Document:

Unassociated Document

    
      EXHIBIT
        10.18

    

    

      SECURITIES
        PURCHASE AGREEMENT

       

      by
        and
        between

       

      GRAN
        TIERRA ENERGY INC. and

       

      CROSBY
        CAPITAL, LLC

       

      May
        25,
        2006

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                ARTICLE
                  I

              	
                SALE
                  AND TRANSFER OF ARGOSY INTERESTS; CLOSING

              	
                1

              
	
                1.1

              	
                Argosy
                  Interests

              	
                1

              
	
                1.2

              	
                Purchase
                  Price 

              	
                1

              
	
                1.3

              	
                Closing

              	
                2

              
	
                1.4

              	
                Closing
                  Obligations

              	
                2

              
	
                1.5

              	
                Calculation
                  of Restricted Stock

              	
                3

              
	
                1.6

              	
                Closing
                  Date Cash Payment Adjustment

              	
                3

              
	
                1.7

              	
                Administration
                  of Tax Matters

              	
                4

              
	
                1.8

              	
                Allocation
                  of Purchase Price

              	
                5

              
	
                1.9

              	
                Certain
                  Taxes and Fees

              	
                5

              
	
                1.10

              	
                Payment
                  to Aviva Overseas, Inc

              	
                5

              
	
                1.11

              	
                Colombian
                  Participation Agreement Covenants

              	
                6

              
	
                ARTICLE
                  II

              	
                DEFINITIONS

              	
                7

              
	
                ARTICLE
                  III

              	
                REPRESENTATIONS
                  AND WARRANTIES OF CROSBY RELATED TO ARGOSY

              	
                15

              
	
                3.1

              	
                Organization
                  and Good Standing

              	
                15

              
	
                3.2

              	
                Subsidiaries

              	
                15

              
	
                3.3

              	
                Directors;
                  Officers

              	
                15

              
	
                3.4

              	
                Authority;
                  No Conflict

              	
                15

              

      

      
        	
                3.5

              	
                Capitalization

              	
                16

              
	
                3.6

              	
                Financial
                  Statements

              	
                16

              
	
                3.7

              	
                Books
                  and Records

              	
                17

              
	
                3.8

              	
                Title
                  to Properties; Liens

              	
                17

              
	
                3.9

              	
                Oil
                  and Gas Contracts

              	
                18

              
	
                3.10

              	
                Wells

              	
                18

              
	
                3.11

              	
                Owned
                  and Leased Tangible Personal Property

              	
                18

              
	
                3.12

              	
                Accounts
                  Receivable

              	
                18

              
	
                3.13

              	
                Inventory

              	
                18

              
	
                3.14

              	
                Taxes

              	
                19

              
	
                3.15

              	
                No
                  Material Adverse Change

              	
                19

              
	
                3.16

              	
                Employee
                  Benefits

              	
                20

              

      

      

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

            

            

            TABLE
              OF CONTENTS

             

          

        
 

      
        	
                3.17

              	
                Compliance
                  with Legal Requirements; Governmental Authorizations

              	
                20

              
	
                3.18

              	
                Legal
                  Proceedings; Orders

              	
                20

              
	
                3.19

              	
                Absence
                  of Certain Changes and Events

              	
                21

              
	
                3.20

              	
                Contracts;
                  No Defaults

              	
                21

              
	
                3.21

              	
                Insurance

              	
                24

              
	
                3.22

              	
                Environmental
                  Matters

              	
                24

              
	
                3.23

              	
                Employees

              	
                25

              
	
                3.24

              	
                Labor
                  Relations; Compliance

              	
                26

              
	
                3.25

              	
                Intellectual
                  Property

              	
                26

              
	
                3.26

              	
                Brokers
                  or Finders

              	
                27

              
	
                3.27

              	
                No
                  Undisclosed Liabilities

              	
                27

              
	
                3.28

              	
                Transactions
                  with Affiliates

              	
                27

              
	
                3.29

              	
                Customers
                  and Suppliers

              	
                28

              
	
                3.30

              	
                Certain
                  Payments

              	
                28

              
	
                3.31

              	
                Bank
                  and Brokerage Accounts; Investment Assets

              	
                28

              
	
                3.32

              	
                No
                  Argosy Debt

              	
                29

              
	
                3.33

              	
                Argosy
                  Interests

              	
                29

              
	
                3.34

              	
                Disclosure

              	
                29

              
	
                3.35

              	
                Representations
                  and Warranties Exclusive

              	
                29

              
	
                ARTICLE
                  IV

              	
                REPRESENTATIONS
                  AND WARRANTIES REGARDING AEC 

              	
                30

              
	
                4.1

              	
                Organization
                  and Good Standing

              	
                30

              
	
                4.2

              	
                General
                  Partner

              	
                30

              
	
                4.3

              	
                Partnership
                  Interest

              	
                30

              
	
                4.4

              	
                Directors;
                  Officers

              	
                31

              
	
                4.5

              	
                Authority;
                  No Conflict

              	
                31

              
	
                4.6

              	
                Capitalization

              	
                31

              
	
                4.7

              	
                Business

              	
                32

              
	
                4.8

              	
                Taxes

              	
                32

              
	
                4.9

              	
                Compliance
                  with Legal Requirements; Governmental Authorizations

              	
                33

              
	
                4.10

              	
                Legal
                  Proceedings; Orders

              	
                33

              

      

      

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

          

          

          TABLE
            OF CONTENTS

           

        

      

      

      
        	
                4.11

              	
                No
                  Undisclosed Liabilities

              	
                33

              
	
                4.12

              	
                No
                  AEC Debt

              	
                33

              
	
                4.13

              	
                Brokers
                  or Finders

              	
                33

              
	
                4.14

              	
                Transactions
                  with Affiliates

              	
                33

              
	
                4.15

              	
                Disclosure

              	
                34

              
	
                ARTICLE
                  V

              	
                REPRESENTATIONS
                  AND WARRANTIES REGARDING CROSBY

              	
                34

              
	
                5.1

              	
                Organization
                  and Good Standing

              	
                34

              
	
                5.2

              	
                Authority;
                  No Conflict

              	
                34

              
	
                5.3

              	
                Argosy
                  Interests

              	
                35

              
	
                5.4

              	
                Legal
                  Proceedings

              	
                35

              
	
                5.5

              	
                Brokers
                  or Finders

              	
                35

              
	
                5.6

              	
                Investment
                  Representations

              	
                36

              
	
                5.7

              	
                Non-Foreign
                  Person

              	
                37

              
	
                5.8

              	
                No
                  Knowledge of Claims

              	
                37

              
	
                ARTICLE
                  VI

              	
                REPRESENTATIONS
                  AND WARRANTIES OF GTEI

              	
                38

              
	
                6.1

              	
                Organization
                  and Good Standing

              	
                38

              
	
                6.2

              	
                Authority;
                  No Conflict

              	
                38

              
	
                6.3

              	
                Legal
                  Proceedings; Orders

              	
                38

              
	
                6.4

              	
                Brokers
                  or Finders

              	
                39

              
	
                6.5

              	
                Capital
                  Stock

              	
                39

              
	
                6.6

              	
                Colombian
                  Nexus

              	
                39

              
	
                6.7

              	
                Reports
                  and Financial Statements

              	
                39

              
	
                6.8

              	
                No
                  Actual Knowledge of Breaches

              	
                40

              
	
                6.9

              	
                GTEI
                  Investment Representations and Warranties

              	
                40

              
	
                ARTICLE
                  VII

              	
                COVENANTS
                  OF CROSBY

              	
                41

              
	
                7.1

              	
                Access
                  and Investigation

              	
                41

              
	
                7.2

              	
                Operation
                  of the Business of Argosy

              	
                41

              
	
                7.3

              	
                Negative
                  Covenants

              	
                42

              
	
                7.4

              	
                Notification

              	
                44

              
	
                7.5

              	
                No
                  Negotiation

              	
                44

              
	
                7.6

              	
                Related
                  Party Obligations

              	
                45

              
	
                7.7

              	
                Covenant
                  Not To Compete; Non-Solicitation

              	
                45

              

      

      

        
          
            
            

          

          
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            TABLE
              OF CONTENTS

             

          

        
 

      
        	
                ARTICLE
                  VIII

              	
                COVENANTS
                  OF GTEI

              	
                46

              
	
                8.1

              	
                Notification

              	
                46

              
	
                8.2

              	
                Activities
                  in Colombia

              	
                47

              
	
                ARTICLE
                  IX

              	
                COVENANTS
                  OF THE PARTIES

              	
                47

              
	
                9.1

              	
                Required
                  Approval

              	
                47

              
	
                9.2

              	
                Litigation
                  Support

              	
                47

              
	
                9.3

              	
                Further
                  Assurances

              	
                47

              
	
                9.4

              	
                Press
                  Releases; Public Announcements

              	
                48

              
	
                9.5

              	
                Confidentiality

              	
                48

              
	
                ARTICLE
                  X

              	
                CONDITIONS
                  PRECEDENT TO GTEI’S OBLIGATION TO CLOSE

              	
                48

              

      

      
        	
                10.1

              	
                Accuracy
                  of Representations

              	
                48

              
	
                10.2

              	
                Crosby’s
                  Performance

              	
                49

              
	
                10.3

              	
                Consents

              	
                49

              
	
                10.4

              	
                Additional
                  Documents

              	
                49

              
	
                10.5

              	
                No
                  Proceedings

              	
                49

              
	
                10.6

              	
                No
                  Prohibition

              	
                49

              
	
                10.7

              	
                No
                  Material Adverse Change

              	
                50

              
	
                10.8

              	
                Private
                  Placement Offering

              	
                50

              
	
                ARTICLE
                  XI

              	
                CONDITIONS
                  PRECEDENT TO CROSBY’ OBLIGATIONS TO CLOSE

              	
                50

              
	
                11.1

              	
                Accuracy
                  of Representations

              	
                50

              
	
                11.2

              	
                GTEI’s
                  Performance

              	
                50

              
	
                11.3

              	
                Consents

              	
                51

              
	
                11.4

              	
                Additional
                  Documents

              	
                51

              
	
                11.5

              	
                No
                  Proceedings

              	
                51

              
	
                11.6

              	
                No
                  Prohibition

              	
                51

              
	
                ARTICLE
                  XII

              	
                TERMINATION

              	
                51

              
	
                12.1

              	
                [Intentionally
                  Omitted]

              	
                51

              
	
                12.2

              	
                Termination

              	
                51

              
	
                12.3

              	
                Final
                  Termination

              	
                52

              

      

      

        
          
            
            

          

          
            iv

            
              

            

          

          
            
            

            

            

            TABLE
              OF CONTENTS

             

          

        
 

      
        	
                12.4

              	
                Effect
                  of Termination

              	
                52

              
	
                12.5

              	
                Break
                  Up Fee

              	
                53

              
	
                12.6

              	
                Post
                  Termination Covenants

              	
                53

              
	
                ARTICLE
                  XIII

              	
                INDEMNIFICATION;
                  REMEDIES

              	
                53

              

      

      
        	
                13.1

              	
                Survival
                  and Time Limitations

              	
                53

              
	
                13.2

              	
                Indemnification
                  and Payment of Damages by Crosby

              	
                54

              
	
                13.3

              	
                Indemnification
                  and Payment of Damages by GTEI

              	
                54

              
	
                13.4

              	
                Limitations
                  on Amount

              	
                55

              
	
                13.5

              	
                Procedure
                  for Indemnification - Third Party Claims

              	
                55

              
	
                13.6

              	
                Procedure
                  for Indemnification - Other Claims

              	
                57

              
	
                13.7

              	
                Threshold
                  Accounting

              	
                57

              
	
                13.8

              	
                Sole
                  Remedy

              	
                57

              
	
                13.9

              	
                Effect
                  of GTEI Knowledge

              	
                57

              
	
                ARTICLE
                  XIV

              	
                GENERAL
                  PROVISIONS

              	
                58

              
	
                14.1

              	
                Expenses

              	
                58

              
	
                14.2

              	
                Notices

              	
                58

              
	
                14.3

              	
                Dispute
                  Resolution

              	
                59

              
	
                14.4

              	
                Waiver

              	
                60

              
	
                14.5

              	
                Entire
                  Agreement

              	
                61

              
	
                14.6

              	
                Amendments

              	
                61

              
	
                14.7

              	
                Third
                  Party Beneficiaries

              	
                61

              
	
                14.8

              	
                Assignment

              	
                61

              
	
                14.9

              	
                Severability

              	
                61

              
	
                14.10

              	
                Section,
                  Article and Part Headings

              	
                62

              

      

      
        
          	
                  14.11

                	
                  Construction;
                    Interpretation

                	
                  62

                
	
                  14.12

                	
                  Governing
                    Law

                	
                  62

                
	
                  14.13

                	
                  Counterparts
                    and Facsimile Signatures

                	
                  62

                
	
                  14.14

                	
                  GTEI
                    Waiver of Consumer Protection Laws

                	
                  62

                
	
                  ARTICLE
                    XV

                	
                  SPECIAL
                    INDEMNITIES

                	
                  62

                
	
                  15.1

                	
                  Indemnity
                    With Respect to Securities Offering

                	
                  62

                
	
                  15.2

                	
                  Indemnity
                    of Officers and Directors of AEC

                	
                  63

                

        

      
        
          
          

        

        
          v

          
            

          

        

        
          
          

          

          

          TABLE
            OF CONTENTS

           

        

      

      

       

      

        
          	
                  EXHIBITS

                	 
	 	 
	
                  Exhibit
                    A: 

                	
                  List
                    of Argosy Interests.

                
	
                  Exhibit
                    B: 

                	
                  Form
                    Colombian Participation Agreement.

                
	
                  Exhibit
                    C: 

                	
                  Form
                    Registration Rights Agreement. 

                
	
                  Exhibit
                    D: 

                	
                  Form
                    of Escrow Agreement. 

                
	
                  Exhibit
                    E:

                	
                  Map
                    of POPA Prospect Area. 

                
	
                  Exhibit
                    1.8: 

                	
                  Allocation
                    of Purchase Price for Tax Purposes.

                
	
                  Exhibit
                    1.9: 

                	
                  Form
                    FIRPTA Certificates. 

                
	
                  Exhibit
                    7.7: 

                	
                  Crosby’s
                    Non-Competition Territory.

                
	
                  Exhibit
                    10.4-1:

                	Form
                  Legal Opinion of Glast, Phillips & Murray,
                  P.C.
	
                  Exhibit
                    10.4-2:

                	
                  Form
                    Legal Opinion of Snell & Wilmer L.L.P.

                
	 	 
	
                  SCHEDULES
                    PROVIDED BY CROSBY

                
	 	 
	
                  Schedule
                    1.7: 

                	
                  Information
                    for Argosy’s tax returns.

                
	
                  Schedule
                    2.53: 

                	
                  Historical
                    Properties.

                
	
                  Schedule
                    2.68: 

                	
                  Oil
                    and Gas Contracts.

                
	
                  Schedule
                    2.81: 

                	
                  Liens.

                
	
                  Schedule
                    3.2(a): 

                	
                  Argosy
                    Subsidiaries.

                
	
                  Schedule
                    3.3: 

                	
                  Argosy
                    Directors and Officers

                
	
                  Schedule
                    3.4(a) 

                	
                  No
                    Conflict. 

                
	
                  Schedule
                    3.4(b): 

                	
                  Consents.
                    

                
	
                  Schedule
                    3.5: 

                	
                  Capitalization.

                
	
                  Schedule
                    3.6(a)-1: 

                	
                  December
                    31, 2003 Audited Financials.

                
	
                  Schedule
                    3.6(a)-2: 

                	
                  December
                    31, 2004 Audited Financials.

                
	
                  Schedule
                    3.6(a)-3: 

                	
                  December
                    31, 2005 Audited Financials

                
	
                  Schedule
                    3.6(a)-4: 

                	
                  March
                    31, 2006 Unaudited Financials.

                
	
                  Schedule
                    3.6(b):

                	
                  Non-GAAP
                    Audited Financial Statements. 

                
	
                  Schedule
                    3.6(c):

                	
                  Non-GAAP
                    Interim Financial Statements. 

                
	
                  Schedule
                    3.8(a): 

                	
                  Real
                    Property.

                
	
                  Schedule
                    3.8(b): 

                	
                  Permitted
                    Liens. 

                
	
                  Schedule
                    3.8(c): 

                	
                  Subleases
                    and Licenses.

                
	
                  Schedule
                    3.9: 

                	
                  Oil
                    and Gas Contracts

                
	
                  Schedule
                    3.10: 

                	
                  Oil
                    and Gas Wells.

                
	
                  Schedule
                    3.11: 

                	
                  Tangible
                    Personal Property.

                
	
                  Schedule
                    3.12: 

                	
                  Accounts
                    Receivable.

                
	
                  Schedule
                    3.14: 

                	
                  Argosy’s
                    Tax and Employer ID Numbers.

                
	
                  Schedule
                    3.16: 

                	
                  Argosy
                    Benefit Plans.

                
	
                  Schedule
                    3.18(a): 

                	
                  Pending
                    Proceedings.

                
	
                  Schedule
                    3.18(b): 

                	
                  Orders.
                    

                
	
                  Schedule
                    3.19: 

                	
                  Business
                    Operations not in the Ordinary Course.

                
	
                  Schedule
                    3.20(a): 

                	
                  Contracts,
                    and Additional Expenses, Accruing to Argosy as a result of the
                    Contemplated Transactions. 

                

        

        
          
            
              
                

                 

              

              
              

            

            
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                TABLE
                  OF CONTENTS

                 

              

            

          

 

        
          	
                  Schedule
                    3.20(a)(i): 

                	
                  Services,
                    goods or materials by Argosy.

                
	
                  Schedule
                    3.20(a)(ii): 

                	
                  Services,
                    goods or materials to Argosy.

                
	
                  Schedule
                    3.20(a)(iii): 

                	
                  Contracts
                    not in the ordinary course.

                
	
                  Schedule
                    3.20(a)(iv):

                	
                  Lease,
                    rental, occupancy, license, etc.

                
	
                  Schedule
                    3.20(a)(v): 

                	
                  JV,
                    Partnership, etc., Agreements.

                
	
                  Schedule
                    3.20(a)(vi): 

                	
                  Commission
                    Payment Agreements.

                
	
                  Schedule
                    3.20(a)(vii):

                	
                  Warrants,
                    Guarantees, etc. 

                
	
                  Schedule
                    3.20(a)(viii): 

                	Employment
                  termination or retirement with ongoing payment
                  obligations.
	
                  Schedule
                    3.20(a)(ix): 

                	
                  Loans
                    and Loan Guaranties.

                
	
                  Schedule
                    3.20(a)(x): 

                	
                  Intellectual
                    Property Contracts.

                
	
                  Schedule
                    3.20(a)(xi): 

                	
                  Change
                    of Control Arguments.

                
	
                  Schedule
                    3.20(a)(xii):

                	
                  Restrictions
                    on Argosy Competition.

                
	
                  Schedule
                    3.20(a)(xiii):

                	
                  Agreements
                    which default would cause a MAC.

                
	
                  Schedule
                    3.20(a)(xiv):

                	
                  List
                    of Agreements with Consideration in Excess of $250,000.

                
	
                  Schedule
                    3.20(a)(xv):

                	
                  Agreements
                    that would Delay or Prohibit the Contemplated
                    Transactions.

                
	
                  Schedule
                    3.20(a)(xvi):

                	
                  Non-Colombian
                    Contracts.

                
	
                  Schedule
                    3.20(a)(xvii):

                	
                  Amendments,
                    Supplements and Modifications.

                
	
                  Schedule
                    3.21(a):

                	
                  List
                    of Insurance Policies.

                
	
                  Schedule
                    3.21(b): 

                	
                  Validity
                    of and Premium Adjustments to Insurance Policies.

                
	
                  Schedule
                    3.21(e): 

                	
                  Self-Insurance
                    Policies.

                
	
                  Schedule
                    3.22: 

                	
                  Environmental
                    Matters.

                
	
                  Schedule
                    3.22(e): 

                	
                  List
                    of Environmental Permits.

                
	
                  Schedule
                    3.23(a): 

                	
                  Employees
                    and Directors.

                
	
                  Schedule
                    3.24(a): 

                	
                  Collective
                    Bargaining, Labor Contracts, and Outstanding Employee
                    Obligations.

                
	
                  Schedule
                    3.24(b):

                	
                  List
                    of Former Employees to whom Outstanding Obligations are
                    Owed.

                
	
                  Schedule
                    3.25(a): 

                	
                  List
                    of Owned Intellectual Property.

                
	
                  Schedule
                    3.25(c): 

                	
                  Owned
                    Patents.

                
	
                  Schedule
                    3.25(d): 

                	
                  Owned
                    Registered Marks.

                
	
                  Schedule
                    3.25(e): 

                	
                  Owned
                    Registered Copyrights.

                
	
                  Schedule
                    3.26: 

                	
                  Brokers
                    and Finders.

                
	
                  Schedule
                    3.27: 

                	
                  Undisclosed
                    Liabilities.

                
	
                  Schedule
                    3.28: 

                	
                  Affiliate
                    Transactions.

                
	
                  Schedule
                    3.29: 

                	
                  Customers
                    and Suppliers.

                
	
                  Schedule
                    3.31: 

                	
                  Bank
                    and Brokerage Accounts.

                
	
                  Schedule
                    3.32: 

                	
                  Argosy
                    Debt.

                
	
                  Schedule
                    4.4: 

                	
                  AEC
                    Officers And Directors.

                
	
                  Schedule
                    4.5(b): 

                	
                  AEC
                    Agreements Conflicting with the Contemplated
                    Transactions.

                
	
                  Schedule
                    4.5(c): 

                	
                  AEC
                    Required Consents.

                
	
                  Schedule
                    4.8: 

                	
                  AEC’s
                    tax indentification number.

                
	
                  Schedule
                    4.10: 

                	
                  Pending
                    Proceedings of AEC.

                
	
                  Schedule
                    4.13: 

                	
                  Broker
                    and Finder Fees.

                
	
                  Schedule
                    4.14: 

                	
                  Transactions
                    with AEC Affiliates.

                
	
                  Schedule
                    5.2(b): 

                	
                  Notice
                    or Consent.

                

        

        
          
            
              
                

                 

              

              
              

            

            
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                TABLE
                  OF CONTENTS

                 

              

            

          

 

        
          	
                  Schedule
                    5.3: 

                	
                  Argosy
                    Interests not Owned by Crosby.

                
	
                  Schedule
                    5.4: 

                	
                  Legal
                    Proceedings.

                
	
                  Schedule
                    5.5: 

                	
                  Brokers
                    and Finders

                
	
                  Schedule
                    7.3(r): 

                	
                  Related
                    Party Transactions.

                
	
                  Schedule
                    7.6: 

                	
                  Related
                    Party Obligations.

                
	
                  Schedule
                    13.3: 

                	
                  Crosby
                    Indemnified Persons.

                
	
                  Schedule
                    15.2: 

                	
                  AEC
                    Indemnified Persons. 

                
	 	 
	
                  SCHEDULES
                    PROVIDED BY GTEI

                
	 	 
	
                  Schedule
                    6.2(b): 

                	
                  Notice
                    or Consent.

                
	
                  Schedule
                    6.4: 

                	
                  Brokers
                    and Finders.

                
	
                  Schedule
                    6.5: 

                	
                  Outstanding
                    Convertible Securities of Gran
                    Tierra.

                

        

      

      

      

      
        
          
            

             

          

          
          

        

        
          viii

          
            

          

        

        
          
          

        

      

      SECURITIES
        PURCHASE AGREEMENT

       

      This
        Securities Purchase Agreement (this “Agreement”)
        is
        made as of May 25, 2006, by and between Gran Tierra Energy Inc., a Nevada
        corporation with Federal Employer Identification Number 98-0479924
        (“GTEI”)
        and
        Crosby Capital, LLC, a Texas limited liability company (“Crosby”).
        GTEI
        and Crosby are each hereinafter referred to individually as a “Party”
and
        collectively as the “Parties.”

       

      RECITALS

       

      WHEREAS,
        GTEI desires to purchase (i) all of the limited partnership interests of
        Argosy Energy International, a Utah limited partnership (“Argosy”),
        (ii) all of the outstanding capital stock of Argosy Energy Corp., a
        Delaware corporation (“AEC”)
        and
        (iii) all of Crosby’s rights with respect to Crosby’s original purchase of
        debt and related exchange of such debt for interests in Argosy (the
“Original
        Purchase Documents,”
and
        collectively, and as set forth on Exhibit
        A
        attached
        hereto, the “Argosy
        Interests”)
        and
        Crosby desires to sell the Argosy Interests to GTEI, for the consideration
        and
        on the terms set forth in this Agreement. 

       

      AGREEMENT

       

      NOW
        THEREFORE, based on the recitals set forth above, the promises contained
        in this
        Agreement and other good and valuable consideration, the receipt and sufficiency
        of which are hereby confirmed, the parties, intending to be legally bound,
        hereby agree as follows:

       

      ARTICLE
        I

       

      Sale
        and Transfer of Argosy Interests; Closing

       

      1.1 Argosy
        Interests.

       

      Subject
        to the terms and conditions of this Agreement, at the Closing, Crosby shall
        sell, transfer and assign to GTEI the Argosy Interests, and GTEI shall purchase
        such Argosy Interests from Crosby.

       

      1.2 Purchase
        Price .

       

      The
        purchase price (the “Purchase
        Price”)
        for
        the Argosy Interests shall be equal to Forty-Two Million Dollars
        ($42,000,000.00), payable in the following form: (a) a cash payment of
        Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000.00) at the
        Closing (the “Closing
        Date Cash Payment”);
        (b) shares of Restricted Stock with a value of Three Million Five Hundred
        Thousand Dollars ($3,500,000.00), calculated pursuant to Section 1.5 hereof,
        to
        be issued at the Closing; and (c) participation rights in the Colombian
        assets of Argosy, deemed by the parties hereto to have a value of One Million
        Dollars ($1,000,000.00), as set forth in the Colombian Participation Agreement
        attached as Exhibit
        B
        to this
        Agreement. The Purchase Price shall be reduced in the amount of the Excess
        Partner Distribution, calculated pursuant to Section 1.6 hereof, and in the
        amount of any Crosby Expenses paid by Argosy. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      1.3 Closing.

       

      The
        purchase and sale of the Argosy Interests (the “Closing”)
        provided for in this Agreement shall take place at the offices of GTEI’s
        counsel, McGuireWoods LLP, at 1345 Avenue of the Americas, New York, New
        York,
        at 10:00 a.m. (local time) on the date agreed to by GTEI and Crosby. The
        date on
        which the Closing actually takes place is referred to herein as the
“Closing
        Date.”
GTEI
        shall provide prior written notice of the Closing to Crosby at least five
        (5)
        business days prior to the Closing. 

       

      1.4 Closing
        Obligations.

       

      At
        the
        Closing:

       

      (a) Crosby
        shall deliver or cause to be delivered to GTEI:

       

      (i) certificates
        representing the Argosy Interests, duly endorsed for transfer to GTEI, with
        signatures in proper form for transfer, with all required transfer tax stamps
        affixed or provided for or, as applicable, transfer and assignment documents
        in
        a form reasonably acceptable to the Parties transferring and assigning all
        of
        Crosby’s right, title and interest in and to the Argosy Interests;

       

      (ii) a
        certificate executed by Crosby representing and warranting to GTEI that Crosby’s
        representations and warranties in this Agreement were accurate in all material
        respects as of the date of this Agreement and are accurate in all material
        respects as of the Closing Date as if made on the Closing Date (giving full
        effect to the disclosure schedules delivered by the parties concurrently
        with
        the execution and delivery of this Agreement (the “Disclosure
        Schedules”)); 

       

      (iii) copies
        of
        the resolutions of the governing body of Crosby authorizing the execution,
        delivery and performance of this Agreement and all related documents and
        agreements, certified as of the Closing Date by an officer of Crosby as being
        true and correct copies of the originals thereof subject to no modifications
        or
        amendments;

       

      (iv) certificates,
        dated within ten days prior to the Closing Date, of the Secretary of State
        or
        other comparable officer of each jurisdiction in which either AEC or Argosy
        is
        organized or the nature of its business requires it to be qualified to due
        business in, establishing that each of AEC and Argosy is in existence and
        otherwise is in good standing to transact business in such jurisdiction;
        

       

      (v) an
        executed copy of the Registration Rights Agreement, in substantially the
        form
        attached hereto as Exhibit
        C,
        setting
        forth the rights and obligations of GTEI and Crosby with respect to the
        Restricted Stock issued to Crosby at the Closing; 

       

      (vi) the
        Escrow Agreement executed by Crosby; and

       

      (vii) the
        documents contemplated by Section 10.4. 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

       

      (b) GTEI
        shall deliver or cause to be delivered to Crosby:

       

      (i) by
        wire
        transfer of immediately available funds to the account(s) specified by Crosby,
        the Closing Date Cash Payment;

       

      (ii) the
        shares of Restricted Stock, valued at $3,500,000, pursuant to Section
        1.5;

       

      (iii) an
        executed copy of the Registration Rights Agreement, in substantially the
        form
        attached hereto as Exhibit
        C,
        setting
        forth the rights and obligations of GTEI and Crosby with respect to the
        Restricted Stock issued to Crosby at the Closing; 

       

      (iv) a
        certificate executed by GTEI to the effect that GTEI’s representations and
        warranties in this Agreement (including without limitation the representation
        and warranty set forth in Section 6.8) were accurate in all material respects
        as
        of the date of this Agreement and are accurate in all material respects as
        of
        the Closing Date as if made on the Closing Date (giving full effect to the
        Disclosure Schedules); 

       

      (v) a
        copy of
        the resolutions of the board of directors of GTEI authorizing the execution,
        delivery and performance of this Agreement and all related documents and
        agreements, certified as of the Closing Date by an officer of GTEI as being
        true
        and correct copies of the originals thereof subject to no modifications or
        amendments; 

       

      (vi) the
        Escrow Agreement executed by GTEI; 

       

      (vii) by
        wire
        transfer of immediately available funds to the account specified by the Escrow
        Agent, the Escrow Amount; and

       

      (viii) the
        documents contemplated by Section 11.4.

       

      1.5 Calculation
        of Restricted Stock.

       

      On
        the
        Closing Date, GTEI shall issue to Crosby Eight Hundred Seventy Thousand Six
        Hundred Forty Seven (870,647) shares of GTEI’s common stock, par value $0.001
        per share, which shares shall be issued in a private transaction and not
        registered with the Securities and Exchange Commission under an effective
        registration statement (the “Restricted
        Stock”).
        The
        value of each share of Restricted Stock to be issued to Crosby as consideration
        at the Closing shall be $4.02 per share, which price represents the weighted
        average of the final closing stock price of GTEI’s common stock for the twenty
        trading days prior to April 3, 2006, the date of the public announcement
        by the
        parties of the proposed transaction. 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

       

      1.6 Closing
        Date Cash Payment Adjustment. 

       

      Crosby
        shall, in good faith, prepare and deliver to GTEI not less than three (3)
        business days prior to Closing an estimate of (a) the distributions of
        property made by Argosy to any Limited Partner or AEC for any reason
        between
        January 1, 2006 and the Closing Date (the “Partner
        Distributions”);
        and
        (b) the Crosby Expenses incurred by Argosy at any time prior to the Closing
        Date. The Partner Distributions shall not exceed a value of Three Million
        Two
        Hundred Fifty Thousand Dollars ($3,250,000.00) without the prior written
        consent
        of GTEI. The Closing Date Cash Payment shall be adjusted downwards in the
        amount
        of the sum of (i) any Partner Distributions that exceed Three Million Two
        Hundred Fifty Thousand Dollars ($3,250,000.00) (the “Excess
        Partner Distributions”),
        whether or not such Excess Partner Distributions were approved in advance
        by
        GTEI; plus (ii) the amount of the Crosby Expenses paid by Argosy.
        Notwithstanding the other provisions of this Section 1.6, (i) Partner
        Distributions shall not include (A) the Aviva Payoff, (B) any payments made
        to
        Aviva after August 19, 2005, (C) payments made by Argosy under the Redemption
        Agreements effective April 1, 2006 between Argosy and Dale E. Armstrong and
        Richard McKnight, respectively, (D) the transfer of the workstation and
        related software and files, and (E) any dividends or transfers from AEC to
        Crosby; and (ii) the aggregate amount of the Excess Partner Distributions
        shall
        increase by $25,000 per day for each day the Closing is delayed (other than
        as a
        result of the events described in Sections 12.2(c), 12.2(e) or 12.2(f)) after
        June 30, 2006, without affecting the Purchase Price. 

