ARRANGEMENT AGREEMENT

Key to Location of Defined Terms

This Arrangement Agreement  (this “ Agreement ”) is entered into as of July 28, 2008, among:

Gran Tierra Energy Inc. , a Nevada corporation (hereinafter referred to as “ Gran Tierra ”)

- and –

Solana Resources Limited , an Alberta corporation (hereinafter referred to as “ Solana ”)

- and –

Gran Tierra Exchangeco Inc. ( “ Gran Tierra Exchangeco ”), an Alberta corporation and a wholly-owned subsidiary of Gran Tierra Callco ULC

Whereas:

A.   The respective boards of directors of Gran Tierra, Solana and Gran Tierra Exchangeco each deem it advisable and in the best interests of their respective stockholders and shareholders to combine their respective businesses by Gran Tierra Exchangeco acquiring common shares of Solana pursuant to the Plan of Arrangement (as hereinafter defined), subject to the terms and conditions contained herein.

B.     In furtherance of such combination, the respective boards of directors of Gran Tierra, Solana and Gran Tierra Exchangeco have approved the transactions contemplated by this Agreement, the board of directors of Solana has agreed to submit the Plan of Arrangement and the other transactions contemplated hereby to its shareholders (the “ Solana Shareholders ”), warrantholders and optionholders (the warrantholders and optionholders, together with the Solana Shareholders, “ Solana   Securityholders ”) and the Court of Queen’s Bench of Alberta (the “ Court ”) for approval, and the board of directors of Gran Tierra has agreed to submit the issuance of the shares of Gran Tierra Common Stock (as hereinafter defined) issuable in connection with the transactions contemplated by this Agreement and the Plan of Arrangement, to its stockholders for approval.

Now, Therefore , in consideration of the premises and of the representations, warranties, covenants and agreements herein contained, the parties hereto, intending to be legally bound, agree as follows:

1.1   Plan of Arrangement

As promptly as practicable after the preliminary Joint Proxy Statement (as hereinafter defined) is cleared by the U.S. Securities and Exchange Commission (the “ SEC ”), Solana will apply to the Court pursuant to Section 193 of the Business Corporations Act (Alberta), as amended, (the “ ABCA ”) for an interim order of the Court under Subsection 193(4) of the ABCA containing declarations and directions with respect to the Arrangement (as hereinafter defined), in form and substance reasonably satisfactory to Gran Tierra (such order as it may be affirmed, amended or modified by the Court, the “ Interim Order ”) providing for, among other things, the calling and holding of the Solana Securityholders Meeting (as hereinafter defined) for the purpose of considering and, if deemed advisable, approving the arrangement (the “ Arrangement ”) pursuant to Section 193 of the ABCA and pursuant to this Agreement and the Plan of Arrangement substantially in the form of Exhibit A (as amended or supplemented from time to time in accordance with Article 6 thereof, the “ Plan of Arrangement ”). If the Solana Securityholders approve the Arrangement and all necessary approvals of Gran Tierra stockholders are obtained, Solana will take the necessary steps to submit the Arrangement to the Court and apply for a final order of the Court approving the Arrangement pursuant to Subsection 193(9)(a) of the ABCA, in form and substance reasonably satisfactory to Gran Tierra (such order as it may be affirmed, amended or modified by the Court, (the “ Final Order ”). Upon issuance of the Final Order and subject to satisfaction or waiver (in respect of those conditions that can be waived) of the conditions precedent in Article 6, each of Gran Tierra and Gran Tierra Exchangeco on the one hand and Solana on the other hand shall execute and deliver such closing documents and instruments and forthwith proceed to file the articles of arrangement in respect of the Arrangement required under Subsection 193(10) of the ABCA to be sent to the Registrar after the Final Order has been granted (the date of such filing, the “ Effective Date ” ), giving effect to the Arrangement (the “ Articles of Arrangement ”), the Final Order and such other documents as may be required to give effect to the Arrangement with the Registrar pursuant to Subsection 193(9) of the ABCA, whereupon the transactions comprising the Arrangement shall occur (the time of such filing, the “ Effective Time ”) and shall be deemed to have occurred in the order set out therein without any further act or formality.

1.2   Adjustments to Exchange Ratio

The Exchange Ratio (as defined in the Plan of Arrangement) shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Gran Tierra Common Stock or Solana Common Shares (as hereinafter defined)), merger, reorganization, recapitalization or other like change with respect to Gran Tierra Common Stock or Solana Common Shares occurring after the date hereof and prior to the Effective Time.

1.3   Dissenting Shares

Holders of Solana Common Shares will have rights of dissent with respect to such shares in connection with the Arrangement pursuant to and in the manner set forth in Section 191 of the ABCA, as modified by Article 4 of the Plan of Arrangement. Holders of options ( “ Solana Options ”) and warrants ( “ Solana Warrants ”) to acquire Solana Common Shares will not have rights of dissent with respect to such securities in connection with the Arrangement. Solana shall give Gran Tierra (i) prompt notice of any written demands of a right of dissent, withdrawals of such demands, and any other instruments served pursuant to the ABCA and received by Solana, and (ii) the opportunity to participate in all negotiations and proceedings with respect to such rights. Without the prior written consent of Gran Tierra, except as required by applicable law, Solana shall not make any payment with respect to any such rights or offer to settle or settle any such rights.

1.4   Joint Proxy Statement; Registration Statement

a.   As promptly as practicable after execution of this Agreement, Gran Tierra and Solana shall prepare and Gran Tierra shall file with the SEC a preliminary joint management information circular and proxy statement (the “ Joint Proxy Statement ”), together with any other documents required by the Securities Act of 1933, as amended (the “ Securities Act ”), or the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), in connection with the Arrangement and the other transactions contemplated hereby. The Joint Proxy Statement shall constitute (i) the management information circular of Solana with respect to the meeting of Solana Securityholders relating to the Arrangement and the approval of certain matters in connection therewith (the “ Solana Securityholders Meeting ”), and (ii) the proxy statement of Gran Tierra with respect to the meeting of stockholders of Gran Tierra with respect to the issuance of Gran Tierra Common Stock from time to time after the Effective Time in connection with the transactions contemplated by this Agreement and the Plan of Arrangement (the “ Gran Tierra Stockholders Meeting ”). As promptly as practicable after the preliminary Joint Proxy Statement is cleared by the SEC and, if required by the SEC, after the Registration Statement is declared effective and subject to receipt of the Interim Order, Gran Tierra and Solana shall cause the Joint Proxy Statement to be mailed to each company’s respective securityholders entitled to vote, as the case may be. As promptly as practicable after execution of this Agreement, Gran Tierra shall file a registration statement (the “ Registration Statement ”) with the SEC to register the issuance of the Gran Tierra Common Stock to be issued from time to time after the Effective Time upon the exchange of the exchangeable shares to be issued by Gran Tierra Exchangeco as contemplated by the Plan of Arrangement (the “ Exchangeable Shares ”) and the exercise of the Solana Warrants which shall by their terms upon the Effective Date become automatically exercisable into Gran Tierra Common Stock (the “ Gran Tierra Warrants ”), if such offering may be included on the Registration Statement. Gran Tierra and Solana shall use their commercially reasonable efforts to cause the Registration Statement to become effective. If the Registration Statement is filed and becomes effective, Gran Tierra will use its commercially reasonable efforts to maintain the effectiveness of the Registration Statement for so long as any Exchangeable Shares or Gran Tierra Warrants remain outstanding or until such earlier time as Gran Tierra determines that the securities covered by such Registration Statement have been sold, or may be sold without volume restrictions pursuant to Rule 144, as determined by the counsel to Gran Tierra pursuant to a written opinion letter to such effect, addressed and acceptable to Gran Tierra’s transfer agent.

b.   Each party shall promptly furnish to the other parties all information concerning such party and its securityholders as may be reasonably required in connection with any action contemplated by this Section 1.4. The Joint Proxy Statement and the Registration Statement shall comply in all material respects with all applicable requirements of law. Each of Gran Tierra and Solana will notify the other promptly of the receipt of any comments from the SEC and of any request by the SEC for amendments or supplements to the Joint Proxy Statement or the Registration Statement, or for additional information, and will supply the other with copies of all correspondence with the SEC with respect to the Joint Proxy Statement or the Registration Statement. Whenever any event occurs which should be set forth in an amendment or supplement to the Joint Proxy Statement or the Registration Statement, Gran Tierra or Solana, as the case may be, shall promptly inform the other of such occurrence and cooperate in filing with the SEC, and/or mailing to securityholders entitled to vote of Gran Tierra and Solana, as may be applicable, such amendment or supplement.

c.   Gran Tierra and Solana shall take any action required to be taken under any applicable provincial or state securities laws (including “blue sky” laws) in connection with the issuance of the Gran Tierra Common Stock and the Arrangement; provided, however, that with respect to the blue sky and Canadian provincial qualifications, neither Gran Tierra nor Solana shall be required to register or qualify as a foreign corporation or reporting issuer where any such entity is not now so registered or qualified except as to matters and transactions arising solely from the offer and sale of the Gran Tierra Common Stock or the issuance of the Exchangeable Shares.

1.5   Material Adverse Effect or Material Adverse Change

In this Agreement, the term “ Material Adverse Effect ” or “ Material Adverse Change ” used with respect to any party means any matter or action that has an effect or change that is, or could reasonably be expected to be, material and adverse to the business, operations, assets, capitalization, financial condition or prospects of such party and subsidiaries, taken as a whole, but excluding any matter, action, effect or change occurring after the date of this Agreement relating to or resulting from: (i) general economic, financial, currency exchange, securities or commodity prices in Canada, the United States or elsewhere, (ii) conditions affecting the oil and gas exploration, exploitation, development and production industry as a whole, and not specifically relating to any party or its respective subsidiaries (in the case of Solana, the “ Solana Subsidiaries ”) and (in the case of Gran Tierra, the “ Gran Tierra Subsidiaries ”), including changes in laws (including tax laws) and royalties, (iii) any decline in crude oil or natural gas prices on a current or forward basis, (iv) any matter which has been publicly disclosed or has been communicated in writing to the other party as of the date hereof , (v) the results of any well commenced or completed by Gran Tierra or Solana, as the case may be, after the date hereof (it being the intention of the parties that a determination that any one or more wells completed or commenced after the date hereof (provided that the capital expenditures relating to such wells have been included in such party’s 2008 capital budget previously provided to the other party) is not capable of commercial production shall not be considered to be a Material Adverse Change for the purposes of this Agreement or the Arrangement), or (vi) matters permitted by this Agreement, the Solana Disclosure Letter (as hereinafter defined), the Gran Tierra Disclosure Letter (as hereinafter defined) or consented to or approved in writing by the other party.

1.6   Currency

Unless otherwise specified, all references in this Agreement to “ dollars ” or “ $ ” shall mean United States dollars.

