respect to such matters.

     

    13.6. Headings. Section
      headings are inserted for convenience only and shall
      not
      affect any construction or interpretation of this Agreement.

     

    13.7. Interpretation.
      This
      Agreement, and all other documents or instruments executed pursuant to this
      Agreement, were negotiated and drafted by the mutual efforts of all Parties
      and
      their counsel and, accordingly, the language of each of this Agreement and
      such
      other documents and instruments shall be construed as a whole, according to
      its
      fair meaning, and not strictly for or against any Party.

     

    13.8. Further
      Assurances.
      Each
      Party agrees to execute any and all documents reasonably required to effectuate
      the purposes and intent of this Agreement, at present or in the future.
      Specifically and without limiting the prior sentence, if the law of Colombia
      in
      the future provides for a direct assignment of the Base Overriding Royalty
      from
      the Historical Properties, at
      the
      request of Crosby, Argosy shall make such assignment to Crosby.

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    13.9. Governing
      Law.
      THE
      PARTIES HEREBY AGREE THAT THIS AGREEMENT AND ALL INSTRUMENTS EXECUTED PURSUANT
      TO THIS AGREEMENT (UNLESS OTHERWISE EXPRESSLY STATED THEREIN) SHALL BE GOVERNED
      BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS WITHOUT
      GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW THEREOF.

     

    13.10. No
      Liability.
      Crosby
      and/or any holder of the Crosby Net Profits Interest shall not be liable to
      Argosy and/or any other Party for any costs, expenses, losses or liabilities
      of
      any nature whatsoever related to the operation of the Historical Properties
      after the date hereof.

     

    13.11. Force
      Majeure.
      Gran
      Tierra’s and Argosy’s obligations to make capital expenditures under this
      Agreement shall be suspended and tolled during any period to the extent Argosy
      cannot conduct its business due to accident, labor dispute or disruption,
      strike, shortage of labor, materials, fuel or power, fire, flood or other act
      of
      God or lack of transportation facilities. Gran Tierra’s and Argosy’s obligations
      hereunder shall promptly begin again after Argosy’s business is no longer such
      disrupted. Gran Tierra and/or Argosy shall within 30 days of a qualifying force
      majeure event under this Section
      13.11
      give
      Crosby written notice of such event, or the provisions of this Section
      13.11
      shall
      not be applicable.

     

    13.12. Survival.
      The
      representations, warranties, agreements and covenants of the Parties shall
      survive the execution and delivery of this Agreement.

     

    13.13. Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which constitute one and the same instrument.
      The
      execution and delivery of this Agreement by facsimile shall constitute the
      valid
      execution and delivery of this Agreement by the Party providing the facsimile
      signature.

     

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

     

    13.15. Payments
      in U.S. Dollars.
      All
      payments owed to Crosby hereunder shall be paid in United States
      dollars.

     

    13.16. Purchase
      Agreement.
      In the
      event of any inconsistency between the Purchase Agreement and this Agreement,
      the terms and provisions of this Agreement shall govern.

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
      executed as of the date first written above.

     

    
      	
               

            	
              ARGOSY
                ENERGY INTERNATIONAL

            
	 	
              By:

            	
              Argosy
                Energy Corp., General Partner

            
	 
              	 	 	 
	 	 	
              By:

            	
              /s/
                Dana Coffield

            
	 	 	
              Name:
                

            	
              Dana
                Coffield

            
	 	 	
              Title:
                

            	
              President

            

    

    

    
      	
              CITY
                OF CALGARY

            	
              §

            
	 	
              §

            
	
              PROVINCE OF ALBERTA

            	
              §

            

    

     

    On
      this
      22nd day of June, 2006, before me appeared Dana Coffield, to me personally
      known, who being by me duly sworn did say that he is the President of Argosy
      Energy Corp., the General Partner of Argosy Energy International, and that
      the
      instrument was signed on behalf of Argosy Energy International, by the authority
      of the Board of Directors of Argosy Energy Corp. as the General Partner of
      such
      partnership, and that he acknowledged the instrument to be the free act and
      deed
      of said partnership.

     

    This
      instrument was acknowledged before me on the 22nd day of June, 2006, by Dana
      Coffield, the President of Argosy Energy Corp., the General Partner of Argosy
      Energy International.

     

    
      	 
              	 	
              [illegible]

            
	 	 	
              Notary
                Public in and for the Province of Alberta

            
	 	 	 
	
              My
                Commission Expires:

            	 	 
	
              not
                applicable

            	 	 

    

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

     

    
      	
              GRAN
                TIERRA ENERGY INC.

            
	 
              	 
	
              By:

            	
              /s/
                Dana Coffield

            
	
              Name:
                

            	
              Dana
                Coffield

            
	
              Title:
                

            	
              President
                and Chief Executive Officer

            

    

    

    
      	
              CITY
                OF CALGARY

            	
              §

            
	 	
              §

            
	
              PROVINCE
                OF ALBERTA

            	
              §

            

    

     

    On
      this
      22nd day of June, 2006, before me appeared Dana Coffield, to me personally
      known, who being by me duly sworn did say that he is the President of and Chief
      Executive Officer of Gran Tierra Energy Inc., and that the instrument was signed
      on behalf of same, by the authority of its Board of Directors, and that he
      acknowledged the instrument to be the free act and deed of said
      corporation.

     

    This
      instrument was acknowledged before me on the 22nd day of June, 2006, by Dana
      Coffield, the President and Chief Executive Officer of Gran Tierra Energy
      Inc.

     

    
      	 
              	 	
              [illegible]

            
	 	 	
              Notary
                Public in and for the Province of Alberta

            
	 	 	 
	
              My
                Commission Expires:

            	 	 
	 	 	 
	
              not
                applicable

            	 	 

    

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    
      	
              CROSBY
                CAPITAL, LLC

            
	 	 
	
              By:

            	
              /s/
                Jay Allen Chaffee

            
	 	
              Jay
                Allen Chaffee

            
	 	
              President

            

    

    

    
      	
              CITY
                OF TEXAS

            	
              §

            
	 	
              §

            
	
              PROVINCE
                OF HARRIS

            	
              §

            

    

     

    On
      this
      26th day of June, 2006, before me appeared Jay Chaffee, to me personally known,
      who being by me duly sworn did say that he is the President of Crosby Capital,
      LLC, and that the instrument was signed on behalf of same, by the authority
      of
      its Board of Managers, and that he acknowledged the instrument to be the free
      act and deed of said limited liability company.