       

      1.7 Administration
        of Tax Matters.

       

      (a) Tax
        Returns.
        Crosby
        shall prepare and timely file, or cause to be timely filed, for Argosy, the
        United States federal income tax return and other Tax Returns, if any (the
        “Short
        Period Tax Returns”),
        that
        are required by law to be filed for the taxable period of Argosy that ends
        on
        the Closing Date. Crosby shall prepare and timely file, or cause to be filed,
        the United States federal income tax returns and other Tax Returns for the
        year
        ended December 31, 2005 for Argosy and AEC. GTEI, AEC and Argosy shall cooperate
        with Crosby in allowing Crosby access to GTEI, Argosy and AEC employees,
        books,
        records and information reasonably necessary for Crosby’s preparation of such
        Tax Returns, including without limitation providing Crosby the information
        set
        forth on Schedule
        1.7.
        

       

      (b) General
        Administration of Tax Matters.
        GTEI,
        AEC and Argosy, on the one hand, and Crosby, on the other hand, shall cooperate
        fully, as and to the extent reasonably requested, in connection with any
        audit,
        litigation or other proceeding with respect to United States Taxes and United
        States Tax Returns (which Crosby shall control with respect to the Pre-Closing
        Tax Periods). Such cooperation shall include the retention, and (upon the
        other
        party’s request) the provision, of records and information which are reasonably
        relevant to any such audit, litigation or other proceeding and making employees
        available on a mutually convenient basis to provide additional information
        and
        explanation of any material provided hereunder; provided,
        however,
        the
        party requesting assistance shall pay the reasonable out-of-pocket expenses
        incurred by the party providing such assistance; provided,
        further,
        no
        party shall be required to provide assistance at times or in amounts that
        would
        interfere unreasonably with the business and operations of such party. GTEI
        agrees to retain or cause to be retained all books and records with respect
        to
        Tax matters pertinent to Argosy and AEC relating to the Pre-Closing Tax Periods,
        until the expiration of any applicable statute of limitations or extensions
        thereof. Prior to disposing of any such books and records, GTEI shall provide
        reasonable notice to Crosby of such impending destruction, and allow Crosby
        reasonable opportunity, at Crosby’s expense, to take possession of such books
        and records. 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

       

      1.8 Allocation
        of Purchase Price.

       

      The
        Purchase Price shall be allocated by GTEI and Crosby among the purchased
        assets
        as of the Closing in
        accordance with Exhibit
        1.8
        (the
“Allocation”).
        Any
        subsequent adjustments to the Purchase Price shall be reflected in the
        Allocation in a manner consistent with Section 1060 of the Internal Revenue
        Code
        of 1986, as amended (the “Code”),
        and
        any such adjustments shall not be made unless agreed to in advance in writing
        by
        Crosby and GTEI. GTEI and Crosby will (i) file Internal Revenue Service Form
        8594 and all federal, state and local Tax Returns, strictly in accordance
        with
        the Allocation, and (ii) report the transactions contemplated by this Agreement
        for Tax purposes in a manner strictly consistent with the Allocation. Each
        of
        GTEI and Crosby will provide the other promptly with any other information
        reasonably required to complete Form 8594. GTEI and Crosby will notify the
        other
        in the event of an examination, audit or other proceeding regarding the agreed
        upon allocation of the Purchase Price. GTEI and Crosby agree that no portion
        of
        the Purchase Price, including any post-Closing adjustments with respect to
        the
        Purchase Price, shall for Tax purposes be allocated to, or characterized
        as a
        payment for, any past or future services.

       

      1.9 Certain
        Taxes and Fees.
        

       

      (a) All
        transfer, documentary, sales, use, stamp, registration and other such Taxes,
        and
        all conveyance fees, recording charges and other fees and charges (including
        any
        penalties and interest) incurred in connection with consummation of the
        transactions contemplated by this Agreement shall be paid by Crosby when
        due,
        and Crosby will, at its own expense, file all necessary Tax Returns and other
        documentation with respect to all such Taxes, fees and charges, and, if required
        by applicable law, GTEI, Argosy and AEC will join in the execution of any
        such
        Tax Returns and other documentation. 

       

      (b) All
        real
        estate taxes, personal property taxes, or any other taxes and special
        assessments (special or otherwise) of any nature upon the property levied,
        assessed, accrued or pending for the calendar year in which the Closing occurs
        (including the period prior to Closing, regardless of when due and payable)
        pertaining to AEC shall be prorated based on the number of calendar days
        each
        party owns AEC during the relevant Tax period and, if no tax bills or assessment
        statements for such calendar year are available, such amounts shall be estimated
        on the basis of the best available information. 

       

      (c) GTEI
        shall not withhold any portion of the Purchase Price in respect of any Taxes,
        whether withholding taxes or otherwise. At Closing, Crosby shall provide
        GTEI an
        affidavit of non-foreign status pursuant to Section 1445 of the Code in the
        form
        attached hereto as Exhibit
        1.9.
        

       

      1.10 Payment
        to Aviva Overseas, Inc.

       

      At
        Closing, Crosby shall (i) cause Argosy to pay off amounts due under the
        Promissory Note, dated as of August 19, 2005, in the principal amount of
        $1,125,000 made in favor of Aviva Overseas, Inc., a Delaware corporation
        (“Aviva”),
        by
        wire transfer to an account specified by Aviva, and (ii) cause Argosy to
        pay the
        estimated amount of the Contingent Payment, as defined in the Contingent
        Payment
        Agreement, dated as of August 19, 2005, by and between Argosy and Aviva,
        to
        allow the release to Crosby of the Escrowed Documents (as defined in the
        Escrow
        Agreement, dated as of August 19, 2005, by and among Argosy, Aviva and JPMorgan
        Chase Bank, N.A.). The amount paid to Aviva under this Section 1.10 is referred
        to as the “Aviva
        Payoff.”
As
        of
        May 16, 2006, the estimated amount of the Aviva Payoff is $1,166,783.40.
        

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

       

      1.11 Colombian
        Participation Agreement Covenants.
        

       

      (a) Delivery
        of the Colombian Participation Agreement, Escrow Agreement and Letter of
        Credit.
        GTEI
        and Argosy shall deliver the Colombian Participation Agreement duly executed
        by
        GTEI and Argosy within two business days of the Closing Date. On the Closing
        Date, GTEI and Argosy shall deliver to Crosby an Escrow Agreement, in
        substantially the form attached hereto as Exhibit
        D
        (the
“Escrow
        Agreement”)
        by and
        among Argosy, Crosby and the Bank of New York, as escrow agent (the
“Escrow
        Agent”),
        placing into escrow with Escrow Agent the sum of $4,000,000 (the “Escrow
        Amount”)
        upon
        the terms set forth in the Escrow Agreement. Within 90 days of the Closing
        Date,
        GTEI and Argosy shall deliver to Crosby an irrevocable standby letter of
        credit
        (the “Letter
        of Credit”)
        on
        substantially the terms set forth in the Colombian Participation Agreement,
        and
        containing provisions consistent with the Letter of Credit Draws Term Sheet
        attached thereto as Exhibit A. 

       

      (b) No
        Offset; Interpleader.
        There
        shall be no commercial offset, net out or any other non-judicial suspension
        or
        setoff of payments of any amounts due Crosby and its successors and assigns
        under the Colombian Participation Agreement for any reason whatsoever, including
        without limitation with respect to claims by GTEI Indemnified Persons under
        Article XIII hereof. Notwithstanding the foregoing, if prior to November
        30,
        2006 there is a claim by a Gran Tierra Indemnified Person for indemnification
        under Article XIII hereof in accordance and compliance with such Article
        XIII,
        then Gran Tierra and Argosy or their successors may immediately commence
        an
        arbitration pursuant to Section 11
        of the
        Colombian Participation Agreement (without regard to the provisions of
Section
        11.1
        of the
        Colombian Participation Agreement) and to the extent of the amount in issue,
        may
        deposit the applicable payments due under the Colombian Participation Agreement
        (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.

       

      (c) Failure
        to Deliver the Colombian Participation Agreement, Escrow Agreement or Letter
        of
        Credit.
        If GTEI
        or Argosy fail to deliver the Colombian Participation Agreement, the Escrow
        Agreement or the Letter of Credit as set forth in Section 1.11(a), the following
        shall occur (in addition to any other remedies to which Crosby may be entitled
        at law or equity): (i) Crosby shall be entitled to put the Restricted Stock
        to GTEI for $3,500,000, payable in cash promptly after Crosby notifies GTEI
        in
        writing of Crosby’s exercise of such put right; (ii) GTEI shall promptly
        pay Crosby cash in the amount of $4,000,000; and (iii) any survival of
        Crosby’s representations, warranties, covenants and agreements pursuant to
        Section 13.1 shall immediately terminate.

       

      (d) Dispute
        Resolution.
        Any
        disputes related to the Colombian Participation Agreement (other than with
        respect to this Section 1.11) shall be resolved pursuant to the Colombian
        Participation Agreement. 

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

       

      ARTICLE
        II

      Definitions

       

      2.1 “AAA
        Rules”
has
        the
        meaning in Section 14.3(b) hereof.

       

      2.2 “Accounts
        Receivable”
has
        the
        meaning in Section 3.12 hereof.

       

      2.3 “AEC”
has
        the
        meaning in the introductory paragraph hereof. 

       

      2.4 “AEC
        Interest”
shall
        mean the 0.7143% general partnership interest in Argosy held by AEC.

       

      2.5 “Agreement
        Dispute”
has
        the
        meaning in Section 14.3(a) hereof.

       

      2.6 “Allocation”
has
        the
        meaning in Section 1.8 hereof.

       

      2.7 “Agreement”
has
        the
        meaning in the introductory paragraph hereof.

       

      2.8 “Argosy”
has
        the
        meaning in the introductory paragraph hereof. 

       

      2.9 “Argosy
        Benefit Plan”
shall
        mean all “employee benefit plans” as defined by section 3(3) of the
        Employee Retirement Income Security Act of 1974, collectively with any successor
        law, and regulations and rules issued pursuant
        to that
        Act or any successor law, “ERISA,”
        all
        specified fringe benefit plans as defined in section 6039D of the
        Code, and
        all
        other bonus, incentive compensation, deferred compensation, profit sharing,
        stock option, stock appreciation right, stock bonus, stock purchase, employee
        stock ownership, savings, severance, supplemental unemployment, layoff, salary
        continuation, retirement, pension, health, life insurance, dental, disability,
        accident, group insurance, vacation, holiday, sick leave, fringe benefit
        or
        welfare plan, and any other employee compensation or benefit plan, agreement,
        policy, practice, commitment, contract, or understanding (whether qualified
        or
        nonqualified, currently effective, written or unwritten), and any trust,
        escrow
        or other agreement related thereto, which currently is sponsored, established,
        maintained or contributed to or required to be contributed by
        Argosy.

       

      2.10 “Argosy
        Debt”
shall
        mean with respect to any Person at any date, without duplication, (i) all
        obligations of such Person for borrowed money or in respect of loans or
        advances, (ii) all obligations of such Person upon which
        interest
        charges are customarily paid, (iii) all obligations of such Person evidenced
        by
        bonds, debentures, notes or similar instruments, (iv) all obligations in
        respect
        of letters of credit, whether or not drawn, and bankers’ acceptances issued for
        the account of such Person, (v) all capitalized lease obligations of such
        Person
        including, without limitation, any lease termination payments or charges,
        (vi)
        any obligations of such Person for the deferred purchase price of goods and
        services, including any such obligations secured by a contractual lien, but
        excluding trade accounts payable and accrued expenses incurred in the ordinary
        course of business, (vii) all interest rate protection agreements of such
        Person, (viii) any accrued but unpaid interest or prepayment or other penalties
        upon any of the foregoing, and (ix) all guarantees (or arrangements having
        the
        economic effect of a guarantee) of such Person in connection with any of
        the
        foregoing.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

       

      2.11 “Argosy
        Interests”
has
        the
meaning
        in
        recitals hereof. 

       

      2.12 “Audited
        Balance Sheets”
has
        the
        meaning in Section 3.6(a) hereof.

       

      2.13 “Audited
        Financial Statements”
has
        the
        meaning in Section 3.6(a) hereof.

       

      2.14 “Aviva”
has
        the
        meaning in Section 1.10 hereof. 

       

      2.15 “Aviva
        Payoff”
has
        the
        meaning in Section 1.10 hereof. 

       

      2.16 “Basis”
shall
        mean any past or present fact, situation, circumstance, status, condition,
        activity, practice, plan, occurrence, event, incident, action, failure to
        act,
        or transaction that forms or could form the basis for any specified
        consequence.

       

      2.17 “Cap
        Amount”
has
        the
        meaning in Section 13.4(b) hereof.

       

      2.18 “Closing”
has
        the
        meaning in Section 1.3 hereof.

       

      2.19 “Closing
        Date”
has
        the
        meaning in Section 1.3 hereof.

       

      2.20 “Closing
        Date Cash Payment”
has
        the
        meaning in Section 1.2 hereof. 

       

      2.21 “Code”
has
        the
        meaning in Section 1.8 hereof.

       

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

       

      2.23 “Colombian
        Participation Agreement”
shall
        mean the Colombian Participation
        Agreement to be executed by and among GTEI, Argosy and Crosby in substantially
        the form attached as Exhibit
        B
        hereto.

       

      2.24 “Competing
        Proposed Transaction”
has
        the
        meaning in Section 7.5(a) hereof.

       

      2.25 “Consent”
has
        the
        meaning in Section 3.4(c) hereof.

       

      2.26 “Contemplated
        Transactions”
shall
        mean all
        of
        the transactions contemplated by this Agreement, including (a) the performance
        by GTEI
        and
        Crosby of
        their
        respective covenants and obligations under this Agreement; and (b) the sale
        of
        the Argosy Interests by Crosby to GTEI.

       

      2.27 “Crosby”
has
        the
        meaning in the recitals hereof.

       

      2.28 “Crosby
        Deductible”
has
        the
        meaning in Section 13.4(a) hereof.

       

      2.29 “Crosby
        Expenses”
shall
        mean all out-of-pocket expenses of Crosby for (a) all fees and expenses of
        legal, accounting and financial advisors and other third parties incurred
        by
        Crosby in connection with the Contemplated Transactions, and (b) any
        stay/pay bonuses paid or payable by Crosby prior to, at or after the Closing
        Date with any person. Crosby Expenses shall not include (i) any fees and
        expenses of legal, accounting or other advisors of Argosy or AEC to support
        Argosy’s business, including without limitation any legal expenses related to
        any current, pending or threatened proceeding not related to the Contemplated
        Transactions, (ii) any United States tax consulting expenses of Argosy
        and/or AEC, which shall not exceed $25,000 for the period from January 1,
        2006
        through the Closing, (iii) any expenses of legal, accounting or other
        advisors incurred by Argosy in Colombia in the Ordinary Course of Business,
        (iv) any expenses of legal, accounting or other advisors incurred by Argosy
        in Colombia regarding the Contemplated Transactions, which shall not exceed
        $100,000, and (v) any out of pocket expenses of AEC or Crosby billed to
        Argosy related to the Contemplated Transactions other than those set forth
        in
        paragraphs (a) and (b) of the preceding sentence, which shall not exceed
        $25,000. 

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

       

      2.30 “Crosby
        Indemnified Persons”
has
        the
        meaning in Section 13.3 hereof.

       

      2.31 “Crosby’s
        Knowledge”
shall
        mean the actual knowledge of Jay A. Chaffee. 

       

      2.32 “Crosby
        Transferors”
has
        the
        meaning in Section 3.35(a) hereof.

       

      2.33 “Cure
        Period”
has
        the
        meaning in Section 14.3(a) hereof. 

       

      2.34 “Damages”
        has
        the
        meaning in Section 13.2(a) hereof.

       

      2.35 “Demand”
has
        the
        meaning in Section 14.3(b) hereof.

       

      2.36 “Disclosure
        Schedules”
has
        the
        meaning in Section 1.4(a)(ii) hereof.

       

      2.37 “Ecopetrol”
shall
        mean Ecopetrol, S.A., a Colombian company formerly known as Empresa Colombiana
        de Petroleos.

       

      2.38 “Environmental
        Law”
shall
        mean any applicable federal, state, and local statute, rule, regulation,
        code,
        ordinance, or order of any Governmental Body relating to the protection of
        public health and welfare, or the environment, including without limitation,
        any
        relating to the generation, processing, treatment, investigation, remediation,
        storage, transport, disposal, management, handling, and use of Hazardous
        Materials.

       

      2.39 “Environmental
        Permit”
shall
        mean any permit, authorization, certificate or other approval of a Governmental
        Authority required by any Environmental Law for the ownership or operation
        of
        Argosy or any of Argosy’s assets. 

       

      2.40 “ERISA
        Affiliate”
shall
        mean any trade or business (whether or not incorporated) which is or at any
        time
        within the six year
        period
        preceding the date of this Agreement would have been treated as a “single
        employer” with Argosy under section 414(b), (c), (m), or (o) of the
        Code.

       

      2.41 “Escrow
        Agent,”
        “Escrow
        Agreement”
and
        “Escrow
        Amount”
each
        has the meaning in Section 1.11 hereof. 

       

      2.42 “Excess
        Partner Distributions”
has
        the
        meaning in Section 1.6 hereof. 

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

       

      2.43 “Facilities”
has
        the
        meaning in Section 3.22(b) hereof.

       

      2.44 “Fee
        Properties”
shall
        mean the surface fee interests and oil and gas interests, if any, owned by
        Argosy. 

       

      2.45 “GAAP”
shall
        mean United States generally accepted accounting principles applied on a
        basis
        consistent with the methodologies, practices and principles used in the
        preparation of the Argosy’s latest Audited Balance Sheet. 

       

      2.46 “Governmental
        Authorization”
shall
        mean any approval, consent, license, permit, waiver, or other authorization
        issued, granted, given, or
        otherwise made available by or under the authority of any Governmental Body
        or
        pursuant to any Legal Requirement.

       

      2.47 “Governmental
        Body”
shall
        mean any (A) nation, state, county, city, town, district, or other jurisdiction
        of any nature; (B) federal, state, local, municipal, foreign, or other
        government; (C) governmental authority of any nature
        (including any governmental agency, branch, department, official, or entity
        and
        any court
        or other
        tribunal); (D) multi-national organization or body; or (E) body exercising,
        or
        entitled to exercise, any administrative, executive, judicial, legislative,
        police, regulatory, or taxing authority or power of any nature.

       

      2.48 “GTEI”
has
        the
        meaning in the introductory paragraph hereof. 

       

      2.49 “GTEI
        Indemnified Persons”
has
        the
        meaning in Section 13.2 hereof. 

       

      2.50 “GTEI’s
        Advisors”
has
        the
        meaning in Section 7.1 hereof. 

       

      2.51 “GTEI
        Recipients”
has
        the
        meaning in Section 3.35(a) hereof. 

       

      2.52 “Hazardous
        Materials”
shall
        mean any waste or other substance that is listed, defined, designated, or
        classified as, or otherwise determined to be, hazardous, radioactive, or
        toxic,
        or a pollutant or a contaminant under or pursuant to any Environmental
        Law.

       

      2.53 “Historical
        Properties”
shall
        mean the properties described on Schedule
        2.53
        attached
        hereto. 

       

      2.54 “Hydrocarbons”
shall
        mean any of the following substances that are produced from the Historical
        Properties: 

       

      (i)
         crude
        oil; 

       

      (ii)
         natural
        gas; 

       

      (iii)
         casinghead
        gas; 

       

      (iv)
         condensate;
        

       

      (v)
         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

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

       

      (vi)
         any
        other
        minerals which the Oil and Gas Contracts allow to be extracted and sold.
        

       

      2.55 “Intellectual
        Property”
shall
        mean:

       

      (i) trademarks,
        service marks, trade dress, logos, slogans, trade names, corporate names,
        Internet domain names, and rights in telephone numbers, together with all
        translations, adaptations, derivations, and combinations thereof and including
        all goodwill associated therewith, and all applications, registrations, and
        renewals in connection therewith (collectively, “Marks”);

       

      (ii) all
        inventions (whether patentable or unpatentable and whether or not reduced
        to
        practice), all improvements thereto, and all patents, patent applications,
        and
        patent disclosures, together with all reissuances, continuations,
        continuations-in-part, revisions, extensions, and reexaminations thereof
        (collectively, “Patents”);

       

      (iii) all
        copyrightable works and copyrights in both published works and unpublished
        works, including related registrations and applications (collectively,
“Copyrights”);
        

       

      (iv) all
        trade
        secrets and confidential business information (including ideas, research
        and
        development, know-how, business and marketing plans and proposals, formulae,
        compositions, assembly processes and techniques, manufacturing processes
        and
        techniques, production processes and techniques, technical data, designs,
        drawings, specifications, customer and supplier information, including customer
        and supplier identities, contact information, pricing and cost information);
        

       

      (v) all
        computer software (including source code, executable code, data, databases,
        and
        related documentation); 

       

      (vi) all
        material advertising and promotional materials; 

       

      (vii) all
        other
        proprietary rights and 

       

      (viii) all
        copies and tangible embodiments thereof (in whatever form or
        medium).

       

      2.56 “Interim
        Balance Sheets”
has
        the
meaning
        in
        Section 3.6(a) hereof.

       

      2.57 “Interim
        Financial Statements”
has
        the
meaning
        in
        Section 3.6(a) hereof.

       

      2.58 “IRS”
has
        the
meaning
        in
        Section 3.16(b)(v) hereof.

       

      2.59 “Legal
        Requirement”
shall
        mean any federal, state, local, municipal, foreign, international,
        multinational, or other administrative order, constitution, law, ordinance,
        principle of common law, regulation, statute, or treaty.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      

       

      2.60 “Lien”
shall
        mean any
        charge, claim, community property interest, condition, equitable interest,
        lien,
        option, pledge, security interest, right of first refusal, or restriction
        of any
        kind, including any restriction on use, voting, transfer, receipt of income,
        or
        exercise of any other attribute of ownership.

       

      2.61 “Limited
        Partner”
shall
        mean Crosby Capital, LLC, a Texas limited liability company, which Limited
        Partner owns 100% of the Limited Partnership Interests of Argosy. 

       

      2.62 “Limited
        Partnership Interests”
shall
        mean all outstanding limited partnership interests of Argosy. 

       

      2.63 “MAE”
has
        the
        meaning in Section
        3.1(b)
        hereof.

       

      2.64 “Material
        Contract”
has
        the
meaning
        in
        Section 3.20(a) hereof.

       

      2.65 “Material
        Customers”
has
        the
        meaning in Section 3.29 hereof.

       

      2.66 “Material
        Suppliers”
has
        the
        meaning in Section 3.29 hereof.

       

      2.67 “Non-Compete
        Period”
has
        the
        meaning in Section 7.8(a) hereof.

       

      2.68 “Oil
        and Gas Contracts”
shall
        mean the agreements listed on Schedule
        2.68
        of the
        Disclosure Schedules. 

       

      2.69 “Operative
        Agreements”
shall
        mean this Agreement, the Colombian Participation Agreement, the Registration
        Rights Agreement and any other agreements to be entered into in connection
        with
        the transactions contemplated
        by this
        Agreement.

       

      2.70 “Order”
shall
        mean any award, decision, injunction, judgment, order, ruling, subpoena,
        or
        verdict entered, issued, made, or rendered by any court, administrative agency,
        or other Governmental Body or by any arbitrator.

       

      2.71 “Ordinary
        Course of Business”
means
        an
        action
        taken by a Person shall be deemed to have been
        taken
        only if: 

       

      (a) such
        action is recurring in nature and consistent with the past practices of such
        Person and is taken in the ordinary course of the normal day-to-day operations
        of such Person; and

       

      (b) such
        action is not required to be authorized by the board of directors of such
        Person
        (or by any Person or group of Persons exercising similar authority) and is
        not
        required to be specifically authorized by the parent company (if any) of
        such
        Person.

       

      2.72 “Owned
        Copyrights”
shall
        mean Copyrights owned by the Company.

       

      2.73 “Owned
        Intellectual Property Assets”
shall
        mean Intellectual Property owned by Argosy.

       

      2.74 “Owned
        Marks”
shall
        mean Marks owned by Argosy.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      

       

      2.75 “Owned
        Patents”
shall
        mean Patents owned by Argosy.

       

      2.76 “Owned
        Registered Copyrights”
shall
        mean registrations of and applications to register Owned
        Copyrights.

       

      2.77 “Owned
        Registered Marks”
shall
        mean registrations of and applications to register Owned Marks.

       

      2.78 “Panel”
        has
        the
        meaning in Section 14.3(b) hereof.

       

      2.79 “PBGC”
shall
        mean the Pension
        Benefit
        Guaranty Corporation.

       

      2.80 “Partner
        Distributions”
has
        the
meaning
        in
        Section 1.6 hereof. 

       

      2.81 “Permitted
        Liens”
shall
        mean, collectively, (i) Liens that are disclosed in Schedule
        2.81
        of the
        Disclosure Schedules, (ii) Liens for Taxes, fees, levies, duties or other
        governmental charges of any kind which are not yet delinquent or are being
        contested in good faith by appropriate proceedings, (iii) Liens for carriers,
        contractors, warehousemen, mechanics, materialmen, laborers, employees,
        suppliers or other similar Persons arising by operation of law and incurred
        in
        the Ordinary Course of Business for sums not yet delinquent or being contested
        in good faith, (iv) Liens relating to deposits made in the Ordinary Course
        of
        Business in connection with workers’ compensation, unemployment insurance and
        other types of social security or to secure the performance of leases, trade
        contracts or other similar agreements; and (v) in the case of real property,
        any
        matters, restrictions, covenants, conditions, limitations, rights, rights
        of
        way, encumbrances, encroachments, reservations, easements, agreements and
        other
        matters of record, such state of facts of which an accurate survey or inspection
        of the property would reveal and do not materially interfere with the use
        or
        value of the property; provided,
        however,
        that
        with respect to each of the foregoing clauses (ii) through (v), to the extent
        that any such Lien relates to, or secures the payment of, a liability that
        is
        required to be accrued under GAAP, such Lien shall not be a Permitted Lien
        unless adequate accruals for such liability have been established therefor
        on
        the Interim Balance Sheet in conformity with GAAP.

       

      2.82 “Person”
shall
        mean any natural person, corporation, general partnership, limited partnership,
        limited liability company
        or
        partnership, proprietorship, other business organization, trust, union,
        association or Governmental Body.

       

      2.83 “Post-closing
        Affiliates”
has
        the
        meaning in Section 7.6 hereof.

       

      2.83A “POPA
        Prospect Area”
shall
        mean the acreage of the Río Magdalena Association Contract area that lies south
        of the northernmost 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, approximately as demarcated on Exhibit
        E
        to this
        Agreement. The Río 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 of the Colombian Participation Agreement, pages 40 and 79. 

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      

       

      2.84 “Pre-Closing
        Tax Periods”
has
        the
        meaning in Section 1.7(b) hereof.

       

      2.85 “Prevailing
        Party”
has
        the
        meaning in Section 14.3(e) hereof.

       

      2.86 “Proceeding”
shall
        mean any action, arbitration, audit, hearing, investigation, litigation,
        or suit
        (whether civil, criminal,
        administrative, investigative, or informal) commenced, brought, conducted,
        or
        heard by or before, or otherwise involving, any Governmental Body or
        arbitrator.

       

      2.87 “Purchase
        Price”
has
        the
        meaning in Section 1.2 hereof.

       

      2.88 “Qualified
        Plan”
shall
        mean any Argosy Benefit Plan intended to be “qualified” within the meaning of
        section 401(a) of the Code.

       

      2.89 “Reg.
        D”
has
        the
        meaning in Section 4.6(b) hereof.

       

      2.90 “Registration
        Rights Agreement”
has
        the
        meaning in Section 1.4(a)(vi) hereof.

       

      2.91 “Related
        Party”
has
        the
        meaning in Section 3.28 hereof.

       

      2.92 “Rights-of-Way”
shall
        mean all rights-of-way, easements and related agreements and instruments
        granting Argosy access, license or other interest in real property.

       

      2.93 “Securities
        Act”
has
        the
        meaning in Section 4.6(a) hereof.

       

      2.94 “Short
        Period Tax Returns”
has
        the
        meaning in Section 1.7(a)(i) hereof.

       

      2.95 “Subsidiary”
shall
        mean any Person with respect to which a specified Person (or Subsidiary thereof)
        owns a majority
        of the
        common stock or has the power to vote or direct the voting of sufficient
        securities to elect a majority of the directors or other governing
        body.

       

      2.96 “Taxes”
shall
        mean all federal, state, local, foreign and other governmental net income,
        gross
        income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
        license, lease, service, service use, withholding, payroll, employment,
        unemployment, excise, severance, stamp, occupation, premium, property, windfall
        profits, customs, duties, or other taxes, fees, assessments or charges of
        any
        kind whatever, together with any interest and any penalties, additions to
        tax or
        additional amounts with respect thereto, and the term “Tax” 
        shall
        mean any one of the foregoing Taxes. 

       

      2.97 “Tax
        Return”
shall
        mean all reports, returns, information returns, declarations, statements,
        and
        other documents required to be filed in respect of Taxes. 

       

      2.98 “Third
        Party Claim”
has
        the
        meaning in Section 13.5(a) hereof.

       

      2.99 “Transferred
        Materials”
has
        the
        meaning in Section 3.35(a) hereof. 

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

       

      ARTICLE
        III

      Representations
        and Warranties of Crosby Related to Argosy

       

      As
        a
        material inducement to purchase the Argosy Interests and consummate the
        Contemplated Transactions, Crosby represents and warrants to GTEI as
        follows:

       

      3.1 Organization
        and Good Standing.

       

      (a) Argosy
        is
        a limited partnership duly organized, validly existing, and in good standing
        under the laws of the State of Utah, with power and authority to conduct
        its
        business as it is now being conducted, to own or use the properties and assets
        that it purports to own or use, and to perform all its obligations under
        the
        contracts to which it is a party. Crosby has delivered to GTEI copies of
        Argosy’s certificate of limited partnership and its partnership agreement, as
        currently in effect.

       

      (b) Argosy
        is
        duly qualified to do business as a foreign partnership and is in good standing
        under the laws of each state or other jurisdiction in which either the ownership
        or use of the properties owned or used by it, or the nature of the activities
        conducted by it, requires such qualification, except where failure to be
        so
        qualified could not reasonably be expected to have a material adverse effect
        on
        its financial condition, business operations, liabilities or assets
        (an “MAE”).

       

      3.2 Subsidiaries.

       

      Schedule
        3.2(a) of the Disclosure Schedules lists (i) the name, type of entity and
        state of organization of the one Subsidiary of Argosy and (ii) the name and
        Colombian registration number of Argosy’s registered branch office in Colombia.
        The Subsidiary is an entity organized under the laws of Colombia. Such
        Subsidiary has no operations. All of the outstanding equity interests of
        such
        Subsidiary are wholly owned, beneficially, by Argosy. There are no outstanding
        options or warrants with the respect to the equity interests of such Subsidiary
        or agreements, arrangements, or understandings to issue options or warrants
        with
        respect to the equity interests of such Subsidiary. 

       

      3.3 Directors;
        Officers.

       

      The
        name
        of each director (or manager or similar position) and officer of Argosy and
        each
        Subsidiary on the date hereof, and the position with Argosy and each Subsidiary,
        are listed in Schedule 3.3 of the Disclosure Schedules.

       

      3.4 Authority;
        No Conflict.

       

      (a) Except
        as
        set forth in Schedule 3.4(a) of the Disclosure Schedules, the consummation
        or
        performance of any of the Contemplated Transactions shall not, directly or
        indirectly (with or without notice or lapse of time):

       

      (i) contravene,
        conflict with, or result in a violation of (A) any provision of the certificate
        of limited partnership or partnership agreement of Argosy, or (B) any resolution
        adopted by AEC or the Limited Partner of Argosy;

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

       

      (ii) contravene,
        conflict with, or result in a violation of, or give any Governmental Body
        the
        right to challenge any of the Contemplated Transactions or to exercise any
        remedy or obtain any relief under any Legal Requirement or any Order to which
        Argosy, or any of the assets owned or used by Argosy, may be subject, other
        than
        such contraventions, conflicts or violations as would occur solely as a result
        of the identity or the legal or regulatory status of GTEI or any of its
        affiliates (determined without regard to GTEI’s ownership of the Argosy
        Interests); or 

       

      (iii) contravene,
        conflict with, or result in a violation of any of the terms or requirements
        of,
        or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
        terminate, or modify, any Governmental Authorization that is held by Argosy
        that
        otherwise relates to the business of, or any of the assets owned or used
        by,
        Argosy. 

       

      (b) Except
        as
        set forth in Schedule 3.4(b) of the Disclosure Schedules, Argosy is not,
        and
        Argosy shall not be, required to give any notice to or obtain any approval,
        consent, ratification, waiver, or other authorization (including any
        Governmental Authorization) (each, a “Consent”)
        from
        any Person in connection with the execution and delivery of any of the Operative
        Agreements to which it is a party or the consummation or performance of any
        of
        the Contemplated Transactions. 