1.7   Exhibits

The following Exhibits attached hereto are incorporated herein by reference:

Except as set forth in a letter dated the date of this Agreement and delivered by Solana to Gran Tierra concurrently herewith (the “ Solana Disclosure Letter ”), Solana hereby represents and warrants to, and agrees with, Gran Tierra that:

2.1   Organization and Standing

a.   Solana and each body corporate, partnership, joint venture, association or other business entity of which more than 50% of the total voting power of shares of stock or units of ownership or beneficial interest entitled to vote in the election of directors (or members of a comparable governing body) is owned or controlled, directly or indirectly, by Solana (the “ Solana Subsidiaries ”), is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, has full requisite power and authority to carry on its business as it is currently conducted, and to own, lease and operate the properties currently owned, leased and operated by it, and is duly qualified or licensed to do business and is in good standing as a foreign corporation or organization authorized to do business in all jurisdictions in which the character of the properties owned or leased or the nature of the business conducted by it would make such qualification or licensing necessary, except where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect on Solana. The Solana Disclosure Letter sets forth a complete list, as at the date hereof, of the Solana Subsidiaries and the percentage of each subsidiary’s outstanding capital stock or other ownership interest owned by Solana or any Solana Subsidiary. Except as set forth in the Solana Disclosure Letter, neither Solana nor any Solana Subsidiary owns any debt or equity interests in any entity other than the Solana Subsidiaries.

b.   No Solana Subsidiary has total assets which constitute more than 5% of the consolidated assets of Solana as at March 31, 2008, or the total revenues of which constitute more than 5% of the consolidated revenues of Solana for the three month period ended March 31, 2008, other than the Colombian branch of Solana Petroleum Exploration (Colombia) Limited (“ Solana Colombia ”). As of the date hereof, Solana is the beneficial direct or indirect owner of all of the outstanding shares, trust units and partnership units, as applicable, of the Solana Subsidiaries with good title thereto free and clear of any and all encumbrances. There are no options, warrants or other rights, shareholder or unitholder rights plans, agreements or commitments of any character whatsoever requiring the issuance, sale or transfer by any of the Solana Subsidiaries of any securities of the Solana Subsidiaries or any securities convertible into, or exchangeable or exercisable for, or otherwise evidencing a right to acquire, any securities of the Solana Subsidiaries. All outstanding securities of the Solana Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to, nor were they issued in violation of, any pre-emptive rights.

2.2   Agreement Authorized and its Effect on Other Obligations

a.   Solana has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder and, subject to approval of the Solana Securityholders and the Court as provided in this Agreement, to consummate the Arrangement and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement by Solana and, subject to approval of the Solana Securityholders and the Court as provided in this Agreement, the consummation by Solana of the Arrangement and the other transactions contemplated hereby have been unanimously approved by the Solana Board of Directors and have been duly authorized by all other necessary corporate action on the part of Solana. This Agreement has been duly executed and delivered by Solana and is a valid and binding obligation of Solana, enforceable in accordance with its terms, except that such enforceability may be subject to (i) bankruptcy, insolvency, reorganization or other similar laws affecting or relating to enforcement of creditors’ rights generally, (ii) general equitable principles, and (iii) that the consummation of the Arrangement is subject to approval of the Solana Securityholders and the Court as provided in this Agreement.

b.   Neither the execution, delivery or performance of this Agreement or the Arrangement by Solana, nor the consummation of the transactions contemplated hereby or thereby by Solana nor compliance with the provisions hereof or thereof by Solana will: (i) conflict with, or result in any violations of, the articles of incorporation or bylaws of Solana or any equivalent document of any of the Solana Subsidiaries, (ii) result in any breach of or cause a default (with or without notice or lapse of time, or both) under, (iii) give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in, or the loss of any material benefit or the incurrence of any material cost (including, but not limited to, seismic data transfer fees) under, or (iv) result in the creation of any lien, charge, mortgage, adverse claim, hypothec, pledge, warrant, lease, sublease, encumbrance, right to possession, security interest, option, preferential purchase right or other right or interest of any other person (collectively, an “ Encumbrance ”) upon any of the material properties or assets of Solana or any of the Solana Subsidiaries under, any term, condition or provision of any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Solana or any of the Solana Subsidiaries or their respective properties or assets, other than any such breaches, defaults, rights, losses, or Encumbrances which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Solana.

2.3   Governmental and Third Party Consents

a.   No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (each a “ Governmental Entity ”), is required to be obtained by Solana or any of the Solana Subsidiaries in connection with the execution and delivery of this Agreement or the Plan of Arrangement or the consummation of the transactions contemplated hereby or thereby, except for: (i) the filing with the applicable Canadian provincial securities commissions or regulatory authorities (the “ Commissions ”) and the Court and the mailing to the Solana Securityholders of the Joint Proxy Statement relating to the Solana Securityholders Meeting; (ii) the furnishing to the SEC of such reports and information under the Exchange Act and the rules and regulations promulgated by the SEC thereunder, as may be required in connection with this Agreement and the transactions contemplated hereby (the “ SEC Filings ”); (iii) approval by the Court of the Arrangement and the filings of the articles of arrangement and other required arrangement or other documents as required by the ABCA; (iv) such filings, authorizations, orders and approvals as may be required under state “control share acquisition,” “anti-takeover” or other similar statutes, any other applicable federal, provincial or state securities laws and the rules of the AMEX, the Toronto Stock Exchange ( “ TSX ”), the TSX Venture Exchange or the AIM; (v) such competition and foreign investment notices and filings with any Governmental Entity as may be necessary, including, under the Colombian merger control regime; and (vi) where the failure to obtain such consents, approvals, etc., would not prevent or delay the consummation of the Arrangement or otherwise prevent Solana from performing its obligations under this Agreement and would not reasonably be expected to have a Material Adverse Effect on Solana.

b.   Other than as contemplated by Section 2.3 (a), no consents, assignments, waivers, authorizations or other certificates are necessary in connection with the transactions contemplated hereby to provide for the continuation in full force and effect of all of Solana’s material contracts or leases or for Solana to consummate the transactions contemplated hereby, except when the failure to receive such consents or other certificates would not reasonably be expected to have a Material Adverse Effect on Solana.

2.4   Capitalization

a.   The authorized capital of Solana consists of an unlimited number of common shares ( “ Solana Common Shares ”). As of July 1, 2008, 126,426,792 Solana Common Shares were issued and outstanding and an aggregate of 4,045,000 Solana Common Shares were reserved for issuance pursuant to outstanding Solana Options granted under the Stock Option Plan of Solana (the “ Solana Option Plan ”), and an aggregate of 7,500,000 Solana Common Shares were reserved for issuance pursuant to outstanding Solana Warrants, and as at such date, no other Solana Common Shares are reserved for issuance pursuant to any outstanding rights or options and no Solana   Preferred Shares are reserved for issuance. All unvested Solana Options will be vested upon the consummation of the transactions contemplated by this Agreement. All of the issued and outstanding Solana Common Shares have been duly authorized and validly  issued, are fully paid and non-assessable, were not issued in violation of the terms of any agreement or other understanding binding upon Solana and were issued in compliance with all applicable charter documents of Solana and all applicable federal, provincial and foreign securities laws, rules and regulations. There are, and have been, no preemptive rights with respect to the issuance of the Solana Common Shares or any other capital stock of Solana.

b.   Other than as set forth above, as of the date of this Agreement, there are no outstanding subscriptions, options, warrants, convertible securities, calls, commitments, agreements or rights (contingent or otherwise) of any character to purchase or otherwise acquire from Solana any shares of, or any securities convertible into, the capital stock of Solana.

c.   To the knowledge of Solana, neither Solana nor any of the Solana Subsidiaries or their respective shareholders is a party to any unanimous shareholder agreement, pooling agreement, voting trust or other similar type of arrangements in respect of their outstanding securities.

2.5   Securities Reports and Financial Statements

a.   Solana has filed, if required, all forms, reports, annual reports, business acquisition reports and documents with the SEC pursuant to the Securities Act and the Exchange Act and the rules and regulations thereunder and with the Commissions pursuant to relevant Canadian securities statutes, regulations, policies and rules and filed all forms, reports, annual reports, business acquisition reports and documents with the Alternative Investment Market of the London Stock Exchange plc (the “ AIM ”) and the TSX Venture Exchange required to be filed by it pursuant the relevant regulations, policies and rules (collectively, the “ Solana Securities Reports ”), all of which have complied in all material respects with all applicable requirements of such statutes, regulations, policies and rules. None of the Solana Securities Reports, at the time filed or as subsequently amended, 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 made therein, in light of the circumstances under which they were made, not misleading. No subsidiary of Solana is required to file any form, report or other document with the SEC or the Commissions. The financial statements of Solana contained in the Solana Canadian Securities Reports complied in all material respects with the then applicable accounting requirements and the published rules and regulations of the relevant Canadian securities statutes with respect thereto, were prepared in accordance with Canadian generally accepted accounting principles applied on a consistent basis during the periods involved (except as may have been indicated in the notes thereto or, in the case of unaudited statements, as permitted by applicable laws, rules or regulations) and fairly present (subject, in the case of the unaudited statements, to normal, year-end audit adjustments) the consolidated financial position of Solana and its consolidated Solana Subsidiaries as at the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended.

b.   There has been no change in Solana’s accounting policies or the methods of making accounting estimates or changes in estimates that are material to such financial statements, except as described in the notes thereto.

2.6   Liabilities

Neither Solana nor any Solana Subsidiary has, and none of Solana or any Solana Subsidiary is or would reasonably be expected to become responsible for performing or discharging, any accrued, contingent or other liabilities of any nature, either matured or unmatured, that are, individually or in the aggregate, material to Solana or any Solana Subsidiary, except for: (a) liabilities reflected or reserved against in financial statements contained in the Solana Securities Reports; (b) normal and recurring current liabilities that have been incurred in the ordinary course of business and consistent with past practices by Solana or any Solana Subsidiary since the date of the last filed Solana Securities Report filed on SEDAR; (c) liabilities for performance of obligations of Solana or any Solana Subsidiary under any contracts by Solana or any Solana Subsidiary, to the extent such liabilities are readily ascertainable (in nature, scope and amount) from the written terms of such contracts and such contracts have been delivered to Gran Tierra; (d) liabilities described in part 2.6 of the Disclosure Letter; and (e) liabilities that would not, in the aggregate, have a Material Adverse Effect on Solana or any Solana Subsidiary.

2.7   Information Supplied

None of the information supplied or to be supplied by Solana for inclusion or incorporation by reference in the Joint Proxy Statement (and, if filed, the Registration Statement) will, at the time the Joint Proxy Statement is mailed to the securityholders of Solana and at the time of the Solana Securityholders Meeting (and, if filed, at the time the Registration Statement is declared effective), contain any untrue statement which, at the time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading. The Joint Proxy Statement will comply as to form in all material respects with the provisions of the ABCA, applicable United States and Canadian securities laws, the rules and policies of the TSX Venture Exchange and the rules and regulations promulgated thereunder.

2.8   No Defaults

Neither Solana nor any Solana Subsidiary is, or has received notice that it would be with the passage of time, in default or violation of any term, condition or provision of (a) its articles or bylaws; (b) any judgment, decree or order applicable to it; or (c) any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license or other instrument to which Solana or any Solana Subsidiary is now a party or by which it or any of its properties or assets may be bound, except in the case of item (c) for defaults and violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Solana.

2.9   Litigation; Investigations

There is no claim, action, suit or proceeding pending, or to the knowledge of Solana threatened against Solana or any of the Solana Subsidiaries, which would, if adversely determined, individually or in the aggregate, have a Material Adverse Effect on Solana, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Solana or any of the Solana Subsidiaries having, or which, insofar as reasonably can be foreseen, in the future could have, any such effect. There is no investigation pending or, to the knowledge of Solana, threatened, against Solana or any of the Solana Subsidiaries before any Governmental Entity which could have such effect.

2.10   Absence of Certain Changes and Events

a.   Since March 31, 2008, there has not been:

i.   Any Material Adverse Effect on Solana;

ii.   Any material damage, destruction, or loss to the business or properties of Solana and the Solana Subsidiaries, taken as a whole, not covered by insurance;

iii.   Any declaration, setting aside or payment of any dividend or other distribution in respect of the capital stock of Solana, or any direct or indirect redemption, purchase or any other acquisition by Solana of any such stock;

iv.   Any material labor dispute or charge of unfair labor practice (other than routine individual grievances) or, to the knowledge of Solana, any activity or proceeding by a labor organizer or union or by a representative thereof to organize any employees of Solana or any Solana Subsidiary or any campaign being conducted to solicit authorization from employees to be represented by such labor union; or

v.   Any other event or condition known to Solana particularly pertaining to and adversely affecting the operations, assets or business of Solana or any of the Solana Subsidiaries (other than events or conditions which are of a general or industry-wide nature and of general public knowledge) which would constitute a Material Adverse Effect on Solana.

b.   Since July 1, 2008, there has not been any change in the capital stock or in the number of shares or classes of Solana’s authorized or outstanding capital stock as described in Section 2.4 (other than as a result of exercises of Solana Options and Solana Warrants described in Section 2.4 (a)).