     

    This
      instrument was acknowledged before me on the 26th day of June, 2006, by Jay
      Allen Chaffee, the President of Crosby Capital, LLC

     

    
      	 
              	 	
              /s/
                Peggy Ann Maltie

            
	 	 	
              Notary
                Public in and for the State of Texas

            
	 	 	 
	
              My
                Commission Expires:

            	 	
              [seal]

            
	 	 	 
	
              July
                11, 2007

            	 	 
              

    

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.8

    COLOMBIAN
      ASSOCIATION CONTRACTS

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    

      
        	
                Colombia
                  

                Block/Field(a)

              	 	
                Well
                  Name

              	 	
                Royalty

                Interest

              	 	
                Other

                Working

                Interest

              	 	
                Argosy

                Working

                Interest

              	 	
                Argosy
                  Net

                Revenue

                Interest

              	
              
	
                Guayuyaco

                Field:
                  Guayuyaco

                 

              	 	 	
                
                

                Guayuyaco 1

                Guayuyaco 2

              	 	 	
                
                

                8.00000

                8.00000
                  

              	
                
                

                (b)  

                (b)

              	 	
                
                

                65.00000

                65.00000

              	 	 	
                
                

                35.00000

                35.00000

              	 	 	
                
                

                32.20000

                32.20000

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Santana

                Field:
                  Linda

              	 	 	
                
                

                 

                Linda 1

                Linda
                  2

                Linda
                  3

                Linda
                  4

                Linda
                  5

              	 	 	
                
                

                20.00000

                20.00000

                20.00000

                20.00000

                20.00000

              	 	 	
                
                

                65.00000

                65.00000

                65.00000

                65.00000

                65.00000

              	 	 	
                
                

                35.00000

                35.00000

                35.00000

                35.00000

                35.00000

              	 	 	
                
                

                28.00000

                28.00000

                28.00000

                28.00000

                28.00000

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Santana

                Field:
                  Inchiyaco (c)

              	 	 	
                
                

                Inchiyaco
                  1

              	 	 	
                
                

                20.00000

              	 	 	
                
                

                74.17350

              	 	 	
                
                

                25.82650

              	 	 	
                
                

                20.66120

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Santana

                Field:
                  Mary

              	 	 	
                Mary
                  1

                 

                
                

                Mary
                  2

                Mary
                  3

                Mary
                  5

              	 	 	
                20.00000

                 

                
                

                20.00000

                20.00000

                20.00000

              	 	 	
                65.00000

                 

                
                

                65.00000

                65.00000

                65.00000

              	 	 	
                35.00000

                 

                
                

                35.00000

                35.00000

                35.00000

              	 	 	
                28.00000

                 

                
                

                28.00000

                28.00000

                28.00000

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Santana:

                Field:
                  Miraflor

              	 	 	
                
                

                Miraflor

              	 	 	
                
                

                20.00000

              	 	 	
                
                

                65.00000

              	 	 	
                
                

                35.00000

              	 	 	
                
                

                28.00000

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Santana

                Field:
                  Toroyaco

              	 	 	
                Toroyaco
                  1

                 

                
                

                Toroyaco
                  2

                Toroyaco
                  3

                Toroyaco
                  4

              	 	 	
                20.00000

                 

                
                

                20.00000

                20.00000

                20.00000

              	 	 	
                65.00000

                 

                
                

                65.00000

                65.00000

                65.00000

              	 	 	
                35.00000

                 

                
                

                35.00000

                35.00000

                35.00000

              	 	 	
                28.00000

                 

                
                

                28.00000

                28.00000

                28.00000

              	 

      

    

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

    

      
        	
                Colombia
                  

                Block/Field(a)

              	 	
                Well Name

              	 	
                Royalty

                Interest

              	 	
                Other

                Working

                Interest

              	 	
                Argosy

                Working

                Interest

              	 	
                Argosy
                  Net

                Revenue

                Interest

              	 
	
                Chaza

              	 	 	
                 

              	
                
                  
                    
                      (d)

                    

                  

                

              	 	
                8.00000
                  (b

              	
                )

              	 	
                50.00000

              	 	 	
                50.00000

              	 	 	
                46.00000

              	 
	
                Mecaya

              	 	 	
                 

              	
                
                  
                    
                      (d)

                    

                  

                

              	 	
                8.00000
                  (b

              	
                )

              	 	
                85.00000

              	 	 	
                15.00000

              	 	 	
                13.80000

              	 
	
                Mandiyaco

              	 	 	
                 

              	
                
                  
                    
                      (d)(e)

                    

                  

                

              	 	
                8.00000
                  (b

              	
                )

              	 	
                0.00000

              	 	 	
                100.00000

              	 	 	
                92.00000

              	 
	
                Rio
                  Magdalena

              	 	 	
                 

              	
                
                  
                    
                      (d)

                    

                  

                

              	 	
                8.00000
                  (b

              	
                )

              	 	
                65.00000

              	 	 	
                35.00000

              	 	 	
                32.20000

              	 
	
                Talora

              	 	 	
                 

              	
                
                  
                    
                      (d)

                    

                  

                

              	 	
                8.00000
                  (b

              	
                )

              	 	
                80.00000

              	 	 	
                20.00000

              	 	 	
                18.40000

              	 
	
                Primavera

              	 	 	
                 

              	
                
                  
                    
                      (d)

                    

                  

                

              	 	
                8.00000
                  (b

              	
                )

              	 	
                85.00000

              	 	 	
                15.00000

              	 	 	
                13.80000

              	 

      

    

     

    
      	
            	(a)	
              The
                formations for each block and field are referenced on CPA Schedule
                1.54
                and Argosy’s Net Revenue Interest is the same for each formation in such
                field.