       

      3.5 Capitalization.

       

      Included
        in the Argosy Interests are constitute all of the authorized and outstanding
        capital securities of AEC and Argosy, all of which are owned beneficially
        and of
        record as set forth on Exhibit
        A
        attached
        hereto. As applicable, the Argosy Interests (other than the Original Purchase
        Documents) are duly authorized, validly issued, fully paid and nonassessable.
        The Argosy Interests (other than the Original Purchase Documents) have not
        been
        issued in violation of any preemptive rights or similar rights. Other than
        this
        Agreement and except as set forth in Schedule 3.5 of the Disclosure Schedules,
        there are no contracts relating to the issuance, sale, voting, or transfer
        of
        any equity securities or other securities (including warrants and options)
        of
        Argosy. Except the Subsidiaries set forth in Schedule 3.2(a) and as set forth
        in
        Schedule 3.5 of the Disclosure Schedules, Argosy does not own, or have any
        contract to acquire, any equity securities or other securities of any Person
        or
        any direct or indirect equity or ownership interest in any other
        business.

       

      3.6 Financial
        Statements.

       

      (a) Attached
        hereto as Schedules 3.6(a)-1, 3.6(a)-2, 3.6(a)-3 and 3.6(a)-4 are: (i) the
        audited balance sheets of Argosy as of December 31, 2003, 2004, and 2005
        (the
“Audited
        Balance Sheets”),
        and
        the related audited statements of income and cash flow for each of the fiscal
        years then ended, together with the report thereon of KPMG LLP, independent
        certified public accountants to Argosy (collectively, the “Audited
        Financial Statements”),
        and
        (ii) the unaudited balance sheet of Argosy as of March 31, 2006 (the
“Interim
        Balance Sheet”),
        and
        the related unaudited statements of income and cash flow for the three-month
        period then ended (collectively, the “Interim
        Financial Statements”).
        

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      

       

      (b) The
        Audited Financial Statements and notes thereto fairly present in all material
        respects the financial condition and the results of operations and cash flow
        of
        Argosy at the respective dates of and for the periods referred to in the
        Audited
        Financial Statements. Except as set forth in the notes thereto and as disclosed
        in Schedule 3.6(b) of the Disclosure Schedules, the Audited Financial Statements
        have been prepared in accordance with GAAP and reflect the consistent
        application of such accounting principles throughout the periods involved.
        The
        Audited Financial Statements have been prepared based on the books and records
        of Argosy.

       

      (c) To
        Crosby’s Knowledge, the Interim Financial Statements fairly present in all
        material respects the financial condition and the results of operations and
        cash
        flow of Argosy at and as of March 31, 2006, for the periods referred to in
        the
        Interim Financial Statements. To Crosby’s Knowledge and except as disclosed in
        Schedule 3.6(c) of the Disclosure Schedules, the Interim Financial Statements
        have been prepared in accordance with GAAP, subject to normal recurring year-end
        adjustments (the effect of which shall not, individually or in the aggregate,
        be
        materially adverse to Argosy) and the absence of notes (that, if presented,
        would not differ materially from those included in the Audited Financial
        Statements). The Interim Financial Statements have been prepared based on
        the
        books and records of Argosy.

       

      3.7 Books
        and Records.

       

      The
        books
        of account, unit record books, and other records of Argosy, all of which
        have
        been made available to GTEI, are accurate and have been maintained in accordance
        with sound business practices, including the maintenance of an adequate system
        of internal controls. At the Closing, all of those books and records shall
        be in
        the possession of Argosy. 

       

      3.8 Title
        to Properties; Liens.

       

      (a) Schedule
        3.8(a) of the Disclosure Schedules sets forth a complete and correct list
        of all
        real property which is owned or leased by Argosy, and any other real property
        with respect to which Argosy has an option to purchase or right of first
        refusal.

       

      (b) Except
        as
        set forth in Schedule 3.8(b), Argosy owns (with good, valid, marketable,
        fee
        simple and indefeasible title in the case of real property) all the properties
        and assets (whether real, personal, or mixed and whether tangible or intangible)
        that it purports to own, including all of the properties and assets reflected
        in
        the most recent Audited Balance Sheet and the Interim Balance Sheet (except
        for
        personal property sold since the date of the most recent Audited Balance
        Sheet
        in the Ordinary Course of Business), and all of the properties and assets
        purchased or otherwise acquired by Argosy since the date of the most recent
        Audited Balance Sheet (except for personal property acquired and sold since
        the
        date of the most recent Audited Balance Sheet in the Ordinary Course of
        Business). Except as set forth in Schedule 3.8(b), all such properties and
        assets are located in the country of Colombia. 

       

      (c) Argosy
        enjoys peaceful and undisturbed possession of all real property owned or
        leased
        by it. No landlord-tenant disputes exist with respect to any such real property.
        No security deposit or portion thereof deposited with respect to any leased
        real
        property has been applied in respect of a breach or default under such lease
        which has not been redeposited in full. Except as set forth in Schedule 3.8(c),
        Argosy has not subleased, licensed or otherwise granted any Person the right
        to
        use or occupy any real property or any portion thereof.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      

       

      3.9 Oil
        and Gas Contracts.
        Argosy
        is, to the extent described in Schedule 3.9 of the Disclosure Schedules,
        the
        operator of the Historical Properties covered by the Oil and Gas Contracts.
        All
        royalty interests, Argosy working interests, other working interests and
        Argosy’s net revenue interest, which are all of the burdens on production from
        the Historical Properties, are reflected in the percentage interests set
        forth
        on Schedule 1.8 of the Colombian Participation Agreement. Such percentage
        interests on Schedule 1.8 of the Colombian Participation Agreement are in
        full
        force and effect, and all payments due thereon will be fully and timely paid
        when due.

       

      3.10 Wells.
        Schedule 3.10 contains
        a true, correct and complete list of all oil and gas wells located on the
        Historical Properties producing Hydrocarbons as of the date hereof, including
        the percentage and type of interest therein.

       

      3.11 Owned
        and Leased Tangible Personal Property.
        

       

      (a) Title
        to
        all items of tangible, personal property and equipment included within the
        Historical Properties is held by Argosy, free and clear of any claim, lease,
        mortgage, security interest, conditional sale agreement or other title retention
        agreement, restriction or Lien or encumbrance of any kind or nature whatsoever,
        except as set forth on Schedule 3.11, and other than the rights of Argosy’s
        joint venture partners set forth on Schedule 3.20(a)(v). 

       

      (b) Each
        item
        of tangible personal property and equipment is in good repair and good operating
        condition, ordinary wear and tear excepted, is suitable for immediate use
        in the
        Ordinary Course of Business. No item of tangible personal property is in
        need of
        repair or replacement other than as part of routine maintenance in the Ordinary
        Course of Business. Except as disclosed in Schedule 3.11, all items of tangible
        personal property and equipment used in Argosy’s business is in the possession
        of Argosy.

       

      3.12 Accounts
        Receivable.

       

      To
        Crosby’s Knowledge, all accounts receivable, notes receivable from customers and
        all other obligations from customers with respect to the sale of goods or
        services, whether or not evidenced by a note, of Argosy that are reflected
        on
        the Audited Balance Sheets or the Interim Balance Sheet or on the accounting
        records of Argosy as of the Closing Date (collectively, the “Accounts
        Receivable”)
        represent or shall represent valid obligations arising from sales actually
        made
        or services actually performed in the Ordinary Course of Business. To Crosby’s
        Knowledge, Schedule 3.12 of the Disclosure Schedules contains a complete
        and
        accurate list of all Accounts Receivable as of the date of the Interim Balance
        Sheet, which list sets forth appropriate reserves for such Accounts
        Receivable.

       

      
        
          
          

        

        
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      3.13 Inventory.

       

      All
        inventory of Argosy, whether or not reflected in the Audited Balance Sheets
        or
        the Interim Financial Statements, consists of a quality usable and salable
        in
        the Ordinary Course of Business, except for obsolete items and items of
        below-standard quality, all of which have been written off, written down
        or
        adequately reserved for to net realizable value in the Audited Balance Sheets
        or
        the Interim Balance Sheet or on the accounting records of Argosy as of the
        Closing Date, as the case may be. All inventories not written off have been
        priced at the lower of cost or market. The quantities of each item of inventory
        (whether raw materials, work-in-process, or finished goods) are not excessive,
        but are reasonable in the present circumstances of Argosy. 

       

      3.14 Taxes.

       

      (a) All
        Tax
        Returns required to be filed by Argosy have been accurately prepared in all
        respects and timely filed and all Taxes for which Argosy may be held liable,
        have been paid or accrued within the prescribed period or any extension thereof.
        

       

      (b) (i)
        No
        federal, state, local or foreign audits or other administrative proceedings
        or
        court proceedings are presently pending with regard to any Taxes or Tax Returns
        of Argosy, and Argosy has not received a written notice of any pending or
        proposed claims, audits or proceedings with respect to Taxes, (ii) Argosy
        has
        not received any written notice of deficiency or assessment from any
        Governmental Body for any amount of Tax that has not been fully settled or
        satisfied, and (iii) no claim has been made in writing by any Governmental
        Bodies in a jurisdiction where Argosy does not file Tax Returns that it is,
        or
        may be, subject to taxation by that jurisdiction.

       

      (c) There
        are
        no Tax liens upon any property of Argosy or the Argosy Interests, except
        for
        Liens for current Taxes not yet due and payable.

       

      (d) At
        all
        times during its existence, Argosy has been a “partnership” for United States
        federal income tax purposes. At all times during its existence, Argosy has
        not
        been a “publicly traded partnership” within the meaning of Code section 7704 and
        the corresponding Treasury Regulations. Argosy is not and never has been
        a
“corporation” or an entity taxable as an “association” for United States federal
        income tax purposes.

       

      (e) Neither
        Argosy nor anyone on behalf of Argosy has waived any statute of limitations
        in
        respect of Taxes or agreed to any extension of time with respect to any Tax
        assessment or deficiency.

       

      (f) Set
        forth
        in Schedule 3.14 of the Disclosure Schedules are Argosy’s federal employer
        identification number and any Tax or employer identification number used
        in any
        state or foreign jurisdiction by Argosy.

       

      (g) Argosy
        has delivered or made available to GTEI correct and complete copies of all
        federal income Tax Returns of or which include Argosy, and any examination
        reports, and statements of deficiencies assessed against or agreed to by
        Argosy
        since January 1, 2003.

       

      3.15 No
        Material Adverse Change.

       

      From
        the
        date of the most recent Audited Balance Sheet, there has not been any material
        adverse change in the financial condition, business operations, liabilities
        or
        assets of Argosy, taken as a whole, and no event has occurred or circumstance
        exists that may result in such a material adverse change. For the purposes
        of
        this Section 3.15, neither (i) any matters concerning the drilling of the
        POPA
        #1 well nor (ii) the failure of the POPA Prospect Area to become a
        commercial field, shall constitute a material adverse change in the financial
        condition, business operations, liabilities or assets of Argosy, nor shall
        such
        failure constitute an event or circumstance that may result in a material
        adverse change. 

       

      
        
          
          

        

        
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      3.16 Employee
        Benefits.

       

      (a) Argosy
        has no United States-based Argosy Benefit Plans, including any United
        States-based Argosy Benefit Plans subject to ERISA. 

       

      (b) Argosy
        has delivered to GTEI, or has made available for GTEI to review, all personnel,
        payroll and employment manuals and policies. 

       

      (c) All
        Argosy Benefit Plans that are maintained by Argosy or any Subsidiary outside
        of
        the United States primarily for the benefit of current or former employees
        of
        Argosy or its Subsidiaries working outside the United States (the “Foreign
        Benefit Plans”)
        have
        been established, maintained, and administered in material compliance with
        their
        terms, and a complete and accurate list of all such plans is set forth on
        Schedule 3.16 of the Disclosure Schedules. 

       

      3.17 Compliance
        with Legal Requirements; Governmental Authorizations.
        

       

      Except
        for Environmental Matters, which are addressed in Section 3.22:

       

      (a) To
        Crosby’s Knowledge, Argosy is, and at all times since January 1, 2003 has been,
        in material compliance with each Legal Requirement that is or was applicable
        to
        it or to the conduct or operation of its business or the ownership or use
        of any
        of its assets.

       

      (b) Argosy
        has not received, at any time since January 1, 2001, any written, or to Crosby’s
        Knowledge oral, notice or other communication from any Governmental Body
        regarding (i) any actual, alleged, possible, or potential violation of, or
        failure to comply with, any Legal Requirement, or (ii) any actual, alleged,
        possible, or potential obligation on the part of Argosy to undertake, or
        to bear
        all or any portion of the cost of, any remedial action of any nature, in
        each
        case the failure of which to satisfy or meet could reasonably be expected
        to
        result in a MAE,
        nor,
        to
        Crosby’s Knowledge, is Argosy aware of any information which might form the
        Basis of any such claims.

       

      3.18 Legal
        Proceedings; Orders.

       

      (a) Except
        as
        set forth in Schedule 3.18(a) of the Disclosure Schedules, there is no pending
        Proceeding:

       

      (i) that
        has
        been commenced by or against Argosy or that otherwise relates to or may affect
        the business of, or any of the assets owned or used by, Argosy; 

       

      (ii) that
        challenges, or that may have the effect of preventing, delaying, making illegal,
        or otherwise interfering with, any of the Contemplated Transactions;
        or

       

      
        
          
          

        

        
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      (iii) to
        Crosby’s Knowledge, (1) no such Proceeding has been threatened, and (2) no event
        has occurred or circumstance exists that may give rise to or serve as a Basis
        for the commencement of any such Proceeding, except as set forth in Schedule
        3.18(a). Argosy has delivered or made available to GTEI copies of all pleadings,
        correspondence, and other documents relating to each Proceeding listed in
        Schedule 3.18(a). 

       

      (b) Except
        as
        set forth in Schedule 3.18(b) of the Disclosure Schedules:

       

      (i) there
        is
        no Order to which Argosy, or any of the assets owned or used by Argosy, is
        subject; and

       

      (ii) no
        officer, director, agent, or employee of AEC or Argosy is subject to any
        Order
        that prohibits such officer, director, agent, or employee from engaging in
        or
        continuing any conduct, activity, or practice relating to the business of
        AEC or
        Argosy.

       

      3.19 Absence
        of Certain Changes and Events.

       

      Except
        as
        set forth in Schedule 3.19 of the Disclosure Schedules, since December 31,
        2005,
        Argosy has conducted its business only in the Ordinary Course of Business
        and
        there has not been any action taken by Argosy, or failure by Argosy to take
        any
        action, during the period from the date of the most recent Audited Balance
        Sheet
        through the date of this Agreement that, if Argosy had taken such action,
        or
        failed to take such action, as applicable, during the period from the date
        of
        this Agreement through the Closing Date, would constitute a breach of Section
        7.2 or 7.3. Since the date of the most recent Audited Balance Sheet, there
        has
        been no damage to or destruction or loss of any asset or property of Argosy,
        whether or not covered by insurance, materially and adversely affecting the
        financial condition, business operations, liabilities or assets
        of
        Argosy.

       

      3.20 Contracts;
        No Defaults.

       

      (a) Schedule
        3.20(a) of the Disclosure Schedules contains a complete and accurate list
        of the
        following contracts. Argosy has delivered or made available to GTEI true
        and
        complete copies (summaries of in the case of oral contracts), of the following
        contracts in effect as of the date hereof and as of Closing:

       

      (i) Schedule
        3.20(a)(i) of the Disclosure Schedules contains a complete and accurate list
        of
        each contract that involves performance of services or delivery of goods
        or
        materials by Argosy of an amount or value in excess of $250,000 during an
        annual
        period;

       

      (ii) Schedule
        3.20(a)(ii) of the Disclosure Schedules contains a complete and accurate
        list of
        each contract that involves performance of services or delivery of goods
        or
        materials to Argosy of an amount or value in excess of $250,000 during an
        annual
        period;

       

      (iii) Schedule
        3.20(a)(iii) of the Disclosure Schedules contains a complete and accurate
        list
        of each contract that was not entered into in the Ordinary Course of
        Business;

       

      
        
          
          

        

        
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      (iv) Schedule
        3.20(a)(iv) of the Disclosure Schedules contains a complete and accurate
        list of
        each lease, rental or occupancy agreement, license (other than with respect
        to
        Owned Intellectual Property Assets), installment and conditional sales
        agreement, and other contract affecting the ownership of, leasing of, title
        to,
        use of, or any leasehold or other interest in, any real or personal property
        (except personal property leases and installment and conditional sales
        agreements having a value per item or aggregate payments of less than
        $250,000 and
        with
        terms of less than one year);

       

      (v) Schedule
        3.20(a)(v) of the Disclosure Schedules contains a complete and accurate list
        of
        each joint venture, partnership, and other contract (however named) involving
        a
        sharing of benefit plans (not including, however, any Argosy Benefit Plans),
        profits, losses, costs, or liabilities by Argosy with any other
        Person;

       

      (vi) Schedule
        3.20(a)(vi) of the Disclosure Schedules contains a complete and accurate
        list of
        each contract providing for payments to or by any Person based on sales,
        purchases, or profits, other than direct payments for goods less than
        $250,000;

       

      (vii) Schedule
        3.20(a)(vii) of the Disclosure Schedules contains a complete and accurate
        list
        of each warranty, guaranty, and or other similar undertaking with respect
        to
        contractual performance extended by Argosy other than in the Ordinary Course
        of
        Business; 

       

      (viii) Schedule
        3.20(a)(viii) of the Disclosure Schedules contains a complete and accurate
        list
        of each contract which relates to the employment, retirement or termination
        of
        the services of any officer, employee or consultant (whose annual salary
        exceeds
        $250,000) or former officer, employee or consultant of Argosy who is entitled
        to
        payments thereunder after the date of this Agreement;

       

      (ix) Schedule
        3.20(a)(ix) of the Disclosure Schedules contains a complete and accurate
        list of
        each contract which relates to the borrowing of money, the guaranty of another
        Person’s borrowing of money or any capital lease obligation;

       

      (x) Schedule
        3.20(a)(x) of the Disclosure Schedules contains a complete and accurate list
        of
        license agreements, cross-license agreements, research agreements, development
        agreements, distribution agreements, end-user license agreements, advertising
        agreements, settlement agreements, consent-to-use agreements and covenants
        not
        to sue, pursuant to which (i) any Person has licensed or granted to Argosy
        any
        right to use, exploit or practice any of such Person’s Intellectual Property;
        (ii) Argosy has: (x) granted to any Person any right to use, exploit or practice
        any Intellectual Property in which Argosy holds any right, title or interest,
        or
        (y) agreed to any restriction on the right of Argosy to use or enforce any
        Intellectual Property or to use any Intellectual Property; or (iii) Argosy
        is
        obligated to pay royalties, share revenue or account for profits to any other
        Person in an amount greater than $250,000; 

       

      (xi) Schedule
        3.20(a)(xi) of the Disclosure Schedules contains a complete and accurate
        list of
        each contract which provides for future payments that are conditioned, in
        whole
        or in part, on a change of control of Argosy; 

       

      
        
          
          

        

        
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      (xii) Schedule
        3.20(a)(xii) of the Disclosure Schedules contains a complete and accurate
        list
        of each contract which restricts the right of Argosy or its current or future
        affiliates to compete in any way with any other Person or which contains
        covenants pursuant to which any Person has agreed not to compete, or covenants
        which otherwise restrict a Person’s ability to engage freely, in any line of
        business or geographic area with respect to Argosy or any of its current
        or
        future affiliates, or covenants pursuant to which any Person has agreed not
        to
        disclose to others information concerning its business; 

       

      (xiii) Schedule
        3.20(a)(xiii) of the Disclosure Schedules contains a complete and accurate
        list
        of each contract which the consequence of a default or termination thereof
        would
        result in a material adverse change
        in
        the financial
        condition, business operations, liabilities or assets
        of
        Argosy;
        

       

      (xiv) Schedule
        3.20(a)(xiv) of the Disclosure Schedules contains a complete and accurate
        list
        of each contract which, along with any related agreements, involves
        consideration in excess of $250,000; 

       

      (xv) Schedule
        3.20(a)(xv) of the Disclosure Schedules contains a complete and accurate
        list of
        each contract which would prohibit or delay the consummation of any of the
        Contemplated Transactions or cause Argosy to pay any money to any Person
        (including any employee) in connection with the consummation of any of the
        Contemplated Transactions; 

       

      (xvi) Schedule
        3.20(a)(xvi) of the Disclosure Schedules contains a complete and accurate
        list
        of each contract, agreement or instrument which requires performance outside
        of
        the country of Colombia, pertains to assets located outside of the country
        of
        Colombia, or pertains to a subject matter located or performed outside of
        the
        country of Colombia; and

       

      (xvii) Schedule
        3.20(a)(xvii) of the Disclosure Schedules contains, without duplication,
        a
        complete and accurate list of each amendment, supplement, and modification
        (whether oral or written) in respect of any of the foregoing. 

       

      Each
        of
        the foregoing is referred to in this Agreement as a “Material
        Contract.”
Each
        Material Contract is legal, valid and binding on, and enforceable against,
        Argosy and each other party thereto, except as limited by (i) bankruptcy,
        insolvency, reorganization, moratorium and other similar laws of general
        application affecting the rights and remedies of creditors and (ii) general
        principles of equity (regardless of whether such enforcement is considered
        in a
        proceeding in equity or at law). Each Material Contract will continue to
        be
        legal, valid, binding, enforceable and in full force and effect on identical
        terms following the consummation of the Contemplated Transactions. Argosy
        has
        performed in all material respects all obligations required to be performed
        by
        it under each Material Contract and to Crosby’s Knowledge each other party to
        each Material Contract has performed in all material respects all obligations
        required to be performed by it under such Material Contract. Argosy has not
        violated, breached or defaulted under, nor has it received notice of, any
        violation, acceleration or breach of or default under (or any condition which
        with the passage of time or the giving of notice or both would cause such
        a
        violation, acceleration of or default under), any Material Contract and to
        Crosby’s Knowledge no other party to a Material Contract has violated, breached
        or defaulted under any Material Contract. There are no renegotiations of,
        attempts to renegotiate, or outstanding rights to renegotiate any material
        amounts paid or payable to Argosy under any current or completed contract,
        agreement, commitment or understanding with any Person and no Person has
        made a
        demand for such renegotiation. The contracts, agreements, commitments or
        understandings relating to the provision of services or products by Argosy
        have
        been entered into in the Ordinary Course of Business and have been entered
        into
        without the commission of any act alone or in concert with any other Person,
        or
        any consideration having been paid or promised, that is or would be in violation
        of any law. Schedule 3.20(a) of the Disclosure Schedules provides Argosy’s good
        faith estimate of the additional costs and expenses which will accrue to
        Argosy
        under any Material Contract as a result of the Contemplated Transactions,
        and
        such estimate is, in the aggregate, accurate in all material respects. This
        entire paragraph is subject to the disclosures made in the Disclosure Schedules.
        

       

      
        
          
          

        

        
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      (b) No
        officer, director, agent, employee, consultant, or contractor of Argosy is
        bound
        by any contract that purports to limit the ability of such officer, director,
        agent, employee, consultant, or contractor to (A) engage in or continue any
        conduct, activity, or practice relating to the business of Argosy, or (B)
        assign
        to Argosy or to any other Person any rights to any invention, improvement,
        or
        discovery.

       

      3.21 Insurance.

       

      (a) Schedule
        3.21(a) of the Disclosure Schedules contains a summary of all policies of
        insurance to which Argosy is a named insured or under which Argosy, or any
        officer or manager of Argosy, is or has been an insured at any time within
        the
        five years preceding the date of this Agreement. Argosy has delivered or
        made
        available to GTEI true and complete copies of all such policies of insurance.
        

       

      (b) Except
        as
        set forth in Schedule 3.21(b) of the Disclosure Schedules, all policies under
        which Argosy is a named insured (i) are valid and enforceable; and (ii) do
        not
        provide for any material retrospective premium adjustment or other
        experienced-based liability on the part of Argosy.

       

      (c) Argosy
        has paid all premiums due, and has otherwise performed all of its respective
        obligations, under each policy to which Argosy is a party or that provides
        coverage to Argosy or any officer or manager thereof.

       

      (d) Argosy
        has given notice to the insurer of all claims that to Crosby’s Knowledge are
        insured thereby.

       

      (e) Except
        as
        set forth in Schedule 3.21(e) of the Disclosure Schedules, Argosy does not
        have
        any self-insurance arrangement. 

       

      3.22 Environmental
        Matters.

       

      Except
        as
        set forth in Schedule 3.22 of the Disclosure Schedules, and to Crosby’s
        Knowledge:

       

      
        
          
          

        

        
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      (a) Argosy
        is
        in compliance with, and does not have liability under, any Environmental
        Law or
        any Environmental Permit;

       

      (b) Argosy
        has not received any order, notice, or other written communication, or verbal
        communication, from any Governmental Body or third party of any alleged failure
        to comply with any Environmental Law or Environmental Permit, or of any
        obligation to undertake or bear the cost of any investigation and remediation
        with respect to (i) any real property, leaseholds, or other interests currently
        or formerly owned or operated by Argosy and any buildings, plants, structures,
        or equipment (including motor vehicles, tank cars, and rolling stock) currently
        owned or operated by Argosy (the “Facilities”)
        or
        (ii) any other properties or assets (whether real, personal, or mixed) in
        which
        Argosy has had an interest, or with respect to any property to which Hazardous
        Materials generated by Argosy may have been sent where the alleged noncompliance
        or obligation described in such order, notice or communication remains
        unresolved;

       

      (c) there
        are
        no Proceedings or threatened claims, Liens (except Permitted Liens), or other
        restrictions of any nature, arising under or pursuant to any Environmental
        Law
        or Environmental Permit, with respect to or affecting any of the Facilities
        or
        any other properties and assets (whether real, personal, or mixed) in which
        Argosy has an interest; 

       

      (d) there
        are
        no Hazardous Materials present in the soil or groundwater at the Facilities
        or
        any real property, leaseholds, or other interests currently or formerly owned
        or
        operated by Argosy in such amounts that would give rise to material liabilities
        or obligations under any Environmental Law or that may inhibit or increase
        the
        cost of expansion on or use of any of the Facilities; and

       

      (e) Argosy
        has obtained all Environmental Permits required for compliance under the
        Environmental Laws for the operation of Argosy and its assets as are currently
        being conducted. A list of the Environmental Permits is attached hereto as
        Schedule 3.22(e). All required renewals of the Environmental Permits have
        been
        timely filed and Argosy has no reason to believe any such Environmental Permits
        will not be reissued in due course without adverse conditions and without
        material expense or delay. No consent or approval from any Governmental Body
        is
        required under any Environmental Law or Environmental Permit in order to
        consummate the Contemplated Transactions. 

       

      3.23 Employees.

       

      (a) Schedule
        3.23(a) of the Disclosure Schedules contains a complete and accurate list
        of the
        following information for each employee of Argosy, including each employee
        on
        leave of absence or layoff status: name; job title and current compensation
        paid
        or payable (including bonuses paid or payable).

       

      (b) No
        employee of Argosy is a party to, or is otherwise bound by, any agreement
        or
        arrangement, including any confidentiality, noncompetition, or proprietary
        rights agreement, between such employee and any other Person that in any
        way
        adversely affects or shall affect (i) the performance of his duties as an
        employee of Argosy, or (ii) the ability of Argosy to conduct its business.
        No
        key employee of Argosy has notified Argosy that such key employee intends
        to
        terminate his employment or resign any office with Argosy. 

       

      
        
          
          

        

        
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      3.24 Labor
        Relations; Compliance.

       

      (a) Except
        as
        set forth in Schedule 3.24(a) of the Disclosure Schedules, since January
        1,
        2004, Argosy has not been nor is it a party to any collective bargaining
        or
        other labor contract. Except as set forth in Schedule 3.24(a) of the Disclosure
        Schedules, since January 1, 2004, there has not been, there is not presently
        pending or existing, and to Crosby’s Knowledge there is not threatened,
        (i) any strike, slowdown, picketing, work stoppage, or employee grievance
        process, (ii) any Proceeding against or affecting Argosy relating to the
        alleged
        violation of any Legal Requirement pertaining to labor relations or employment
        matters. There is no lockout of any employees by Argosy, and no such action
        is
        contemplated by Argosy. 

       

      (b) Schedule
        3.24(b) of the Disclosure Schedules sets forth a list of all former employees
        of
        Argosy to which Argosy has outstanding obligations, and a summary of such
        obligations. 

       

      3.25 Intellectual
        Property.

       

      (a) Agreements.

       

      Schedule
        3.25(a) of the Disclosure Schedules contains a complete and accurate list
        and
        summary description of all contracts relating to the Owned Intellectual Property
        Assets to which Argosy is a party or by which Argosy is bound, except for
        any
        license implied by the sale of a product and licenses for commonly available
        software programs with a value of less than $5,000 under which Argosy is
        the
        licensee. There are no outstanding and, to Crosby’s Knowledge, no threatened
        disputes or disagreements with respect to any such agreement. 

       

      (b) Intellectual
        Property.

       

      Argosy
        either owns all right, title, and interest in each of the Owned Intellectual
        Property Assets, free and clear of all Liens (except Permitted Liens), or
        has
        rights to the Intellectual Property sufficient for the operation of Argosy’s
        business as it is currently conducted.

       

      (c) Patents.

       

      (i) Schedule
        3.25(c) of the Disclosure Schedules contains a complete and accurate list
        and
        summary description of all Owned Patents.

       

      (ii) No
        Owned
        Patent is infringed upon or, to Crosby’s Knowledge, has been threatened in any
        way. None of the products manufactured and sold, nor any process or know-how
        used, by Argosy infringes or is alleged to infringe any Patent of any other
        Person.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      

       

      (d) Trademarks.

       

      (i) Schedule
        3.25(d) of the Disclosure Schedules contains a complete and accurate list
        and
        summary description of all Owned Registered Marks.

       

      (ii) No
        Owned
        Mark is infringed upon or, to Crosby’s Knowledge, has been threatened in any
        way. None of the Marks used by Argosy infringes or is alleged to infringe
        any
        Mark of any third party.

       

      (e) Copyrights.

       

      (i) Schedule
        3.25(e) of the Disclosure Schedules contains a complete and accurate list
        and
        summary description of all Owned Registered Copyrights.

       

      (ii) No
        Owned
        Copyright is infringed upon or, to Crosby’s Knowledge, has been threatened in
        any way. None of the subject matter of any of the Copyrights used by Argosy
        infringes or is alleged to infringe any Copyright of any third
        party.

       

      3.26 Brokers
        or Finders.

       

      Except
        as
        set forth in Schedule 3.26 of the Disclosure Schedules, Argosy and its
        representatives have incurred no obligation or liability, contingent or
        otherwise, for brokerage or finders’ fees or agents’ commissions or other
        similar payment in connection with the Operative Agreements and the Contemplated
        Transactions.

       

      3.27 No
        Undisclosed Liabilities.

       

      Except
        as
        set forth on Schedule 3.27, Argosy has no liabilities or obligations of any
        nature except for (i) liabilities, indebtedness, commitments, expenses, claims,
        deficiencies or obligations reflected or reserved against on the face of
        the
        Audited Financial Statements (and not the notes thereto), the Interim Financial
        Statements or referenced on any Schedule hereto, (ii) liabilities or
        obligations that would not be required to be disclosed in the Audited Financial
        Statements (or the notes thereto) or the Interim Financial Statements in
        accordance with GAAP and (iii) liabilities incurred by Argosy in the Ordinary
        Course of Business since the date of the Interim Financial Statements (none
        of
        which are the result of a breach of contract, breach of warranty or
        tort).

       

      3.28 Transactions
        with Affiliates.

       

      Except
        as
        set forth in Schedule 3.28 of the Disclosure Schedules, there are no material
        contracts in effect on the date hereof or which will become effective or
        remain
        in effect after the Closing Date between AEC and Argosy on the one hand and
        Crosby or any of its affiliates (each such Person, other than Argosy, being
        referred to herein as a “Related
        Party”)
        on the
        other. Except as set forth in Schedule 3.28 of the Disclosure Schedules,
        no
        Related Party owns or has owned (of record or as a beneficial owner) an interest
        in a Person that has (a) had business dealings or a direct or indirect financial
        interest in any transaction with Argosy, other than business dealings or
        transactions conducted in the Ordinary Course of Business at substantially
        prevailing market prices and on substantially prevailing market terms or
        (b)
        engaged in a business competing with Argosy with respect to any line of the
        products or services of Argosy in any market presently served by Argosy,
        except
        for the ownership of less than 2% of the outstanding capital stock of any
        such
        competing business that is publicly traded on any recognized exchange or
        in the
        over the counter market. Except (i) as is set forth in Schedule 3.28 of the
        Disclosure Schedules, (ii) with respect to any claims or rights under the
        Operative Agreements and (iii) with respect to any indemnity rights under
        Argosy’s Third Amended and Restated Agreement of Limited Partnership, as
        amended, and as in effect on the date hereof, none of Crosby, its members,
        Leon
        J. Backes or Robert J. Schumacher has any claims or rights, directly or
        indirectly, against Argosy. 