2.11   Additional Solana Information

The Solana Disclosure Letter contains true, complete and correct lists of the following items with respect to Solana and each of the Solana Subsidiaries, and Solana has previously furnished or made available to Gran Tierra true, complete and correct copies of all documents referred to in such lists:

a.   All contracts which involve, or may involve, aggregate payments by any party thereto of $1,000,000 or more, which payments or obligations are to be performed in whole or in part after the Effective Time and which are not cancellable or terminable by Solana without payment or penalty in excess of $500,000;

b.   All option, bonus, incentive compensation, deferred compensation, employment agreements, profit-sharing, retirement, pension, welfare, group insurance, death benefit, or other fringe benefit plans, arrangements or trust agreements (collectively, “ Solana Employment Agreements ”);

c.   All material patents, trademarks, copyrights and other intellectual property rights owned, licensed or used and all applications therefor;

d.   All material trade names and fictitious names used or held, whether and where such names are registered and where used;

e.   All obligations or liabilities, direct or indirect, vested or contingent in respect of any rate swap transactions, basis swaps, forward rate transactions, commodity swaps, hedges, commodity options, equity or equity index swaps, equity or equity index options, bond options, interest rate options, foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, production sales transactions having terms greater than 90 days or any other similar transactions (including any option with respect to any of such transactions) or any combination of such transactions;

f.   All material long-term and short-term promissory notes, installment contracts, loan agreements, credit agreements, operating and finance leases, and any other material agreements relating thereto or with respect to collateral securing the same;

g.   All material indebtedness, liabilities and commitments of third parties (other than Solana Subsidiaries) and as to which it is a guarantor, endorser, co-maker, surety or accommodation maker, or is contingently liable therefor (excluding liabilities as an endorser of cheques and the like in the ordinary course of business) or has otherwise provided any form of financial assistance and all letters of credit in excess of $300,000, whether stand-by or documentary, issued by any third party; and

h.   All Encumbrances.

2.12   Certain Agreements

Except for the Solana employment agreements disclosed under Section 2.11 (b), neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (a) result in any payment (including severance, unemployment compensation, parachute payment, bonus, retention, termination or otherwise) becoming due to any director, employee or independent contractor of Solana or any of the Solana Subsidiaries under any Solana Plan (as defined in Section 2.13) or otherwise; (b) materially increase any benefits otherwise payable under any Solana Plan or otherwise; or (c) result in the acceleration of the time of payment or vesting of any such benefits. Upon completion of the Arrangement, the aggregate amount payable pursuant to (a) above will not exceed $1.5 million.

2.13   Employee Benefit Plans

All employee benefits plans covering active, former or retired employees of Solana and the Solana Subsidiaries are listed in the Solana Disclosure Letter (the “ Solana Plans ”). Solana has made available to Gran Tierra true, complete and correct copies of each Solana Plan, any related trust agreement, annuity or insurance contract or other funding vehicle, and: (a) each Solana Plan has been maintained and administered in material compliance with its terms and is, to the extent required by applicable law or contract, fully funded without having any deficit or unfunded actuarial liability or adequate provision has been made therefor; (b) all required employer contributions under any such plans have been made and the applicable funds have been funded in accordance with the terms thereof, (c) each Solana Plan that is required or intended to be qualified under applicable law or registered or approved by a governmental agency or authority has been so qualified, registered or approved by the appropriate governmental agency or authority, and nothing has occurred since the date of the last qualification, registration or approval to adversely affect, or cause, the appropriate governmental agency or authority to revoke such qualification, registration or approval; (d) there are no pending or anticipated material claims against or otherwise involving any of the Solana Plans and no suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Solana Plan activities) has been brought against or with respect to any Solana Plan; (e) all material contributions, reserves or premium payments required to be made to the Solana Plans have been made or provided for; and (f) neither Solana nor any Solana Subsidiary has any material obligations for retiree health and life benefits under any Solana Plan.

2.14   Intellectual Property

Solana or the Solana Subsidiaries own or possess licenses to use all patents, patent applications, trademarks and service marks (including registrations and applications therefor), trade names, copyrights and written know-how, trade secrets and all other similar proprietary data and the goodwill associated therewith (collectively, the “ Solana Intellectual Property ”) that are either material to the business of Solana or any Solana Subsidiary or that are necessary for the manufacture, use, license or sale of any services or products manufactured, used, licensed or sold by Solana and the Solana Subsidiaries. The Solana Intellectual Property is owned or licensed by Solana or the Solana Subsidiaries free and clear of any Encumbrance other than such Encumbrances that would not reasonably be expected to have a Material Adverse Effect on Solana. Except in the ordinary course of business, neither Solana nor any of the Solana Subsidiaries has granted to any other person any license or sublicense to use any Solana Intellectual Property. Neither Solana nor any of the Solana Subsidiaries has received any notice of infringement, misappropriation or conflict with, the intellectual property rights of others in connection with the use by Solana and the Solana Subsidiaries of the Solana Intellectual Property.

2.15   Title to Properties

Except for the Solana Interests (as hereinafter defined) and for goods and other property sold, used or otherwise disposed of since March 31, 2008 in the ordinary course of business for fair value, Solana has good and defensible title to all its properties, interests in properties and assets, real and personal, reflected in its March 31, 2008, financial statements, free and clear of any Encumbrance, except: (a) Encumbrances reflected in the balance sheet of Solana as of March 31, 2008 and listed in the Disclosure Letter; (b) liens for current taxes not yet due and payable; and (c) such imperfections of title, easements and Encumbrances as would not reasonably be expected to have a Material Adverse Effect on Solana. All leases pursuant to which Solana or any Solana Subsidiary leases (whether as lessee or lessor) any real or personal property are in good standing, valid, and effective; and there is not, under any such leases, any existing or prospective default or event of default or event which with notice or lapse of time, or both, would constitute a default by Solana or any Solana Subsidiary which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Solana and in respect to which Solana or a Solana Subsidiary has not taken adequate steps to prevent a default from occurring. The buildings and premises of Solana and each of the Solana Subsidiaries that are used in its business are in good operating condition and repair, subject only to ordinary wear and tear. All major items of operating equipment of Solana and the Solana Subsidiaries are in good operating condition and in a state of reasonable maintenance and repair, ordinary wear and tear excepted, and are free from any known defects except as may be repaired by routine maintenance and such minor defects as do not substantially interfere with the continued use thereof in the conduct of normal operations.

2.16   Environmental Matters

a.   There are no environmental conditions or circumstances, such as the presence or release of any hazardous substance, on any property presently or, to the knowledge of Solana, previously owned or leased by Solana or any of the Solana Subsidiaries that could reasonably be expected to result in a Material Adverse Effect on Solana;

b.   Solana and the Solana Subsidiaries have in full force and effect all material environmental permits, licenses, approvals and other authorizations required to conduct their operations and are operating in material compliance thereunder;

c.   Solana’s and the Solana Subsidiaries’ operations and the use of their assets do not violate any applicable Canadian or Colombian federal, provincial or local law, statute, ordinance, rule, regulation, order or notice requirement pertaining to (i) the condition or protection of air, groundwater, surface water, soil, or other environmental media, (ii) the environment, including natural resources or any activity which affects the environment or (iii) the regulation of any pollutants, contaminants, waste or other substances (whether or not hazardous or toxic), including their use, storage, treatment, transportation and disposition (collectively the “ Applicable Environmental Laws ”), except for violations which, either singly or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Solana;

d.   To the knowledge of Solana, none of the operations or assets of Solana or any Solana Subsidiary has ever been conducted or used by Solana or any Solana Subsidiary in such a manner as to constitute a violation of any of the Applicable Environmental Laws, except for violations which, either singly or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Solana or have been rectified;

e.   No written notice has been served on Solana or any Solana Subsidiary from any entity, governmental agency or individual regarding any existing, pending or threatened investigation or inquiry related to alleged violations under any Applicable Environmental Laws, or regarding any claims for remedial obligations or contribution under any Applicable Environmental Laws, or which may require any material work, repairs, construction or expenditures, other than any of the foregoing which, either singly or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Solana; and

f.   Solana does not know of any reason that would preclude it from renewing or obtaining a reissuance of the material permits, licenses or other authorizations required pursuant to any Applicable Environmental Laws to operate and use any of Solana’s or the Solana Subsidiaries’ assets for their current purposes and uses.

2.17   Compliance With Other Laws

Neither Solana nor any Solana Subsidiary is in violation of or in default with respect to, or in alleged violation of or alleged default with respect to any other applicable law or any applicable rule or regulation, or any writ or decree of any court or any Governmental Entity or delinquent with respect to any report required to be filed with any Governmental Entity, except for violations, defaults and delinquencies which, either singly or in the aggregate, do not and would not reasonably be expected to result in a Material Adverse Effect on Solana.

2.18   Taxes

a.   Except with respect to failures which, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Solana, proper and accurate federal, provincial, state and local income, capital, withholding, value added, sales, use, franchise, gross revenue, turnover, excise, payroll, property, employment, customs duties and any and all other tax returns, reports, and estimates have been filed with appropriate governmental agencies, domestic and foreign, by Solana and each of the Solana Subsidiaries for each period for which any returns, reports, or estimates were due (taking into account any extensions of time to file before the date hereof); all taxes shown by such returns to be payable and any other taxes due and payable have been paid other than those being contested in good faith by Solana or a Solana Subsidiary; and the tax provision reflected in Solana’s financial statements is adequate, in accordance with Canadian or United States (if applicable) generally accepted accounting principles, to cover liabilities of Solana and the Solana Subsidiaries for all taxes, including any interest, penalties and additions to taxes of any character whatsoever applicable to Solana and the Solana Subsidiaries or their assets or businesses.

b.   No waiver of any statute of limitations executed by Solana or a Solana Subsidiary with respect to any tax is in effect for any period.

c.   Neither Solana nor any Solana Subsidiary has received any notice of reassessment from the Canada Revenue Agency or the Alberta Tax and Revenue Administration, or any tax authority in Colombia, the Cayman Islands or any other jurisdiction that could reasonably be expected to result in a Material Adverse Effect on Solana.

d.   There are no tax liens on any assets of Solana or the Solana Subsidiaries except for taxes not yet currently due and those which could not reasonably be expected to result in a Material Adverse Effect on Solana.

e.   Solana and the Solana Subsidiaries have withheld from each payment made to any of its present or former employees, officers and directors, and to all persons who are non-residents of Canada for the purposes of the Tax Act, all amounts required by law or as required in accordance with published administrative practice of the Canada Revenue Agency and will continue to do so until the Effective Time and have remitted withheld amounts within the prescribed periods to the appropriate governmental agencies. All Canada Pension Plan contributions, Employment Insurance premiums, employer health taxes and other taxes payable by Solana and the Solana Subsidiaries in respect of employees have been or will be paid to the proper governmental agencies within the time required by law. Solana and the Solana Subsidiaries have charged, collected and remitted on a timely basis all taxes as required by applicable law on any sale, supply or delivery whatsoever made by them.

f.   None of sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the Tax Act, or any equivalent provision of the tax legislation of any province or any other jurisdiction, have applied or will apply to Solana or the Solana Subsidiaries at any time up to and including the Effective Time.

g.   No meetings of the Solana Colombia Board of Directors have ever occurred in Canada. At no time since the incorporation of Solana Colombia have the majority of its directors been Canadian resident, nor have any written resolutions of its Board of Directors been executed by a majority of the signatories in Canada. The business and operations of Solana Colombia have been managed, since its incorporation, from outside of Canada.