            

    

    
      	
            	(b)	
              Subject
                to sliding scale

            

    

    
      	
            	(c)	
              Inchiyaco
                field connected to Mary Field

            

    

    
      	
            	(d)	
              No
                producing wells as of May 25, 2006

            

    

    
      	
            	(e)	
              Potential
                other working interest owner if Repsol Farm-in is basis of property
                acquisition. Such interest, if any, would reduce Argosy’s Net Revenue
                Interest.

            

    

     

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.14

    HISTORICAL
      PROPERTIES

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.14

    TO
      THE

    COLOMBIAN
      PARTICIPATION AGREEMENT

     

    COLOMBIAN
      ASSOCIATION CONTRACTS

     

    SEE
      ATTACHED PAGE 1

     

    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

    

      
        	
                Block

              	 	
                Contractual
                  Documentation

              	 	
                Effective
                  Date

              
	
                Santana

              	 	
                ECP
                  Risk Sharing Contract

              	 	
                July
                  27, 1987

              
	 	 	 	 	 
	
                Rio
                  Magdalena

              	 	
                ECP
                  Association Contract

              	 	
                February
                  8, 2002

              
	 	 	 	 	 
	
                Guayuyaco

              	 	
                ECP
                  Association Contract

              	 	
                September
                  20, 2002

              
	 	 	 	 	 
	
                Talora

              	 	
                ANH
                  Contract for Exploration and Exploitation of Hydrocarbons

              	 	
                September
                  16, 2004

              
	 	 	 	 	 
	
                Chaza

              	 	
                ANH
                  Contract for Exploration and Exploitation of Hydrocarbons

              	 	
                June
                  27, 2005

              
	 	 	 	 	 
	
                Primavera

              	 	
                ANH
                  Contract for Exploration and Exploitation of Hydrocarbons

              	 	
                May
                  9, 2006

              
	 	 	 	 	 
	
                Mecaya

              	 	
                Application
                  for ANH Contract for Exploration and Exploitation of
                  Hydrocarbons

              	 	
                (1)

              
	 	 	 	 	 
	
                Mandiyaco

              	 	
                Application
                  for ANH Contract for Exploration and Exploitation of
                  Hydrocarbons

              	 	
                (2)

              

      

    

     

    
      	
              (1)

            	
              Argosy
                submitted the “Mecaya” application to ANH on October 27, 2005 for an area
                in the Putumayo basin. ANH advised Argosy verbally the application
                was
                accepted on April 20, 2006. Argosy has received written confirmation
                and
                is scheduling a contract closing on or about June 2,
                2006.

            

    

     

    
      	
              (2)

            	
              Argosy
                submitted the “Mandiyaco” application to ANH on April 26, 2006 for an area
                in the Putumayo Basin. ANH has suspended review of this application
                until
                a previously submitted application is processed. Therefore, this
                application may need to be renewed and/or
                resubmitted.

            

    

     

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.33 

    CURRENT
      NET REVENUE INTERESTS

     

    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.33 

    TO
      THE

    COLOMBIAN
      PARTICIPATION AGREEMENT

    

    HISTORICAL
      PROPERTIES

    

    
      	
              Colombia

              Block/Field

            	 	
              Well
                Names

            	 	
              Argosy
                Net

              Revenue

              Interest

            	 	
              Description
                of Historical Property(1)

            
	
              Block:
                Santana

              Fields:
                Linda

               

               

              Inchiyaco

              Mary

               

               

              Miraflor

              Toroyaco

            	 	
              Linda
                1

              Linda
                2

              Linda
                3

              Linda
                4

              Linda
                5

              Inchiyaco
                I

              Mary
                1

              Mary
                2

              Mary
                3

              Mary
                5

              Miraflor

              Toroyaco
                1

              Toroyaco
                2

              Toroyaco
                3

              Toroyaco
                4

            	 	
              28.0%

              28.0%

              28.0%

              28.0%

              28.0%

              20.6612%

              28.0%

              28.0%

              28.0%

              28.0%

              28.0%

              28.0%

              28,0%

              28.0%

              28.0%

            	 	
              The
                area more specifically described in Annex A of the Amendment to the
                Santana Shared Risk Contract effective August 14, 2002, attached
                to this
                Schedule 1.28 on pages 2 to 28, setting forth the coordinates of
                the
                property (a) comprising an area of 21,191 hectares and 5,800 square
                meters, located in the Guayuyaco Sector in the municipal jurisdictions
                of
                Villa Garzón, Puerto Guzman and Mocoa in the Putumayo Province, and the
                municipal jurisdiction of Santa Rosa in the Cauca Province, and
                including
                only
                (b) (i) the productive areas individually redefined for each of the
                reservoirs of the Mary, Miraflor, Linda and Toroyaco fields, as described
                more fully therein; and (ii) the Inchiyaco field which has been determined
                to be connected to the Mary field.

            
	
              Block:
                Guayuyaco

              Field:
                Guayuyaco

            	 	
              Guayuyaco
                1

              Guayuyaco
                2

            	 	
              32.2%

              32.2%

            	 	
              The
                area more specifically described in Annex A of the Guayuyaco Adjacent
                Prospect Contract effective September 20, 2002, attached to this
                Schedule
                1.28 on pages 29 to 39, setting forth the coordinates of the property
                (a)
                comprising an area of 21,191 hectares and 5,800 square meters, located
                in
                the Guayuyaco Sector in the municipal jurisdictions of Villa Garzón,
                Puerto Guzmán and Mocoa in the Putumayo Province, and the municipal
                jurisdiction of Santa Rosa in the Cauca Province, and excluding
                (b) (i) the productive areas individually redefined for each of the
                reservoirs of the Mary, Miraflor, Linda and Toroyaco fields, as described
                more fully therein; and (ii) the Inchiyaco field which has been determined
                to be connected to the Mary field.

            
	
              Block:

              Rio
                Magdalena

            	 	
              (2)

            	 	
              32.2%

            	 	
              The
                area more specifically described in Annex A of the Rio Magdalena
                Association Contract effective February 8, 2002, attached to this
                Schedule
                1.28 on pages 40 to 79, setting forth the coordinates of property
                comprising an area of 43,841 hectares and 867 square meters, located
                in
                the Río Magdalena Sector in the municipal jurisdictions of San Juan de
                Rioseco, Beltrán, Pulí and Guataqui in the Cundinamarca Province, and the
                municipal jurisdictions of Guayabal, Lérida, Venadillo, Ambalema and
                Piedras in the Tolima Province.