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      

       

      3.29 Customers
        and Suppliers.

       

      Schedule
        3.29 of the Disclosure Schedules sets forth a true and complete list by dollar
        volume of sales made or services provided in the aggregate by Argosy or for
        Argosy for the one-year period ended December 31, 2005 and the three-month
        period ended March 31, 2006, to the 10 largest customers for each such time
        period (such customers, the “Material
        Customers”)
        and
        from the 10 largest suppliers for each such time period (such suppliers,
        the
“Material
        Suppliers”).
        Except as set forth in Schedule 3.29 of the Disclosure Schedules, none of
        the
        Material Customers or Material Suppliers has: (a) notified Argosy that such
        Person intends or has threatened to terminate, not to extend, not to renew,
        not
        to expand or to materially reduce its business relationship with Argosy in
        calendar year 2006 or thereafter or (b) changed, or requested a change to,
        the
        terms of any contract. Since the date of the Interim Balance Sheet, there
        has
        been no material adverse change in the business relationship of Argosy with
        any
        of the Material Customers or Material Suppliers, and no indication that any
        such
        change is reasonably foreseeable.

       

      3.30 Certain
        Payments.

       

      Since
        January 1, 2003, neither Argosy nor any employee of Argosy nor any other
        Person
        associated with or acting for or on behalf of Argosy, has directly or indirectly
        with respect to Argosy (a) made any contribution, gift, bribe, rebate, payoff,
        influence payment, kickback, or other payment to any Person, private or public,
        regardless of form, whether in money, property, or services (i) to obtain
        favorable treatment in securing business, (ii) to pay for favorable treatment
        for business secured, (iii) to obtain special concessions or for special
        concessions already obtained, for or in respect of Argosy or any affiliate
        of
        Argosy, or (iv) in violation of any Legal Requirement, or (b) established
        or
        maintained any fund or asset that has not been recorded in the books and
        records
        of Argosy. 

       

      3.31 Bank
        and Brokerage Accounts; Investment Assets.
        

       

      Schedule
        3.31
        of
        the
        Disclosure Schedules
        sets
        forth (a) a true and complete list of the names and locations of all banks,
        trust companies, securities brokers and other financial institutions at which
        Argosy has an account or safe deposit box or maintains a banking, custodial,
        trading or other similar relationship; (b) a true and complete list and
        description of each such account, box and relationship, indicating in each
        case
        the account number and the names and titles and capacities of the respective
        representatives of Argosy having signatory power with respect thereto; and
        (c) a
        list of each investment asset, the name of the record and beneficial owner
        thereof, the location of the certificates, if any, therefor, the maturity
        date,
        if any, and any stock or bond powers or other authority for transfer granted
        with respect thereto.  

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      

       

      3.32 No
        Argosy Debt.
        

       

      Argosy
        has no outstanding Argosy Debt other than as set forth on Schedule 3.32 of
        the
        Disclosure Schedules and, between the date of this Agreement and the Closing,
        has no intention to incur any additional Argosy Debt. 

       

      3.33 Argosy
        Interests.
        

       

      To
        Crosby’s Knowledge, Argosy has no obligations under the agreements set forth
        under clause (iii) of the definition of “Argosy Interests” except obligations
        which, post-Closing, Argosy will owe to itself. 

       

      3.34 Disclosure.
        

       

      No
        representation or warranty regarding Argosy contained in the Operative
        Agreements, and no statement contained in the Disclosure Schedules or in
        any
        certificate, list or other writing furnished to GTEI pursuant to any provision
        of the Operative Agreements (including without limitation the Audited Financial
        Statements and Interim Financial Statements) contains any untrue statement
        of a
        material fact or omits to state a material fact necessary in order to make
        the
        statements herein or therein, in the light of the circumstances under which
        they
        were made, not misleading.

       

      3.35 Representations
        and Warranties Exclusive.
        

       

      Except
        as
        specifically and expressly set forth in this Agreement, Crosby has not made,
        and
        will not make, any representation or warranty, whether direct or indirect,
        express or implied, oral or written, or statutory, whatsoever in connection
        with
        this Agreement or the transactions contemplated herein. Notwithstanding any
        other provision of this Agreement, and in addition to (and not in limitation
        of)
        the first sentence of this Section 3.35, Crosby specifically disclaims any
        representation or warranty whatsoever regarding the following:

       

      (a) The
        accuracy or completeness of data, information, or materials, whether oral
        or
        written, and in whatever media provided (collectively, the “Transferred
        Materials”)
        furnished at any time by Crosby, Argosy or any of their respective agents,
        attorneys, accountants, auditors advisors or representatives (collectively,
        the
“Crosby
        Transferors”)
        to
        GTEI or any of its agents, attorneys, accountants, auditors advisors or
        representatives (collectively, the “GTEI
        Recipients”)
        in
        connection with:

       

      (i) 
        the
        Historical Properties or the quality or quantity of Hydrocarbon reserves
        and/or
        prospective resources (if any) attributable to the Historical Properties
        (provided,
        however,
        that
        this Section 3.35(a)(i) shall not limit the representations and warranties
        set
        forth in Sections 3.8, 3.9, 3.10 and 3.11); or

       

      (ii) the
        ability of the Historical Properties to produce Hydrocarbons.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      

       

      All
        Transferred Materials furnished by any of the Crosby Transferees to any of
        the
        GTEI Recipients were transferred as a convenience, and reliance on or use
        of
        them is at GTEI’s sole risk. 

       

      (b) Recovery
        (or no recovery) of Hydrocarbons from any of the Historical
        Properties.

       

      (c) The
        Historical Properties or the quality or quantity of Hydrocarbon reserves
        and/or
        prospective resources (if any) attributable to the Historical
        Properties.

       

      (d) The
        ability of the Historical Properties to produce Hydrocarbons.

       

      ARTICLE
        IV

      Representations
        and Warranties Regarding AEC
        .

       

      As
        a
        material inducement to purchase the Argosy Interests and consummate the
        Contemplated Transactions, Crosby represents and warrants to GTEI with respect
        to AEC only, as follows: 

       

      4.1 Organization
        and Good Standing.

       

      (a) AEC
        is a
        corporation duly organized, validly existing, and in good standing under
        the
        laws of the State of
        Delaware, with power and authority to conduct its business as it is now being
        conducted, to
        own or
        use the properties and assets that it purports to own or use, and to perform
        all
        its obligations under the contracts to which it is a party. Crosby has delivered
        to GTEI copies of AEC’s certificate of incorporation and bylaws, as currently in
        effect.

       

      (b) AEC
        is
        duly qualified to do business as a foreign corporation and is in good standing
        under the laws of each state or other jurisdiction in which either the ownership
        or use of the properties owned or used by it, or the nature of the activities
        conducted by it, requires such qualification, except where failure to be
        so
        qualified could not reasonably be expected to have a MAE.

       

      4.2 General
        Partner. 

       

      AEC
        is
        the sole General Partner of Argosy. 

       

      4.3 Partnership
        Interest. 

       

      AEC
        owns,
        beneficially and of record, solely the general partnership interest in Argosy.
        AEC’s general partnership interest equals 0.7143% of the total equity of Argosy.
        Other than the Lien in favor of Aviva, which shall be released contemporaneously
        with the Closing, the general partnership interest is free and clear of all
        Liens. AEC is not a party to any voting trust, proxy, or other agreement
        or
        understanding with respect to the voting of any of the partnership interest
        of
        Argosy. AEC is not a party to any option, warrant, right, contract, call,
        put or
        other agreement or commitment providing for the disposition or acquisition
        of
        the general partnership interest. Except
        for such general partnership interest, AEC does not own, or have any contract
        to
        acquire, any other securities of any Person or any direct or indirect equity
        or
        ownership interest in any other business.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      

       

      4.4 Directors;
        Officers.

       

      The
        names
        of all directors and officers of AEC on the date hereof, and such persons’
positions with AEC, are listed in Schedule 4.4 of the Disclosure
        Schedules.

       

      4.5 Authority;
        No Conflict.

       

      (a) The
        Operative Agreements to which AEC is a party constitute legal, valid and
        binding
        obligations of AEC, enforceable against AEC in accordance with their terms,
        except as limited by (i) bankruptcy, insolvency, reorganization, moratorium
        and
        other similar laws of general application affecting the rights and remedies
        of
        creditors, and (ii) general principles of equity (regardless of whether such
        enforcement is considered in a proceeding in equity or at law). 

       

      (b) Except
        as
        set forth in Schedule 4.5(b) of the Disclosure Schedules, the consummation
        or
        performance of any of the Contemplated Transactions shall not, directly or
        indirectly (with or without notice or lapse of time):

       

      (i) contravene,
        conflict with, or result in a violation of (A) any provision of the certificate
        of incorporation or bylaws of AEC, or (B) any resolution adopted by the board
        of
        directors of AEC; or

       

      (ii) contravene,
        conflict with, or result in a violation of, or give any Governmental Body
        the
        right to challenge any of the Contemplated Transactions or to exercise any
        remedy or obtain any relief under any Legal Requirement or any Order to which
        AEC may be subject, other than such contraventions, conflicts or violations
        as
        would occur solely as a result of the identity or the legal or regulatory
        status
        of GTEI or any of its affiliates. 

       

      (c) Except
        as
        set forth in Schedule 4.5(c) of the Disclosure Schedules, AEC is not, and
        shall
        not be, required to give any notice to or obtain any Consent from any Person
        in
        connection with the execution and delivery of any of the Operative Agreements
        to
        which it is a party or the consummation or performance of any of the
        Contemplated Transactions. 

       

      4.6 Capitalization.

       

      The
        authorized capital of AEC consists of 1,000 shares of common stock, par value
        $0.001 per share (the “AEC
        Stock”),
        of
        which 1,000 shares are issued and outstanding as of the date of this Agreement.
        Such outstanding shares of AEC Stock constitute all of the authorized and
        outstanding capital securities of AEC, all of which are owned beneficially
        and
        of record by Crosby. The outstanding shares of AEC Stock are duly authorized,
        validly issued, fully paid and nonassessable. The outstanding shares of AEC
        Stock have not been issued in violation of any preemptive rights or similar
        rights. 

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      

       

      4.7 Business. 

       

      AEC
        has
        only one asset (real, personal or mixed), its general partnership interest
        in
        Argosy. AEC has no employees. AEC has no liabilities and/or executory contracts,
        independent of its capacity as General Partner of Argosy.

       

      4.8 Taxes.

       

      (a) All
        Tax
        Returns required to be filed by AEC
        have
        been
        accurately prepared in all respects and timely filed and all Taxes for which
        AEC
        may
        be
        held liable, have been paid or accrued within the prescribed period or any
        extension thereof. All Taxes required to be withheld by AEC,
        including but not limited to, Taxes arising as a result of payments to employees
        of AEC,
        have
        been collected or withheld, and have either been paid to the respective
        Government Bodies, set aside in accounts for such purpose, or accrued, reserved
        against, and entered upon the books and records of AEC.
        

       

      (b) (i)
        No
        federal, state, local or foreign audits or other administrative proceedings
        or
        court proceedings are presently pending with regard to any Taxes or Tax Returns
        of AEC,
        and
AEC
        has
        not
        received a written notice of any pending or proposed claims, audits or
        proceedings with respect to Taxes, (ii) AEC
        has
        not
        received any written notice of deficiency or assessment from any Governmental
        Body for any amount of Tax that has not been fully settled or satisfied,
        and
        (iii) no claim has been made in writing by any Governmental Bodies in a
        jurisdiction where AEC
        does
        not
        file Tax Returns that it is, or may be, subject to taxation by that
        jurisdiction.

       

      (c) There
        are
        no Tax liens upon any property or equity securities of AEC,
        except
        for Liens for current Taxes not yet due and payable.

       

      (d) At
        all
        times during its existence, AEC
        has
        been
        a “C Corporation” for United States federal income tax purposes. 

       

      (e) Neither
        AEC
        nor
        anyone on behalf of AEC
        has
        waived any statute of limitations in respect of Taxes or agreed to any extension
        of time with respect to any Tax assessment or deficiency.

       

      (f) Set
        forth
        in Schedule 4.8 of the Disclosure Schedules are Argosy’s federal employer
        identification number and any Tax or employer identification number used
        in any
        state or foreign jurisdiction by AEC.

       

      (g) AEC
        has
        disclosed on its United States federal income tax returns all positions taken
        therein that could give rise to a substantial understatement of federal income
        Tax within the meaning of Code section 6662. 

       

      (h) AEC
        has
        made
        available to GTEI correct and complete copies of all federal income Tax Returns
        of or which include AEC,
        and any
        examination reports, and statements of deficiencies assessed against or agreed
        to by AEC
        since
        January 1, 2003.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      

       

      4.9 Compliance
        with Legal Requirements; Governmental Authorizations.
        

       

      AEC
        is,
        and at all times since January 1, 2003 has been, in material compliance with
        each Legal Requirement that is or was applicable to it or to the conduct
        or
        operation of its business or the ownership or use of any of its assets. AEC
        has
        not received, at any time since January 1, 2001, any notice or other
        communication (whether oral or written) from any Governmental Body regarding
        (i)
        any actual, alleged, possible, or potential violation of, or failure to comply
        with, any Legal Requirement, or (ii) any actual, alleged, possible, or potential
        obligation on the part of AEC to undertake, or to bear all or any portion
        of the
        cost of, any remedial action of any nature, in each case the failure of which
        to
        satisfy or meet could reasonably be expected to result in a MAE,
        nor
        is
        AEC aware of any information which might form the Basis of any such
        claims.

       

      4.10 Legal
        Proceedings; Orders.

       

      Except
        as
set
        forth in
        Schedule 4.10 of the Disclosure Schedules, there is no pending
        Proceeding:

       

      (a) that
        has
        been commenced by or against AEC or that otherwise relates to or may affect
        the
        business of, or any of the assets owned or used by, AEC; 

       

      (b) to
        Crosby’s Knowledge (i) no such Proceeding has been threatened, and (ii) no event
        has occurred or circumstance exists that may give rise to or serve as a Basis
        for the commencement of any such Proceeding, except as set forth in Schedule
        4.10. 

       

      4.11 No
        Undisclosed Liabilities.

       

      AEC
        has
        no liabilities or obligations of any nature, except as the general partner
        of
        Argosy. 

       

      4.12 No
        AEC
        Debt.
        

       

      AEC
        has
        no outstanding debt and, between the date of this Agreement and the Closing,
        has
        no intention to incur any debt. 

       

      4.13 Brokers
        or Finders.

       

      Except
        as
        set forth in Schedule 4.13 of the Disclosure Schedules, AEC and its
        representatives have incurred no obligation or liability, contingent or
        otherwise, for brokerage or finders’ fees or agents’ commissions or other
        similar payment in connection with the Operative Agreements and the Contemplated
        Transactions.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      

       

      4.14 Transactions
        with Affiliates.

       

      Except
        as
        set forth in Schedule 4.14 of the Disclosure Schedules, there are no material
        contracts in effect on the date hereof or which will become effective or
        remain
        in effect after the Closing Date between AEC and Argosy on the one hand and
        Crosby or any of its affiliates (each such Person, other than AEC, being
        referred to herein as a “Related
        Party”
for
        the
        purposes of this Section 4.16) on the other. Except as set forth in Schedule
        4.14 of the Disclosure Schedules, no Related Party owns or has owned (of
        record
        or as a beneficial owner) an interest in a Person that has (a) had business
        dealings or a direct or indirect financial interest in any transaction with
        AEC,
        other than business dealings or transactions conducted in the Ordinary Course
        of
        Business at substantially prevailing market prices and on substantially
        prevailing market terms or (b) engaged in a business competing with AEC
        with respect to any line of the products or services of AEC in any market
        presently served by AEC, except for the ownership of less than 2% of the
        outstanding capital stock of any such competing business that is publicly
        traded
        on any recognized exchange or in the over the counter market. Except (i) as
        is set forth in Schedule 4.14 of the Disclosure Schedules, (ii) with
        respect to any claims or rights under the Operative Agreements and
        (iii) with respect to any indemnity rights under Argosy’s Third Amended and
        Restated Agreement of Limited Partnership, as amended, and as in effect on
        the
        date hereof, none of Crosby, its members, Leon J. Backes or Robert J. Schumacher
        has any claims or rights, directly or indirectly, against AEC.

       

      4.15 Disclosure.
        

       

      No
        representation or warranty regarding AEC
        contained
        in the Operative Agreements, and no statement contained in the Disclosure
        Schedules or in any certificate, list or other writing furnished to GTEI
        pursuant to any provision of the Operative Agreements contains any untrue
        statement of a material fact or omits to state a material fact necessary
        in
        order to make the statements herein or therein, in the light of the
        circumstances under which they were made, not misleading.

       

      ARTICLE
        V

      Representations
        and Warranties Regarding
        Crosby

       

      As
        a
        material inducement to purchase the Argosy Interests and consummate the
        Contemplated Transactions, Crosby
        represents and warrants to GTEI, with respect to Crosby only,
        as
        follows:

       

      5.1 Organization
        and Good Standing.

       

      Crosby
        is
        a limited liability company duly organized, validly existing, and in good
        standing under the laws of the State of Texas. 

       

      5.2 Authority;
        No Conflict.

       

      (a) Crosby
        has the right, power, authority, and capacity to execute and deliver the
        Operative Agreements to which it is a party and to perform its obligations
        under
        the Operative Agreements to which it is a party. The Operative Agreements
        to
        which it is a party constitute legal, valid, and binding obligations of Crosby,
        enforceable against Crosby in accordance with their terms, except as limited
        by
        (i) bankruptcy, insolvency, reorganization, moratorium and other similar
        laws of
        general application affecting the rights and remedies of creditors and (ii)
        general principles of equity (regardless of whether such enforcement is
        considered in a proceeding in equity or at law).

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      

       

      (b) Except
        as
        set forth in Schedule 5.2(b) of the Disclosure Schedules, Crosby is not and
        will
        not be required to give any notice to or obtain any Consent from any Person
        in
        connection with the execution and delivery of the Operative Agreements to
        which
        it is a party or the consummation or performance of any of the Contemplated
        Transactions. 

       

      (c) Neither
        the execution and delivery of the Operative Agreements to which it is a party
        nor the consummation or performance of any of the Contemplated Transactions
        will, directly or indirectly (with or without notice or lapse of
        time):

       

      (i) contravene,
        conflict with, or result in a violation of (A) any provision of any governing
        document of Crosby, or (B) any resolution adopted by the governing body or
        security holders of Crosby;

       

      (ii) contravene,
        conflict with, or result in a violation of, or give any Governmental Body
        the
        right to challenge, any of the Contemplated Transactions or to exercise any
        remedy or obtain any relief under any Legal Requirement or any Order to which
        Crosby, or any of its assets, may be subject, other than such contraventions,
        conflicts or violations as would occur solely as a result of the identity
        or the
        legal or regulatory status of GTEI or any of its affiliates (determined without
        regard to GTEI’s ownership of the Argosy Interests); or 

       

      (iii) result
        in
        the imposition or creation of a Lien upon or with respect to the Argosy
        Interests sold hereunder by Crosby or the assets of Argosy.
        

       

      5.3 Argosy
        Interests.

       

      Except
        as
        set forth on Schedule 5.3 of the Disclosure Schedules, Crosby owns, beneficially
        and of record, the Argosy Interests, free and clear of all Liens. Except
        as set
        forth in Schedule
        5.3
        of the
        Disclosure Schedules, Crosby is not a party to any voting trust, proxy, or
        other
        agreement or understanding with respect to the voting of any capital stock
        of
        Argosy. Crosby is not a party to any option, warrant, right, contract, call,
        put
        or other agreement or commitment providing for the disposition or acquisition
        of
        the Argosy Interests (other than this Agreement). 

       

      5.4 Legal
        Proceedings.

       

      Except
        as
        set forth in Schedule
        5.4
        of the
        Disclosure Schedules, there is no pending Proceeding (or to Crosby’s Knowledge,
        threatened Proceeding) that challenges, or that may have the effect of
        preventing, delaying, making illegal, or otherwise interfering with, any
        of the
        Contemplated Transactions.

       

      5.5 Brokers
        or Finders. 

       

      Except
        as
        set forth in Schedule 5.5 of the Disclosure Schedules, Crosby and its agents
        have incurred no obligation or liability, contingent or otherwise, for brokerage
        or finders’ fees or agents’ commissions or other similar payment in connection
        with the Operative Agreements and the Contemplated Transactions. 

       

      
        
          
          

        

        
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      5.6 Investment
        Representations. 

       

      (a) Crosby
        has been advised by GTEI that and acknowledges that the Restricted Stock
        to be
        acquired by Crosby pursuant to this Agreement will not be registered under
        the
        U.S. Securities Act of 1933, as amended (the “Securities
        Act”)
        and
        the issuance to Crosby of such stock is being made on the basis of an exemption
        afforded under the Securities Act and GTEI’s reliance on such statutory
        exemption is based in part on the representations made herein by
        Crosby.

       

      (b) Crosby
        is
        either an “accredited investor”, as defined in Rule 501 of Regulation D
        promulgated under the Securities Act (“Reg.
        D”)
        or has
        been advised by a “purchaser representative” (as defined in Reg. D) in
        connection with GTEI’s issuance of shares of Restricted Stock to be received by
        Crosby pursuant to this Agreement. Crosby, or if it is not an accredited
        investor, as advised by its purchaser representative, has such knowledge
        and
        experience in financial and business matters that it is capable of evaluating
        the merits and risks of an investment in the Restricted Stock, and is able
        to
        bear the economic risk of such investment.

       

      (c) Crosby
        or
        if it is not an accredited investor, its purchaser representative, is familiar
        with the condition, financial or otherwise, of GTEI and its affairs as it
        has
        deemed necessary to evaluate the merits and risks of becoming a stockholder
        of
        GTEI and acknowledges that GTEI has offered to make available and has, when
        requested, made available, such additional information that would be provided
        in
        a registration statement under the Securities Act and granted access to such
        reasonable additional information necessary to verify the accuracy of all
        information furnished.

       

      (d) Crosby,
        as advised by legal counsel as deemed necessary, (i) is familiar with the
        nature
        of the limitations imposed by the Securities Act, and the rules and regulations
        promulgated thereunder, on the transfer of the Restricted Stock, (ii)
        understands that the Restricted Stock must be held indefinitely unless a
        disposition thereof is registered under the Securities Act, or in the opinion
        of
        counsel to Crosby (reasonably acceptable to GTEI) in form and substance
        satisfactory to GTEI’s counsel (a signed copy of which opinion shall have been
        delivered to GTEI prior to the disposition of any shares of Restricted Stock),
        is exempt from registration under the Securities Act, including a disposition
        in
        accordance with all the requirements and limitations of Rule 144 promulgated
        under the Securities Act, and complies with other applicable federal and
        state
        securities laws;

       

      (e) Crosby
        will acquire the Restricted Stock for its own account, for investment and
        not
        with a view to the distribution or resale thereof within the meaning of the
        Securities Act, nor with any present intention of selling or distributing
        the
        same; provided,
        that
        Crosby may distribute the Restricted Stock to its members in accordance with
        the
        Registration Rights Agreement. 

       

      (f) Crosby
        is
        a resident of the state of Texas.

       

      (g) Crosby
        will not transfer any shares of Restricted Stock except in compliance with
        the
        terms and provisions of this Section 5.6 and with the provisions of the
        Registration Rights Agreement.

       

      
        
          
          

        

        
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      (h) Crosby
        agrees that each certificate to be received by it representing shares of
        Restricted Stock will bear the following legends:

       

      “THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
        AND
        HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED.
        THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
        REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY OTHER APPLICABLE
        SECURITIES LAWS.

       

      “THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
        TRANSFER SET FORTH IN A REGISTRATION RIGHTS AGREEMENT AMONG GRAN TIERRA ENERGY
        INC. AND ITS STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT CAN BE OBTAINED
        FROM GRAN TIERRA ENERGY INC. AT ITS EXECUTIVE OFFICES.”

       

      (i) In
        addition to marking the certificates with the above legends, Crosby agrees
        that
        GTEI is authorized to notify its transfer agent of the status of the shares
        of
        Restricted Stock and to take such action, including stop transfer instructions,
        as GTEI in its sole discretion may deem necessary or proper to prevent the
        violation of the Security Act or other securities laws and to assure compliance
        with the terms of this Agreement; provided, however, that GTEI shall not
        make
        any such authorization or take such action with respect to shares of Restricted
        Stock issued to Crosby which is materially inconsistent with the manner it
        is
        treating restricted stock of other Persons. 

       

      5.7 Non-Foreign
        Person. 

       

      Crosby
        is
        not a foreign corporation, foreign partnership, foreign trust or foreign
        estate
        (as those items are defined in the Code and Treasury Regulations).

       

      5.8 No
        Knowledge of Claims. 

       

      To
        Crosby’s Knowledge, there is no agreement, indebtedness, obligation or claim of
        any nature or kind whatsoever that it or any of its members, officers,
        directors, affiliates or agents has, or of which there is a Basis to have,
        against Argosy, AEC, GTEI or their respective successors, assigns, officers,
        directors, agents, employees, affiliates and subsidiaries, past and present,
        except such rights or claims as are contemplated by this Agreement or any
        other
        Operative Agreement, or any indemnity rights under Argosy’s Third Amended and
        Restated Agreement of Limited Partnership, as amended and as in effect on
        the
        date hereof, which will survive the Closing. 

       

      
        
          
          

        

        
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      ARTICLE
        VI

      Representations
        and Warranties of GTEI

       

      As
        a
        material inducement to consummate the Contemplated Transactions,
        Gran
        Tierra represents
        and warrants to Crosby as
        follows:

       

      6.1 Organization
        and Good Standing.

       

      GTEI
        is a
        corporation duly organized, validly existing, and in good standing under
        the
        laws of the State of Nevada with full corporate power and authority to conduct
        its business as it is now being conducted, and to own or use the properties
        and
        assets that it purports to own or use. 

       

      6.2 Authority;
        No Conflict.

       

      (a) GTEI
        has
        the right, power, authority, and capacity to execute and deliver the Operative
        Agreements to which it is a party and to perform its obligations under the
        Operative Agreements to which it is a party. The Operative Agreements to
        which
        it is a party constitute legal, valid, and binding obligations of GTEI,
        enforceable against GTEI in accordance with its terms, except as limited
        by (i)
        bankruptcy, insolvency, reorganization, moratorium and other similar laws
        of
        general application affecting the rights and remedies of creditors and (ii)
        general principles of equity (regardless of whether such enforcement is
        considered in a proceeding in equity or at law). 

       

      (b) Except
        as
        set forth in Schedule 6.2(b) of the Disclosure Schedules, GTEI is not and
        will
        not be required to give any notice to or obtain any Consent from any Person
        in
        connection with the execution and delivery of the Operative Agreements to
        which
        it is a party or the consummation or performance of any of the Contemplated
        Transactions. 

       

      (c) Neither
        the execution and delivery of the Operative Agreements to which it is a party
        nor the consummation or performance of any of the Contemplated Transactions
        will, directly or indirectly (with or without notice or lapse of
        time):

       

      (i) contravene,
        conflict with, or result in a violation of (A) any provision of any governing
        document of GTEI, or (B) any resolution adopted by the governing body or
        security holders of GTEI; or

       

      (ii) contravene,
        conflict with, or result in a violation of, or give any Governmental Body
        the
        right to challenge any of the Contemplated Transactions or to exercise any
        remedy or obtain any relief under any Legal Requirement or any Order to which
        GTEI, or any of its assets, may be subject, other than such contraventions,
        conflicts or violations as would occur solely as a result of the identity
        or the
        legal or regulatory status of Crosby. 

       

      6.3 Legal
        Proceedings; Orders.

       

      (a) There
        is
        no pending Proceeding (i) that has been commenced by or against GTEI or that
        otherwise relates to or may affect the business of, or any of the assets
        owned
        or used by, GTEI, or (ii) that challenges, or that may have the effect of
        preventing, delaying, making illegal, or otherwise interfering with, any
        of the
        Contemplated Transactions.

       

      
        
          
          

        

        
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      (b) To
        GTEI’s
        knowledge, (i) no such Proceeding has been threatened, and (ii) no event
        has
        occurred or circumstance exists that may give rise to or serve as a Basis
        for
        the commencement of any such Proceeding. 

       

      6.4 Brokers
        or Finders. 

       

      Except
        as
        set forth in Schedule 6.4 of the Disclosure Schedules, GTEI and its agents
        have
        incurred no obligation or liability, contingent or otherwise, for brokerage
        or
        finders’ fees or agents’ commissions or other similar payment in connection with
        the Operative Agreements to which it is a party and the Contemplated
        Transactions. 

       

      6.5 Capital
        Stock. 

       

      The
        authorized capital stock of GTEI consists of 80,000,001 shares of common
        stock,
        par value $0.001 per share, of which, as of the date of this Agreement,
        44,547,612 shares are issued and outstanding. Such outstanding shares of
        common
        stock are, and the shares of Restricted Stock to be issued pursuant to this
        Agreement will be, validly issued, fully paid and nonassessable and not subject
        to preemptive rights. Except for this Agreement, and except as is set forth
        in
        Schedule 6.5 of the Disclosure Schedules, there are no warrants, rights,
        options, other equity or debt securities convertible into the capital stock
        of
        GTEI, or other agreements to which GTEI is a party or by which it is bound
        obligating GTEI to issue, deliver or sell, or cause to be issued, delivered
        or
        sold, additional shares of capital stock of GTEI.

       

      6.6 Colombian
        Nexus. 

       

      GTEI
        has
        not ever had, and currently has no employees based in, or living in, the
        country
        of Colombia. GTEI has not ever had, and currently has no registered branch
        in
        the country of Colombia. GTEI has not ever had, and currently has no office,
        whether owned or leased, in the country of Colombia. GTEI has not ever had,
        and
        currently has no agreements to explore or produce Hydrocarbons in
        Colombia.

       

      6.7 Reports
        and Financial Statements. 

       

      (i) GTEI
        has
        filed all required reports, schedules, forms, statements and other documents
        required to be filed by it with the SEC with respect to periods commencing
        on
        and after November 1, 2005 (collectively, including all exhibits thereto,
        the
“Company
        SEC Reports”).
        None
        of the Company SEC Reports, as of their respective dates (and, if amended
        or
        superseded by a filing prior to the date of this Agreement or of the Closing
        Date, then on the date of such filing), contained by any untrue statement
        of a
        material fact or omitted to state a material fact required to be stated therein
        or necessary to make the statements therein, in light of the circumstances
        under
        which they were made, not misleading. Each of the financial statements
        (including the related notes) included in the Company SEC Reports presents
        fairly, in all material respects, the consolidated financial position and
        consolidated results of operations and cash flows of GTEI and its Subsidiaries
        as of the respective dates or for the respective periods set forth therein,
        all
        in conformity with U.S. GAAP except as otherwise noted therein, and subject,
        in
        the case of the unaudited interim financial statements, to the absence of
        complete notes and normal year-end adjustments. All of such Company SEC Reports,
        as of their respective dates (and as of the date of any amendment to the
        respective Company SEC Report), complied as to form in all material respects
        with the applicable requirements of the Securities Act and the Exchange Act
        and
        the rules and regulations promulgated thereunder.

       

      
        
          
          

        

        
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      (ii) Except
        as
        set forth in the Company SEC Reports filed prior to the date of this Agreement,
        and except for liabilities and obligations incurred in the ordinary course
        of
        business since December 31, 2005, GTEI does not have any liabilities or
        obligations of any nature required by GAAP to be set forth on a consolidated
        balance sheet of the Company which would be reasonably expected to have an
        MAE
        on GTEI. 

       

      6.8 No
        Actual Knowledge of Breaches.

       

      GTEI
        has
        no actual knowledge that any of the representations or warranties made by
        Crosby
        as of the date hereof and as of Closing are untrue, incomplete or inaccurate,
        or
        that Crosby has breached any of its covenants or agreements herein to be
        performed on or prior to Closing.

       

      6.9 GTEI
        Investment Representations and Warranties.

       

      (a) GTEI
        has
        been advised by Crosby that and acknowledges that the Argosy Interests to
        be
        acquired by GTEI pursuant to this Agreement are not and will not be registered
        under the Securities Act and the sale of such Argosy Interests is being made
        on
        the basis of an exemption afforded under the Securities Act and Crosby’s
        reliance on such exemption is based in part on the representations made herein
        by GTEI.

       

      (b) GTEI
        is
        an “accredited investor”, as defined in Rule 501 of Reg. D. GTEI has such
        knowledge and experience in financial and business matters, including with
        respect to the oil and gas industry, that it is capable of evaluating the
        merits
        and risks of an investment in the Argosy Interests, and is able to bear the
        economic risk of such investment.