2.19   Insurance 

Policies of insurance are in force as of the date hereof naming Solana as an insured that adequately cover all risks as are customarily covered by oil and gas producers in the industry in which Solana operates. All such policies shall remain in force and effect and shall not be cancelled or otherwise terminated as a result of the transactions contemplated by this Agreement.

2.20   Indebtedness to and by Officers, Directors and Others 

Solana is not indebted to any of the directors, officers, employees or consultants or any of their respective associates or affiliates or other parties not at arm’s length to Solana, except for amounts due as normal compensation or reimbursement of ordinary business expenses, nor is there any indebtedness owing by any such parties to Solana.

2.21   No Limitation 

There is no non-competition, exclusivity or other similar agreement, commitment or understanding in place to which Solana is a party or by which it is otherwise bound that would now or hereafter in any way limit the business or operations of Solana in a particular manner or to a particular locality or geographic region or for a limited period of time (including, for greater certainty, following the completion of the Arrangement), and the execution, delivery and performance of this Agreement does not and will not result in the restriction of Solana from engaging in this business or from competing with any person or in any geographic area.

2.22   Information to Independent Engineer 

Solana has no reason to believe that the report prepared by DeGolyer and MacNaughton Canada Limited dated April 10, 2008 and effective as at December 31, 2007, evaluating the crude oil, natural gas liquids and natural gas reserves and future net production revenues attributable to the properties of Solana as of December 31, 2007 (the “ Solana Reserve Report ”) and, if applicable, any updates to such report or any other reserve evaluation reports which may be, or be deemed to be, included or incorporated by reference in the Solana Joint Proxy Statement, whether in addition to or as a replacement to the Solana Reserve Report, was not accurate in all material respects as at the effective date of such report and, except for any impact of changes in commodity prices, which may or may not be material, Solana has no knowledge of a Material Adverse Change in the production, costs, price, reserves, estimates of future net production revenues or other relevant information from that disclosed in that report. Solana has provided to DeGolyer and MacNaughton Canada Limited all material information concerning land descriptions, well data, facilities and infrastructure, ownership and operations, future development plans and historical technical and operating data respecting the principal oil and gas assets of Solana, in each case as at the effective dates of such reports and, in particular, all material information respecting the interests of Solana in its principal oil and gas assets and royalty burdens and net profits interest burdens thereon and such information was accurate and correct in all material respects as at the respective dates thereof and did not omit any information necessary to make any such information provided not misleading as at the respective dates thereof and there has been no Material Adverse Change in any of the material information so provided since the date thereof. 

2.23   No Insider Rights 

No director, officer, insider or other party not at arm’s length to Solana has any right, title or interest in (or the right to acquire any right, title or interest in) any royalty interest, participation interest or any other interest whatsoever, in any properties of Solana.

2.24   Petroleum and Natural Gas Property Interests

Other than Solana Permitted Encumbrances (as hereinafter defined) and security obligations with respect to its bank indebtedness, all of the interests of each of Solana and each of the Solana Subsidiaries in its petroleum and natural gas rights and leases and all related tangibles, equipment, facilities and miscellaneous interests (collectively, the " Solana Interests ") are free and clear of Encumbrances created by, through or under Solana or the Solana Subsidiaries, except as disclosed in the Solana Financial Statements or those arising in the ordinary course of business and that would not reasonably be expected to have a Material Adverse Effect on Solana and, to its knowledge, each of Solana and each of the Solana Subsidiaries holds the Solana Interests under valid and subsisting licenses, leases, permits, concessions, concession agreements, contracts, subleases, reservations or other agreements except where the failure to so hold the Solana Interests would not reasonably be expected to have a Material Adverse Effect on Solana. " Solana Permitted Encumbrances " means: (a) the terms and conditions of the Solana Documents of Title (as hereinafter defined), including the following: (i) any overriding royalties, net profits interests or other encumbrances applicable to the Solana Interests, (ii) any existing potential alteration of the Solana Interests because of a payout conversion or farm-in, farm-out or other such agreement, and (iii) any penalty or forfeiture that applies to the Solana Interests at the date hereof because of Solana's election not to participate in a particular operation; (b) easements, rights of way, servitudes or other similar rights, including, without limitation, rights of way for highways, railways, sewers, drains, gas or oil pipelines, gas or water mains, electric light, power, telephone or cable television towers, poles, and wires; (c) the regulations and any rights reserved to or vested in any municipality or governmental, statutory or public authority to levy taxes or to control or regulate any of Solana's assets in any manner, including, without limitation, the right to control or regulate production rates and the conduct of operations; (d) statutory exceptions to title and the reservations, limitations and conditions in any grants or transfers from the Crown of any of the Solana Interests or interests therein; (e) undetermined or inchoate liens incurred or created in the ordinary course of business as security for Solana's share of the costs and expenses of the development or operation of any of its assets, which costs and expenses are not delinquent as of the Effective Time; (f) undetermined or inchoate mechanics' liens and similar liens for which payment for services rendered or goods supplied is not delinquent as of the Effective Time; and (g) liens granted in the ordinary course of business to a public entity, municipality or governmental authority respecting operations pertaining to any of Solana's assets. " Solana Documents of Title " means, collectively, any and all certificates of title, leases, permits, licences, unit agreements, assignments, trust declarations, royalty agreements, operating agreements or procedures, participation agreements, farm-in and farm-out agreements, sale and purchase agreements, pooling agreements and other agreements by virtue of which Solana's or any of the Solana Subsidiary's title to and interest in its oil and gas assets are derived.

2.25   Title to Oil and Gas Properties

Although it does not warrant title, other than Solana Permitted Encumbrances, Solana is not aware of any defects, failures or impairments to the title to the Solana Interests, whether or not an action, suit, proceeding or inquiry is pending or threatened and whether or not discovered by any third party, which taken together, could reasonably be expected to have a Material Adverse Effect on: (a) the quantity and pre-tax present worth values of its oil and gas reserves; (b) the current production attributable to its properties; or (c) the current cash flow from such properties.

2.26   No Encumbrances

Other than Solana Permitted Encumbrances, neither Solana nor any of the Solana Subsidiaries has encumbered or alienated its respective interest in the Solana Interests or agreed to do so and such assets are free and clear of all encumbrances except for or pursuant to: (i) encumbrances securing Solana's current credit facility and derivative transactions with the lenders (and other affiliates) thereunder; or (ii) encumbrances arising in the ordinary course of business, which are not material in the aggregate.

2.27   Compliance

To Solana's knowledge, neither Solana nor any Solana Subsidiary has failed to comply with, perform, observe or satisfy any term, condition, obligation or liability which has heretofore arisen under the provisions of any of title or operating documents or any other agreements and documents to which the Solana Interests are subject.

2.28   Areas of Mutual Interest

Neither Solana nor any Solana Subsidiary is bound by or subject to active area of mutual interest covenants.

2.29   Production Related Contracts

Neither Solana nor any Solana Subsidiary is a party to or is otherwise bound or affected by any material: (i) production sales contracts that cannot be terminated on notice of 31 days or less (without an early termination penalty or other cost); (ii) gas balancing or similar agreements; (iii) agreements for transportation, processing or disposal; (iv) agreements for the contract operation by a third party of any of its assets; and (v) agreements to provide transportation, processing or disposal capacity or service to any third party which, for (ii) to (iv) above, cannot be terminated on notice of 60 days or less.

2.30   Take or Pay Obligations

Neither Solana nor any Solana Subsidiary has any take or pay obligations.

2.31   No Defaults Under Leases and Agreements 

a.   Solana has not received notice of any default under any of the leases and other title and operating documents or any other agreement or instrument pertaining to the Solana Interests to which Solana is a party or by or to which Solana or the Solana Interests are bound or subject except to the extent that such defaults would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

b.   To Solana’s knowledge:

i.   each of Solana and the Solana Subsidiaries is in good standing under all, and is not in default under any; and

ii.   there is no existing condition, circumstance or matter which constitutes or which, with the passage of time or the giving of notice, would constitute a default under any,

leases and other title and operating documents or any other agreements and instruments pertaining to the Solana Interests to which it is a party or by or to which it or the Solana Interests are bound or subject and, to their knowledge, all such leases, title and operating documents and other agreements and instruments are in good standing and in full force and effect and none of the counterparties to such leases, title and operating documents and other agreements and instruments is in default thereunder except to the extent that such defaults would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

2.32   No Reduction of Interests 

Except as is reflected in the Solana Reserve Report, none of the Solana Interests are subject to reduction by reference to payout of or production penalty on any well or otherwise or to change to an interest of any other size or nature by virtue of or through any right or interest granted by, through or under Solana or the Solana Subsidiaries except to the extent that such reduction or change to an interest would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

2.33   Royalties, Rentals and Taxes Paid 

All royalties and rentals payable on or before the date hereof under the leases and other title and operating documents pertaining to the Solana Interests and all ad valorem , property, production, severance and similar taxes and assessments based upon or measured by the ownership of such assets or the production of petroleum substances derived therefrom or allocated thereto or the proceeds of sales thereof payable on or before the date hereof have been properly paid in full and in a timely manner except to the extent that such non-payment would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

2.34   Production Allowables and Production Penalties 

a.   None of the wells in which Solana or any Solana Subsidiary holds an interest has produced in excess of applicable production allowables imposed by any applicable law or any Governmental Entity and Solana has no knowledge of any impending change in production allowables imposed by any applicable law or any Governmental Entity that may be applicable to any of the wells in which it holds an interest, other than changes of general application in the jurisdiction in which such wells are situated except to the extent that such non-compliance or changes would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

b.   Neither Solana nor any of the Solana Subsidiaries has received notice of any production penalty or similar production restriction of any nature imposed or to be imposed by any Governmental Entity, including gas-oil ratio, off-target and overproduction penalties imposed by any Governmental Entity with jurisdiction, and, to Solana’s knowledge, none of the wells in which it holds an interest is subject to any such penalty or restriction except to the extent that any such penalty or restriction would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

2.35   Operation and Condition of Wells

All wells in which Solana or an Solana Subsidiary holds an interest:

a.   for which Solana or an Solana Subsidiary was or is operator, were or have been drilled and, if and as applicable, completed, operated and abandoned in accordance with good and prudent oil and gas industry practices in Colombia and all applicable laws; and

b.   for which Solana or an Solana Subsidiary was not or is not operator, to Solana’s knowledge, were or have been drilled and, if and as applicable, completed, operated and abandoned in accordance with good and prudent oil and gas industry practices in Colombia and all applicable laws;

except that, in either case, to the extent that such non-compliance with prudent oil and gas industry practices or applicable laws would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

2.36   Operation and Condition of Tangibles 

Solana’s and the Solana Subsidiaries’ tangible depreciable property used or intended for use in connection with its oil and gas assets:

a.   for which Solana or an Solana Subsidiary was or is operator, was or has been constructed, operated and maintained in accordance with good and prudent oil and gas industry practices in Colombia and all applicable laws during all periods in which Solana or an Solana Subsidiary was operator thereof and is in good condition and repair, ordinary wear and tear excepted, and is useable in the ordinary course of business; and

b.   for which Solana or an Solana Subsidiary was not or is not operator, to Solana’s knowledge, was or has been constructed, operated and maintained in accordance with good and prudent oil and gas industry practices in Colombia and all applicable laws during all periods in which Solana or an Solana Subsidiary was not operator thereof and is in good condition and repair, ordinary wear and tear excepted, and is useable in the ordinary course of business;

except to the extent that such non-compliance with such prudent oil and gas industry practices or applicable law would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Solana.

2.37   Outstanding AFEs 

There are no outstanding authorizations for expenditure pertaining to any of the Solana Interests or any other commitments, approvals or authorizations pursuant to which an expenditure may be required to be made in respect of such assets after the date of the most recent Solana Financial Statements in excess of $500,000 for each such commitment, approval or authorization other than pursuant to the 2008 capital budget disclosed in writing to Gran Tierra prior to the date hereof.