            
	
              Block:
                Talora

            	 	
              (2)

            	 	
              18.4%

            	 	
              The
                area more specifically described in Annex A of the Talora Exploration
                and
                Exploitation Contract effective September 16, 2004, attached to this
                Schedule 1.28 on pages 45 to 47, setting forth the coordinates of
                property
                comprising an area of 32,472 hectares and 6,893 square meters, located
                in
                the Chaza Sector in the municipal jurisdictions of Mocoa and Villagarzón
                in the Putumayo Province and the municipal jurisdiction of Piamonte
                in the
                Cauca Province.

            

    

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

    

    
      	
              Block:
                Chaza

            	 	
              (2)

            	 	
              46.0%

            	 	
              The
                area more specifically described in Annex A of the Chaza Exploration
                and
                Exploitation Contract effective June 27, 2005, attached to this Schedule
                1.28 on pages 53 to 62, setting forth the coordinates of property
                comprising an area of 32,472 hectares and 6,893 square meters, located
                in
                the Chaza Sector in the municipal jurisdictions of Mocoa and Villagarzón
                in the Putumayo Province and the municipal jurisdiction of Piamonte
                in the
                Cauca Province.

            
	
              Block:
                Primavera

            	 	
              (2)

            	 	
              13.8%

            	 	
              The
                area more specifically described in Annex A of the Primavera Exploration
                and Exploitation Agreement effective May 9, 2006, setting forth the
                coordinates of property commonly known as Primavera Block, which
                description is attached to this Schedule 1.28 on pages 63 to
                74.

            
	
              Block:
                Mecaya

            	 	
              (2)

            	 	
              13.8%

            	 	
              The
                area more specifically described in Exhibit I of the Mecaya Commercial
                Agreement effective May 23, 2006 by and among Expet S.A., Mecaya
                Colombia
                Partners LLC and Argosy Energy International, setting forth the
                coordinates of the Mecaya exploration block in the Putumayo Province
                of
                Colombia, which Exhibit I is attached to this Schedule 1.28 op pages
                75 to
                77.

            
	
              Block:
                Mandiyaco

            	 	
              (2)

            	 	
              92.0%

            	 	
              The
                area more specifically described in the attachment to the application
                for
                the Mandiyaco Block with ANH dated April 27, 2006, setting forth
                the
                coordinates of the proposed Mandiyaco exploration block in the Cauca
                Province of Colombia, which such “Mandiyaco Area” attachment is attached
                to this Schedule 1.28 on pages 78 to
                79.

            

    

    

    
      	
            	(1)	
              The
                following descriptions are the surface areas for such Historical
                Properties, and include any productive Hydrocarbon bearing intervals
                which
                are found beneath such surface
                areas.

            

    

     

    
      	
            	(2)	
              No
                producing wells as of May 25, 2006

            

    

     

    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.53 

    POPA
      PROSPECT AREA MAP

     

    
      
        
        

      

      
        -43-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.53 

    TO
      THE

    COLOMBIAN
      PARTICIPATION AGREEMENT

     

    POPA
      PROSPECT AREA MAP

     

    SEE
      ATTACHED PAGE 1

     

    [Map]

     

    CPA
      SCHEDULE 1.53 PAGE 1

     

    [Map]

    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.54 

    PREEXISTING
      FIELDS

    

    

    
      
        
        

      

      
        -45-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.54 

    TO
      THE

    COLOMBIAN
      PARTICIPATION AGREEMENT

     

    PRE-EXISTING
      FIELDS

     

    SEE
      ATTACHED PAGE 1

    
      
        
        

      

      
        -46-

        
          

        

      

      
        
        

      

    

    

    
      	
              Field
                

              Name

            	
               

            	
              Colombian
                

              Contract
                Area

            	
               

            	
              Formation
                

              Name

            	
               

            	
              Formation
                

              Depth

            
	
              Linda

            	
               

            	
              Santana
                Block

            	
               

            	
              Villeta
                “U”

            	
               

            	
              8688
                - 8938

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “T”

            	
               

            	
              8800
                - 8970

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “N”

            	
               

            	
              8076
                - 8345

            
	
               

            	
               

            	
               

            	
               

            	
              Caballos

            	
               

            	
              8991
                - 9105

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Mary

            	
               

            	
              Santana
                Block

            	
               

            	
              Villeta
                “U”

            	
               

            	
              7404
                - 7715

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “T”

            	
               

            	
              7647
                - 7882

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “N”

            	
               

            	
              6894
                - 6902

            
	
               

            	
               

            	
               

            	
               

            	
              Caballos

            	
               

            	
              7767
                - 8018

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Inchiyaco

            	
               

            	
              Santana
                Block

            	
               

            	
              Villeta
                “U”

            	
               

            	
              7354
                - 7520

            
	
               

            	
               

            	
               

            	
               

            	
              Caballos

            	
               

            	
              7916
                - 7976

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Miraflor

            	
               

            	
              Santana
                Block

            	
               

            	
              Villeta
                “U”

            	
               

            	
              6476
                - 6545

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “T”

            	
               

            	
              6652
                - 6798

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “N”

            	
               

            	
              5868
                - 5896

            
	
               

            	
               

            	
               

            	
               

            	
              Caballos

            	
               

            	
              6780
                - 6820

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Toroyaco

            	
               

            	
              Santana
                Block

            	
               

            	
              Villeta
                “U”

            	
               

            	
              8838
                - 9100

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “T”

            	
               

            	
              9036
                - 9274

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “N”

            	
               

            	
              8128
                - 8138

            
	
               

            	
               

            	
               

            	
               

            	
              Caballos

            	
               

            	
              9370
                - 9396

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Guayuyaco

            	
               

            	
              Guayuyaco
                Block

            	
               

            	
              Villeta
                “U”

            	
               

            	
              7490
                - 7620

            
	
               

            	
               

            	
               

            	
               

            	
              Villeta
                “T”

            	
               

            	
              7754
                - 7790

            
	
               

            	
               

            	
               

            	
               

            	
              Caballos

            	
               

            	
              7882
                - 7903

            

    

     

    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      9.1 

    TO
      THE

    COLOMBIAN
      PARTICIPATION AGREEMENT

     

    CROSBY
      CAPITAL, LLC MEMBERS

     

    SEE
      ATTACHED PAGE 1

     

    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

    

    
      	
            	•	
              LJB
                Partners, L.P.