       

      (c) GTEI
        is
        familiar with the condition, financial or otherwise, of AEC, Argosy and their
        respective affairs as it has deemed necessary to evaluate the merits and
        risks
        of becoming owners of the Argosy Interests, and acknowledges that Crosby
        has
        offered to make available and has, when requested, made available, such
        additional information requested by GTEI and granted access to such reasonable
        additional information necessary to verify the accuracy of all information
        furnished.

       

      (d) GTEI,
        as
        advised by legal counsel as deemed necessary, (i) is familiar with the nature
        of
        the limitations imposed by the Securities Act, and the rules and regulations
        promulgated thereunder, on the transfer of the Argosy Interests, (ii)
        understands that the Argosy Interests must be held indefinitely unless a
        disposition thereof is registered under the Securities Act, or is exempt
        from
        registration under the Securities Act, and complies with other applicable
        federal and state securities laws;

       

      
        
          
          

        

        
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      (e) GTEI
        will
        acquire the Argosy Interests for its own account, for investment and not
        with a
        view to the distribution or resale thereof within the meaning of the Securities
        Act, nor with any present intention of selling or distributing the
        same.

       

      (f) GTEI
        is a
        resident of the state of Nevada.

       

      (g) GTEI
        agrees that any certificate to be received by it representing any of the
        Argosy
        Interests will bear the following legends:

       

      “THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
        AND
        HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED.
        THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
        REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY OTHER APPLICABLE
        SECURITIES LAWS.”

       

      “THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
        TRANSFER SET FORTH IN A COLOMBIAN PARTICIPATION AGREEMENT. A COPY OF SUCH
        COLOMBIAN PARTICIPATION AGREEMENT CAN BE OBTAINED FROM GRAN TIERRA ENERGY
        INC.
        AT ITS EXECUTIVE OFFICES.”

       

      ARTICLE
        VII

      Covenants
        of Crosby

       

      7.1 Access
        and Investigation.

       

      Between
        the date of this Agreement and the Closing Date Crosby shall cause Argosy
        and
        AEC to, (a) afford GTEI, its counsel, accountants, financial advisors, other
        authorized representatives and prospective lenders and their representatives
        (collectively, “GTEI’s
        Advisors”)
        with
        reasonable access, upon reasonable prior notice and during normal business
        hours
        to Argosy’s and AEC’s personnel, customers, vendors, properties, contracts,
        books and records, and other documents and data, (b) furnish GTEI and GTEI’s
        Advisors with copies of all such contracts, books and records, and other
        existing documents and data as GTEI may reasonably request, and (c) furnish
        GTEI
        and GTEI’s Advisors with such additional financial, operating, and other data
        and information as GTEI may reasonably request; provided
        that
        neither GTEI nor GTEI’s Advisors shall contact any customer or vendor without
        the prior written approval of Crosby, which shall not be unreasonably withheld,
        conditioned or delayed. No investigation conducted pursuant to this Section
        7.1
        shall affect or be deemed to modify or limit any representation or warranty
        made
        in any Operative Agreement.

       

      7.2 Operation
        of the Business of Argosy.

       

      Unless
        otherwise agreed in writing by GTEI, which approval shall not be unreasonably
        withheld, between the date of this Agreement and the Closing Date, Crosby
        shall
        cause Argosy to:

       

      (a) conduct
        the business of Argosy only in the Ordinary Course of Business;

       

      
        
          
          

        

        
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      (b) use
        reasonable efforts to preserve intact the current business organization of
        Argosy, keep available the services of the current officers, employees, and
        agents of Argosy, and maintain the relations and goodwill with suppliers,
        customers, landlords, licensors, lessors, creditors, employees, agents, and
        others having business relationships with Argosy; 

       

      (c) have
        in
        effect and maintain at all times insurance of the kinds, in the amounts and
        with
        the insurers as is presently in effect; 

       

      (d) keep
        in
        working condition and good order and repair all of the assets and other
        properties of Argosy; 

       

      (e) deliver
        to GTEI, as soon as practical after they become available, monthly unaudited
        balance sheets and statements of income and cash flow of Argosy for any month
        ending after the date hereof, which are consistent with the books and records
        and fairly present, in all material respects, the financial position and
        results
        of operation and cash flow of Argosy at the respective dates of and for the
        periods referred to therein in accordance with GAAP, subject to normal recurring
        year-end adjustments (the effect of which shall not, individually or in the
        aggregate, be materially adverse to Argosy) and the absence of notes (that,
        if
        presented, would not differ materially from those included in the Audited
        Financial Statements); and

       

      (f) otherwise
        report periodically to GTEI concerning the status of the business, operations,
        and finances of Argosy.

       

      7.3 Negative
        Covenants.

       

      Except
        as
        otherwise expressly permitted by this Agreement, between the date of this
        Agreement and the Closing Date, Crosby shall cause Argosy not to, without
        the
        prior written consent of GTEI, which consent shall not be unreasonably withheld,
        

       

      (a) take
        any
        affirmative action that could reasonably be likely to result in a material
        adverse change in the business, operations, properties, assets, or condition
        of
        Argosy; provided, however, neither (i) any matters concerning the drilling
        of the POPA #1 well nor (ii) the failure of the POPA Prospect Area to
        become a commercial field, shall constitute a material adverse change in
        the
        financial condition, business operations, liabilities or assets of Argosy,
        nor
        shall such failure constitute an event or circumstance that may result in
        a
        material adverse change;

       

      (b) grant
        any
        option, warrant or right to purchase Argosy Interests or other securities
        of
        Argosy; issue any security convertible into such Argosy Interests or other
        securities (other than Argosy Interests held by employees of Argosy upon
        the
        termination of their employment); purchase, redeem, retire, or, except for
        the
        Partner Distributions permitted under Section 1.6 of this Agreement, otherwise
        acquire any Argosy Interests or other securities; or declare or pay any dividend
        or other distribution or payment in respect of such Argosy Interests or other
        securities;

       

      (c) amend
        the
        governing documents of Argosy;

       

      (d) increase
        any bonuses, salaries, or other compensation to any director, officer, or
        employee (earning more than $75,000 per year) or enter into any employment,
        severance, or similar Contract with any director, officer, or
        employee;

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      

       

      (e) adopt,
        amend, or increase the payments to or benefits under, any profit sharing,
        bonus,
        deferred compensation, savings, insurance, pension, retirement, or other
        employee benefit plan for or with any employees of Argosy, except as required
        by
        law;

       

      (f) enter
        into, modify, terminate, or permit to lapse (except for lapses in accordance
        with its terms) (i) any license, distributorship, dealer, sales representative,
        joint venture, credit, or similar agreement, or (ii) any Contract or transaction
        involving a total remaining commitment by or to Argosy of at least
        $250,000;

       

      (g) sell
        (other than sales of inventory in the Ordinary Course of Business), lease,
        or
        otherwise dispose of any asset or property of Argosy resulting in proceeds
        to
        Argosy of at least $250,000, or mortgage, pledge, or impose any Lien or
        otherwise encumber any asset or property of Argosy (other than Permitted
        Liens),
        except for the sale or other disposition of any asset or property required
        to be
        disposed by Crosby prior to the Closing pursuant to Section 6.6;

       

      (h) cancel
        or
        waive any claims or rights with a value to Argosy in excess of
        $100,000;

       

      (i) materially
        change the accounting methods used by Argosy; 

       

      (j) acquire
        (including without limitation by merger, consolidation or acquisition of
        stock
        or assets) any interest in any Person or any assets or any division
        thereof;

       

      (k) enter
        into any new line of business; 

       

      (l) incur
        any
        additional Argosy Debt other than the currently-existing letters of credit,
        set
        forth on Schedule 3.32 of the Disclosure Schedules, issued for the benefit
        of
        ANH, and the issuance of letters of credit for the benefit of ANH for the
        Primavera and Mecaya Oil and Gas Contracts; 

       

      (m) (i)
        pre-pay any long-term debt, (ii) pay,
        discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
        contingent or otherwise), except in the Ordinary Course of Business and in
        accordance with their terms, (iii) accelerate or delay collection of notes
        or
        accounts receivable in advance of or beyond their regular due dates or the
        dates
        when the same would have been collected in the Ordinary Course of Business,
        (iv)
        delay or accelerate payment of any account payable in advance of its due
        date or
        the date such liability would have been paid in the Ordinary Course of Business,
        (v) factor, discount or otherwise accept less than full payment with regard
        to
        its accounts receivable or other amounts due or (vi) vary Argosy’s inventory
        practices in any respect from Argosy’s past practices;

       

      (n) waive,
        release, assign, settle or compromise any claims or any litigation or
        arbitration, except for claims or litigation or arbitration involving only
        monetary damages that are not in excess of $100,000; 

       

      (o) make
        or
        change any Tax election, file any amended Tax Return, settle any Tax claim
        or
        assessment relating to Argosy, surrender any right to claim a refund of Taxes,
        consent to any extension or waiver of the limitation period applicable to
        any
        Tax claim or take any other similar action relating to the filing of any
        Tax
        Return or the payment of any Tax;

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

      

       

      (p) implement
        any employee layoff or termination or plant or facility closing or partial
        closing that could trigger the applicable provisions of any foreign, state
        or
        local Legal Requirements with respect to a layoff or termination of employment
        of employees or the closure or partial closure of plants and facilities;
        

       

      (q) other
        than in the Ordinary Course of Business and without prior written notice
        to
        GTEI, make or incur any capital expenditure or series of related capital
        expenditures which individually or in the aggregate exceeds $250,000;

       

      (r) pay,
        loan
        or advance any amount to, or sell, transfer or lease any of its assets to,
        or
        enter any Contract with Crosby or its affiliates (other than as contemplated
        by
        Schedule 7.3(r) of the Disclosure Schedules);

       

      (s) take
        any
        action or fail to take any action that causes or results in any of the
        representations or warranties to be untrue at any time after the date hereof
        through the Closing Date; or

       

      (t) agree,
        whether orally or in writing, to do any of the foregoing.

       

      7.4 Notification.

       

      Between
        the date of this Agreement and the Closing Date, Crosby shall promptly notify
        GTEI in writing if Crosby, AEC or Argosy becomes aware of any fact or condition
        that causes or constitutes a breach of any of Crosby’ representations and
        warranties as of the date of this Agreement, or if Crosby, AEC or Argosy
        becomes
        aware of the occurrence after the date of this Agreement of any fact or
        condition that would (except as expressly contemplated by this Agreement)
        cause
        or constitute a breach of any such representation or warranty had such
        representation or warranty been made as of the time of occurrence or discovery
        of such fact or condition. During the same period, Crosby shall promptly
        notify
        GTEI of the occurrence of any breach of any covenant of Crosby in this Article
        VI or Article VIII or of the occurrence of any event that shall make the
        satisfaction of the conditions in Article IX impossible or unlikely. The
        delivery of any notice pursuant to this Section 6.4 shall not cure any breach
        or
        otherwise limit or affect the remedies available hereunder to the party
        receiving such notice.

       

      7.5 No
        Negotiation.

       

      (a) Until
        such time, if any, as this Agreement is terminated pursuant to Article XII,
        Crosby shall not, and shall cause Argosy and AEC and each of their
        representatives not to, directly or indirectly solicit, initiate, or encourage
        any inquiries or proposals from, discuss or negotiate with, agree to or enter
        into any contract with, provide any non-public information to, or consider
        the
        merits of any unsolicited inquiries or proposals from, any Person (other
        than
        GTEI) relating to any transaction involving the sale of the business or the
        assets (other than sales of inventory in the Ordinary Course of Business)
        of
        Argosy and AEC, or any of the voting or economic equity interests of Argosy,
        or
        any merger, consolidation, business combination, or similar transaction
        involving Argosy and AEC (a “Competing
        Proposed Transaction”).
        Crosby shall request (or if it has the contractual right to do so, demand)
        the
        return of all documents, analysis, financial statements, projections,
        descriptions and other data and information previously furnished to third
        parties in connection with efforts to sell Argosy and AEC. In addition to
        the
        foregoing, if Argosy, AEC or Crosby receives prior to the earlier of the
        Closing
        Date or the termination under Article XII any offer or proposal (formal or
        informal, oral, written or otherwise) relating to, or any inquiry or contact
        from any Person with respect to, a Competing Proposed Transaction, Crosby
        shall
        immediately notify GTEI thereof and provide GTEI with the details thereof,
        including the identity of the Person or Persons making such offer or proposal,
        and will keep GTEI fully informed on a current basis of the status and details
        of any such offer or proposal and of any modifications to the terms thereof;
        provided,
        however,
        that
        this provision shall not in any way be deemed to limit the obligations of
        Crosby. 

       

      
        
          
          

        

        
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      (b) Each
        of
        Crosby and GTEI acknowledge that this Section 7.5 was a significant inducement
        for GTEI to enter into this Agreement and the absence of such provision would
        have resulted in either a material reduction in the Purchase Price to be
        paid or
        a failure to induce GTEI to enter into this Agreement.

       

      7.6 Related
        Party Obligations.

       

      Except
        as
        provided in Schedule 7.6 of the Disclosure Schedules, Crosby shall, on or
        prior
        to the Closing Date, pay, settle or cancel any payables, receivables, accounts,
        indebtedness or other liabilities between it or any of its affiliates other
        than
        Argosy (collectively, “Post-closing
        Affiliates”),
        on
        the one hand, and Argosy, on the other hand. Except as provided in Schedule
        7.6
        or expressly provided in any agreement entered into after the Closing Date,
        effective immediately after the Closing, all such intercompany payables,
        receivables, accounts, indebtedness or other liabilities owing from Crosby
        or
        any Post-closing Affiliate to Argosy or owing from Argosy to Crosby or any
        Post-closing Affiliate will be automatically canceled. Any holder of a note
        or
        other evidence of indebtedness for borrowed money deemed settled pursuant
        to
        this Section 7.6 will surrender such note or other evidence of indebtedness
        to
        the obligor thereon. Except as provided in Schedule 7.6, the Purchase Price
        shall not increase as a result of any such payment, cancellation or settlement.
        Notwithstanding the foregoing, nothing in this Section 7.6 shall affect or
        impair (i) the rights of Crosby or any Post-Closing Affiliate under any
        Operative Agreement, and (ii) the indemnity rights of Crosby or any Post-Closing
        Affiliate under Argosy’s Third Amended and Restated Agreement of Limited
        Partnership, as amended, and as in effect on the date hereof.

       

      7.7 Covenant
        Not To Compete; Non-Solicitation.

       

      (a) Crosby
        agrees that for a period from and after the Closing Date through December
        31,
        2007 (the “Non-Compete
        Period”),
        Crosby will not directly or indirectly engage in, carry on, be employed by,
        be a
        consultant or independent contractor to, or have any financial interest in
        a
        business competing against Argosy in any geographic area set forth on
Exhibit
        7.7
        (the
“Non-Compete
        Territory”);
        provided,
        however,
        that
        nothing herein shall prohibit Crosby from being a passive owner of not more
        than
        2% of the outstanding stock of any class of any corporation that engages
        in such
        business, so long as (i) Crosby has no active participation in the business
        of
        such corporation, and (ii) such stock is traded on a recognized stock market
        or
        on NASDAQ.

       

      (b) During
        the period from and after the Closing Date through December 31, 2010 (the
        “Non-Solicit
        Period”),
        Crosby shall not directly or indirectly (i) induce or attempt to induce any
        employee of GTEI or Argosy to leave the employ of GTEI or Argosy, or in any
        way
        interfere with the relationship between GTEI or Argosy and any employee thereof,
        or (ii) hire any of the key management employees of Argosy.

       

      
        
          
          

        

        
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      (c) During
        the Non-Solicit Period, Crosby shall not directly or indirectly employ, assist
        in employing or otherwise associate in business with any present, former
        or
        future employee of Argosy, now or subsequently existing.

       

      (d) During
        the Non-Compete Period, Crosby shall not directly or indirectly induce any
        customer, supplier or any other party with whom Argosy does business to refuse
        to do business with or otherwise modify its relationship with
        Argosy.

       

      (e) Crosby
        acknowledges that the length of time and geographic restriction pertaining
        to
        all prohibitions in this Section 7.7 are reasonable and necessary for the
        legitimate protection of GTEI’s interests.

       

      (f) Without
        limiting the remedies available, the parties agree that damages at law would
        be
        an insufficient remedy in the event of breach of this Section 7.7 and that
        the
        injured party should be entitled to injunctive relief or other equitable
        remedies in the event of any such breach.

       

      (g) If
        any of
        the provisions of this Section 7.7 are held to be unenforceable in any
        jurisdiction, then, as to such jurisdiction, such provision shall be ineffective
        to the extent of its unenforceability in such jurisdiction, without affecting
        the remaining provisions of this Section 7.7 in such jurisdiction, or affecting
        in any other jurisdiction the validity or enforceability of such provision
        or of
        this Section 7.7, and such unenforceable provision shall be deemed to
        automatically be revised and “blue-penciled” in such jurisdiction to the maximum
        extent of enforceability.

       

      (h) In
        the
        event Crosby violates any legally enforceable provision of this Section 7.7,
        the
        time period of the restrictions contained in this Section 7.7 will be tolled
        from the date of the violation until the violation ceases. 

       

      ARTICLE
        VIII

      Covenants
        of GTEI

       

      8.1 Notification.

       

      Between
        the date of this Agreement and the Closing Date, GTEI shall promptly notify
        Crosby in writing if GTEI becomes aware of any fact or condition that causes
        or
        constitutes a breach of any of GTEI’s representations and warranties as of the
        date of this Agreement, or if GTEI becomes aware of the occurrence after
        the
        date of this Agreement of any fact or condition that would (except as expressly
        contemplated by this Agreement) cause or constitute a breach of any such
        representation or warranty had such representation or warranty been made
        as of
        the time of occurrence or discovery of such fact or condition. During the
        same
        period, GTEI shall promptly notify Crosby of the occurrence of any breach
        of any
        covenant of GTEI in this Article VIII or Article IX or of the occurrence
        of any
        event that shall make the satisfaction of the conditions in Article X impossible
        or unlikely. The delivery of any notice pursuant to this Section 8.1 shall
        not
        cure any breach or otherwise limit or affect the remedies available hereunder
        to
        the party receiving such notice.

       

      
        
          
          

        

        
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      8.2 Activities
        in Colombia.

       

      Between
        the date of this Agreement and the Closing Date, neither GTEI nor any of
        its
        affiliates, agents, employees or representatives shall take any actions in
        Colombia, including without limitation contacting any Colombian Governmental
        Authority, without Crosby’s prior written consent, which may be withheld in
        Crosby’s sole discretion.

       

      ARTICLE
        IX

      Covenants
        of the Parties

       

      9.1 Required
        Approval.

       

      Subject
        to Section 13.1, each of the parties will use commercially reasonable efforts,
        in good faith, to take, or cause to be taken, or do, or cause to be done,
        all
        things necessary, proper or advisable to satisfy all conditions to the
        obligations of the parties under this Agreement over which it has control
        or
        influence and to cause the Contemplated Transactions to be consummated on
        or
        prior to the Closing Date in accordance with the terms hereof, including
        without
        limitation by using commercially reasonable efforts to: (i) obtain any required
        consents, approvals or authorizations of any Governmental Body or other third
        party, (ii) vigorously contest and resist all actual or threatened lawsuits
        or
        other Proceedings, including without limitation actions and proceedings by
        or on
        behalf of a Governmental Body, challenging this Agreement or the consummation
        of
        the Contemplated Transactions, (iii) vacate, lift, reverse or overturn any
        injunction or restraining order or other Order adversely affecting the ability
        of the parties to consummate the Contemplated Transactions in accordance
        with
        the terms hereof, and (iv) effect all necessary registrations and filings
        and
        submissions of information required or requested by any Governmental Body
        with
        respect to the transactions contemplated hereby; provided,
        however
        that
        nothing in this Section 9.1 shall be deemed to create an obligation on GTEI
        to
        accept financing on terms not acceptable to it in its sole discretion. Each
        of
        the parties will cooperate fully with each other party and their respective
        officers, directors, employees, agents, counsel and other designees in
        connection with using such efforts, satisfying such conditions and causing
        the
        Closing to occur in accordance with the terms hereof.

       

      9.2 Litigation
        Support.

       

      In
        the
        event and for so long as any party hereto actively is contesting or defending
        against any Proceeding from a third party in connection with (i) any
        Contemplated Transaction or (ii) any fact, situation, circumstance, status,
        condition, activity, practice, plan, occurrence, event, incident, action,
        failure to act, or transaction on or prior to the Closing Date involving
        Argosy,
        the other party will cooperate with the contesting or defending party and
        its
        counsel in the contest or defense, make available its personnel, and provide
        such testimony and access to its books and records as shall be reasonably
        necessary in connection with the contest or defense, all at the sole cost
        and
        expense of the contesting or defending party (unless the contesting or defending
        party is entitled to indemnification therefor hereunder). 

       

      
        
          
          

        

        
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      9.3 Further
        Assurances.

       

      After
        the
        Closing, the parties hereto agree to execute and deliver such other documents,
        certificates, agreements and other writings and to take such other actions
        as
        may be reasonably necessary or desirable (including obtaining third party
        consents) to effectuate the consummation of the Contemplated Transactions.
        

       

      9.4 Press
        Releases; Public Announcements.

       

      Prior
        to
        the Closing, no party will issue or cause the publication of any press release
        or make any other public announcement with respect to the Operative Agreements
        or the Contemplated Transactions without the prior consent of the other party
        in
        writing; provided,
        however,
        that
        nothing herein will prohibit any party from issuing or causing publication
        of
        any such press release or public announcement to the extent that such party
        in
        good faith determines such action to be required by Legal Requirements, in
        which
        event the party making such determination will use reasonable efforts to
        allow
        the other party reasonable time to comment on such release or announcement
        in
        advance of its issuance. 

       

      9.5 Confidentiality.

       

      Between
        the date of this Agreement and the Closing Date, the parties shall maintain
        in
        confidence, and shall cause their respective directors, officers, employees,
        agents, and advisors to maintain in confidence, and not use to the detriment
        of
        another party any written, oral, or other information obtained in confidence
        from another party in connection with this Agreement or the Contemplated
        Transactions, unless (a) such information is already known to such party
        or to
        others not bound by a duty of confidentiality or such information becomes
        publicly available through no fault of such party, (b) the use of such
        information is necessary or appropriate in making any filing or obtaining
        any
        consent or approval required for the consummation of the Contemplated
        Transactions, or (c) the furnishing or use of such information is required
        by
        legal proceedings. Notwithstanding the foregoing, the parties may use such
        confidential information in any litigation over the Agreement. 

       

      ARTICLE
        X

      Conditions
        Precedent to GTEI’s Obligation to Close

       

      GTEI’s
        obligation to purchase the Argosy Interests and to take the other actions
        required to be taken by GTEI at the Closing are subject to the satisfaction,
        at
        or prior to the Closing, of each of the following conditions (any of which
        may
        be waived by GTEI, in whole or in part):

       

      10.1 Accuracy
        of Representations.

       

      (a) Crosby’s
        and Argosy’s representations and warranties in this Agreement to
        the
        extent not qualified by materiality
        or MAE
        must have been accurate in all material respects as of the date of this
        Agreement, and must be accurate in all material respects as of the Closing
        Date
        as if made on the Closing Date (except
        to the extent such representations and warranties relate to an earlier date,
        in
        which case as of such earlier date).

       

      
        
          
          

        

        
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      (b) Crosby’s
        and Argosy’s representations and warranties in this Agreement to
        the
        extent qualified by materiality
        or MAE
        must have been accurate in all respects as of the date of this Agreement,
        and
        must be accurate in all respects as of the Closing Date as if made on the
        Closing Date (except
        to the extent such representations and warranties relate to an earlier date,
        in
        which case as of such earlier date).

       

      10.2 Crosby’s
        Performance.

       

      Each
        of
        the covenants, agreements and obligations that Crosby is required to perform
        or
        to comply with pursuant to this Agreement at or prior to the Closing must
        have
        been duly performed and complied with in all material respects.

       

      10.3 Consents.

       

      Each
        of
        the Consents identified in Schedule 3.4(b), 4.5(c) and 5.2(b) of the Disclosure
        Schedules must have been obtained and must be in full force and effect. All
        conditions and requirements prescribed in any such Consents shall have been
        satisfied. 

       

      10.4 Additional
        Documents.

       

      Each
        of
        the following documents and instruments must have been delivered to
        GTEI:

       

      (a) a
        legal
        opinion of Glast, Phillips & Murray, P.C., counsel to Crosby, in the form
        attached hereto as Exhibit
        10.4-1
        and a
        legal opinion of Snell & Wilmer L.L.P., counsel to Crosby, in the form
        attached hereto as Exhibit
        10.4-2,
        each of
        which shall expressly state that GTEI’s lenders are entitled to rely thereon as
        if such opinions were addressed to them;

       

      (b) the
        documents set forth in Section 1.4(a), including without limitation the Escrow
        Agreement duly executed by Crosby and the Escrow Agent; and

       

      (c) such
        other documents as GTEI may reasonably request for the purpose of (i) evidencing
        the satisfaction of any condition referred to in this Article X, or (ii)
        otherwise facilitating the consummation or performance of any of the
        Contemplated Transactions.

       

      10.5 No
        Proceedings.

       

      Since
        the
        date of this Agreement, there must not have been commenced or threatened
        against
        Crosby any Proceeding (a) involving any challenge to, or seeking material
        damages or equitable relief in connection with, any of the Contemplated
        Transactions, or (b) that may have the effect of preventing, delaying, making
        illegal, or otherwise interfering with any of the Contemplated Transactions,
        except for Proceedings that arise out of the identity or legal or regulatory
        status of GTEI (determined without regard to GTEI’s ownership of the Argosy
        Interests). 

       

      
        
          
          

        

        
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      10.6 No
        Prohibition.

       

      Neither
        the consummation nor the performance of any of the Contemplated Transactions
        will, directly or indirectly (with or without notice or lapse of time),
        materially contravene, or conflict with, or result in a material violation
        of,
        or cause GTEI to suffer any material adverse consequence under, (a) any
        applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
        that has been published, introduced, or otherwise proposed by or before any
        Governmental Body. 

       

      10.7 No
        Material Adverse Change.

       

      There
        shall have been no material adverse change in the assets, condition (financial
        or otherwise), results of operations, cash flows or properties, taken as
        a
        whole, of Argosy between the date of this Agreement and the Closing Date.
        For
        the purposes of this Section 10.7, neither (i) any matters concerning
        drilling of the POPA #1 well, nor (ii) the
        failure of the POPA Prospect Area to become a commercial field, shall constitute
        a material adverse change in the financial condition, business operations,
        liabilities or assets of Argosy, nor shall such failure constitute an event
        or
        circumstance that may result in a material adverse change

       

      10.8 Private
        Placement Offering.

       

      GTEI
        shall have closed, contemporaneously with or prior to the Closing, a private
        placement offering of its securities to accredited investors and/or incurrence
        of mezzanine debt, with net proceeds of no less than Forty One Million Dollars
        ($41,000,000), upon such terms and for such price per share of common stock
        as
        GTEI shall determine in its sole discretion. 

       

      ARTICLE
        XI

      Conditions
        Precedent to Crosby’ Obligations to Close

       

      Crosby’
        obligations to sell the Argosy Interests and to take the other actions required
        to be taken by Crosby at the Closing are subject to the satisfaction, at
        or
        prior to the Closing, of each of the following conditions (any of which may be
        waived by Crosby, in whole or in part):

       

      11.1 Accuracy
        of Representations.

       

      (a) Each
        of
        GTEI’s representations and warranties in this Agreement to
        the
        extent not qualified by materiality
        or
        material adverse effect must have been accurate in all material respects
        as of
        the date of this Agreement, and must be accurate in all material respects
        as of
        the Closing Date as if made on the Closing Date (except
        to the extent such representations and warranties relate to an earlier date,
        in
        which case as of such earlier date).

       

      (b) Each
        of
        GTEI’s representations and warranties in this Agreement to
        the
        extent qualified by materiality
        or
        material adverse effect must have been accurate in all respects as of the
        date
        of this Agreement, and must be accurate in all respects as of the Closing
        Date
        as if made on the Closing Date (except
        to the extent such representations and warranties relate to an earlier date,
        in
        which case as of such earlier date).

       

      11.2 GTEI’s
        Performance.

       

      Each
        of
        the covenants and obligations that GTEI is required to perform or to comply
        with
        pursuant to this Agreement at or prior to the Closing must have been performed
        and complied with in all material respects.

       

      
        
          
          

        

        
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      11.3 Consents.

       

      Each
        of
        the Consents identified in Part 4.2(b) of the Disclosure Schedules must have
        been obtained and must be in full force and effect. All conditions and
        requirements prescribed in any such Consents shall have been
        satisfied. 

       

      11.4 Additional
        Documents.

       

      Each
        of
        the following documents and instruments must have been delivered to Argosy
        and
        Crosby:

       

      (a) the
        Purchase Price as provided for in Section 1.2;

       

      (b) all
        deliverables set forth in Section 1.4(b), including without limitation the
        Escrow Agreement duly executed by GTEI and the Escrow Agent; 

       

      (c) all
        deliverables set forth in Section 1.11; and

       

      (d) such
        documents as Crosby may reasonably request for the purpose of
        (i) evidencing the satisfaction of any condition referred to in this
        Article X, or (ii) otherwise facilitating the consummation of any of the
        Contemplated Transactions.

       

      11.5 No
        Proceedings.

       

      Since
        the
        date of this Agreement, there must not have been commenced or threatened
        against
        Crosby any Proceeding (a) involving any challenge to, or seeking damages
        or
        other relief in connection with, any of the Contemplated Transactions, or
        (b)
        that may have the effect of preventing, delaying, making illegal, or otherwise
        interfering with any of the Contemplated Transactions. 

       

      11.6 No
        Prohibition.

       

      Neither
        the consummation nor the performance of any of the Contemplated Transactions
        will, directly or indirectly (with or without notice or lapse of time),
        materially contravene, or conflict with, or result in a material violation
        of,
        or cause any Crosby to suffer any material adverse consequence under, (a)
        any
        applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
        that has been published, introduced, or otherwise proposed by or before any
        Governmental Body. 

       

      ARTICLE
        XII

      Termination

       

      12.1 [Intentionally
        Omitted].

       

      12.2 Termination.

       

      This
        Agreement and the Contemplated Transactions may be terminated at any time
        prior
        to the Closing:

       

      
        
          
          

        

        
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      (a) by
        mutual
        written consent of GTEI, on the one hand, and Crosby, on the other hand;
        

       

      (b) by
        Crosby, if (i) there has been a material misrepresentation or breach in the
        representations, warranties, covenants or agreements of GTEI, (ii) Crosby
        has
        notified GTEI in writing of the misrepresentation or breach and (iii) such
        misrepresentation or breach has continued without cure for a period of 5
        business days after the notice and Crosby has not waived such misrepresentation
        or breach;

       

      (c) by
        GTEI,
        if (i) there has been a material misrepresentation or breach in the
        representations, warranties, covenants or agreements of Crosby, (ii) GTEI
        has
        notified Crosby in writing of the misrepresentation or breach and (iii) such
        misrepresentation or breach has continued without cure for a period of 5
        business days after the notice and has not been waived by GTEI;

       

      (d) by
        Crosby
        if events have occurred which have made it impossible to satisfy a condition
        precedent to the obligation of Crosby to consummate the Contemplated
        Transactions on or prior to July 21, 2006 (other than through the failure
        of
        Crosby to comply with its obligations under this Agreement);

       

      (e) by
        GTEI
        if events have occurred which have made it impossible to satisfy a condition
        precedent to the obligation of GTEI to consummate the Contemplated Transactions
        on or prior to July 21, 2006 (other than through the failure of GTEI to comply
        with its obligations under this Agreement, or through GTEI’s failure to complete
        the private placement offering of its securities to accredited investors
        and/or
        incurrence of mezzanine debt, as set forth in Section 10.8); 

       

      (f) by
        either
        GTEI, on the one hand, or Crosby, on the other hand, if there shall have
        been
        entered a final, non-appealable Order of any Governmental Body restraining
        or
        prohibiting the consummation of the Contemplated Transactions or any material
        part thereof; or

       

      (g) by
        GTEI
        for any reason not set forth in Sections 12.2(a), 12.2(c) or 12.2(e), in
        its
        sole discretion; provided that upon such termination GTEI shall immediately
        pay
        Crosby the Break-Up Fee pursuant to Section 12.5 hereof.

       

      The
        party
        desiring to terminate this Agreement pursuant to Sections 12.1(b) through
        12.1(g) shall give written notice of such termination to the other
        party.

       

      12.3 Final
        Termination.
        

       

      If
        closing of the Consummated Transactions has not occurred, this Agreement
        shall
        terminate on 6:00 p.m. Eastern time on July 21, 2006, unless extended by
        mutual
        written consent of the Parties, without the necessity of any further action
        on
        the part of any of the Parties.