2.38   Confidentiality Agreements 

All agreements entered into by Solana with persons other than Gran Tierra regarding the confidentiality of information provided to such persons or reviewed by such persons with respect to the sale of Solana or a substantial portion of its assets or any other business combination or similar transaction with another party are in substantially the form of the Confidentiality Agreement between Gran Tierra and Solana dated July 26, 2007 (the “ Confidentiality Agreement ”) and Solana has not waived the standstill or other provisions of any of such agreements.

2.39   Outstanding Acquisitions

Other than as disclosed in the Solana Disclosure Letter, Solana has no rights to purchase assets, properties or undertakings of third parties under any agreements to purchase that have not closed in excess of $500,000 individually or $2,000,000 in the aggregate, other than pursuant to the 2008 capital budget disclosed in writing to Gran Tierra prior to the date hereof.

2.40   Foreign Private Issuer

Solana is a “foreign private issuer” within the meaning of Rule 405 of Regulation C adopted by the SEC under the U.S. Securities Act.

2.41   Investment Company and PFIC

Solana is not registered and, to the best of its knowledge, is not required to be registered as an investment company pursuant to the U.S. Investment Company Act of 1940 ,   as amended, and Solana was not in 2007 a “passive foreign investment company” for the purposes of U.S. tax laws.

2.42   Off-Balance Sheet Arrangements

Solana does not have any “off-balance sheet arrangements” as such term is defined in Form 40-F adopted by the SEC.

2.43   Board Approval

Subject to the delivery of the Solana Fairness Opinion (as hereinafter defined), the Solana Board of Directors has unanimously approved the Arrangement and approved this Agreement, has unanimously determined that the Arrangement and this Agreement are in the best interests of Solana and the Solana Securityholders, and has unanimously determined that the Arrangement is fair to Solana Securityholders.

2.44   Brokers and Finders

Other than Tristone Capital Inc. in accordance with the terms of its engagement letter dated May 30, 2008, a copy of which has been provided to Gran Tierra, none of Solana or any of the Solana Subsidiaries nor any of their respective directors, officers or employees has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or similar payments in connection with the transactions contemplated by this Agreement. The Solana Disclosure Letter includes a description of all of the fees and other financial obligations and commitments of Solana’s engagement arrangement with such firm.

2.45   Fairness Opinion

The Solana Board of Directors has received a verbal opinion as of July 28, 2008 (and have been advised that they will receive a written opinion) from Tristone Capital Inc. that the Plan of Arrangement is fair from a financial point of view to the Solana Securityholders (the “ Solana Fairness Opinion ”).

2.46   Restrictions on Business Activities

There is no material agreement, judgment, injunction, order or court decree binding upon Solana or any Solana Subsidiary that has or could reasonably be expected to have the effect of prohibiting or materially impairing any current business practice of Solana or any Solana Subsidiary, any acquisition of property by Solana or any Solana Subsidiary or the conduct of any current business by Solana or any Solana Subsidiary.

2.47   Books and Records

The books, records and accounts of Solana and the Solana Subsidiaries (a) have been maintained in accordance with good business practices on a basis consistent with prior years, (b) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Solana and the Solana Subsidiaries, and (c) accurately and fairly reflect the basis for the Solana financial statements. Solana has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that (a) transactions are executed in accordance with management’s general or specific authorization; and (b) transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with Canadian generally accepted accounting principles or any other criteria applicable to such statements, and (ii) to maintain accountability for assets.

2.48   Minute Books

The corporate records and minute books of Solana and each of the Solana Subsidiaries as provided to Gran Tierra's legal counsel have been maintained in accordance with all applicable statutory requirements and are complete and up-to-date in all material respects.

2.49   Debt 

As at the time of execution and delivery of this Agreement by Solana to Gran Tierra, Solana’s Debt (as defined below) is $nil. “Solana's Debt ” means total consolidated indebtedness, including long-term debt, bank debt and working capital deficiency, but excluding hedging obligations, future taxes and abandonment and reclamation obligations.

2.50   No Default Under Lending Agreements

No event of default or breach of any material covenant has occurred and is continuing under Solana's existing banking and lending agreements.

2.51   Flow Through Obligations

Neither Solana nor any of the Solana Subsidiaries has entered into any agreements or made any covenants with any parties with respect to the issuance of shares which are "flow-through shares" for the purposes of the Income Tax Act (Canada) or the incurring and renunciation of Canadian exploration expense or Canadian development expense, which amounts have not been fully expended and renounced as required thereunder, without the written approval of Gran Tierra.

2.52   No Shareholders' Rights Protection Plan

Solana is not a party to, and prior to the Effective Time, Solana will not implement, a shareholder rights plan or any other form of plan, agreement, contract or instrument that will trigger any rights to acquire Solana Common Shares or other securities of Solana or rights, entitlements or privileges in favour of any person upon the entering into of this Agreement or the consummation of the Arrangement, without the approval of Gran Tierra.

2.53   Transaction Costs

Solana's aggregate transaction costs related to the transaction contemplated hereby (including all financial advisory (inclusive of the amounts contemplated by Section 2.44), legal, accounting or engineering payments, and any and all other costs and expenses of Solana relating to the transaction contemplated hereby), but exclusive of the costs contemplated by Section 2.12, shall not exceed $5 million. No such costs (other than costs contemplated by Section 2.12) will be incurred by any Solana Subsidiary.

2.54   No Guarantees or Indemnities

Neither Solana nor any Solana Subsidiary is a party to or bound by any agreement of guarantee, indemnification (other than an indemnification of directors and officers in accordance with the by-laws of each of Solana and the Solana Subsidiaries and applicable law and other than standard indemnities in favour of purchasers of assets in purchase and sale agreements and underwriters and agents in connection with offerings of securities, the financial advisor engaged by Solana for purposes of the transactions contemplated hereby, Solana's registrar and transfer agent, indemnities and guarantees in favour of Solana's bankers and indemnities to support Solana's obligations pursuant to agreements entered into in the ordinary course of business), or any other like commitment of the obligations, liabilities (contingent or otherwise) or indebtedness of any other person.

2.55   Reporting Issuer Status

Solana is a reporting issuer in the provinces of British Columbia, Alberta and Ontario and is in material compliance with all applicable Canadian securities laws therein. The Solana Common Shares are listed and posted for trading on the TSX Venture Exchange and the AIM and Solana is in material compliance with the rules of the TSX Venture Exchange and the AIM.

2.56   No Cease Trade Orders

No securities commission or similar regulatory authority has issued any order preventing or suspending trading of any securities of Solana or any of the Solana Subsidiaries and neither Solana nor any Solana Subsidiary is in default of any requirement of applicable law that would reasonably be expected to have a Material Adverse Effect on the transactions contemplated by this Agreement.

2.57   Disclosure

No representation or warranty made by Solana in this Agreement or the Solana Disclosure Letter, nor any document, written information, statement, financial statement, certificate or Exhibit prepared and furnished or to be prepared and furnished by Solana or its representatives pursuant hereto or in connection with the transactions contemplated hereby, when taken together, contains or contained (as of the date made) any untrue statement of a material fact when made, or omits or omitted (as of the date made) to state a material fact necessary to make the statements or facts contained herein or therein not misleading, in any material way, in light of the circumstances under which they were made.

Except as set forth in a letter dated the date of this Agreement and delivered by Gran Tierra to Solana concurrently herewith (the “ Gran Tierra Disclosure Letter ”), Gran Tierra hereby represents and warrants to, and agrees with, Solana that:

3.1   Organization and Standing

a.   Gran Tierra and each body corporate, partnership, joint venture, association or other business entity of which more than 50% of the total voting power of shares of stock or units of ownership or beneficial interest entitled to vote in the election of directors (or members of a comparable governing body) is owned or controlled, directly or indirectly, by Gran Tierra (the “ Gran Tierra Subsidiaries ”), is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, has full requisite power and authority to carry on its business as it is currently conducted, and to own, lease and operate the properties currently owned, leased and operated by it, and is duly qualified or licensed to do business and is in good standing as a foreign corporation or organization authorized to do business in all jurisdictions in which the character of the properties owned or leased or the nature of the business conducted by it would make such qualification or licensing necessary, except where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect on Gran Tierra. The Gran Tierra Disclosure Letter sets forth a complete list, as at the date hereof, of the Gran Tierra Subsidiaries and the percentage of each subsidiary’s outstanding capital stock or other ownership interest owned by Gran Tierra or another Gran Tierra Subsidiary. Except as set forth in the Gran Tierra Disclosure Letter, neither Gran Tierra nor any Gran Tierra Subsidiary owns any debt or equity interests in any entity other than the Gran Tierra Subsidiaries.

b.   No Gran Tierra Subsidiary has total assets which constitute more than 5% of the consolidated assets of Gran Tierra as at March 31, 2008, or the total revenues of which constitute more than 5% of the consolidated revenues of Gran Tierra for the three month period ended March 31, 2008. As of the date hereof, Gran Tierra is the beneficial direct or indirect owner of all of the outstanding shares, trust units and partnership units, as applicable, of the Gran Tierra Subsidiaries with good title thereto free and clear of any and all encumbrances. There are no options, warrants or other rights, shareholder or unitholder rights plans, agreements or commitments of any character whatsoever requiring the issuance, sale or transfer by any of the Gran Tierra Subsidiaries of any securities of the Gran Tierra Subsidiaries or any securities convertible into, or exchangeable or exercisable for, or otherwise evidencing a right to acquire, any securities of the Gran Tierra Subsidiaries. All outstanding securities of the Gran Tierra Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to, nor were they issued in violation of, any pre-emptive rights.

3.2   Agreement Authorized and its Effect on Other Obligations

a.   Gran Tierra has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder and, subject to approval of Gran Tierra’s stockholders as provided in this Agreement, to consummate the Arrangement and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement by Gran Tierra and, subject to approval of Gran Tierra’s stockholders as provided in this Agreement, the consummation by Gran Tierra of the Arrangement and the other transactions contemplated hereby have been unanimously approved by the Gran Tierra Board of Directors and have been duly authorized by all other necessary corporate action on the part of Gran Tierra. This Agreement has been duly executed and delivered by Gran Tierra and is a valid and binding obligation of Gran Tierra, enforceable in accordance with its terms, except that such enforceability may be subject to: (i) bankruptcy, insolvency, reorganization or other similar laws affecting or relating to enforcement of creditors’ rights generally; (ii) general equitable principles; and (iii) that the consummation of the Arrangement is subject to approval of Gran Tierra’s stockholders as provided in this Agreement.

b.   Neither the execution, delivery or performance of this Agreement or the Arrangement by Gran Tierra, nor the consummation of the transactions contemplated hereby or thereby by Gran Tierra nor compliance with the provisions hereof or thereof by Gran Tierra will: (i) conflict with, or result in any violations of, the Articles of Incorporation or bylaws of Gran Tierra or any equivalent document of any of the Gran Tierra Subsidiaries, (ii) result in any breach of or cause a default (with or without notice or lapse of time, or both) under, (iii) give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in, or the loss of any material benefit or incurrence of any material cost (including, but not limited to, seismic data transfer fees) under, or (iv) result in the creation of any Encumbrance upon any of the material properties or assets of Gran Tierra or any of the Gran Tierra Subsidiaries under, any term, condition or provision of any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Gran Tierra or any of the Gran Tierra Subsidiaries or their respective properties or assets, other than any such breaches, defaults, rights, losses, or Encumbrances which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Gran Tierra.