            

    

     

    
      	
            	•	
              Schumacher
                Living Trust

            

    

     

    
      	
            	•	
              Lincoln
                Trust Company, Custodian FBO Robert J. Schumacher Roth/IRA — Account
                60481057

            

    

     

    
      	
            	•	
              Lincoln
                Trust Company, Custodian FBO Robert J. Schumacher Roth/IRA — Account
                60481066

            

    

     

    
      	
            	•	
              Jay
                Allen Chaffee

            

    

     

    
      	
            	•	
              Bunker
                Hill Associates, Inc.

            

    

     

    
      
        
        

      

      
        -49-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    TO
      COLOMBIAN PARTICIPATION AGREEMENT

    Terms
      of Letter of Credit Draws

     

    The
      Initial Letter of Credit, a New Letter of Credit or any replacement letter
      of
      credit provided under Section 6 of this Agreement (collectively, the
“Letters
      of Credit”)
      can be
      drawn under the following circumstances: (i) a payment default by Gran Tierra
      and/or Argosy under this Agreement pursuant to the terms of Section I below
      (a
“Payment
      Default”),
      or
      (ii) any time Crosby should be protected with a Letter of Credit in the correct
      aggregate amount as set forth in Section
      6
      of this
      Agreement but is not, pursuant to the terms of Section II below (a “Letter
      of Credit Default”),
      or
      (iii) any time Crosby should be protected with a Letter of Credit from an Issuer
      Bank with an Issuer Acceptable Credit Rating as set forth in Section 6 of this
      Agreement but is not, pursuant to the terms of Section
      III
      below.

    I. Payment
      Default.

     

    Crosby
      shall be entitled to draw under the Letter of Credit in the exact amount that
      it
      is owed under this Agreement if and only it certifies to the issuing bank (the
      “Issuer
      Bank”)
      with
      reasonable evidence attached thereto that one of the following two conditions
      has been satisfied:

    A. Condition
      One: Gran Tierra and/or Argosy fail to make a payment and Gran Tierra and/or
      Argosy admit explicitly in writing that they owe such amount; or

    B. Condition
      Two: Either:

     

    
      
        
          	
                	(1)	
                   

                

        

        
          	
                	(a)	
                  An
                    award of the Panel provided in Section 11.2 provides for payment
                    of money
                    to Crosby (“Crosby
                    Arbitration Award”);
                    and

                

        

      

    

    
      	
            	
              (b)

            	
              Within
                10 business days of such award, (i) the Crosby Arbitration Award
                has not
                been paid and (ii) the Crosby Arbitration Award has been appealed;
                or

            

    

     

    
      
        	
              	(2)	
                 

              

      

      
        	
              	(a)	
                In
                  the event the Crosby Arbitration Award has been appealed, a final
                  determination favorable to Crosby has been entered (the “Crosby
                  Final Determination”);
                  and

              

      

    

    
      	
            	
              (b)

            	
              Crosby
                has not been paid in full the amount of the Crosby Final Determination
                within five business days of such Crosby Final
                Determination.

            

    

     

    II. Letter
      of Credit Renewal Default.

     

    Crosby
      shall be entitled to draw a Letter of Credit in full and deposit such amount
      in
      an escrow account at the Crosby Escrow Bank if and only if it certifies to
      the
      Issuer Bank with reasonable evidence attached thereto that the money will be
      deposited in such escrow and the following two conditions are
      satisfied:

    A. Not
      less
      than 60 days nor more than 90 days prior to the end of any Letter of Credit
      term, Crosby delivered written notice to Gran Tierra, Argosy and/or any
      permitted transferee, that any of them, as the case may be, is required under
      pursuant to Section
      6
      and this
Exhibit
      A
      to
      deliver to Crosby a Letter of Credit satisfying the terms set forth Section
      6
      and this
Exhibit
      A;
      and

    
      
        
        

      

      
        -50-

        
          

        

      

      
        
        

      

    

    

    B. Gran
      Tierra, Argosy or such permitted transferee has not within ten (10) business
      days provided such new Letter of Credit.

     

    III. Issuer
      Bank Credit Rating Non-Maintenance Default.

     

    Crosby
      shall be entitled to draw a Letter of Credit in full and
      deposit
      such amount in an escrow account at the Crosby Escrow Bank if and only if it
      certifies to the Issuer Bank with reasonable evidence attached thereto that
      the
      money will be deposited in such escrow and the following two conditions are
      satisfied:

    A. Crosby
      delivered written notice to Gran Tierra, Argosy and/or any permitted transferee,
      as applicable, that the Issuer Bank’s rating by Standard & Poor’s has fallen
      below the Issuer Acceptable Credit Rating, and requesting delivery of a
      replacement Letter of Credit as required under and satisfying the terms of
      Section
      6
      and this
Exhibit
      A;
      and

    B. Gran
      Tierra, Argosy or such permitted transferee, as the case may be, has not within
      fifteen (15) business days provided such new Letter of Credit.

     

    
      
        
        

      

      
        -51-

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

     

    [Form
      of the Initial Letter of Credit attached hereto]

     

     

    Amendment
      No. 1 to

    Colombian
      Participation Agreement

     

    
      
        
        

      

      
        -52-

        
          

        

      

      
        
        

      

    

    IRREVOCABLE
      STANDBY LETTER OF CREDIT

     

    Effective
      as of 31st October, 2006

     

    Irrevocable
      Letter of Credit No. [   ]

     

    
      	 	
              APPLICANT:

              GRAN
                TIERRA ENERGY INC.

              300,
                611 - 10th
                Avenue S.W.