       

      12.4 Effect
        of Termination.

       

      Upon
        the
        termination of this Agreement in accordance with the terms of Sections 12.2
        or
        12.3, this Agreement shall become void and of no further force and effect;
        provided,
        however,
        that no
        such termination shall be deemed to relieve any party hereto of liability
        for
        its breach, as a result of its fraud or willful misconduct, of any
        representation, warranty, covenant, agreement or any of the terms and provisions
        hereof. Notwithstanding anything herein to the contrary, the provisions of
        Sections 9.4 (Press Releases; Public Announcements), 9.5 (Confidentiality),
        12.5
        (Break Up Fee); 14.1 (Expenses) and 14.13 (Governing Law) shall survive any
        termination of this Agreement pursuant to the Sections 12.1, 12.2 or 12.3.
        

       

      
        
          
          

        

        
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      12.5 Break
        Up Fee.

       

      If
        by
        6:00 pm Eastern time on July 21, 2006, GTEI does not consummate the Contemplated
        Transactions, the following provisions apply:

       

      (a) GTEI
        shall pay the Break-Up Fee to Crosby.

       

      (b) The
        base
        amount of the break-up fee shall be $3,500,000 (the “Base
        Break-Up Fee”),
        payable at GTEI’s option in cash, Restricted Stock or both, with Restricted
        Stock valued pursuant to Section 1.5 hereof. For each day after June 30,
        2006
        that the Closing is delayed, the Base Break-Up Fee shall increase by $25,000,
        payable in cash (as adjusted hereunder, the “Break-Up
        Fee”).
        

       

      (c) Notwithstanding
        the foregoing, no Break-Up Fee shall be payable for a termination by GTEI
        pursuant to Sections 12.2(a), (c), (e) or (f).

       

      (d) If
        the
        Contemplated Transactions have not closed by 6:00 p.m. Eastern time on July
        21,
        2006, and this Agreement has not otherwise been terminated, GTEI shall pay
        Crosby the Break-Up Fee on or prior to July 24, 2006. 

       

      (e) If
        GTEI
        elects to pay the Break-Up Fee in Restricted Stock, GTEI shall accompany
        the
        delivery of such Restricted Stock with the Registration Rights Agreement,
        duly
        executed by GTEI.

       

      12.6 Post
        Termination Covenants.

       

      If
        this
        Agreement is terminated, without obtaining the prior written consent of Crosby,
        GTEI agrees that, for the period from termination of this Agreement through
        October 4, 2007, neither the GTEI nor any of its Affiliates (i) will solicit
        to
        employ or hire any employees of Argosy or (ii) solicit to employ or hire
        any
        former employee of Argosy who was an employee on the date of termination
        hereof.

       

      ARTICLE
        XIII

      Indemnification;
        Remedies

       

      13.1 Survival
        and Time Limitations.

       

      (a) Except
        as
        provided below, all representations and warranties in this Agreement, the
        Disclosure Schedules, the certificate delivered pursuant to Section 1.4(a)(ii),
        and the certificate delivered pursuant to Section 1.4(a)(iii) shall, unless
        otherwise noted in this Section 13.1, survive the Closing until December
        31,
        2008. The representations and warranties made by Crosby in Article V as to
        the
        ownership of the Argosy Interests (as set forth in Section 5.3) shall survive
        the Closing until December 31, 2010. Notwithstanding the limitations set
        forth
        above, representations and warranties shall survive beyond the above dates
        with
        respect to any breach thereof, notice of which shall have been duly given
        prior
        to such date.

       

      
        
          
          

        

        
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      (b) The
        covenants and agreements contained in this Agreement shall survive the Closing
        until December 31, 2006, unless a specified period is otherwise set forth
        in
        this Agreement (in which event such specified period will control).

       

      13.2 Indemnification
        and Payment of Damages by Crosby.

       

      Subject
        to Section 13.2(b), Crosby shall indemnify and hold harmless GTEI and its
        officers, directors, security holders, employees, partners, controlling persons,
        successors, assigns, representatives, agents, and affiliates (collectively,
        the
“GTEI
        Indemnified Persons”)
        for,
        and shall pay to the GTEI Indemnified Persons the amount of, any loss,
        liability, claim, damage (including consequential damages, but excluding
        punitive damages unless punitive damages are actually paid to a third party),
        expense (including reasonable costs of investigation and defense and reasonable
        attorneys’ fees), whether or not involving a third-party claim (collectively,
“Damages”),
        arising, directly or indirectly, from or in connection with:

       

      (a) any
        breach of any representation or warranty made by Crosby in Article III of
        this
        Agreement (Argosy Matters);

       

      (b) any
        breach of any representation or warranty made by Crosby in Article IV of
        this
        Agreement (AEC Matters);

       

      (c) any
        breach of any representation or warranty made by Crosby in Article V of this
        Agreement (Crosby Matters);

       

      (d) any
        breach by Crosby of any covenant or obligation of Crosby in this Agreement;
        

       

      (e) any
        liability for Taxes of Crosby with respect to any tax period ending on or
        before
        the Closing Date; and

       

      (f) any
        claim
        by any Person for brokerage or finder’s fees or commissions or similar payments
        based upon any agreement or understanding alleged to have been made by any
        such
        Person with Crosby (or any Person acting on its behalf) in connection with
        any
        of the Contemplated Transactions.

       

      13.3 Indemnification
        and Payment of Damages by GTEI.

       

      GTEI
        shall indemnify and hold harmless Crosby and the persons listed on Schedule
        13.3
        (collectively, the “Crosby
        Indemnified Persons”),
        and
        shall pay to Crosby Indemnified Party the amount of any Damages arising,
        directly or indirectly, from or in connection with:

       

      (a) any
        breach of any representation or warranty made by GTEI in this Agreement or
        the
        certificate delivered pursuant to Section 1.4(b)(ii); 

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

      

      

       

      (b) any
        breach by GTEI of any covenant or obligation of GTEI in this
        Agreement;

       

      (c) any
        claim
        by any Person for brokerage or finder’s fees or commissions or similar payments
        based upon any agreement or understanding alleged to have been made by any
        such
        Person with GTEI (or any Person acting on its behalf) in connection with
        any of
        the Contemplated Transactions; or

       

      (d) any
        claim
        by any Person related to the operation of Argosy after the Closing
        Date.

       

      (e) Notwithstanding
        the provisions of Section 13.3(a) through (d), no Crosby Indemnified Person
        shall be entitled to indemnification under Section 13.3(a) through (d) if
        prior
        to the Closing, such Crosby Indemnified Person had actual knowledge of such
        breach, liability or claim that is the subject of such indemnity
        claim.

       

      13.4 Limitations
        on Amount.
        

       

      (a) Crosby
        shall have no liability with respect to any matters described in Section
        13.2,
        until the total amount of all Damages with respect to such matters exceeds
        $1,250,000 (the “Crosby
        Deductible”),
        and
        then only for the amount of such Damages which exceeds the Crosby Deductible,
        subject to Section 13.4(b).
        For the
        purposes of determining whether there has been a breach in respect of any
        representation or warranty for this Section 13.4(a), any requirement in any
        representation or warranty that an event or fact be material or have a material
        adverse effect or MAE shall be ignored. 

       

      (b) The
        maximum amount of Damages that Crosby shall be obligated to pay to the GTEI
        Indemnified Persons under Section 13.2(a) shall be limited to $15,000,000
        (the
“Cap
        Amount”).
        For
        the purposes of determining whether there has been a breach in respect of
        any
        representation or warranty for this Section 13.4(b), any requirement in any
        representation or warranty that an event or fact be material or have a material
        adverse effect or MAE shall be ignored.

       

      13.5 Procedure
        for Indemnification - Third Party Claims. 

       

      (a) Promptly
        after receipt by an indemnified party under Section 13.2
        or
        Section 13.3 of
        notice
        of the commencement of any Proceeding against it (a “Third
        Party Claim”),
        such
        indemnified party shall, if a claim may be made against an indemnifying party
        under such Section (and if the indemnifying party is Crosby, without regard
        to
        whether the Crosby Deductible has been exceeded), give notice to the
        indemnifying party of the commencement of such claim. The failure to timely
        notify the indemnifying party shall relieve the indemnifying party of any
        liability that it may have to any indemnified party. For purposes of this
        Section 13.5(a), such notice is timely given if provided in writing with
        90 days
        of the indemnified party’s receipt of such Third Party Claim.

       

      
        
          
          

        

        
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      (b) The
        indemnifying party shall have the right, upon written notice to the indemnified
        party within 30 days of receipt of notice from the indemnified party of the
        commencement of such Third Party Claim, to assume the defense thereof with
        counsel selected by the Indemnifying Party and reasonably satisfactory to
        the
        Indemnified Party. Such defense shall be at the expense of the indemnifying
        party, unless the indemnifying party is Crosby, in which event such defense
        shall be at the expense of the indemnified party until the Crosby Deductible
        is
        reached, and thereafter such defense shall be at the expense of Crosby. If
        the
        indemnifying party assumes and continues the defense of such Third Party
        Claim,
        the indemnified party shall have the right to employ separate counsel and
        to
        participate in (but not control) the defense thereof, but the fees and expenses
        of such counsel shall be at the expense of the indemnified party, unless
        the
        indemnifying party does not pursue the defense in a reasonable manner. If
        the
        indemnifying party assumes the defense of any Third Party Claim, the indemnified
        party shall cooperate with the indemnifying party in such defense and make
        available to the indemnifying party all witnesses, pertinent records, materials
        and information in the indemnified party's possession or under the indemnified
        party's control relating thereto as is reasonably required by the indemnifying
        party. If the indemnifying party assumes and continues the defense of any
        Third
        Party Claim, the indemnified party shall not admit any liability with respect
        to, or settle, compromise or discharge, or offer to compromise, settle or
        discharge, such Third Party Claim without the indemnifying party's prior
        written
        consent unless the indemnifying party withdraws from the defense of such
        Third
        Party Claim or unless a final judgment from which no appeal may be taken
        by or
        on behalf of the indemnifying party is entered against the indemnified party
        for
        such Third Party Claim. If the indemnified party assumes the defense of any
        such
        claims or proceeding pursuant to this Section 13.5(b) and proposes to settle
        such claims or proceeding prior to a final judgment thereon or to forgo any
        appeal with respect thereto, then the indemnified party shall act reasonably
        as
        to such settlement of the claims or proceedings and shall give the indemnifying
        party prompt written notice thereof.

       

      (c) If
        the
        indemnifying party assumes and continues the defense of a Third Party Claim,
        the
        indemnifying party may enter into any compromise or settlement of such claims
        without the prior written consent of the indemnified party, subject to the
        following conditions: (i) the indemnifying party shall pay or cause to be
        paid all amounts arising out of such settlement either concurrently with
        the
        effectiveness thereof or shall obtain and deliver to such indemnified party
        prior to the execution of such settlement a complete and irrevocable general
        release of all Persons who brought such Third Party Claim, which release
        shall
        release such indemnified party, its affiliates and their respective directors,
        security holders, officers, employees, consultants and agents from any liability
        in such manner, (ii) the indemnifying party shall not be authorized to encumber
        any of the assets of any indemnified party or to agree to any restriction
        that
        would apply to any indemnified party or its affiliates or to their respective
        conduct of business, (iii) such settlement does not involve the imposition
        of
        equitable remedies or leave unsettled related claims for equitable remedies,
        (iv) such settlement does not involve criminal or quasi-criminal matters
        or
        admissions, and (v) the indemnified party does not in good faith believe
        that
        such settlement would establish a practice that could reasonably be expected
        to
        have a material adverse effect on other Proceedings to which it may be or
        may in
        the future become a party.

       

      (d) Subject
        to Section 13.5(c), if a firm offer is made to settle a Third Party Claim
        and
        the indemnifying party desires to accept and agree to such offer, the
        indemnifying party will give written notice to the indemnified party to that
        effect. If the indemnified party objects to such settlement in writing within
        ten business days after its receipt of such notice, the indemnified party
        may
        continue to contest or defend such Third Party Claim and, in such event,
        the
        maximum liability of the indemnifying party as to such Third Party Claim
        will
        not exceed the amount of such settlement offer.

       

      
        
          
          

        

        
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      13.6 Procedure
        for Indemnification - Other Claims.

       

      A
        claim
        for indemnification for any matter not involving a Third Party Claim may
        be
        asserted by notice to the party from whom indemnification is sought. The
        failure
        to timely notify the indemnifying party (if the indemnifying party is Crosby,
        without regard to whether the Crosby Deductible has been exceeded) shall
        relieve
        the indemnifying party of any liability that it may have to any indemnified
        party. For purposes of Section 13.6, such notice shall be timely if delivered
        in
        writing within 90 days after the day on which the indemnified party becomes
        aware of any occurrence or circumstance that could give rise to a claim under
        this Article XIII.

       

      13.7 Threshold
        Accounting.

       

      Within
        90
        days of the end of each calendar year during which it is eligible to make
        indemnification claims under this Article XIII, GTEI shall prepare an annual
        statement of the Crosby Deductible setting forth any matter which GTEI has
        applied to the Crosby Deductible and the amounts incurred against the Crosby
        Deductible. Such statement shall include a reasonable description of such
        claims
        and any expenditures relating to the claims. If such report is not timely
        delivered, no expenditures for such annual period shall be claimed against
        the
        Crosby Deductible.

       

      13.8 Sole
        Remedy.

       

      Upon
        and
        after the Closing, the provisions of Article XIII of
        this
        Agreement represent the sole and exclusive remedy available to any party
        to this
        Agreement for any misstatement or omission by any other party relating to
        any
        representation or warranty contained herein or a certificate delivered hereunder
        or for any breach by any other party of any covenant or agreement required
        to be
        performed prior to the Closing contained herein or under a certificate delivered
        hereunder, and, except with respect to fraudulent acts (which are expressly
        not
        waived), each party hereby unconditionally waives any other rights that it
        may
        have at law or in equity for any misstatement or omission by any other party
        from any representation or warranty contained herein or a certificate delivered
        hereunder or for any breach by any other party of any covenant or agreement
        required to be performed prior to the Closing contained herein or under a
        certificate delivered hereunder. Notwithstanding the foregoing, the provisions
        of this Section 13.8 shall not affect Crosby’s right to receive, or GTEI’s
        obligation to pay, the Break-Up Fee in accordance with the terms of this
        Agreement. 

       

      13.9 Effect
        of GTEI Knowledge.

       

      IF
        GTEI
        OR ITS REPRESENTATIVES HAVE ACTUAL KNOWLEDGE PRIOR TO CLOSING OF AN EVENT,
        CONDITION OR CIRCUMSTANCE THAT WOULD RESULT IN A BREACH OF OR RENDER INACCURATE
        ANY REPRESENTATION OR WARRANTY OF CROSBY OR REVEAL THE OCCURRENCE OF A BREACH
        OF
        ANY COVENANT OR AGREEMENT OF CROSBY CONTAINED IN THIS AGREEMENT OR ANY AGREEMENT
        ANCILLARY HERETO (INCLUDING WITHOUT LIMITATION ANY ITEMS SET FORTH IN ANY
        SCHEDULE HERETO), AND GTEI CONSUMMATES THE CONTEMPLATED TRANSACTIONS IN SPITE
        OF
        SUCH BREACH OR INACCURACY, NO GTEI INDEMNIFIED PERSON SHALL BE ENTITLED TO,
        AND
        NO GTEI INDEMNIFIED PERSON SHALL, MAKE A CLAIM AFTER CLOSING IN RESPECT OF
        SUCH
        INACCURACY OR BREACH.

       

      
        
          
          

        

        
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      ARTICLE
        XIV

      General
        Provisions

       

      14.1 Expenses.

       

      Except
        as
        otherwise expressly provided in this Agreement, each party to this Agreement
        shall bear its respective expenses incurred in connection with the preparation,
        execution, and performance of this Agreement and the Contemplated Transactions,
        including all fees and expenses of agents, representatives, counsel, and
        accountants, whether or not the Contemplated Transactions are consummated.
        In
        the event of termination of this Agreement, the obligation of each party
        to pay
        its own expenses shall be subject to any rights of such party arising from
        a
        breach of this Agreement by another party. 

       

      14.2 Notices.

       

      All
        notices, consents, waivers, and other communications under this Agreement
        must
        be in writing and shall be deemed to have been duly given when (a) delivered
        by
        hand, (b) sent by facsimile (against receipt therefor), provided that a copy
        is
        mailed by registered mail, return receipt requested, or (c) when received
        by the
        addressee, if sent by a nationally recognized overnight delivery service
        (receipt requested), in each case to the appropriate addresses and facsimile
        numbers set forth below (or to such other addresses and facsimile numbers
        as a
        party may designate by notice to the other parties) in the manner provided
        below:

       

      If
        to
        Crosby:

      

      Crosby
        Capital, LLC

      1717
        Main
        Street, Suite 1700

      Houston,
        TX 77002

      Facsimile:
        (713) 223-5379

      Attn:
        Jay
        Allen Chaffee

      

      With
        copies to:

      

      Glast,
        Phillips & Murray, P.C.

      2200
        One
        Galleria Tower

      13355
        Noel Road

      Dallas,
        TX 75240

      Facsimile:
        (972) 419-8329

      Attn: Stanton
        P. Eigenbrodt

      

      If
        to
        GTEI:

      

      Gran
        Tierra Energy Inc.

      300,
        611-10th Avenue S.W.

      Calgary,
        Alberta, Canada T2R 0B2

      Facsimile:
        (403) 265-3242

      Attn:
        James Hart

      
        
          
          

        

        
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      With
        copies to:

      

      McGuireWoods
        LLP

      1345
        Avenue of the Americas, 7th
        Floor

      New
        York,
        New York 10105-0106

      Facsimile:
        (212) 548-2175

      Attn:
        Louis W. Zehil

      

      14.3 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 “Agreement
        Dispute”),
        shall
        be exclusively governed by and settled in accordance with the provisions
        of this
Section 14.3.

      

      (a) Negotiation.
        The
        parties to any 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.

       

      (b) Arbitration.
        If any
        Agreement Dispute remains unsettled after following the procedures set forth
        in
Section
        14.3(a),
        a party
        hereto may commence arbitration proceedings by delivering a written notice
        (the
“Demand”)
        to the
        other parties providing reasonable description of the Agreement Dispute to
        the
        others and expressly requesting arbitration hereunder. Such 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
        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, 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 Agreement Dispute within one hundred
        eighty (180) days from the commencement of the arbitration. The Panel shall
        be
        entitled to award special, exemplary, punitive or consequential damages
        (including lost profit). 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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      (c) Injunctive
        Relief.
        No
        Party shall be entitled to injunctive relief other than through the emergency
        procedures set forth in the AAA Rules.

       

      (d) 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 Agreement Dispute. 

       

      (e) Legal
        Fees and Expenses.
        If any
        arbitration or other legal action is brought for the resolution of a 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
        14.3(e)
        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.

       

      (f) 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 14.3 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.

       

      14.4 Waiver.

       

      The
        rights and remedies of the parties to this Agreement are cumulative and not
        alternative; provided,
        however,
        that
        this Section 14.4 shall not alter or expand the remedies available with respect
        to this Agreement, which are limited as set forth in Section 13.8. 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.

       

      
        
          
          

        

        
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      14.5 Entire
        Agreement.

       

      This
        Agreement supersedes all prior agreements, written or oral, between the parties
        with respect to its subject matter and constitutes (along with the Disclosure
        Schedules, the Exhibits, and the other documents referred to in this Agreement)
        a complete and exclusive statement of the terms of the agreement between
        the
        parties with respect to its subject matter. 

       

      14.6 Amendments.

       

      This
        Agreement may be amended, modified or supplemented only by written agreement
        of
        GTEI and Crosby.

       

      14.7 Third
        Party Beneficiaries.

       

      Except
        as
        specifically provided in Article XIII with respect to indemnification provided
        to the indemnified parties, nothing expressed or referred to in this Agreement
        shall be construed to give any Person other than the parties to this Agreement
        any legal or equitable right, remedy, or claim under or with respect to this
        Agreement or any provision of this Agreement. This Agreement and all of its
        provisions and conditions are for the sole and exclusive benefit of the parties
        to this Agreement and their successors and permitted assigns.

       

      14.8 Assignment.

       

      This
        Agreement and the rights and obligations hereunder shall not be assignable
        by
        any party hereto without the prior written consent of Crosby and GTEI.
        Notwithstanding the foregoing, GTEI may assign this Agreement and all of
        its
        rights and obligations to (a) an affiliate of GTEI, (b) any Person in connection
        with a sale of all or substantially all assets of GTEI, (c) any person who
        acquires all of the capital stock of GTEI, and (d) any Person providing
        financing to GTEI, its affiliates or any purchaser of GTEI. Any instrument
        purporting to make an assignment in violation of this Section 14.9 shall
        be null
        and void.

       

      14.9 Severability.

       

      If
        any
        provision of this Agreement is held invalid or unenforceable by any court
        of
        competent jurisdiction, the other provisions of this Agreement shall remain
        in
        full force and effect. Any provision of this Agreement held invalid or
        unenforceable only in part or degree shall remain in full force and effect
        to
        the extent not held invalid or unenforceable.

       

      
        
          
          

        

        
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      14.10 Section,
        Article and Part Headings.

       

      The
        headings of Sections and Articles in this Agreement and titles in the Disclosure
        Schedule are provided for convenience only and shall not affect their respective
        construction or interpretation. 

       

      14.11 Construction;
        Interpretation.

       

      (a) All
        words
        used in this Agreement shall be construed to be of such gender or number
        as the
        circumstances require. Unless otherwise expressly provided, the word “including”
shall be construed to mean including without limitation. 

       

      (b) No
        provision of this Agreement shall be interpreted in favor of, or against,
        any
        party hereto by reason of the fact such party or its counsel participated
        in the
        drafting thereof.

       

      14.12 Governing
        Law.

       

      This
        Agreement shall be governed by the internal laws of the State of New York
        without regard to conflict of laws principles.

       

      14.13 Counterparts
        and Facsimile Signatures.

       

      This
        Agreement may be executed in one or more counterparts, each of which shall
        be
        deemed to be an original copy of this Agreement and all of which, when taken
        together, shall be deemed to constitute one and the same agreement. A facsimile
        copy of this Agreement (or any counterpart thereof) shall be deemed an original.
        

       

      14.14 GTEI
        Waiver of Consumer Protection Laws.
        

       

      AS
        PARTIAL CONSIDERATION TO CROSBY TO ENTER INTO THIS AGREEMENT, GTEI CAN AND
        DOES
        EXPRESSLY WAIVE THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES CONSUMER
        PROTECTION ACT, SECTIONS 17.41 THROUGH 17.63, TEXAS BUSINESS AND COMMERCE
        CODE,
        AND ALL OTHER CONSUMER PROTECTION LAWS IN OTHER STATES OF THE UNITED STATES,
        OR
        ANY PROVINCE OF CANADA OR THE REPUBLIC OF COLOMBIA, APPLICABLE TO THIS
        TRANSACTION THAT MAY BE WAIVED BY THE PARTIES.

       

      ARTICLE
        XV

      Special
        Indemnities.

       

      15.1 Indemnity
        With Respect to Securities Offering.

       

      GTEI
        shall indemnify and hold harmless each Crosby
        Indemnified Person,
        and
        shall pay to each Crosby Indemnified Person the amount of any Damages arising,
        directly or indirectly, from or in connection with the Private
        Placement.

       

      
        
          
          

        

        
          62

          
            

          

        

        
          
          

        

      

      

       

      15.2 Indemnity
        of Officers and Directors of AEC.

       

      GTEI
        shall, and shall cause AEC and Argosy, and their successor and assigns to
        indemnify and hold harmless to the fullest extent permitted by law each officer
        and director of AEC as set forth on Schedule 15.2 for all actions taken in
        his
        capacity as an officer or director of AEC or on behalf of Argosy, except
        for
        such officers’ and directors’ willful misconduct or fraud. Such indemnity shall
        include the obligation to advance expenses to the fullest extent permitted
        by
        law, provided that prior to receiving such an advance, the officer or director
        shall execute an undertaking to GTEI to repay all amounts advanced if it
        is
        later determined that such officer or director was not entitled to
        indemnification under this Article XV. 

       

      

       

      

       

      

       

      [Signature
        page follows]

       

      

       

      

      
        
          
          

        

        
          63

          
            

          

        

        
          
          

          
            

          

        

      

      IN
        WITNESS WHEREOF, the parties have executed and delivered this Securities
        Purchase Agreement as of the date first written above.

       

      
        	
                BUYER:

              	 	
                SELLER:

              
	 	 	 
	
                Gran
                  Tierra Energy Inc.

              	 	
                Crosby
                  Capital, LLC

              
	
                 

                 

                By:  /s/
                  James Hart

              	 	
                 

                 

                By:  /s/
                  Jay Allen Chaffee

              
	
                Name:
                  James Hart

                Title:
                  Chief Financial Officer

              	 	
                Name:
                  Jay Allen Chaffee

                Title:
                  President

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

      

      

      
        
          
          

        

        
          64Unassociated Document

    INVESTMENT
      AGREEMENT

     

    INVESTMENT
      AGREEMENT (this "AGREEMENT"), dated as of May 30, 2006 by and between USCorp
      a
      Nevada corporation (the "Company"), and Dutchess Private Equities Fund, LP,
      a
      Delaware limited partnership (the "Investor"). 

     

    WHEREAS,
      the parties desire that, upon the terms and subject to the conditions contained
      herein, the Investor shall invest up to Ten Million dollars ($10,000,000) to
      purchase the Company's Common Stock, $.01 par value per share (the "Common
      Stock"); 

     

    WHEREAS,
      such investments will be made in reliance upon the provisions of Section 4(2)
      under the Securities Act of 1933, as amended (the "1933 Act"), Rule 506 of
      Regulation D, and the rules and regulations promulgated thereunder, and/or
      upon
      such other exemption from the registration requirements of the 1933 Act as
      may
      be available with respect to any or all of the investments in Common Stock
      to be
      made hereunder; and 

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement
      substantially in the form attached hereto (the "Registration Rights Agreement")
      pursuant to which the Company has agreed to provide certain registration rights
      under the 1933 Act, and the rules and regulations promulgated thereunder, and
      applicable state securities laws. 

     

    NOW
      THEREFORE, in consideration of the foregoing recitals, which shall be considered
      an integral part of this Agreement, the covenants and agreements set forth
      hereafter, and other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the Company and the Investor hereby
      agree as follows: 

     

    SECTION
      1. DEFINITIONS. 

     

    As
      used
      in this Agreement, the following terms shall have the following meanings
      specified or indicated below, and such meanings shall be equally applicable
      to
      the singular and plural forms of such defined terms.

    

    “1933
      Act”
shall
      have the meaning set forth in the preamble of this agreement.

    

    “1934
      Act”
shall
      mean the Securities Exchange Act of 1934, as it may be amended.

    

    “Affiliate”
shall
      have the meaning specified in Section 5(h), below.

    

    “Agreement”
shall
      mean this Investment Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Best
      Bid”
      shall
      mean the highest posted bid price of the Common Stock during a given period
      of
      time.

    

    “By-laws”
shall
      have the meaning specified in Section 4(C).

    

    “Certificate
      of Incorporation”
shall
      have the meaning specified in Section 4(C).

    

    “Closing”
shall
      have the meaning specified in Section 2(G).

    

    “Closing
      Date”
shall
      mean no more than seven (7) Trading Days following the Put Notice
      Date.

    

    “Common
      Stock”
shall
      have the meaning set forth in the preamble of this Agreement.

    

    “Control”
or
      “Controls”
shall
      have the meaning specified in Section 5(H).

    

    “Effective
      Date”
shall
      mean the date the SEC declares effective under the 1933 Act the Registration
      Statement covering the Securities.

    

    “Environmental
      Laws”
shall
      have the meaning specified in Section 4(M).

    

    “Equity
      Line Transaction Documents”
shall
      mean this Agreement, the Registration Rights Agreement.

    

    “Execution
      Date”
shall
      mean the date indicated in the preamble to this Agreement.

    

    “Indemnities”
shall
      have the meaning specified in Section 11.

    

    “Indemnified
      Liabilities”
shall
      have the meaning specified in Section 11.

     

    “Ineffective
      Period”
shall
      mean any period of time that the Registration Statement or any Supplemental
      Registration Statement (as defined in the Registration Rights Agreement between
      the parties) becomes ineffective or unavailable for use for the sale or resale,
      as applicable, of any or all of the Registrable Securities (as defined in the
      Registration Rights Agreement) for any reason (or in the event the prospectus
      under either of the above is not current and deliverable) during any time period
      required under the Registration Rights Agreement.

    

    “Investor”
shall
      have the meaning indicated in the preamble of this Agreement.

    

    “Material
      Adverse Effect”
shall
      have the meaning specified in Section 4(a).

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Maximum
      Common Stock Issuance”
shall
      have the meaning specified in Section 2(H).

    

    “Minimum
      Acceptable Price”
with
      respect to any Put Notice Date shall mean seventy-five percent (75%) of the
      lowest closing bid prices for the ten (10) Trading Day period immediately
      preceding each Put Notice Date.

    

    “Open
      Market
      Adjustment Amount”
shall
      have the meaning specified in Section 2(I).

    

    "Open
      Market Purchase" shall have the meaning specified in Section 2(I)

    

    “Open
      Market Share Purchase”
shall
      have the meaning specified in Section 2(I).

    

    “Open
      Period”
shall
      mean the period beginning on and including the Trading Day immediately following
      the Effective Date and ending on the earlier to occur of (i)
      the date
      which is thirty-six (36) months from the Effective Date; or (ii)
      termination of the Agreement in accordance with Section 9, below.

    

    “Pricing
      Period”
shall
      mean the period beginning on the Put Notice Date and ending on and including
      the
      date that is five (5) Trading Days after such Put Notice Date.

    

    “Principal
      Market”
shall
      mean the American Stock Exchange, Inc., the National Association of Securities
      Dealers, Inc. Over-the-Counter Bulletin Board, the NASDAQ National Market System
      or the NASDAQ SmallCap Market, whichever is the principal market on which the
      Common Stock is listed.

    

    “Prospectus”
shall
      mean the prospectus, preliminary prospectus and supplemental prospectus used
      in
      connection with the Registration Statement.

    

    “Purchase
      Amount”
shall
      mean the total amount being paid by the Investor on a particular Closing Date
      to
      purchase the Securities.

    

    “Purchase
      Price”
shall
      mean ninety-five percent (95%) of the lowest closing Best Bid price of the
      Common Stock during the Pricing Period. 

    

    “Put”
shall
      have the meaning set forth in Section 2(B)(1) hereof. 

    

    “Put
      Amount”
shall
      have the meaning set forth in Section 2(B)(1) hereof. 

    

    “Put
      Notice”
shall
      mean a written notice sent to the Investor by the Company stating the Put Amount
      in U.S. dollars the Company intends to sell to the Investor pursuant to the
      terms of the Agreement and stating the current number of Shares issued and
      outstanding on such date.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Put
      Notice Date”
shall
      mean the Trading Day, as set forth below, immediately following the day on
      which
      the Investor receives a Put Notice, however a Put Notice shall be deemed
      delivered on
      (a)
      the
      Trading Day it is received by facsimile or otherwise by the Investor if such
      notice is received prior to 9:00 am Eastern Time, or (b)
      the
      immediately succeeding Trading Day if it is received by facsimile or otherwise
      after 9:00 am Eastern Time on a Trading Day. No Put Notice may be deemed
      delivered on a day that is not a Trading Day. 

    

    “Put
      Restriction”
shall
      mean the days between the beginning of the Pricing Period and Closing Date.
      During this time, the Company shall not be entitled to deliver another Put
      Notice.

    

    “Put
      Shares Due”
shall
      have the meaning specified in Section 2(I).

    

    “Registration
      Period”
shall
      have the meaning specified in Section 5(C), below.

    

    “Registration
      Rights Agreement”
shall
      have the meaning set forth in the recitals, above.

    

    “Registration
      Statement”
means
      the registration statement of the Company filed under the 1933 Act covering
      the
      Common Stock issuable hereunder.

    

    “Related
      Party”
shall
      have the meaning specified in Section 5(G).

    

    “Repurchase
      Adjustment Amounts”

    

    “Resolution”
shall
      have the meaning specified in Section 8(E).

    

    “SEC”
shall
      mean the U.S. Securities & Exchange Commission.

    

    “SEC
      Documents”
shall
      have the meaning specified in Section 4(F).

    

    “Securities”
shall
      mean the shares of Common Stock issued pursuant to the terms of the
      Agreement.

    

    “Shares”
shall
      mean the shares of the Company’s Common Stock.

    

    “Subsidiaries”
shall
      have the meaning specified in Section 4(A).

    

    “Trading
      Day”
shall
      mean any day on which the Principal Market for the Common Stock is open for
      trading, from the hours of 9:30 am until 4:00 pm.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    SECTION
      2. PURCHASE AND SALE OF COMMON STOCK. 