3.3   Governmental and Third Party Consents

a.   No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity, is required to be obtained by Gran Tierra or any of the Gran Tierra Subsidiaries in connection with the execution and delivery of this Agreement or the Plan of Arrangement or the consummation of the transactions contemplated hereby or thereby, except for: (i) the filing with the Commissions and the SEC and the mailing to stockholders of Gran Tierra of the Joint Proxy Statement relating to the Gran Tierra Stockholders Meeting, (ii) the furnishing to the SEC of the SEC Filings; (iii) approval by the Court of the Arrangement and the filings of the articles of arrangement and other required arrangement or other documents as required by the ABCA; (iv) such filings, authorizations, orders and approvals as may be required under applicable federal, provincial or state securities laws and the rules of the AMEX or TSX; (v) such competition and foreign investment notices and filings with any Governmental Entity as may be necessary, including, under the Colombian merger control regime; (vi) such notice, filings, orders and approvals as may be necessary under the Public Utilities Board Act (Alberta), Gas Utilities Act (Alberta) or similar legislation in other applicable provinces; and (vii) where the failure to obtain such consents, approvals, etc., would not prevent or delay the consummation of the Arrangement or otherwise prevent Gran Tierra from performing its obligations under this Agreement and would not reasonably be expected to have a Material Adverse Effect on Gran Tierra.

b.   Other than as contemplated by Section 3.3 (a), no consents, assignments, waivers, authorizations or other certificates are necessary in connection with the transactions contemplated hereby to provide for the continuation in full force and effect of all of Gran Tierra’s material contracts or leases or for Gran Tierra to consummate the transactions contemplated hereby, except when the failure to receive such consents or other certificates would not reasonably be expected to have a Material Adverse Effect on Gran Tierra.

3.4   Capitalization

a.   The authorized capital stock of Gran Tierra consists of 300,000,000 shares of common stock, $0.001 par value ( “ Gran Tierra Common Stock ”), 25,000,000 shares of preferred stock, par value $0.001 per share, issuable in series ( “ Gran Tierra Preferred Stock ”), and one (1) share of special voting stock ( “ Gran Tierra Special Voting Stock ”). As of June 30, 2008, 99,582,314 shares of Gran Tierra Common Stock were issued and outstanding, no shares of Gran Tierra Preferred Stock were issued and outstanding, and one (1) share of Gran Tierra Special Voting Stock was issued and outstanding. As of June 30, 2008, 5,630,000 shares of Gran Tierra Common Stock were allocated for issuance upon the exercise of stock options then outstanding under Gran Tierra’s stock option plans, 18,418,867 shares of Gran Tierra Common Stock were allocated for issuance upon the exercise of warrants to purchase shares of Gran Tierra Common Stock, and 11,192,856 shares of Gran Tierra Common Stock were allocated for issuance upon exchange of exchangeable shares outstanding and exchangeable for shares of Gran Tierra Common Stock. All of the issued and outstanding shares of Gran Tierra Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of the terms of any agreement or other understanding binding upon Gran Tierra and were issued in compliance with all applicable charter documents of Gran Tierra and all applicable federal, state and foreign securities laws, rules and regulations. There are, and have been, no preemptive rights with respect to the issuance of the shares of Gran Tierra Common Stock or any other capital stock of Gran Tierra.

b.   Other than as set forth above, as of the date of this Agreement, there are no outstanding subscriptions, options, warrants, convertible securities, calls, commitments, agreements or rights (contingent or otherwise) of any character to purchase or otherwise acquire from Gran Tierra any shares of, or any securities convertible into, the capital stock of Gran Tierra.

c.   To the knowledge of Gran Tierra, neither Gran Tierra nor any of the Gran Tierra Subsidiaries or their respective shareholders is a party to any unanimous shareholder agreement, pooling agreement, voting trust or other similar type of arrangements in respect of their outstanding securities.

3.5   Securities Reports and Financial Statements

a.   Gran Tierra has filed all forms, reports, annual reports and documents required to be filed by it with the SEC pursuant to the Securities Act and the Exchange Act and the rules thereunder and all forms, reports, annual reports and documents required to be filed by it with the Commissions and AMEX and the TSX (collectively, the “ Gran Tierra Securities Reports ”), all of which have complied in all material respects with all applicable requirements of such statutes, regulations, policies and rules. None of the Gran Tierra Securities Reports, at the time filed or as subsequently amended, 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 made therein, in light of the circumstances under which they were made, not misleading. No subsidiary of Gran Tierra is required to file any form, report or other document with the SEC or the Commissions. The financial statements of Gran Tierra contained in the Gran Tierra Securities Reports complied in all material respects with the then applicable accounting requirements and the published rules and regulations of the relevant United States securities statutes with respect thereto, were prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (except as may have been indicated in the notes thereto or, in the case of unaudited statements, as permitted by applicable laws, rules or regulations) and fairly present (subject, in the case of the unaudited statements, to normal, year-end audit adjustments) the consolidated financial position of Gran Tierra and its consolidated Gran Tierra Subsidiaries as at the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended.

b.   There has been no change in Gran Tierra’s accounting policies or the methods of making accounting estimates or changes in estimates that are material to such financial statements, except as described in the notes thereto.

3.6   Liabilities

Neither Gran Tierra nor any Gran Tierra Subsidiary has, and none of Gran Tierra or any Gran Tierra Subsidiary is or would reasonably be expected to become responsible for performing or discharging, any accrued, contingent or other liabilities of any nature, either matured or unmatured, that are, individually or in the aggregate, material to Gran Tierra or any Gran Tierra Subsidiary, except for: (a) liabilities reflected or reserved against in financial statements contained in the Gran Tierra Securities Reports; (b) normal and recurring current liabilities that have been incurred in the ordinary course of business and consistent with past practices by Gran Tierra or any Gran Tierra Subsidiary since the date of the last filed Gran Tierra Securities Report filed with the SEC; (c) liabilities for performance of obligations of Gran Tierra or any Gran Tierra Subsidiary under any contracts by Gran Tierra or any Gran Tierra Subsidiary, to the extent such liabilities are readily ascertainable (in nature, scope and amount) from the written terms of such contracts and such contracts have been delivered to Solana; (d) liabilities described in part 3.6 of the Disclosure Letter; and (e) liabilities that would not, in the aggregate, have a Material Adverse Effect on Gran Tierra or any Gran Tierra Subsidiary.

3.7   Information Supplied

None of the information supplied or to be supplied by Gran Tierra for inclusion or incorporation by reference in the Joint Proxy Statement (and, if filed, the Registration Statement) will, at the time the Joint Proxy Statement is mailed to the Securityholders of Gran Tierra and at the time of the Gran Tierra Stockholders Meeting (and, if filed, at the time the Registration Statement is declared effective), contain any untrue statement which, at the time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading. The Joint Proxy Statement will comply as to form in all material respects with the provisions of the ABCA and applicable United States and Canadian securities laws and the rules and regulations promulgated thereunder.

3.8   No Defaults

Neither Gran Tierra nor any Gran Tierra Subsidiary is, or has received notice that it would be with the passage of time, in default or violation of any term, condition or provision of (a) its Articles of Incorporation or bylaws; (b) any judgment, decree or order applicable to it; or (c) any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license or other instrument to which Gran Tierra or any Gran Tierra Subsidiary is now a party or by which it or any of its properties or assets may be bound, except in the case of item (c) for defaults and violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Gran Tierra.

3.9   Litigation; Investigations

There is no claim, action, suit or proceeding pending, or to the knowledge of Gran Tierra threatened against Gran Tierra or any of the Gran Tierra Subsidiaries, which would, if adversely determined, individually or in the aggregate, have a Material Adverse Effect on Gran Tierra, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Gran Tierra or any of the Gran Tierra Subsidiaries having, or which, insofar as reasonably can be foreseen, in the future could have, any such effect. There is no investigation pending or, to the knowledge of Gran Tierra, threatened, against Gran Tierra or any of the Gran Tierra Subsidiaries before any Governmental Entity which could have such effect.

3.10   Absence of Certain Changes and Events

a.   Since March 31, 2008, there has not been:

i.   Any Material Adverse Effect on Gran Tierra;

ii.   Any material damage, destruction, or loss to the business or properties of Gran Tierra and the Gran Tierra Subsidiaries, taken as a whole, not covered by insurance;

iii.   Any declaration, setting aside or payment of any dividend or other distribution in respect of the capital stock of Gran Tierra, or any direct or indirect redemption, purchase or any other acquisition by Gran Tierra of any such stock;

iv.   Any material labor dispute or charge of unfair labor practice (other than routine individual grievances) or, to the knowledge of Gran Tierra, any activity or proceeding by a labor on or by a representative thereof to organize any employees of Gran Tierra or any Gran Tierra Subsidiary or any campaign being conducted to solicit authorization from employees to be represented by such labor union; or

v.   Any other event or condition known to Gran Tierra particularly pertaining to and adversely affecting the operations, assets or business of Gran Tierra or any of the Gran Tierra Subsidiaries (other than events or conditions which are of a general or industry-wide nature and of general public knowledge) which would constitute a Material Adverse Effect on Gran Tierra.

b.   Since July 1, 2008, there has not been any change in the capital stock or in the number of shares or classes of Gran Tierra’s authorized or outstanding capital stock as described in Section 3.4 (other than as a result of exercises of Gran Tierra stock options and warrants described in Section 3.4 (a)).

3.11   Additional Gran Tierra Information

The Gran Tierra Disclosure Letter contains true, complete and correct lists of the following items with respect to Gran Tierra and each of the Gran Tierra Subsidiaries, and Gran Tierra has furnished or made available to Solana true, complete and correct copies of all documents referred to in such lists:

a.   All contracts which involve, or may involve, aggregate payments by any party thereto of $1,000,000 or more, which payments or obligations are to be performed in whole or in part after the Effective Time and which are not cancellable or terminable by Gran Tierra without payment or penalty in excess of $500,000;

b.   All material option, bonus, incentive compensation, deferred compensation, employment agreements, profit-sharing, retirement, pension, welfare, group insurance, death benefit, or other fringe benefit plans, arrangements or trust agreements (collectively, “ Gran Tierra Employment Agreements ”);

c.   All material patents, trademarks, copyrights and other intellectual property rights owned, licensed or used and all applications therefor;

d.   All material trade names and fictitious names used or held, whether and where such names are registered and where used;

e.   All obligations or liabilities, direct or indirect, vested or contingent in respect of any rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, equity or equity index swaps, equity or equity index options, bond options, interest rate options, foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, production sales transactions having terms greater than 90 days or any other similar transactions (including any option with respect to any of such transactions) or any combination of such transactions;

f.   All material long-term and short-term promissory notes, installment contracts, loan agreements, credit agreements, operating and finance leases, and any other material agreements relating thereto or with respect to collateral securing the same; and

All material indebtedness, liabilities and commitments of third parties (other than Gran Tierra Subsidiaries) and as to which it is a guarantor, endorser, co-maker, surety or accommodation maker, or is contingently liable therefor (excluding liabilities as an endorser of checks and the like in the ordinary course of business) or has otherwise provided any form of financial assistance and all letters of credit in excess of $300,000, whether stand-by or documentary, issued by any third party.

3.12   Certain Agreements

Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (a) result in any payment (including severance, unemployment compensation, parachute payment, bonus, retention, termination or otherwise) becoming due to any director, employee or independent contractor of Gran Tierra or any of the Gran Tierra Subsidiaries under any Gran Tierra Plan (as defined in Section 3.13) or otherwise; (b) materially increase any benefits otherwise payable under any Gran Tierra Plan or otherwise; or (c) result in the acceleration of the time of payment or vesting of any such benefits.