              Calgary,
                Alberta

              Canada
                T2R OBZ

               

            
	 	
              STATED
                AMOUNT:

              USD
                $4,000,000

               

            
	 	
              EXPIRY
                DATE:

              31st
                October, 2007

              (save
                as such date may be extended pursuant to paragraph 9

              below)

              AT
                OUR COUNTERS

               

            
	
              BENEFICIARY:

              CROSBY
                CAPITAL, LLC

              712
                Main Street, Suite 1700

              Houston,
                TX 77002

              Attention:
                Jay Allen Chaffee

            	 

    

    

    Re: Colombian
      Participation Agreement

     

    1. We,
      Standard Bank Plc (the “Issuing
      Bank”),
      hereby issue our irrevocable Standby Letter of Credit on behalf of Gran Tierra
      Energy Inc (the “Applicant”)
      for an
      amount of USD 4,000,000 (Four Million United States Dollars) in favour of Crosby
      Capital, LLC (the “Beneficiary”).

     

    2. This
      Standby Letter of Credit covers all monics and liabilities (whether actual
      or
      contingent) for up to the amount of USD 4,000,000 (Four Million United States
      Dollars) which are now or shall at any time hereafter be due, owing or payable
      to the Beneficiary from or by the Applicant under the terms of a participation
      agreement entered into on 22nd
      June,
      2006 between the Applicant, Beneficiary and Argosy Energy International (as
      amended and in effect from time to time, the “Colombian
      Participation Agreement”).

     

    3. CLAIM
      DOCUMENTATION. Authenticated swift or tested telex claiming the sum due and
      in
      the appropriate form designated below:

     

    
      	
              (a)

            	
              if
                a claim is being made with respect to a payment default under the
                Colombian Participation Agreement, the form of Exhibit A
                hereto;

            

    

     

    
      
        
        

      

      
        -53-

        
          

        

      

      
        
        

      

    

    
      	
              (b)

            	
              if
                a claim is being made with respect to a Letter of Credit renewal
                default
                under the Colombian Participation Agreement, the form of Exhibit
                B
                hereto;

            

    

     

    
      	
              (c)

            	
              if
                a claim is being made with respect to a default under the Columbian
                Participation Agreement in providing an additional Letter of Credit
                following a draw under a Letter of Credit, the form of Exhibit C;
                and/or

            

    

     

    
      	
              (d)

            	
              if
                a claim is being made with respect to an Issuing Bank credit rating
                downgrade under the Colombian Participation Agreement, the form of
                Exhibit
                D hereto.

            

    

     

    4. We
      hereby
      irrevocably and unconditionally undertake to honour all claims made by the
      Beneficiary in accordance with the terms and conditions of this Standby Letter
      of Credit within five (5) Business Days after our receipt thereof provided
      such
      claim documentation is received on or prior to 5:30pm (Greenwich Meantime)
      on
      the Expiry Date or on any day prior to the Expiry Date. For the purposes of
      this
      Standby Letter of Credit, “Business
      Day”
shall
      mean any day (other than a Saturday or Sunday) on which banks are open for
      business in London.

     

    5. It
      is
      further agreed that this Standby Letter of Credit shall be without prejudice
      to
      such rights as the Beneficiary may have at any time in respect of any security
      that the Beneficiary may hold for the said indebtedness and liabilities and
      that
      our liability shall not be affected by giving time or other indulgence to the
      Applicant, or by the Beneficiary realizing or entering into any compromise
      with
      depositors or any other collateral the Beneficiary may hold at any time in
      respect of the said liability.

     

    6. TT
      Reimbursement and partial drawings are allowed.

     

    7. This
      Standby Letter of Credit is not assignable.

     

    8. A
      person
      who is not a party to this Standby Letter of Credit has no right under the
      Contracts (Rights of Third Parties) Act 1999 to enforce the terms of this
      Standby Letter of Credit.

     

    9. Save
      as
      may be extended in accordance with the terms below, this Standby Letter of
      Credit expires at the counters of Standard Bank Plc on the Expiry Date. At
      any
      time no less than 90 days but no more than 120 days prior to the Expiry Date,
      the Applicant may by written notice addressed to the Issuing Bank request that
      the Expiry Date is extended for an additional period not to exceed one year.
      The
      Issuing Bank shall, no later than 30 days after receiving such request, notify
      the Beneficiary and the Applicant of its acceptance or rejection of such request
      and, if accepted, confirm the new Expiry Date.

     

    10. All
      documents presented to the Issuing Bank in connection with any demand for
      payment under this Letter of Credit, as well as all notices and other
      communications to the Issuing Bank in respect hereof, shall be in writing,
      shall
      make specific reference to this Standby Letter of Credit by number and shall
      be
      delivered to the Issuing Bank at its office located at Standard Bank PLC, Canon
      Bridge House, 25 Dowgate Hill, London, EC4R 2SB (or at any other office of
      the
      Issuing Bank as may be designated by the Issuing Bank by written notice
      delivered to the Beneficiary) by authenticated SWIFT message (or any other
      form
      of communication previously agreed in writing with the Issuing Bank) to the
      following address (or at any number(s) designated by the Issuing Bank by written
      notice delivered to the Beneficiary), as applicable: [please
      provide].

     

    
      
        
        

      

      
        -54-

        
          

        

      

      
        
        

      

    

    11. This
      Standby Letter of Credit is subject to the Uniform Customs and Practice for
      Documentary Credits (1993 Revision), International Chamber of Commerce,
      Publication No. 500 (the “UCP”).
      This
      Standby Letter of Credit shall be governed by the laws of the State of New
      York,
      and the state and federal courts located in the State, County and City of New
      York shall have non-exclusive jurisdiction in any action or proceeding arising
      out of this Standby Letter of Credit.

     

    12. Demand
      for payment under this Standby Letter of Credit shall be presented directly
      to
      the Issuing Bank and shall not be negotiated.

     

    13. Standard
      Bank Plc’s charges are for the account of the Applicant, all other charges are
      for the account of the Beneficiary.

     

    14. By
      paying
      the Beneficiary an amount demanded in accordance with this Standby Letter of
      Credit, the Issuing Bank makes no representation as to the correctness of the
      amount demanded or of the calculations and representations of the Beneficiary
      required by this Letter of Credit.