     

    (A)
      PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions set
      forth
      herein, the Company shall issue and sell to the Investor, and the Investor
      shall
      purchase from the Company, up to that number of Shares having an aggregate
      Purchase Price of Ten Million dollars ($10,000,000).

     

    (B)
      DELIVERY OF PUT NOTICES. 

     

    (I)
      Subject to the terms and conditions of the Transaction Documents, and from
      time
      to time during the Open Period, the Company may, in its sole discretion, deliver
      a Put Notice to the Investor which states the dollar amount (designated in
      U.S.
      Dollars) (the "Put Amount"), which the Company intends to sell to the Investor
      on a Closing Date (the "Put"). The Put Notice shall be in the form attached
      hereto as Exhibit C and incorporated herein by reference. The amount that the
      Company shall be entitled to Put to the Investor (the "Put Amount") shall be
      equal to, at the Company's election, either: (a) Two Hundred percent (200%)
      of
      the average daily volume (U.S. market only) of the Common Stock for the Ten
      (10)
      Trading Days prior to the applicable Put Notice Date, multiplied by the average
      of the three (3) daily closing bid prices immediately preceding the Put Date,
      or
      (b) two hundred fifty thousand dollars ($250,000). During the Open Period,
      the
      Company shall not be entitled to submit a Put Notice until after the
previous
      Closing has been completed. The Purchase Price for the Common Stock identified
      in the Put Notice shall be equal to ninety-five percent (95%) of the lowest
      closing Best Bid price of the Common Stock during the Pricing Period.

     

    (C)
      COMPANY’S RIGHT TO WITHDRAW. The Company shall reserve the right, but not the
      obligation, to withdraw that portion of the Put that is below the Minimal
      Acceptable Price, by submitting to the Investor, in writing, a notice to cancel
      that portion of the Put. Any shares above the Minimal Acceptable price due
      to
      the Investor shall be carried out by the Company under the terms of this
      Agreement.

     

    (D)
      INTENTIONALLY OMITTED

     

    (E)
      CONDITIONS TO INVESTOR'S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything
      to the contrary in this Agreement, the Company shall not be entitled to deliver
      a Put Notice and the Investor shall not be obligated to purchase any Shares
      at a
      Closing (as defined in Section 2(G)) unless each of the following conditions
      are
      satisfied: 

     

    (I)
      a
      Registration Statement shall have been declared effective and shall remain
      effective and available for the resale of all the Registrable Securities (as
      defined in the Registration Rights Agreement) at all times until the Closing
      with respect to the subject Put Notice; 

     

    (II)
      at
      all times during the period beginning on the related Put Notice Date and ending
      on and including the related Closing Date, the Common Stock shall have been
      listed on the Principal Market and shall not have been suspended from trading
      thereon for a period of two (2) consecutive Trading Days during the Open Period
      and the Company shall not have been notified of any pending or threatened
      proceeding or other action to suspend the trading of the Common Stock;

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (III)
      the
      Company has complied with its obligations and is otherwise not in breach of
      or
      in default under, this Agreement, the Registration Rights Agreement or any
      other
      agreement executed in connection herewith which has not been cured prior to
      delivery of the Investor’s Put Notice Date; 

     

    (IV)
      no
      injunction shall have been issued and remain in force, or action commenced
      by a
      governmental authority which has not been stayed or abandoned, prohibiting
      the
      purchase or the issuance of the Securities; and 

     

    (V)
      the
      issuance of the Securities will not violate any shareholder approval
      requirements of the Principal Market. 

     

    If
      any of
      the events described in clauses (I) through (V) above occurs during a Pricing
      Period, then the Investor shall have no obligation to purchase the Put Amount
      of
      Common Stock set forth in the applicable Put Notice. 

     

    (F)
      RESERVED

     

    (G)
      MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction of
      the
      conditions set forth in Sections 2(E), 7 and 8, the closing of the purchase
      by
      the Investor of Shares (a "Closing") shall occur on the date which is no later
      than seven (7) Trading Days following the applicable Put Notice Date (each
      a
      "Closing Date"). Prior to each Closing Date, (I) the Company shall deliver
      to
      the Investor pursuant to this Agreement, certificates representing the Shares
      to
      be issued to the Investor on such date and registered in the name of the
      Investor; and (II) the Investor shall deliver to the Company the Purchase Price
      to be paid for such Shares, determined as set forth in Sections 2(B). In lieu
      of
      delivering physical certificates representing the Securities and provided that
      the Company's transfer agent then is participating in The Depository Trust
      Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon
      request of the Investor, the Company shall use all commercially reasonable
      efforts to cause its transfer agent to electronically transmit the Securities
      by
      crediting the account of the Investor's prime broker (as specified by the
      Investor within a reasonably in advance of the Investor's notice) with DTC
      through its Deposit Withdrawal Agent Commission ("DWAC") system. 

     

    The
      Company understands that a delay in the issuance of Securities beyond the
      Closing Date could result in economic damage to the Investor. After the
      Effective Date, as compensation to the Investor for such loss, the Company
      agrees to make late payments to the Investor for late issuance of Securities
      (delivery of Securities after the applicable Closing Date) in accordance with
      the following schedule (where "No. of Days Late" is defined as the number of
      trading days beyond the Closing Date, with the Amounts being cumulative.):
      

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

     

      
        	
                LATE
                  PAYMENT FOR EACH

              	 
	
                NO.
                  OF DAYS LATE 

              	
                $10,000
                  WORTH OF COMMON STOCK

              
	 	 
	
                1
                  

              	
                $100

              
	
                2
                  

              	
                $200

              
	
                3
                  

              	
                $300

              
	
                4
                  

              	
                $400

              
	
                5
                  

              	
                $500

              
	
                6
                  

              	
                $600

              
	
                7
                  

              	
                $700

              
	
                8
                  

              	
                $800

              
	
                9
                  

              	
                $900

              
	
                10
                  

              	
                $1,000

              
	
                Over
                  10 

              	
                $1,000
                  + $200 for each Business
                  Day late beyond 10
                  days

              

      

    

     

    The
      Company shall make any payments incurred under this Section in immediately
      available funds upon demand by the Investor. Nothing herein shall limit the
      Investor's right to pursue actual damages for the Company's failure to issue
      and
      deliver the Securities to the Investor, except that such late payments shall
      offset any such actual damages incurred by the Investor, and any Open Market
      Adjustment Amount, as set forth below. 

     

    (H)
      OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained
      herein to the contrary, if during the Open Period the Company becomes listed
      on
      an exchange that limits the number of shares of Common Stock that may be issued
      without shareholder approval, then the number of Shares issuable by the Company
      and purchasable by the Investor, shall not exceed that number of the shares
      of
      Common Stock that may be issuable without shareholder approval (the "Maximum
      Common Stock Issuance"). If such issuance of shares of Common Stock could cause
      a delisting on the Principal Market, then the Maximum Common Stock Issuance
      shall first be approved by the Company's shareholders in accordance with
      applicable law and the By-laws and Amended and Restated Certificate of
      Incorporation of the Company, if such issuance of shares of Common Stock could
      cause a delisting on the Principal Market. The parties understand and agree
      that
      the Company's failure to seek or obtain such shareholder approval shall in
      no
      way adversely affect the validity and due authorization of the issuance and
      sale
      of Securities or the Investor's obligation in accordance with the terms and
      conditions hereof to purchase a number of Shares in the aggregate up to the
      Maximum Common Stock Issuance limitation, and that such approval pertains only
      to the applicability of the Maximum Common Stock Issuance limitation provided
      in
      this Section 2(H). 

     

    (I)
      If,
      by the third (3rd) business day after the Closing Date, the Company fails to
      deliver any portion of the shares of the Put to the Investor (the "Put Shares
      Due") and the Investor purchases, in an open market transaction or otherwise,
      shares of Common Stock necessary to make delivery of shares which would have
      been delivered if the full amount of the shares to be delivered to the Investor
      by the Company (the "Open Market Share Purchase"), then the Company shall pay
      to
      the Investor, in addition to any other amounts due to Investor pursuant to
      the
      Put, and not in lieu thereof, the Open Market Adjustment Amount (as defined
      below). The "Open Market Adjustment Amount" is the amount equal to the excess,
      if any, of (x) the Investor's total purchase price (including brokerage
      commissions, if any) for the Open Market Share Purchase minus (y) the net
      proceeds (after brokerage commissions, if any) received by the Investor from
      the
      sale of the Put Shares Due. The Company shall pay the Open Market Adjustment
      Amount to the Investor in immediately available funds within five (5) business
      days of written demand by the Investor. By way of illustration and not in
      limitation of the foregoing, if the Holder purchases shares of Common Stock
      having a total purchase price (including brokerage commissions) of $11,000
      to
      cover an Open Market Purchase with respect to shares of Common Stock it sold
      for
      net proceeds of $10,000, the Open Market Purchase Adjustment Amount which the
      Company will be required to pay to the Holder will be $1,000.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    SECTION
      3. INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. 

     

    The
      Investor represents and warrants to the Company, and covenants, that:

     

    (A)
      SOPHISTICATED INVESTOR. The Investor has, by reason of its business and
      financial experience, such knowledge, sophistication and experience in financial
      and business matters and in making investment decisions of this type that it
      is
      capable of (I) evaluating the merits and risks of an investment in the
      Securities and making an informed investment decision; (II) protecting its
      own
      interest; and (III) bearing the economic risk of such investment for an
      indefinite period of time. 

     

    (B)
      AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and validly authorized,
      executed and delivered on behalf of the Investor and is a valid and binding
      agreement of the Investor enforceable against the Investor in accordance with
      its terms, subject as to enforceability to general principles of equity and
      to
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      and
      other similar laws relating to, or affecting generally, the enforcement of
      applicable creditors' rights and remedies. 

     

    (C)
      SECTION 9 OF THE 1934 ACT. During the term of this Agreement, the Investor
      will
      comply with the provisions of Section 9 of the 1934 Act, and the rules
      promulgated thereunder, with respect to transactions involving the Common Stock.
      The Investor agrees not to sell the Company's stock short, either directly
      or
      indirectly through its affiliates, principals or advisors, the Company's common
      stock during the term of this Agreement. 

     

    (D)
      ACCREDITED INVESTOR. Investor is an "Accredited Investor" as that term is
      defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (E)
      NO
      CONFLICTS. The execution, delivery and performance of the Transaction Documents
      by the Investor and the consummation by the Investor of the transactions
      contemplated hereby and thereby will not result in a violation of Partnership
      Agreement or other organizational documents of the Investor. 

     

    (F)
      OPPORTUNITY TO DISCUSS. The Investor has received all materials relating to
      the
      Company's business, finance and operations which it has requested. The Investor
      has had an opportunity to discuss the business, management and financial affairs
      of the Company with the Company's management. 

     

    (G)
      INVESTMENT PURPOSES. The Investor is purchasing the Securities for its own
      account for investment purposes and not with a view towards distribution and
      agrees to resell or otherwise dispose of the Securities solely in accordance
      with the registration provisions of the 1933 Act (or pursuant to an exemption
      from such registration provisions). 

     

    (H)
      NO
      REGISTRATION AS A DEALER. The Investor is not and will not be required to be
      registered as a "dealer" under the 1934 Act, either as a result of its execution
      and performance of its obligations under this Agreement or otherwise.

     

    (I)
      GOOD
      STANDING. The
      Investor is a Limited Partnership, duly organized, validly existing and in
      good
      standing in the State of Delaware.

     

    (J)
      TAX
      LIABILITIES. The Investor understands that it is liable for its own tax
      liabilities.

     

    (K)
      REGULATION M. The Investor will comply with Regulation M under the 1934 Act,
      if
      applicable. 

     

    SECTION
      4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 

     

    Except
      as
      set forth in the Schedules attached hereto, or as disclosed on the Company's
      SEC
      Documents, the Company represents and warrants to the Investor that:

     

    (A)
      ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized
      and
      validly existing in good standing under the laws of the State of Nevada,
      and has
      the requisite corporate power and authorization to own its properties and to
      carry on its business as now being conducted. Both the Company and the companies
      it owns or controls (“Subsidiaries”) are duly qualified to do business and are
      in good standing in every jurisdiction in which its ownership of property or
      the
      nature of the business conducted by it makes such qualification necessary,
      except to the extent that the failure to be so qualified or be in good standing
      would not have a Material Adverse Effect. As used in this Agreement, "Material
      Adverse Effect" means any material adverse effect on the business, properties,
      assets, operations, results of operations, financial condition or prospects
      of
      the Company and its Subsidiaries, if any, taken as a whole, or on the
      transactions contemplated hereby or by the agreements and instruments to be
      entered into in connection herewith, or on the authority or ability of the
      Company to perform its obligations under the Transaction Documents (as defined
      in Section 1 and 4(B), below). 

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (B)
      AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS. 

     

    (I)
      The
      Company has the requisite corporate power and authority to enter into and
      perform this Agreement, the Registration Rights Agreement, and each of the
      other
      agreements entered into by the parties hereto in connection with the
      transactions contemplated by this Agreement (collectively, the "Equity Line
      Transaction Documents"), and to issue the Securities in accordance with the
      terms hereof and thereof. 

     

    (II)
      The
      execution and delivery of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated hereby and thereby,
      including without limitation the reservation for issuance and the issuance
      of
      the Securities pursuant to this Agreement, have been duly and validly authorized
      by the Company's Board of Directors and no further consent or authorization
      is
      required by the Company, its Board of Directors, or its shareholders.

     

    (III)
      The
      Transaction Documents have been duly and validly executed and delivered by
      the
      Company. 

     

    (IV)
      The
      Transaction Documents constitute the valid and binding obligations of the
      Company enforceable against the Company in accordance with their terms, except
      as such enforceability may be limited by general principles of equity or
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      or
      similar laws relating to, or affecting generally, the enforcement of creditors'
      rights and remedies. 

     

    (C)
      CAPITALIZATION. As of the date hereof, the authorized capital stock of the
      Company consists of 550,000,000 shares of Class A Common Stock, $.01 par value
      per share, of which as of December 31, 2005, 33,756,461 shares are issued and
      outstanding, with an additional 835,000 shares issued during Q1 of 2006;
      10,000,000 shares of Series A Preferred Stock authorized with no shares issued
      or outstanding, 50,000,000 shares of Series B Preferred Stock with 155,000
      shared issued or outstanding and as of December 31, 2005, 155,000 outstanding
      Common Stock warrants. Further, the Company has authorized 250,000,000 shares
      of
      non-voting Class B Common Shares, $0.001 par value per share, of which 5,000,000
      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 the Company's publicly available filings with the SEC:

     

    (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 shares of capital stock, 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 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; (VII) the Company
      does not have any stock appreciation rights or "phantom stock" plans or
      agreements or any similar plan or agreement; and (VIII) there is no dispute
      as
      to the classification of any shares of the Company's capital stock.

     

    The
      Company has furnished to the Investor, or the Investor has had access through
      EDGAR to, true and correct copies of the Company's Amended and Restated
      Certificate of Incorporation, as in effect on the date hereof (the "Certificate
      of Incorporation"), and the Company's By-laws, as in effect on the date hereof
      (the "By-laws"), and the terms of all securities convertible into or exercisable
      for Common Stock and the material rights of the holders thereof in respect
      thereto. 

     

    (D)
      ISSUANCE OF SHARES. The Company has reserved ________ Shares for issuance
      pursuant to this Agreement, which have been duly authorized and reserved those
      Shares for issuance (subject to adjustment pursuant to the Company's covenant
      set forth in Section 5(F) below) pursuant to this Agreement. Upon issuance
      in
      accordance with this Agreement, the Securities will be validly issued, fully
      paid for and non-assessable and free from all taxes, liens and charges with
      respect to the issue thereof. In the event the Company cannot register a
      sufficient number of Shares for issuance pursuant to this Agreement, the Company
      will use its best efforts to authorize and reserve for issuance the number
      of
      Shares required for the Company to perform its obligations hereunder as soon
      as
      reasonably practicable. 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (E)
      NO
      CONFLICTS. The execution, delivery and performance of the Equity Line
      Transaction Documents by the Company and the consummation by the Company of
      the
      transactions contemplated hereby and thereby will not (I) result in a violation
      of the Certificate of Incorporation, any Certificate of Designations,
      Preferences and Rights of any outstanding series of preferred stock of the
      Company or the By-laws; or (II) conflict with, or constitute a material default
      (or an event which with notice or lapse of time or both would become a material
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any material agreement, contract, indenture
      mortgage, indebtedness or instrument to which the Company or any of its
      Subsidiaries is a party, or to the Company's knowledge result in a violation
      of
      any law, rule, regulation, order, judgment or decree (including United States
      federal and state securities laws and regulations and the rules and regulations
      of the Principal Market or principal securities exchange or trading market
      on
      which the Common Stock is traded or listed) applicable to the Company or any
      of
      its Subsidiaries or by which any property or asset of the Company or any of
      its
      Subsidiaries is bound or affected. Except as disclosed in Schedule 4(e), neither
      the Company nor its Subsidiaries is in violation of any term of, or in default
      under, the Certificate of Incorporation, any Certificate of Designations,
      Preferences and Rights of any outstanding series of preferred stock of the
      Company or the By-laws or their organizational charter or by-laws, respectively,
      or any contract, agreement, mortgage, indebtedness, indenture, instrument,
      judgment, decree or order or any statute, rule or regulation applicable to
      the
      Company or its Subsidiaries, except for possible conflicts, defaults,
      terminations, amendments, accelerations, cancellations and violations that
      would
      not individually or in the aggregate have or constitute a Material Adverse
      Effect. The business of the Company and its Subsidiaries is not being conducted,
      and shall not be conducted, in violation of any law, statute, ordinance, rule,
      order or regulation of any governmental authority or agency, regulatory or
      self-regulatory agency, or court, except for possible violations the sanctions
      for which either individually or in the aggregate would not have a Material
      Adverse Effect. Except as specifically contemplated by this Agreement and as
      required under the 1933 Act or any securities laws of any states, to the
      Company's knowledge, the Company is not required to obtain any consent,
      authorization, permit or order of, or make any filing or registration (except
      the filing of a registration statement as outlined in the Registration Rights
      Agreement between the Parties) with, any court, governmental authority or
      agency, regulatory or self-regulatory agency or other third party in order
      for
      it to execute, deliver or perform any of its obligations under, or contemplated
      by, the Transaction Documents in accordance with the terms hereof or thereof.
      All consents, authorizations, permits, orders, filings and registrations which
      the Company is required to obtain pursuant to the preceding sentence have been
      obtained or effected on or prior to the date hereof and are in full force and
      effect as of the date hereof. Except as disclosed in Schedule 4(e), the Company
      and its Subsidiaries are unaware of any facts or circumstances which might
      give
      rise to any of the foregoing. The Company is not, and will not be, in violation
      of the listing requirements of the Principal Market as in effect on the date
      hereof and on each of the Closing Dates and is not aware of any facts which
      would reasonably lead to delisting of the Common Stock by the Principal Market
      in the foreseeable future. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (F)
      SEC
      DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company has filed
      all reports, schedules, forms, statements and other documents required to be
      filed by it with the SEC pursuant to the reporting requirements of the 1934
      Act
      (all of the foregoing filed prior to the date hereof and all exhibits included
      therein and financial statements and schedules thereto and documents
      incorporated by reference therein being hereinafter referred to as the "SEC
      Documents"). The Company has delivered to the Investor or its representatives,
      or they have had access through EDGAR to, true and complete copies of the SEC
      Documents. As of their respective filing dates, the SEC Documents complied
      in
      all material respects with the requirements of the 1934 Act and the rules and
      regulations of the SEC promulgated thereunder applicable to the SEC Documents,
      and none of the SEC Documents, at the time they were filed with the SEC,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not misleading. As
      of
      their respective dates, the financial statements of the Company included in
      the
      SEC Documents complied as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the SEC
      with
      respect thereto. Such financial statements have been prepared in accordance
      with
      generally accepted accounting principles, by a firm that is a member of the
      Public Companies Accounting Oversight Board ("PCAOB") consistently applied,
      during the periods involved (except (I) as may be otherwise indicated in such
      financial statements or the notes thereto, or (II) in the case of unaudited
      interim statements, to the extent they may exclude footnotes or may be condensed
      or summary statements) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other written
      information provided by or on behalf of the Company to the Investor which is
      not
      included in the SEC Documents, including, without limitation, information
      referred to in Section 4(D) of this Agreement, contains any untrue statement
      of
      a material fact or omits to state any material fact necessary to make the
      statements therein, in the light of the circumstance under which they are or
      were made, not misleading. Neither the Company nor any of its Subsidiaries
      or
      any of their officers, directors, employees or agents have provided the Investor
      with any material, nonpublic information which was not publicly disclosed prior
      to the date hereof and any material, nonpublic information provided to the
      Investor by the Company or its Subsidiaries or any of their officers, directors,
      employees or agents prior to any Closing Date shall be publicly disclosed by
      the
      Company prior to such Closing Date. 

     

    (G)
      ABSENCE OF CERTAIN CHANGES. Except as otherwise set forth in the SEC Documents,
      the Company does not intend to change the business operations of the Company
      in
      any material way. The Company has not taken any steps, and does not currently
      expect to take any steps, to seek protection pursuant to any bankruptcy law
      nor
      does the Company or its Subsidiaries have any knowledge or reason to believe
      that its creditors intend to initiate involuntary bankruptcy proceedings.

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (H)
      ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set forth in
      the
      SEC Documents, there is no action, suit, proceeding, inquiry or investigation
      before or by any court, public board, government agency, self-regulatory
      organization or body pending or, to the knowledge of the executive officers
      of
      Company or any of its Subsidiaries, threatened against or affecting the Company,
      the Common Stock or any of the Company's Subsidiaries or any of the Company's
      or
      the Company's Subsidiaries' officers or directors in their capacities as such,
      in which an adverse decision could have a Material Adverse Effect.

     

    (I)
      ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES. The Company acknowledges
      and agrees that the Investor is acting solely in the capacity of an arm's length
      purchaser with respect to the Transaction Documents and the transactions
      contemplated hereby and thereby. The Company further acknowledges that the
      Investor is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to the Equity Line Transaction Documents
      and
      the transactions contemplated hereby and thereby and any advice given by the
      Investor or any of its respective representatives or agents in connection with
      the Equity Line Transaction Documents and the transactions contemplated hereby
      and thereby is merely incidental to the Investor's purchase of the Securities,
      and is not being relied on by the Company. The Company further represents to
      the
      Investor that the Company's decision to enter into the Equity Line Transaction
      Documents has been based solely on the independent evaluation by the Company
      and
      its representatives. 

     

    (J)
      NO
      UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as set
      forth in the SEC Documents, as of the date hereof, no event, liability,
      development or circumstance has occurred or exists, or to the Company's
      knowledge is contemplated to occur, with respect to the Company or its
      Subsidiaries or their respective business, properties, assets, prospects,
      operations or financial condition, that would be required to be disclosed by
      the
      Company under applicable securities laws on a registration statement filed
      with
      the SEC relating to an issuance and sale by the Company of its Common Stock
      and
      which has not been publicly announced. 

     

    (K)
      EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries is involved
      in any union labor dispute nor, to the knowledge of the Company or any of its
      Subsidiaries, is any such dispute threatened. Neither the Company nor any of
      its
      Subsidiaries is a party to a collective bargaining agreement, and the Company
      and its Subsidiaries believe that relations with their employees are good.
      No
      executive officer (as defined in Rule 501(f) of the 1933 Act) has notified
      the
      Company that such officer intends to leave the Company's employ or otherwise
      terminate such officer's employment with the Company. 

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (L)
      INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own or possess
      adequate rights or licenses to use all trademarks, trade names, service marks,
      service mark registrations, service names, patents, patent rights, copyrights,
      inventions, licenses, approvals, governmental authorizations, trade secrets
      and
      rights necessary to conduct their respective businesses as now conducted. Except
      as set forth in the SEC Documents, none of the Company's trademarks, trade
      names, service marks, service mark registrations, service names, patents, patent
      rights, copyrights, inventions, licenses, approvals, government authorizations,
      trade secrets or other intellectual property rights necessary to conduct its
      business as now or as proposed to be conducted have expired or terminated,
      or
      are expected to expire or terminate within two (2) years from the date of this
      Agreement. The Company and its Subsidiaries do not have any knowledge of any
      infringement by the Company or its Subsidiaries of trademark, trade name rights,
      patents, patent rights, copyrights, inventions, licenses, service names, service
      marks, service mark registrations, trade secret or other similar rights of
      others, or of any such development of similar or identical trade secrets or
      technical information by others and, except as set forth in the SEC Documents,
      there is no claim, action or proceeding being made or brought against, or to
      the
      Company's knowledge, being threatened against, the Company or its Subsidiaries
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Company and its Subsidiaries are unaware of
      any
      facts or circumstances which might give rise to any of the foregoing. The
      Company and its Subsidiaries have taken commercially reasonable security
      measures to protect the secrecy, confidentiality and value of all of their
      intellectual properties. 

     

    (M)
      ENVIRONMENTAL LAWS. The Company and its Subsidiaries (I) are, to the knowledge
      of the management and directors of the Company and its Subsidiaries, in
      compliance with any and all applicable foreign, federal, state and local laws
      and regulations relating to the protection of human health and safety, the
      environment or hazardous or toxic substances or wastes, pollutants or
      contaminants ("Environmental Laws"); (II) have, to the knowledge of the
      management and directors of the Company, received all permits, licenses or
      other
      approvals required of them under applicable Environmental Laws to conduct their
      respective businesses; and (III) are in compliance, to the knowledge of the
      management and directors of the Company, with all terms and conditions of any
      such permit, license or approval where, in each of the three (3) foregoing
      cases, the failure to so comply would have, individually or in the aggregate,
      a
      Material Adverse Effect. 

     

    (N)
      TITLE. The Company and its Subsidiaries have good and marketable title to all
      personal property owned by them which is material to the business of the Company
      and its Subsidiaries, in each case free and clear of all liens, encumbrances
      and
      defects except such as are described in the SEC Documents or such as do not
      materially affect the value of such property and do not interfere with the
      use
      made and proposed to be made of such property by the Company or any of its
      Subsidiaries. Any real property and facilities held under lease by the Company
      or any of its Subsidiaries are held by them under valid, subsisting and
      enforceable leases with such exceptions as are not material and do not interfere
      with the use made and proposed to be made of such property and buildings by
      the
      Company and its Subsidiaries. 

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (O)
      INSURANCE. Each of the Company's Subsidiaries are insured by insurers of
      recognized financial responsibility against such losses and risks and in such
      amounts as management of the Company reasonably believes to be prudent and
      customary in the businesses in which the Company and its Subsidiaries are
      engaged. Neither the Company nor any of its Subsidiaries has been refused any
      insurance coverage sought or applied for and neither the Company nor its
      Subsidiaries has any reason to believe that it will not be able to renew its
      existing insurance coverage as and when such coverage expires or to obtain
      similar coverage from similar insurers as may be necessary to continue its
      business at a cost that would not have a Material Adverse Effect. 

     

    (P)
      REGULATORY PERMITS. The Company and its Subsidiaries have in full force and
      effect all certificates, approvals, authorizations and permits from the
      appropriate federal, state, local or foreign regulatory authorities and
      comparable foreign regulatory agencies, necessary to own, lease or operate
      their
      respective properties and assets and conduct their respective businesses, and
      neither the Company nor any such Subsidiary has received any notice of
      proceedings relating to the revocation or modification of any such certificate,
      approval, authorization or permit, except for such certificates, approvals,
      authorizations or permits which if not obtained, or such revocations or
      modifications which, would not have a Material Adverse Effect. 

     

    (Q)
      INTERNAL ACCOUNTING CONTROLS. The Company and each of its Subsidiaries maintain
      a system of internal accounting controls sufficient to provide reasonable
      assurance that (I) transactions are executed in accordance with management's
      general or specific authorizations; (II) transactions are recorded as necessary
      to permit preparation of financial statements in conformity with generally
      accepted accounting principles by a firm with membership to the PCAOB and to
      maintain asset accountability; (III) access to assets is permitted only in
      accordance with management's general or specific authorization; and (IV) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences. 

     

    (R)
      NO
      MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of its
      Subsidiaries is subject to any charter, corporate or other legal restriction,
      or
      any judgment, decree, order, rule or regulation which in the judgment of the
      Company's officers has or is expected in the future to have a Material Adverse
      Effect. Neither the Company nor any of its Subsidiaries is a party to any
      contract or agreement which in the judgment of the Company's officers has or
      is
      expected to have a Material Adverse Effect. 

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (S)
      TAX
      STATUS. The Company and each of its Subsidiaries has made or filed all United
      States federal and state income and all other tax returns, reports and
      declarations required by any jurisdiction to which it is subject (unless and
      only to the extent that the Company and each of its Subsidiaries has set aside
      on its books provisions reasonably adequate for the payment of all unpaid and
      unreported taxes) and has paid all taxes and other governmental assessments
      and
      charges that are material in amount, shown or determined to be due on such
      returns, reports and declarations, except those being contested in good faith
      and has set aside on its books provision reasonably adequate for the payment
      of
      all taxes for periods subsequent to the periods to which such returns, reports
      or declarations apply. There are no unpaid taxes in any material amount claimed
      to be due by the taxing authority of any jurisdiction, and the officers of
      the
      Company know of no basis for any such claim. 

     

    (T)
      CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents filed at least
      ten (10) days prior to the date hereof and except for arm's length transactions
      pursuant to which the Company makes payments in the ordinary course of business
      upon terms no less favorable than the Company could obtain from disinterested
      third parties and other than the grant of stock options disclosed in the SEC
      Documents, none of the officers, directors, or employees of the Company is
      presently a party to any transaction with the Company or any of its Subsidiaries
      (other than for services as employees, officers and directors), including any
      contract, agreement or other arrangement providing for the furnishing of
      services to or by, providing for rental of real or personal property to or
      from,
      or otherwise requiring payments to or from any officer, director or such
      employee or, to the knowledge of the Company, any corporation, partnership,
      trust or other entity in which any officer, director, or any such employee
      has a
      substantial interest or is an officer, director, trustee or partner.

     

    (U)
      DILUTIVE EFFECT. The Company understands and acknowledges that the number of
      shares of Common Stock issuable upon purchases pursuant to this Agreement will
      increase in certain circumstances including, but not necessarily limited to,
      the
      circumstance wherein the trading price of the Common Stock declines during
      the
      period between the Effective Date and the end of the Open Period. The Company's
      executive officers and directors have studied and fully understand the nature
      of
      the transactions contemplated by this Agreement and recognize that they have
      a
      potential dilutive effect on the shareholders of the Company. The Board of
      Directors of the Company has concluded, in its good faith business judgment,
      and
      with full understanding of the implications, that such issuance is in the best
      interests of the Company. The Company specifically acknowledges that, subject
      to
      such limitations as are expressly set forth in the Equity Line Transaction
      Documents, its obligation to issue shares of Common Stock upon purchases
      pursuant to this Agreement is absolute and unconditional regardless of the
      dilutive effect that such issuance may have on the ownership interests of other
      shareholders of the Company. 

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (V)
      LOCK-UP. The Company shall cause its officers, insiders, directors, and
      affiliates or other related parties under control of the Company, to refrain
      from selling Common Stock during each Pricing Period. 

     

    (W)
      NO
      GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any
      person acting on its behalf, has engaged in any form of general solicitation
      or
      general advertising (within the meaning of Regulation D) in connection with
      the
      offer or sale of the Common Stock to be offered as set forth in this Agreement.
      

     

    (X)
      NO
      BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders
      or financial advisory fees or commissions will be payable by the Company, it's
      agents or Subsidiaries, with respect to the transactions contemplated by this
      Agreement, except as otherwise disclosed in this Agreement. 

     

    SECTION
      5. COVENANTS OF THE COMPANY 

     

    (A)
      BEST
      EFFORTS. The Company shall use all commercially reasonable efforts to timely
      satisfy each of the conditions set forth in Section 7 of this Agreement.

     

    (B)
      BLUE
      SKY. The Company shall, at its sole cost and expense, on or before each of
      the
      Closing Dates, take such action as the Company shall reasonably determine is
      necessary to qualify the Securities for, or obtain exemption for the Securities
      for, sale to the Investor at each of the Closings pursuant to this Agreement
      under applicable securities or "Blue Sky" laws of such states of the United
      States, as reasonably specified by the Investor, and shall provide evidence
      of
      any such action so taken to the Investor on or prior to the Closing Date.

     

    (C)
      REPORTING STATUS. Until one of the following occurs, the Company shall file
      all
      reports required to be filed with the SEC pursuant to the 1934 Act, and the
      Company shall not terminate its status, or take an action or fail to take any
      action, which would terminate its status as a reporting company under the 1934
      Act: (i) this Agreement terminates pursuant to Section 9 and the Investor has
      the right to sell all of the Securities without restrictions pursuant to Rule
      144(k) promulgated under the 1933 Act, or such other exemption (ii) the date
      on
      which the Investor has sold all the Securities and this Agreement has been
      terminated pursuant to Section 9.