3.13   Employee Benefit Plans

All employee benefits plans covering active, former or retired employees of Gran Tierra and the Gran Tierra Subsidiaries are listed in the Gran Tierra Disclosure Letter (the “ Gran Tierra Plans ”). Gran Tierra has made available to Solana true, complete and correct copies of each Gran Tierra Plan, any related trust agreement, annuity or insurance contract or other funding vehicle, and: (a) each Gran Tierra Plan has been maintained and administered in material compliance with its terms and is, to the extent required by applicable law or contract, fully funded without having any deficit or unfunded actuarial liability or adequate provision has been made therefor; (b) all required employer contributions under any such plans have been made and the applicable funds have been funded in accordance with the terms thereof, (c) each Gran Tierra Plan that is required or intended to be qualified under applicable law or registered or approved by a governmental agency or authority has been so qualified, registered or approved by the appropriate governmental agency or authority, and nothing has occurred since the date of the last qualification, registration or approval to adversely affect, or cause, the appropriate governmental agency or authority to revoke such qualification, registration or approval; (d) there are no pending or anticipated material claims against or otherwise involving any of the Gran Tierra Plans and no suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Gran Tierra Plan activities) has been brought against or with respect to any Gran Tierra Plan; (e) all material contributions, reserves or premium payments required to be made to the Gran Tierra Plans have been made or provided for; and (f) neither Gran Tierra nor any Gran Tierra Subsidiary has any material obligations for retiree health and life benefits under any Gran Tierra Plan.

3.14   Intellectual Property

Gran Tierra or the Gran Tierra Subsidiaries own or possess licenses to use all patents, patent applications, trademarks and service marks (including registrations and applications therefor), trade names, copyrights and written know-how, trade secrets and all other similar proprietary data and the goodwill associated therewith (collectively, the “ Gran Tierra Intellectual Property ”) that are either material to the business of Gran Tierra or any Gran Tierra Subsidiary or that are necessary for the manufacture, use, license or sale of any services or products manufactured, used, licensed or sold by Gran Tierra and the Gran Tierra Subsidiaries. The Gran Tierra Intellectual Property is owned or licensed by Gran Tierra or the Gran Tierra Subsidiaries free and clear of any Encumbrance other than such Encumbrances that would not reasonably be expected to have a Material Adverse Effect on Gran Tierra. Except in the ordinary course of business, neither Gran Tierra nor any of the Gran Tierra Subsidiaries has granted to any other person any license to use any Gran Tierra Intellectual Property. Neither Gran Tierra nor any of the Gran Tierra Subsidiaries has received any notice of infringement, misappropriation or conflict with, the intellectual property rights of others in connection with the use by Gran Tierra and the Gran Tierra Subsidiaries of the Gran Tierra Intellectual Property.

3.15   Title to Properties

Except for the Gran Tierra Interests (as hereinafter defined) and for goods and other property sold, used or otherwise disposed of since March 31, 2008 in the ordinary course of business for fair value, Gran Tierra has good and defensible title to all its properties, interests in properties and assets, real and personal, reflected in its March 31, 2008, financial statements, free and clear of any Encumbrance, except: (a) Encumbrances reflected in the balance sheet of Gran Tierra as of March 31, 2008; (b) liens for current taxes not yet due and payable; and (c) such imperfections of title, easements and Encumbrances as would not reasonably be expected to have a Material Adverse Effect on Gran Tierra. All leases pursuant to which Gran Tierra or any Gran Tierra Subsidiary leases (whether as lessee or lessor) any real or personal property are in good standing, valid, and effective; and there is not, under any such leases, any existing or prospective default or event of default or event which with notice or lapse of time, or both, would constitute a default by Gran Tierra or any Gran Tierra Subsidiary which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Gran Tierra and in respect to which Gran Tierra or a Gran Tierra Subsidiary has not taken adequate steps to prevent a default from occurring. The buildings and premises of Gran Tierra and each of the Gran Tierra Subsidiaries that are used in its business are in good operating condition and repair, subject only to ordinary wear and tear. All major items of operating equipment of Gran Tierra and the Gran Tierra Subsidiaries are in good operating condition and in a state of reasonable maintenance and repair, ordinary wear and tear excepted, and are free from any known defects except as may be repaired by routine maintenance and such minor defects as do not substantially interfere with the continued use thereof in the conduct of normal operations.

3.16   Environmental Matters

a.   There are no environmental conditions or circumstances, such as the presence or release of any hazardous substance, on any property presently or, to the knowledge of Gran Tierra, previously owned or leased by Gran Tierra or any of the Gran Tierra Subsidiaries that could reasonably be expected to result in a Material Adverse Effect on Gran Tierra;

b.   Gran Tierra and the Gran Tierra Subsidiaries have in full force and effect all material environmental permits, licenses, approvals and other authorizations required to conduct their operations and are operating in material compliance thereunder;

c.   Gran Tierra’s and the Gran Tierra Subsidiaries’ operations and the use of their assets do not violate any applicable Canadian or Colombian federal, provincial or local law, statute, ordinance, rule, regulation, order or notice requirement pertaining to Applicable Environmental Laws, except for violations which, either singly or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Gran Tierra;

d.   To the knowledge of Gran Tierra, none of the operations or assets of Gran Tierra or any Gran Tierra Subsidiary has ever been conducted or used by Gran Tierra or any Gran Tierra Subsidiary in such a manner as to constitute a violation of any of the Applicable Environmental Laws, except for violations which, either singly or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Gran Tierra or have been rectified;

e.   No written notice has been served on Gran Tierra or any Gran Tierra Subsidiary from any entity, governmental agency or individual regarding any existing, pending or threatened investigation or inquiry related to alleged violations under any Applicable Environmental Laws, or regarding any claims for remedial obligations or contribution under any Applicable Environmental Laws, or which may require any material work, repairs, construction or expenditures, other than any of the foregoing which, either singly or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Gran Tierra; and

f.   Gran Tierra does not know of any reason that would preclude it from renewing or obtaining a reissuance of the material permits, licenses or other authorizations required pursuant to any Applicable Environmental Laws to operate and use any of Gran Tierra’s or the Gran Tierra Subsidiaries’ assets for their current purposes and uses.

3.17   Compliance With Other Laws

Neither Gran Tierra nor any Gran Tierra Subsidiary is in violation of or in default with respect to, or in alleged violation of or alleged default with respect to any other applicable law or any applicable rule or regulation, or any it or decree of any court or any Governmental Entity, or delinquent with respect to any report required to be filed with any Governmental Entity, except for violations, defaults and delinquencies which, either singly or in the aggregate, do not and would not reasonably be expected to result in a Material Adverse Effect on Gran Tierra.

3.18   Taxes

a.   Except with respect to failures which, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Gran Tierra, proper and accurate federal, provincial, state and local income, capital, withholding, value added, sales, use, franchise, gross revenue, turnover, excise, payroll, property, employment, customs duties and any and all other tax returns, reports, and estimates have been filed with appropriate governmental agencies, domestic and foreign, by Gran Tierra and each of the Gran Tierra Subsidiaries for each period for which any returns, reports, or estimates were due (taking into account any extensions of time to file before the date hereof); all taxes shown by such returns to be payable and any other taxes due and payable have been paid other than those being contested in good faith by Gran Tierra or a Gran Tierra Subsidiary; and the tax provision reflected in Gran Tierra’s financial statements is adequate, in accordance with United States or Canadian (if applicable) generally accepted accounting principles, to cover liabilities of Gran Tierra and the Gran Tierra Subsidiaries for all taxes, including any interest, penalties and additions to taxes of any character whatsoever applicable to Gran Tierra and the Gran Tierra Subsidiaries or their assets or businesses. No waiver of any statute of limitations executed by Gran Tierra or a Gran Tierra Subsidiary with respect to any tax is in effect for any period. Neither Gran Tierra nor any Gran Tierra Subsidiary has received any notice of reassessment from the U.S. Internal Revenue Service or any applicable state tax authority, Revenue Canada or Alberta Corporate Tax Administration, or any tax authority in Colombia, Peru or Argentina, that could reasonably be expected to result in a Material Adverse Effect on Gran Tierra. There are no tax liens on any assets of Gran Tierra or the Gran Tierra Subsidiaries except for taxes not yet currently due and those which could not reasonably be expected to result in a Material Adverse Effect on Gran Tierra.

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b.   No meetings of the Gran Tierra Energy Cayman Islands Inc. Board of Directors or the Gran Tierra Energy (C.I.) Inc. Board of Directors have occurred in Canada or the U.S. Gran Tierra Energy Cayman Islands Inc. and Gran Tierra Energy (C.I.) Inc. are in the process of being legally formed. Both corporations are inactive, have never conducted operations or business, and hold no material assets. At no time since the incorporation of either corporation has the majority of the respective members of the Board of Directors of either corporation been U.S. residents.

3.19   Insurance 

Policies of insurance are in force as of the date hereof naming Gran Tierra as an insured that adequately cover all risks as are customarily covered by oil and gas producers in the industry in which Gran Tierra operates. All such policies shall remain in force and effect and shall not be cancelled or otherwise terminated as a result of the transactions contemplated by this Agreement.

3.20   Indebtedness to and By Officers, Directors and Others 

Gran Tierra is not indebted to any of the directors, officers, employees or consultants or any of their respective associates or affiliates or other parties not at arm’s length to Gran Tierra, except for amounts due as normal compensation or reimbursement of ordinary business expenses, nor is there any indebtedness owing by any such parties to Gran Tierra.

3.21   No Limitation 

There is no non-competition, exclusivity or other similar agreement, commitment or understanding in place to which Gran Tierra is a party or by which it is otherwise bound that would now or hereafter in any way limit the business or operations of Gran Tierra in a particular manner or to a particular locality or geographic region or for a limited period of time (including, for greater certainty, following the completion of the Arrangement), and the execution, delivery and performance of this Agreement does not and will not result in the restriction of Gran Tierra from engaging in this business or from competing with any person or in any geographic area.

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3.22   Information to Independent Engineer 

Gran Tierra has no reason to believe that (i) the report prepared by Gaffney, Cline & Associates, dated February 15, 2008, and effective as at December 31, 2007, evaluating the crude oil, natural gas liquids and natural gas reserves and future net production revenues attributable to the properties of Gran Tierra in Colombia as of December 31, 2007 (the “ Gran Tierra Colombia Reserve Report ”) and (ii) the report prepared by Gaffney, Cline & Associates, dated February 15, 2008, and effective as at December 31, 2007, evaluating the crude oil, natural gas liquids and natural gas reserves and future net production revenues attributable to the properties of Gran Tierra in Argentina as of December 31, 2007 (the “ Gran Tierra Argentina Reserve Report, ” and together with the Gran Tierra Colombia Reserve Report, the “ Gran Tierra Reserve Reports ”) and, if applicable, any updates to such reports or any other reserve evaluation reports which may be, or be deemed to be, included or incorporated by reference in the Gran Tierra Joint Proxy Statement, whether in addition to or as a replacement to the Gran Tierra Reserve Reports, were not accurate in all material respects as at the effective date of such reports and, except for any impact of changes in commodity prices, which may or may not be material, Gran Tierra has no knowledge of a Material Adverse Change in the production, costs, price, reserves, estimates of future net production revenues or other relevant information from that disclosed in those reports. Gran Tierra has provided to Gaffney, Cline & Associates, all material information concerning land descriptions, well data, facilities and infrastructure, ownership and operations, future development plans and historical technical and operating data respecting the principal oil and gas assets of Gran Tierra, in each case as at the effective dates of such reports and, in particular, all material information respecting the interests of Gran Tierra in its principal oil and gas assets and royalty burdens and net profits interest burdens thereon and such information was accurate and correct in all material respects as at the respective dates thereof and did not omit any information necessary to make any such information provided not misleading as at the respective dates thereof and there has been no Material Adverse Change in any of the material information so provided since the date thereof.

3.23   No Insider Rights 

No director, officer, insider or other party not at arm’s length to Gran Tierra has any right, title or interest in (or the right to acquire any right, title or interest in) any royalty interest, participation interest or any other interest whatsoever, in any properties of Gran Tierra.