     

    15. This
      Standby Letter of Credit sets forth in full the Issuing Bank’s undertaking, and
      such undertaking shall not be deemed in any way to be modified, amended,
      amplified or otherwise affected by any document, instrument or agreement
      referred to herein (including, without limitation, the Colombian Participation
      Agreement or credit agreement to which is relates), except only the Uniform
      Customs and the certificate(s) provided for herein.

    

      
        	
                STANDARD
                  BANK PLC

              
	 
                	 
                
	
                By:
                  

              	 
                
	
                Title:
                  

              	 
                
	 	 
	 	 
	
                By:
                  

              	
                 

              
	
                Title:

              	
                 

              

      

    

     

    
      
        
        

      

      
        -55-

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    Irrevocable
      Letter of Credit

    No.
        

     

    CERTIFICATE
      FOR A PAYMENT DEFAULT

     

    The
      undersigned hereby certifies to Standard Bank PLC (the “Issuing
      Bank”),
      with
      reference to Irrevocable Letter of Credit No. _______ (the “Letter
      of Credit”)
      issued
      by the Issuing Bank in favor of Crosby Capital, LLC (the “Beneficiary”),
      and
      fur the account of Gran Tierra Energy Inc. (the “Account
      Party”),
      that
      the undersigned is a duly authorized officer of the Beneficiary, that any
      capitalized term used but not defined herein shall have its respective meaning
      set forth in the Letter of Credit or the Colombian Participation ion Agreement
      referred to therein and that:

     

    The
      Beneficiary is entitled to draw $[ 
      ] (the
“Draw
      Amount”)
      under
      the Letter of Credit, which is the exact amount that is owed to the Beneficiary
      under the Colombian Participation Agreement. The Beneficiary hereby directs
      the
      Issuing Bank to pay the Draw Amount by wire transfer of such amount in
      immediately available funds to the account of the Beneficiary specified
      below:

     

    Bank
      Name:

    Address:

    ABA
      No.:

    Account
      Name:

    Account
      No.:

    Attention:

     

    [Include
      either [A] or [B].]

     

    
      	
            	[A]	
              [The
                Beneficiary further certifies to the Issuing Bank that attached hereto
                is
                the written agreement of the Account Party acknowledging that the
                Draw
                Amount is due to the Beneficiary under the Colombian Participation
                Agreement and that the Account Party and its affiliates have failed
                to
                make such payment.]

            

    

     

    
      	
            	[B]	
              [Include
                either [1] or [2]]

            

    

     

    [(1)]
      [The Beneficiary further certifies to the Issuing Bank that:

     

    (a) an
      award
      of the Panel provided in Section 11.2 of the Colombian Participation Agreement,
      provided for payment of the Draw Amount to the Beneficiary (the “Crosby
      Arbitration Award”);
      and

     

    (b) within
      10
      business days of the Crosby Arbitration Award, (i) the Crosby Arbitration Award
      has not been paid and (ii) the Crosby Arbitration Award has not been
      appealed.]

     

    [(2)]
      [The Beneficiary further certifies to the Issuing Bank that:

     

    (a)
      an
      award of the Panel provided in Section 11.2 of the Colombian Participation
      Agreement, provided for payment of the Draw Amount to the Beneficiary (the
      “Crosby
      Arbitration Award”);

     

    
      
        
        

      

      
        -56-

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    Irrevocable
      Letter of Credit

    
      No.
          

       

    

    (b) within
      10
      business days of the Crosby Arbitration Award, (i) the Crosby Arbitration Award
      was not paid and (ii) the Crosby Arbitration Award was appealed;

     

    (c) a
      final
      determination of the Crosby Arbitration Award favorable to the Beneficiary
      has
      been entered (the “Crosby
      Final Determination”)
      on
      appeal; and

     

    (d) the
      Beneficiary has not been paid in full the amount of the Crosby Final
      Determination within 5 business days of such Crosby Final
      Determination.]

     

    IN
      WITNESS WHEREOF, the Beneficiary has executed and delivered this Certificate
      as
      of the ___ day of _____, ______.

     

    
      	CROSBY
              CAPITAL, LLC
	 	 
	
              By:

            	 
              	
            
	
              Title:

            	 
	 

    

     

    
      
        
        

      

      
        -57-

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

    Irrevocable
      Letter of Credit

    No.   

     

     

    CERTIFICATE
      FOR A LETTER OF CREDIT RENEWAL DEFAULT

     

    The
      undersigned hereby certifies to Standard Bank PLC (the “Issuing
      Bank”),
      with
      reference to Irrevocable Letter of Credit No. ____ (the “Letter
      of Credit”)
      issued
      by the Issuing Bank in favor of Crosby Capital, LLC (the “Beneficiary”),
      and
      for the account of Gran Tierra Energy Inc. (the “Account
      Party”),
      that
      the undersigned is a duly authorized officer of the Beneficiary, that any
      capitalized term used but not defined herein shall have its respective meaning
      set forth in the Letter of Credit or the Colombian Participation Agreement
      referred to therein and that:

     

    The
      Beneficiary is entitled to draw the Letter of Credit in full and deposit the
      Stated Amount in the escrow account at the Crosby Escrow Bank specified below
      (the “Escrow
      Account”).
      The
      Crosby Escrow Agreement has been executed by each of the Beneficiary and the
      Crosby Escrow Bank, and contains the provisions required by the Colombian
      Participation Agreement. A copy of such executed Crosby Escrow Agreement is
      delivered herewith. The Beneficiary hereby directs the Issuing Bank to pay
      the
      Stated Amount under the Letter of Credit by wire transfer of such amount in
      immediately available finds directly to the Escrow Account, as
      follows:

     

    Bank
      Name:

    Address:

    ABA
      No.:

    Account
      Name:

    Account
      No.:

    Attention:

     

    [Include
      either [A] or [B].]

     

    
      	
            	[A]	
              The
                Beneficiary hereby further certifies to the Issuing Bank that: (1)
                the
                Initial Term has not expired; and (2) the Account Party has failed
                to
                extend the Expiry Date of the Letter of Credit for an additional
                one year,
                pursuant to Section 9 of the Letter of
                Credit.]