     

    (D)
      USE
      OF PROCEEDS. The Company will use the proceeds from the sale of the Shares
      (excluding amounts paid by the Company for fees as set forth in the Transaction
      Documents) for general corporate and working capital purposes and acquisitions
      or assets, businesses or operations or for other purposes that the Board of
      Directors, in its good faith deem to be in the best interest of the Company.
      

     

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (E)
      FINANCIAL INFORMATION. During the Registration Period, the Company agrees to
      make available to the Investor via EDGAR or other electronic means the following
      documents and information on the forms set forth: (I) within five (5) Trading
      Days after the filing thereof with the SEC, a copy of its Annual Reports on
      Form
      10-KSB, its Quarterly Reports on Form 10-QSB, any Current Reports on Form 8-K
      and any Registration Statements or amendments filed pursuant to the 1933 Act;
      (II) copies of any notices and other information made available or given to
      the
      shareholders of the Company generally, contemporaneously with the making
      available or giving thereof to the shareholders; and (III) within two (2)
      calendar days of filing or delivery thereof, copies of all documents filed
      with,
      and all correspondence sent to, the Principal Market, any securities exchange
      or
      market, or the National Association of Securities Dealers, Inc., unless such
      information is material nonpublic information. 

     

     

    (F)
      RESERVATION OF SHARES. The Company shall take all action necessary to at all
      times have authorized, and reserved for the purpose of issuance, a sufficient
      number of shares of Common Stock to provide for the issuance of the Securities
      to the Investor as required hereunder. In the event that the Company determines
      that it does not have a sufficient number of authorized shares of Common Stock
      to reserve and keep available for issuance as described in this Section 5(F),
      the Company shall use all commercially reasonable efforts to increase the number
      of authorized shares of Common Stock by seeking shareholder approval for the
      authorization of such additional shares. 

     

     

    (G)
      LISTING. The Company shall promptly secure and maintain the listing of all
      of
      the Registrable Securities (as defined in the Registration Rights Agreement)
      on
      the Principal Market and each other national securities exchange and automated
      quotation system, if any, upon which shares of Common Stock are then listed
      (subject to official notice of issuance) and shall maintain, such listing of
      all
      Registrable Securities from time to time issuable under the terms of the Equity
      Line Transaction Documents. Neither the Company nor any of its Subsidiaries
      shall take any action which would be reasonably expected to result in the
      delisting or suspension of the Common Stock on the Principal Market (excluding
      suspensions of not more than one (1) trading day resulting from business
      announcements by the Company). The Company shall promptly provide to the
      Investor copies of any notices it receives from the Principal Market regarding
      the continued eligibility of the Common Stock for listing on such automated
      quotation system or securities exchange. The Company shall pay all fees and
      expenses in connection with satisfying its obligations under this Section 5(G).
      

     

     

    (H)
      TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall cause each of
      its
      Subsidiaries not to, enter into, amend, modify or supplement, or permit any
      Subsidiary to enter into, amend, modify or supplement, any agreement,
      transaction, commitment or arrangement with any of its or any Subsidiary's
      officers, directors, persons who were officers or directors at any time during
      the previous two (2) years, shareholders who beneficially own 5% or more of
      the
      Common Stock, or Affiliates or with any individual related by blood, marriage
      or
      adoption to any such individual or with any entity in which any such entity
      or
      individual owns a 5% or more beneficial interest (each a "Related Party"),
      except for (I) customary employment arrangements and benefit programs on
      reasonable terms, (II) any agreement, transaction, commitment or arrangement
      on
      an arms-length basis on terms no less favorable than terms which would have
      been
      obtainable from a disinterested third party other than such Related Party,
      or
      (III) any agreement, transaction, commitment or arrangement which is approved
      by
      a majority of the disinterested directors of the Company. For purposes hereof,
      any director who is also an officer of the Company or any Subsidiary of the
      Company shall not be a disinterested director with respect to any such
      agreement, transaction, commitment or arrangement. "Affiliate" for purposes
      hereof means, with respect to any person or entity, another person or entity
      that, directly or indirectly, (I) has a 5% or more equity interest in that
      person or entity, (II) has 5% or more common ownership with that person or
      entity, (III) controls that person or entity, or (IV) is under common control
      with that person or entity. "Control" or "Controls" for purposes hereof means
      that a person or entity has the power, directly or indirectly, to conduct or
      govern the policies of another person or entity. 

     

    
      
         

      

      
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    (I)
      FILING OF FORM 8-K. On or before the date which is four (4) Trading Days after
      the Execution Date, the Company shall file a Current Report on Form 8-K with
      the
      SEC describing the terms of the transaction contemplated by the Equity Line
      Transaction Documents in the form required by the 1934 Act, if such filing
      is
      required. 

     

     

    (J)
      CORPORATE EXISTENCE. The Company shall use all commercially reasonable efforts
      to preserve and continue the corporate existence of the Company. 

     

     

    (K)
      NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE
      A
      PUT. The Company shall promptly notify the Investor upon the occurrence of
      any
      of the following events in respect of a Registration Statement or related
      prospectus in respect of an offering of the Securities: (I) receipt of any
      request for additional information by the SEC or any other federal or state
      governmental authority during the period of effectiveness of the Registration
      Statement for amendments or supplements to the Registration Statement or related
      prospectus; (II) the issuance by the SEC or any other federal or state
      governmental authority of any stop order suspending the effectiveness of any
      Registration Statement or the initiation of any proceedings for that purpose;
      (III) receipt of any notification with respect to the suspension of the
      qualification or exemption from qualification of any of the Securities for
      sale
      in any jurisdiction or the initiation or notice of any proceeding for such
      purpose; (IV) the happening of any event that makes any statement made in such
      Registration Statement or related prospectus or any document incorporated or
      deemed to be incorporated therein by reference untrue in any material respect
      or
      that requires the making of any changes in the Registration Statement, related
      prospectus or documents so that, in the case of a Registration Statement, it
      will not contain any untrue statement of a material fact or omit to state any
      material fact required to be stated therein or necessary to make the statements
      therein not misleading, and that in the case of the related prospectus, it
      will
      not contain any untrue statement of a material fact or omit to state any
      material fact required to be stated therein or necessary to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading; and (V) the Company's reasonable determination that a post-effective
      amendment to the Registration Statement would be appropriate, and the Company
      shall promptly make available to Investor any such supplement or amendment
      to
      the related prospectus. The Company shall not deliver to Investor any Put Notice
      during the continuation of any of the foregoing events in this Section 5(K).
      

     

    (L)
      REIMBURSEMENT. If (I) the Investor becomes involved in any capacity in any
      action, proceeding or investigation brought by any shareholder of the Company,
      in connection with or as a result of the consummation of the transactions
      contemplated by the Equity Line Transaction Documents, or if the Investor is
      impleaded in any such action, proceeding or investigation by any person (other
      than as a result of a breach of the Investor’s representations and warranties
      set forth in this Agreement); or (II) the Investor becomes involved in any
      capacity in any action, proceeding or investigation brought by the SEC against
      or involving the Company or in connection with or as a result of the
      consummation of the transactions contemplated by the Equity Line Transaction
      Documents (other than as a result of a breach of the Investor’s representations
      and warranties set forth in this Agreement), or if this Investor is impleaded
      in
      any such action, proceeding or investigation by any person, then in any such
      case, the Company will reimburse the Investor for its reasonable legal and
      other
      expenses (including the cost of any investigation and preparation) incurred
      in
      connection therewith, as such expenses are incurred. In addition, other than
      with respect to any matter in which the Investor is a named party, the Company
      will pay to the Investor the charges, as reasonably determined by the Investor,
      for the time of any officers or employees of the Investor devoted to appearing
      and preparing to appear as witnesses, assisting in preparation for hearings,
      trials or pretrial matters, or otherwise with respect to inquiries, hearing,
      trials, and other proceedings relating to the subject matter of this Agreement.
      The reimbursement obligations of the Company under this section shall be in
      addition to any liability which the Company may otherwise have, shall extend
      upon the same terms and conditions to any affiliates of the Investor that are
      actually named in such action, proceeding or investigation, and partners,
      directors, agents, employees, attorneys, accountants, auditors and controlling
      persons (if any), as the case may be, of Investor and any such affiliate, and
      shall be binding upon and inure to the benefit of any successors of the Company,
      the Investor and any such affiliate and any such person.

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (M)
      TRANSFER AGENT. Upon effectiveness of the Registration Statement, and for so
      long as the Registration Statement is effective, the Company shall deliver
      instructions to its transfer agent to issue Shares to the Investor that are
      covered for resale by the Registration Statement free of restrictive
      legends.

     

    SECTION
      6. INTENTIONALLY OMITTED 

     

    SECTION
      7. CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL. 

     

    The
      obligation hereunder of the Company to issue and sell the Securities to the
      Investor is further subject to the satisfaction, at or before each Closing
      Date,
      of each of the following conditions set forth below. These conditions are for
      the Company's sole benefit and may be waived by the Company at any time in
      its
      sole discretion. 

     

     

    (A)
      The
      Investor shall have executed this Agreement and the Registration Rights
      Agreement and delivered the same to the Company. 

     

    (B)
      The
      Investor shall have delivered to the Company the Purchase Price for the
      Securities being purchased by the Investor between the end of the Pricing Period
      and the Closing Date via a Put Settlement Sheet (hereto attached as Exhibit
      D).
      After receipt of confirmation of delivery of such Securities to the Investor,
      the Investor, by wire transfer of immediately available funds pursuant to the
      wire instructions provided by the Company will disburse the funds constituting
      the Purchase Amount. 

     

    (C)
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement. 

     

    SECTION
      8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE. 

     

    The
      obligation of the Investor hereunder to purchase Shares is subject to the
      satisfaction, on or before each Closing Date, of each of the following
      conditions set forth below. 

     

    (A)
      The
      Company shall have executed the Equity Line Transaction Documents and delivered
      the same to the Investor.

     

    (B)
      The
      Common Stock shall be authorized for quotation on the Principal Market and
      trading in the Common Stock shall not have been suspended by the Principal
      Market or the SEC, at any time beginning on the date hereof and through and
      including the respective Closing Date (excluding suspensions of not more than
      one (1) Trading Day resulting from business announcements by the Company,
      provided that such suspensions occur prior to the Company's delivery of the
      Put
      Notice related to such Closing). 

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    (C)
      The
      representations and warranties of the Company shall be true and correct as
      of
      the date when made and as of the applicable Closing Date as though made at
      that
      time (except for (l) representations and warranties that speak as of a specific
      date and (II) with respect to the representations made in Section 4(g), (h)
      and
      (j) and the third sentence of Section 4(k) hereof, events which occur on or
      after the date of this Agreement and are disclosed in SEC filings made by the
      Company at least ten (10) Trading Days prior to the Applicable Put Notice Date)
      and the Company shall have performed, satisfied and complied with the covenants,
      agreements and conditions required by the Equity Line Transaction Documents
      to
      be performed, satisfied or complied with by the Company on or before such
      Closing Date. The Investor may request an update as of such Closing Date
      regarding the representation contained in Section 4(C) above. 

     

    (D)
      The
      Company shall have executed and delivered to the Investor the certificates
      representing, or have executed electronic book-entry transfer of, the Securities
      (in such denominations as the Investor shall request) being purchased by the
      Investor at such Closing. 

     

    (E)
      The
      Board of Directors of the Company shall have adopted resolutions consistent
      with
      Section 4(B)(II) above (the "Resolutions") and such Resolutions shall not have
      been amended or rescinded prior to such Closing Date. 

     

    (F)
      Reserved 

     

    (G)
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement. 

     

    (H)
      The
      Registration Statement shall be effective on each Closing Date and no stop
      order
      suspending the effectiveness of the Registration statement shall be in effect
      or
      to the Company's knowledge shall be pending or threatened. Furthermore, on
      each
      Closing Date (I) neither the Company nor the Investor shall have received notice
      that the SEC has issued or intends to issue a stop order with respect to such
      Registration Statement or that the SEC otherwise has suspended or withdrawn
      the
      effectiveness of such Registration Statement, either temporarily or permanently,
      or intends or has threatened to do so (unless the SEC's concerns have been
      addressed and Investor is reasonably satisfied that the SEC no longer is
      considering or intends to take such action), and (II) no other suspension of
      the
      use or withdrawal of the effectiveness of such Registration Statement or related
      prospectus shall exist. 

     

    (I)
      At
      the time of each Closing, the Registration Statement (including information
      or
      documents incorporated by reference therein) and any amendments or supplements
      thereto shall not contain any untrue statement of a material fact or omit to
      state any material fact required to be stated therein or necessary to make
      the
      statements therein not misleading or which would require public disclosure
      or an
      update supplement to the prospectus. 

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    (J)
      If
      applicable, the shareholders of the Company shall have approved the issuance
      of
      any Shares in excess of the Maximum Common Stock Issuance in accordance with
      Section 2(H) or the Company shall have obtained appropriate approval pursuant
      to
      the requirements of Nevada law and the Company’s Articles of Incorporation and
      By-laws.

    

    (K)
      The
      conditions to such Closing set forth in Section 2(E) shall have been satisfied
      on or before such Closing Date.

    

    (L)
      The
      Company shall have certified to the Investor the number of Shares of Common
      Stock outstanding when a Put Notice is given to the Investor. The Company's
      delivery of a Put Notice to the Investor constitutes the Company's certification
      of the existence of the necessary number of shares of Common Stock reserved
      for
      issuance.

     

    SECTION
      9. TERMINATION. This Agreement shall terminate upon any of the following events:
      

     

     

    (I)
      when
      the Investor has purchased an aggregate of Ten Million dollars ($10,000,000)
      in
      the Common Stock of the Company pursuant to this Agreement; or,

     

     

    (II)
      on
      the date which is thirty-six (36) months after the Effective Date. 

     

    SECTION
      10. SUSPENSION

    

    This
      Agreement shall be suspended upon any of the following events, and shall remain
      suspended until such event is rectified:

    

    (I)
      the
      trading of the Common Stock is suspended by the SEC, the Principal Market or
      the
      NASD for a period of two (2) consecutive Trading Days during the Open Period;
      or,

    

    (II)
      The
      Common Stock ceases to be registered under the 1934 Act or listed or traded
      on
      the Principal Market. Immediately upon the occurrence of one of the
      above-described events, the Company shall send written notice of such event
      to
      the Investor.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    SECTION
      11. INDEMNIFICATION. 

     

    In
      consideration of the parties mutual obligations set forth in the Transaction
      Documents, each of the parties (in such capacity, an "Indemnitor") shall defend,
      protect, indemnify and hold harmless the other and all of the other party's
      shareholders, officers, directors, employees, counsel, and direct or indirect
      investors and any of the foregoing person's agents or other representatives
      (including, without limitation, those retained in connection with the
      transactions contemplated by this Agreement) (collectively, the "Indemnitees")
      from and against any and all actions, causes of action, suits, claims, losses,
      costs, penalties, fees, liabilities and damages, and reasonable expenses in
      connection therewith (irrespective of whether any such Indemnitee is a party
      to
      the action for which indemnification hereunder is sought), and including
      reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (I)
      any misrepresentation or breach of any representation or warranty made by the
      Indemnitor or any other certificate, instrument or document contemplated hereby
      or thereby; (II) any breach of any covenant, agreement or obligation of the
      Indemnitor contained in the Transaction Documents or any other certificate,
      instrument or document contemplated hereby or thereby; or (III) any cause of
      action, suit or claim brought or made against such Indemnitee by a third party
      and arising out of or resulting from the execution, delivery, performance or
      enforcement of the Transaction Documents or any other certificate, instrument
      or
      document contemplated hereby or thereby, except insofar as any such
      misrepresentation, breach or any untrue statement, alleged untrue statement,
      omission or alleged omission is made in reliance upon and in conformity with
      information furnished to Indemnitor which is specifically intended for use
      in
      the preparation of any such Registration Statement, preliminary prospectus,
      prospectus or amendments to the prospectus. To the extent that the foregoing
      undertaking by the Indemnitor may be unenforceable for any reason, the
      Indemnitor shall make the maximum contribution to the payment and satisfaction
      of each of the Indemnified Liabilities which is permissible under applicable
      law. The indemnity provisions contained herein shall be in addition to any
      cause
      of action or similar rights Indemnitor may have, and any liabilities the
      Indemnitor or the Indemnitees may be subject to. 

     

    SECTION
      12. GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION. 

     

    All
      disputes arising under this agreement shall be governed by and interpreted
      in
      accordance with the laws of the Commonwealth of Massachusetts, without regard
      to
      principles of conflict of laws. The parties to this agreement will submit all
      disputes arising under this agreement to arbitration in Boston, Massachusetts
      before a single arbitrator of the American Arbitration Association (“AAA”). The
      arbitrator shall be selected by application of the rules of the AAA, or by
      mutual agreement of the parties, except that such arbitrator shall be an
      attorney admitted to practice law in the Commonwealth of Massachusetts. No
      party
      to this agreement will challenge the jurisdiction or venue provisions as
      provided in this section. No party to this agreement will challenge the
      jurisdiction or venue provisions as provided in this section. Nothing contained
      herein shall prevent the party from obtaining an injunction.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    (B)
      LEGAL
      FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth in the Transaction
      Documents, each party shall pay the fees and expenses of its advisers, counsel,
      the accountants and other experts, if any, and all other expenses incurred
      by
      such party incident to the negotiation, preparation, execution, delivery and
      performance of this Agreement. Any attorneys' fees and expenses incurred by
      either the Company or the Investor in connection with the preparation,
      negotiation, execution and delivery of any amendments to this Agreement or
      relating to the enforcement of the rights of any party, after the occurrence
      of
      any breach of the terms of this Agreement by another party or any default by
      another party in respect of the transactions contemplated hereunder, shall
      be
      paid on demand by the party which breached the Agreement and/or defaulted,
      as
      the case may be. The Company shall pay all stamp and other taxes and duties
      levied in connection with the issuance of any Securities. 

     

    (C)
      COUNTERPARTS. This Agreement may be executed in two or more identical
      counterparts, all of which shall be considered one and the same agreement and
      shall become effective when counterparts have been signed by each party and
      delivered to the other party; provided that a facsimile signature shall be
      considered due execution and shall be binding upon the signatory thereto with
      the same force and effect as if the signature were an original signature.

     

    (D)
      HEADINGS; SINGULAR/PLURAL. The headings of this Agreement are for convenience
      of
      reference and shall not form part of, or affect the interpretation of, this
      Agreement. Whenever required by the context of this Agreement, the singular
      shall include the plural and masculine shall include the feminine. 

     

    (E)
      SEVERABILITY. If any provision of this Agreement shall be invalid or
      unenforceable in any jurisdiction, such invalidity or unenforceability shall
      not
      affect the validity or enforceability of the remainder of this Agreement in
      that
      jurisdiction or the validity or enforceability of any provision of this
      Agreement in any other jurisdiction. 

     

    (F)
      ENTIRE AGREEMENT; AMENDMENTS. This Agreement is the FINAL AGREEMENT between
      the
      Company and the Investor with respect to the terms and conditions set forth
      herein, and, the terms of this Agreement may not be contradicted by evidence
      of
      prior, contemporaneous, or subsequent oral agreements of the Parties. No
      provision of this Agreement may be amended other than by an instrument in
      writing signed by the Company and the Investor, and no provision hereof may
      be
      waived other than by an instrument in writing signed by the party against whom
      enforcement is sought. The execution and delivery of the Equity Line Transaction
      Documents shall not alter the force and effect of any other agreements between
      the Parties, and the obligations under those agreements.

     

    (G)
      NOTICES. Any notices or other communications required or permitted to be given
      under the terms of this Agreement must be in writing and will be deemed to
      have
      been delivered (I) upon receipt, when delivered personally; (II) upon receipt,
      when sent by facsimile (provided confirmation of transmission is mechanically
      or
      electronically generated and kept on file by the sending party); or (III) one
      (1) day after deposit with a nationally recognized overnight delivery service,
      in each case properly addressed to the party to receive the same. The addresses
      and facsimile numbers for such communications shall be: 

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    If
      to the Company:

    

    USCorp

    4535
      W.
      Sahara Ave.,, Suite 204

    Las
      Vegas, NV 89102

    Telephone:
      (702) 933-4034

    Facsimile:
      (702) 933-4035

    

    

    If
      to the Investor:

    

    Dutchess
      Private Equities Fund, LP, 

    50
      Commonwealth Avenue, Suite 2

    Boston,
      MA 02116 

    Telephone:
      617-301-4700 

    Facsimile:
      617-249-0947

    

     

    Each
      party shall provide five (5) days prior written notice to the other party of
      any
      change in address or facsimile number. 

     

    (H)
      NO
      ASSIGNMENT. This Agreement may not be assigned. 

     

    (I)
      NO
      THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the
      parties hereto and is not for the benefit of, nor may any provision hereof
      be
      enforced by, any other person, except that the Company acknowledges that the
      rights of the Investor may be enforced by its general partner. 

     

    (J)
      SURVIVAL. The representations and warranties of the Company and the Investor
      contained in Sections 2 and 3, the agreements and covenants set forth in
      Sections 4 and 5, and the indemnification provisions set forth in Section 11,
      shall survive each of the Closings and the termination of this Agreement.

     

    (K)
      PUBLICITY. The Company and the Investor shall consult with each other in issuing
      any press releases or otherwise making public statements with respect to the
      transactions contemplated hereby and no party shall issue any such press release
      or otherwise make any such public statement without the prior consent of the
      other party, which consent shall not be unreasonably withheld or delayed, except
      that no prior consent shall be required if such disclosure is required by law,
      in which such case the disclosing party shall provide the other party with
      prior
      notice of such public statement. Notwithstanding the foregoing, the Company
      shall not publicly disclose the name of the Investor without the prior consent
      of the Investor, except to the extent required by law. The Investor acknowledges
      that this Agreement and all or part of the Transaction Documents may be deemed
      to be "material contracts" as that term is defined by Item 601(b)(10) of
      Regulation S-B, and that the Company may therefore be required to file such
      documents as exhibits to reports or registration statements filed under the
      1933
      Act or the 1934 Act. The Investor further agrees that the status of such
      documents and materials as material contracts shall be determined solely by
      the
      Company, in consultation with its counsel. 

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    (L)
      FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and
      performed, all such further acts and things, and shall execute and deliver
      all
      such other agreements, certificates, instruments and documents, as the other
      party may reasonably request in order to carry out the intent and accomplish
      the
      purposes of this Agreement and the consummation of the transactions contemplated
      hereby. 

     

    (M)
      PLACEMENT AGENT. The Company agrees to pay _____________, a registered broker
      dealer ____ percent (__%) of the Put Amount on each draw toward the fee. The
      Investor shall have no obligation with respect to any fees or with respect
      to
      any claims made by or on behalf of other persons or entities for fees of a
      type
      contemplated in this Section that may be due in connection with the transactions
      contemplated by the Transaction Documents. The Company shall indemnify and
      hold
      harmless the Investor, their employees, officers, directors, agents, and
      partners, and their respective affiliates, from and against all claims, losses,
      damages, costs (including the costs of preparation and attorney's fees) and
      expenses incurred in respect of any such claimed or existing fees, as such
      fees
      and expenses are incurred. 

     

    (N)
      NO
      STRICT CONSTRUCTION. The language used in this Agreement will be deemed to
      be
      the language chosen by the parties to express their mutual intent, and no rules
      of strict construction will be applied against any party, as the parties
      mutually agree that each has had a full and fair opportunity to review this
      Agreement and seek the advice of counsel on it. 

     

    (O)
      REMEDIES. The Investor shall have all rights and remedies set forth in this
      Agreement and the Registration Rights Agreement and all rights and remedies
      which such holders have been granted at any time under any other agreement
      or
      contract and all of the rights which the Investor has by law. Any person having
      any rights under any provision of this Agreement shall be entitled to enforce
      such rights specifically (without posting a bond or other security), to recover
      damages by reason of any default or breach of any provision of this Agreement,
      including the recovery of reasonable attorneys fees and costs, and to exercise
      all other rights granted by law. 

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

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

     

    (Q)
      PRICING OF COMMON STOCK. For purposes of this Agreement, the bid price of the
      Common Stock shall be as reported on Bloomberg. 

     

    SECTION
      13. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

     

    (a)
      The
      Company shall not disclose non-public information to the Investor, its advisors,
      or its representatives.

     

     

    (b)
      Nothing herein shall require the Company to disclose non-public information
      to
      the Investor or its advisors or representatives, and the Company represents
      that
      it does not disseminate non-public information to any investors who purchase
      stock in the Company in a public offering, to money managers or to securities
      analysts, provided, however, that notwithstanding anything herein to the
      contrary, the Company will, as hereinabove provided, immediately notify the
      advisors and representatives of the Investor and, if any, underwriters, of
      any
      event or the existence of any circumstance (without any obligation to disclose
      the specific event or circumstance) of which it becomes aware, constituting
      non-public information (whether or not requested of the Company specifically
      or
      generally during the course of due diligence by such persons or entities),
      which, if not disclosed in the prospectus included in the Registration Statement
      would cause such prospectus to include a material misstatement or to omit a
      material fact required to be stated therein in order to make the statements,
      therein, in light of the circumstances in which they were made, not misleading.
      Nothing contained in this Section 13 shall be construed to mean that such
      persons or entities other than the Investor (without the written consent of
      the
      Investor prior to disclosure of such information) may not obtain non-public
      information in the course of conducting due diligence in accordance with the
      terms of this Agreement and nothing herein shall prevent any such persons or
      entities from notifying the Company of their opinion that based on such due
      diligence by such persons or entities, that the Registration Statement contains
      an untrue statement of material fact or omits a material fact required to be
      stated in the Registration Statement or necessary to make the statements
      contained therein, in light of the circumstances in which they were made, not
      misleading. 

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

     

    SIGNATURE
      PAGE OF INVESTMENT AGREEMENT 

     

    Your
      signature on this Signature Page evidences your agreement to be bound by the
      terms and conditions of the Investment Agreement and the Registration Rights
      Agreement as of the date first written above. 

     

     

    The
      undersigned signatory hereby certifies that he has read and understands the
      Investment Agreement, and the representations made by the undersigned in this
      Investment Agreement are true and accurate, and agrees to be bound by its terms.
      

     

    DUTCHESS
      PRIVATE EQUITIES FUND, L.P. 

    BY
      ITS GENERAL PARTNER, 

    DUTCHESS
      CAPITAL MANAGEMENT, LLC 

     

    By:/s/
      Douglas H. Leighton 

     

    Douglas
      H. Leighton, Managing Member 

     

    

    

    USCorp

     

    By:/s/
      Robert Dultz 

     

    Robert
      Dultz, Chief Executive Officer 

     

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

      

     

    LIST
      OF EXHIBITS 

    
 

    
      	EXHIBIT A	 	Registration Rights Agreement
	EXHIBIT B 	 	Opinion of Company's Counsel
	EXHIBIT C 	 	Put Notice
	
              EXHIBIT
                D 

            	 	Put Settlement
              Sheet

    

    
    

     

     

    

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    

     

    

    LIST
      OF SCHEDULES 

    

     

    Schedule
      4(a) Subsidiaries 

     

     

    

     

     

    

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

     

    EXHIBIT
      A 

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    

     

    EXHIBIT
      B 

    

    

    FORM
      OF
      NOTICE OF EFFECTIVENESS 

    OF
      REGISTRATION STATEMENT

    
      
        	 	Date:
                __________

      

    

     

    [TRANSFER
      AGENT]

    

    Re: USCorp.

    

    Ladies
      and Gentlemen:

    

    We
      are
      counsel to USCorp,
      a Nevada
      corporation (the "Company"), and have represented the Company in connection
      with
      that certain Investment Agreement (the "Investment Agreement") entered into
      by
      and among the Company and _________________________ (the "Holder") pursuant
      to
      which the Company has agreed to issue to the Holder shares of the Company's
      common stock, $.01 par value per share (the "Common Stock") on the terms and
      conditions set forth in the Investment Agreement. Pursuant to the Investment
      Agreement, the Company also has entered into a Registration Rights Agreement
      with the Holder (the "Registration Rights Agreement") pursuant to which the
      Company agreed, among other things, to register the Registrable Securities
      (as
      defined in the Registration Rights Agreement), including the shares of Common
      Stock issued or issuable under the Investment Agreement under the Securities
      Act
      of 1933, as amended (the "1933 Act"). In connection with the Company's
      obligations under the Registration Rights Agreement, on ____________ ___, 2006,
      the Company filed a Registration Statement on Form S- ___ (File No.
      333-________) (the "Registration Statement") with the Securities and Exchange
      Commission (the "SEC") relating to the Registrable Securities which names the
      Holder as a selling shareholder thereunder.

    

    In
      connection with the foregoing, we advise you that [a
      member
      of the SEC's staff has advised us by telephone that the SEC has entered an
      order
      declaring the Registration Statement effective]
      [the
      Registration Statement has become effective]
      under
      the 1933 Act at [enter
      the time of effectiveness]
      on
      [enter
      the date of effectiveness]
      and to
      the best of our knowledge, after telephonic inquiry of a member of the SEC’s
      staff, no stop order suspending its effectiveness has been issued and no
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the 1933 Act pursuant
      to the Registration Statement.

    

    Very
      truly yours,

    

    [Company
      Counsel]

    

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    EXHIBIT
      C

     

    Date:
      

     

     

    RE:
      Put
      Notice Number __ 

     

    Dear
      Mr.
      Leighton, 

     

     

    This
      is
      to inform you that as of today, USCorp, a Nevada corporation (the "Company"),
      hereby elects to exercise its right pursuant to the Investment Agreement to
      require Dutchess Private Equities Fund, LP to purchase shares of its common
      stock. The Company hereby certifies that: 

     

    The
      amount of this put is $__________. 

     

    The
      Pricing Period runs from ________ until _______. 

     

    The
      current number of shares issued and outstanding as of the Company are:

     

     

      
        

      

    

     

    The
      number of shares currently available for issuance on the SB-2 for the Equity
      Line are: 

     

    

    Regards,
      

     

    
      

    

    ___________________

    Robert
      Dultz, CEO

    USCorp
      

    

    

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

    EXHIBIT
      D

    PUT
      SETTLEMENT SHEET 

     

    Date:
      

     

    Dear
      Mr.
      Dultz, 

     

    Pursuant
      to the Put given by USCorp to Dutchess Private Equities Fund, L.P. on
      _________________ 200_, we are now submitting the amount of common shares for
      you to issue to Dutchess. 

     

    Please
      have a certificate bearing no restrictive legend totaling __________ shares
      issued to Dutchess Private Equities Fund, LP immediately and send via DWAC
      to
      the following account: 

     

    XXXXXX
      

     

    If
      not
      DWAC eligible, please send FedEx Priority Overnight to: 

     

    XXXXXX
      

     

    Once
      these shares are received by us, we will have the funds wired to the Company.
      

     

    Regards,
      

     

    Douglas
      H. Leighton 

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    

      DATE.
        . .
        . . . . . . . . . . . . . . . . . . PRICE

       

      Date
        of
        Day 1 . . . . . . . . . . . . . . . . Closing Bid of Day 1

      Date
        of
        Day 2 . . . . . . . . . . . . . . . . Closing Bid of Day 2

      Date
        of
        Day 3 . . . . . . . . . . . . . . . . Closing Bid of Day 3

      Date
        of
        Day 4 . . . . . . . . . . . . . . . . Closing Bid of Day 4

      Date
        of
        Day 5 . . . . . . . . . . . . . . . . Closing Bid of Day 5

       

       

      
        	 	
                
                  LOWEST
                    1 (ONE) CLOSING BID IN PRICING PERIOD

                  ------------

                   

                  PUT
                    AMOUNT

                  ------------

                   

                  AMOUNT
                    WIRED TO COMPANY

                  ------------

                   

                  PURCHASE
                    PRICE (95)% (NINETY-FIVE PERCENT))

                  ------------

                   

                  AMOUNT
                    OF SHARES DUE

                  ------------

                

              	 

      

       

    

    The
      undersigned has completed this Put as of this ___th day of _________, 200_.
      

     

     

    USCORP

     

    ______________________________

    

    Robert
      Dultz, CEO 

    
 

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    

     

    SCHEDULE
      4(c) CAPITALIZATION 

    

    

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    

    

     

    

    SCHEDULE
      4(e) CONFLICTS 

    

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

     

     

    SCHEDULE
      4(g) MATERIAL CHANGES 

    

    

    

    

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

     

    SCHEDULE
      4(h) LITIGATION 

    

    

    

    

    

    

    

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

     

    

    SCHEDULE
      4(l) INTELLECTUAL PROPERTY 

    

    

    

    

    

    

    

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

     

     

    SCHEDULE
      4(n) LIENS 

    

    

    

    

    

    

    

    

    

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

     

     

     

    SCHEDULE
      4(t) CERTAIN TRANSACTIONS 

    

    

    

    

    
      
         

      

      
        42

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