            

    

     

    
      	
            	[B]	
              The
                Beneficiary hereby further certifies
                that:

            

    

     

    
      	 	
              (1)

            	
              not
                less than 60 days nor more than 90 days prior to the Stated Termination
                Date, the Beneficiary delivered written notice to the Account Party
                that
                the Account Party is required under Section 6 of the Participation
                Agreement to deliver to the Beneficiary confirmation of an extension
                of
                the Letter of Credit for an additional period equal to the shorter
                of (i)
                one year from the Stated Termination Date and (ii) the period ending
                on
                the last day of the Initial Term;
                and

            

    

     

    
      	 	
              (2)

            	
              the
                Account Party has not provided such an extension of the Letter of
                Credit
                prior to the date that is 10 Business Days following the date which
                is 60
                days prior to the Stated Termination
                Date.]

            

    

     

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

    Exhibit
      B

    Irrevocable
      Letter of Credit

    No.   

     

    IN
      WITNESS WHEREOF, the Beneficiary has executed and delivered this Certificate
      as
      of the ___ day of ______, ______.

     

    
      	
              CROSBY
                CAPITAL, LLC

            
	 
	
              By:
                

            	 
              	
            
	
              Title:
                

            	 
              	
            

    

     

    
      
        
        

      

      
        -59-

        
          

        

      

      
        
        

      

    

    Exhibit
      C

    Irrevocable
      Letter of Credit

    No.   

     

    CERTIFICATE
      FOR A LETTER OF CREDIT REINSTATEMENT DEFAULT

     

    The
      undersigned hereby certifies to Standard Bank PLC (the “issuing
      Bank”),
      with
      reference to Irrevocable Letter of Credit No. ______ (the “Letter
      of Credit”)
      issued
      by the Issuing Bank in favor of Crosby Capital, LLC (the “Beneficiary”),
      and
      for the account of Gran Tierra Energy Inc. (the “Account
      Party”),
      that
      the undersigned is a duly authorized officer of the Beneficiary, that any
      capitalized term used but not defined herein shall have its respective meaning
      set forth in the Letter of Credit or the Colombian Participation Agreement
      referred to therein and that:

     

    The
      Beneficiary is entitled to draw the remaining undrawn portion of the Stated
      Amount of the Letter of Credit (the “Remaining
      Amount”)
      and
      deposit the Remaining Amount in the escrow account at the Crosby Escrow Bank
      specified below (the “Escrow
      Account”).
      The
      Crosby Escrow Agreement has been executed by each of the Beneficiary and the
      Crosby Escrow Bank, and contains the provisions required by the Colombian
      Participation Agreement. A copy of such executed Crosby Escrow Agreement is
      delivered herewith. The Beneficiary hereby directs the Issuing Bank to pay
      the
      Remaining Amount under the Letter of Credit by wire transfer of such amount
      in
      immediately available funds directly to the Escrow Account, as
      follows:

     

    Bank
      Name:

    Address:

    ABA
      No.:

    Account
      Name:

    Account
      No.:

    Attention:

     

    The
      Beneficiary hereby further certifies that, following a prior draw under a Letter
      of Credit, the Account Party has failed to deliver a new letter of credit to
      the
      Beneficiary in the amount of such draw within 45 days of such draw as required
      by the Columbian Participation Agreement.

     

    IN
      WITNESS WHEREOF, the Beneficiary has executed and delivered this Certificate
      as
      of the ____ day of _____, ______.

    
       

      
        	
                CROSBY
                  CAPITAL, LLC

              
	 
	
                By:
                  

              	 
                	
              
	
                Title:
                  

              	 
                	
              

      

    

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

    

    CERTIFICATE
      FOR AN ISSUING BANK CREDIT

    RATING
      NON-MAINTENANCE DEFAULT

     

    The
      undersigned hereby certifies to Standard Bank PLC (the “Issuing
      Bank”),
      with
      reference to Irrevocable Letter of Credit No. ______ (the “Letter
      of Credit”)
      issued
      by the Issuing Bank in favor of Crosby Capital, LLC (the “Beneficiary”),
      and
      for the account of Gran Tierra Energy Inc. (the “Account
      Party”).
      that
      the undersigned is a duly authorized officer of the Beneficiary, that any
      capitalized term used but not defined herein shall have its respective meaning
      set forth in the Letter of Credit or the Colombian Participation Agreement
      referred to therein and that:

     

    The
      Beneficiary is entitled to draw the Letter of Credit in full and deposit the
      Stated Amount in the escrow account at the Crosby Escrow Bank specified below
      (the “Escrow
      Account”).
      The
      Crosby Escrow Agreement has been executed by each of the Beneficiary and the
      Crosby Escrow Bank, and contains the provisions required by the Colombian
      Participation Agreement. A copy of such executed Crosby Escrow Agreement is
      delivered herewith. The Beneficiary hereby directs the Issuing Bank to pay
      the
      Stated Amount under the Letter of Credit by wire transfer of such amount in
      immediately available funds directly to the Escrow Account, as
      follows:

     

    Bank
      Name:

    Address:

    ABA
      No.:

    Account
      Name:

    Account
      No.:

    Attention:

    The
      Beneficiary hereby further certifies that:

     

    
      	 	
              A.

            	
              the
                Beneficiary delivered written notice to the Account Party that the
                Issuing
                Bank’s credit rating has fallen below the Issuer Acceptable Credit Rating
                and requested delivery of a replacement Letter of Credit as required
                under
                Section 6 of the Participation Agreement;
                and

            

    

     

    
      	 	
              B.

            	
              the
                Account Party has not within 15 business days following receipt of
                such
                notice provided such a replacement Letter of
                Credit.

            

    

     

    IN
      WITNESS WHEREOF, the Beneficiary has executed and delivered this Certificate
      as
      of the

     

    ____
      day
      of ______, _______.

    
       

      
        	
                CROSBY
                  CAPITAL, LLC

              
	 
	
                By:
                  

              	 
                	
              
	
                Title:
                  

              	 
                	
              

      

       

      
        
          
          

        

        
          -61-

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