3.24   Petroleum and Natural Gas Property Interests

Other than Gran Tierra Permitted Encumbrances (as hereinafter defined) and security obligations with respect to its bank indebtedness, all of the interests of each of Gran Tierra and each of the Gran Tierra Subsidiaries in its petroleum and natural gas rights and leases and all related tangibles, equipment, facilities and miscellaneous interests (collectively, the " Gran Tierra Interests ") are free and clear of Encumbrances created by, through or under Gran Tierra or the Gran Tierra Subsidiaries, except as disclosed in the Gran Tierra Financial Statements or those arising in the ordinary course of business and that would not reasonably be expected to have a Material Adverse Effect on Gran Tierra and, to its knowledge, each of Gran Tierra and each of the Gran Tierra Subsidiaries holds the Gran Tierra Interests under valid and subsisting licenses, leases, permits, concessions, concession agreements, contracts, subleases, reservations or other agreements except where the failure to so hold the Gran Tierra Interests would not reasonably be expected to have a Material Adverse Effect on Gran Tierra. " Gran Tierra   Permitted Encumbrances " used in this Section 3.24 have the same meaning as set forth in Section 2.24, but replacing each instance of “Solana” with “Gran Tierra” in such definition (including the definition of Solana Documents of Title).

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3.25   Title to Oil and Gas Properties

Although it does not warrant title, other than Gran Tierra Permitted Encumbrances, Gran Tierra is not aware of any defects, failures or impairments to the title to the Gran Tierra Interests, whether or not an action, suit, proceeding or inquiry is pending or threatened and whether or not discovered by any third party, which taken together, could reasonably be expected to have a Material Adverse Effect on: (a) the quantity and pre-tax present worth values of its oil and gas reserves; (b) the current production attributable to its properties; or (c) the current cash flow from such properties.

3.26   No Encumbrances

Other than Gran Tierra Permitted Encumbrances, neither Gran Tierra nor any of the Gran Tierra Subsidiaries has encumbered or alienated its respective interest in the Gran Tierra Interests or agreed to do so and such assets are free and clear of all encumbrances except for or pursuant to: (i) encumbrances securing Gran Tierra's current credit facility with Standard Bank plc and derivative transactions with the lenders (and other affiliates) thereunder; or (ii) encumbrances arising in the ordinary course of business, which are not material in the aggregate.

3.27   Compliance

To Gran Tierra's knowledge, neither Gran Tierra nor any Gran Tierra Subsidiary has failed to comply with, perform, observe or satisfy any term, condition, obligation or liability which has heretofore arisen under the provisions of any of title or operating documents or any other agreements and documents to which the Gran Tierra Interests are subject.

3.28   Areas of Mutual Interest

Neither Gran Tierra nor any Gran Tierra Subsidiary is bound by or subject to active area of mutual interest covenants.

3.29   Production Related Contracts

Neither Gran Tierra nor any Gran Tierra Subsidiary is a party to or is otherwise bound or affected by any material: (i) production sales contracts that cannot be terminated on notice of 31 days or less (without an early termination penalty or other cost); (ii) gas balancing or similar agreements; (iii) agreements for transportation, processing or disposal; (iv) agreements for the contract operation by a third party of any of its assets; and (v) agreements to provide transportation, processing or disposal capacity or service to any third party which, for (ii) to (iv) above, cannot be terminated on notice of 60 days or less.

3.30   Take or Pay Obligations

Neither Gran Tierra nor any Gran Tierra Subsidiary has any take or pay obligations.

3.31   No Defaults Under Leases and Agreements 

a.   Gran Tierra has not received notice of any default under any of the leases and other title and operating documents or any other agreement or instrument pertaining to the Gran Tierra Interests to which Gran Tierra is a party or by or to which Gran Tierra or the Gran Tierra Interests are bound or subject except to the extent that such defaults would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

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b.   To Gran Tierra’s knowledge:

i.   Each of Gran Tierra and the Gran Tierra Subsidiaries is in good standing under all, and is not in default under any; and

ii.   there is no existing condition, circumstance or matter which constitutes or which, with the passage of time or the giving of notice, would constitute a default under any,

leases and other title and operating documents or any other agreements and instruments pertaining to the Gran Tierra Interests to which it is a party or by or to which it or the Gran Tierra Interests are bound or subject and, to their knowledge, all such leases, title and operating documents and other agreements and instruments are in good standing and in full force and effect and none of the counterparties to such leases, title and operating documents and other agreements and instruments is in default thereunder except to the extent that such defaults would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

3.32   No Reduction of Interests 

Except as is reflected in the Gran Tierra Reserve Report, none of the Gran Tierra Interests are subject to reduction by reference to payout of or production penalty on any well or otherwise or to change to an interest of any other size or nature by virtue of or through any right or interest granted by, through or under Gran Tierra or the Gran Tierra Subsidiaries except to the extent that such reduction or change to an interest would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

3.33   Royalties, Rentals and Taxes Paid 

All royalties and rentals payable on or before the date hereof under the leases and other title and operating documents pertaining to the Gran Tierra Interests and all ad valorem, property, production, severance and similar taxes and assessments based upon or measured by the ownership of such assets or the production of petroleum substances derived therefrom or allocated thereto or the proceeds of sales thereof payable on or before the date hereof have been properly paid in full and in a timely manner except to the extent that such non-payment would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

3.34   Production Allowables and Production Penalties 

a.   None of the wells in which Gran Tierra or any Gran Tierra Subsidiary holds an interest has been produced in excess of applicable production allowables imposed by any applicable law or any Governmental Entity and Gran Tierra has no knowledge of any impending change in production allowables imposed by any applicable law or any Governmental Entity that may be applicable to any of the wells in which it holds an interest, other than changes of general application in the jurisdiction in which such wells are situate except to the extent that such non-compliance or changes would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

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b.   Neither Gran Tierra nor any of the Gran Tierra Subsidiaries has received notice of any production penalty or similar production restriction of any nature imposed or to be imposed by any Governmental Entity, including gas-oil ratio, off-target and overproduction penalties imposed by any Governmental Entity with jurisdiction, and, to its knowledge, none of the wells in which it holds an interest is subject to any such penalty or restriction except to the extent that any such penalty or restriction would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

3.35   Operation and Condition of Wells

All wells in which Gran Tierra or any Gran Tierra Subsidiary holds an interest:

a.   for which Gran Tierra or an Gran Tierra Subsidiary was or is operator, were or have been drilled and, if and as applicable, completed, operated and abandoned in accordance with good and prudent oil and gas industry practices in Peru, Colombia and Argentina, as the case may be, and all applicable laws; and

b.   for which Gran Tierra or an Gran Tierra Subsidiary was not or is not operator, to its knowledge, were or have been drilled and, if and as applicable, completed, operated and abandoned in accordance with good and prudent oil and gas industry practices in Peru, Colombia and Argentina, as the case may be, and all applicable laws;

except, in either case, to the extent that such non-compliance with such prudent oil and gas industry practices or applicable laws would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

3.36   Operation and Condition of Tangibles 

Gran Tierra’s and the Gran Tierra Subsidiaries’ tangible depreciable property used or intended for use in connection with its oil and gas assets:

a.   for which Gran Tierra or an Gran Tierra Subsidiary was or is operator, was or has been constructed, operated and maintained in accordance with good and prudent oil and gas industry practices in Peru, Colombia and Argentina, as the case may be, and all applicable laws during all periods in which Gran Tierra or an Gran Tierra Subsidiary was operator thereof and is in good condition and repair, ordinary wear and tear excepted, and is useable in the ordinary course of business; and

b.   for which Gran Tierra or an Gran Tierra Subsidiary was not or is not operator, to its knowledge, was or has been constructed, operated and maintained in accordance with good and prudent oil and gas industry practices in Peru, Colombia and Argentina and all applicable laws during all periods in which Gran Tierra or an Gran Tierra Subsidiary was not operator thereof and is in good condition and repair, ordinary wear and tear excepted, and is useable in the ordinary course of business;

except to the extent that such non-compliance with such prudent oil and gas industry practices or applicable law would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on Gran Tierra.

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3.37   Outstanding AFEs 

There are no outstanding authorizations for expenditure pertaining to any of Gran Tierra’s oil and gas assets or any other commitments, approvals or authorizations pursuant to which an expenditure may be required to be made in respect of such assets after the date of the most recent Gran Tierra Financial Statements in excess of $500,000 for each such commitment, approval or authorization other than pursuant to the 2008 capital budget disclosed in writing to Solana prior to the date hereof.

3.38   Confidentiality Agreements 

All agreements entered into by Gran Tierra with persons other than Solana regarding the confidentiality of information provided to such persons or reviewed by such persons with respect to the sale of Gran Tierra or a substantial portion of its assets or any other business combination or similar transaction with another party are in substantially the form of the Confidentiality Agreement and Gran Tierra has not waived the standstill or other provisions of any of such agreements.

3.39   Outstanding Acquisitions

Other than as disclosed in the Gran Tierra Disclosure Letter, Gran Tierra has no rights to purchase assets, properties or undertakings of third parties under any agreements to purchase that have not closed in excess of $500,000 individually or $2,000,000 in the aggregate, other than pursuant to the 2008 capital budget disclosed in writing to Solana prior to the date hereof.

3.40   Investment Company 

Gran Tierra is not registered and, to the best of its knowledge, is not required to be registered as an investment company pursuant to the U.S. Investment Company Act of 1940 , as amended.

3.41   Off-Balance Sheet Arrangements

Gran Tierra does not have any “off-balance sheet arrangements” as such term is defined in Form 40-F adopted by the SEC.

3.42   Board Approval

Subject to the delivery of the Gran Tierra Fairness Opinion (as hereinafter defined), the Gran Tierra Board of Directors has unanimously approved the issuance of the shares of Gran Tierra Common Stock, issuable in connection with the transactions contemplated by this Agreement and the Plan of Arrangement, and has unanimously determined that the Arrangement and this Agreement are in the best interests of Gran Tierra and the Gran Tierra stockholders.

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3.43   Brokers and Finders

Other than Blackmont Capital Inc., none of Gran Tierra or any of the Gran Tierra Subsidiaries nor any of their respective directors, officers or employees has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or similar payments in connection with the transactions contemplated by this Agreement.

3.44   Fairness Opinion

The Gran Tierra Board of Directors has received a verbal opinion, as of July 28, 2008 (and have been advised that they will receive a written opinion) from Blackmont Capital Inc. that the Exchange Ratio is fair from a financial point of view to Gran Tierra (the “ Gran Tierra Fairness Opinion ”).

3.45   Restrictions on Business Activities

There is no material agreement, judgment, injunction, order or court decree binding upon Gran Tierra or any Gran Tierra Subsidiary that has or could reasonably be expected to have the effect of prohibiting or materially impairing any current business practice of Gran Tierra or any Gran Tierra Subsidiary, any acquisition of property by Gran Tierra or any Gran Tierra Subsidiary or the conduct of any current business by Gran Tierra or any Gran Tierra Subsidiary.

3.46   Books and Records

The books, records and accounts of Gran Tierra and the Gran Tierra Subsidiaries (a) have been maintained in accordance with good business practices on a basis consistent with prior years, (b) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Gran Tierra and the Gran Tierra Subsidiaries, and (c) accurately and fairly reflect the basis for the Gran Tierra financial statements. Gran Tierra has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (a) transactions are executed in accordance with management’s general or specific authorization; and (b) transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with United States generally accepted accounting principles or any other criteria applicable to such statements, and (ii) to maintain accountability for assets.

3.47   Minute Books

The corporate records and minute books of Gran Tierra and each of the Gran Tierra Subsidiaries as provided to Solana's legal counsel have been maintained in accordance with all applicable statutory requirements and are complete and up-to-date in all material respects.

3.48   Debt 

As at the time of execution and delivery of this Agreement by Gran Tierra to Solana, Gran Tierra's Debt is $nil. " Gran Tierra's Debt " means total consolidated indebtedness, including long-term debt, bank debt and working capital deficiency, but excluding hedging obligations, future taxes and abandonment and reclamation obligations

3.49   No Default Under Lending Agreements

No event of default or breach of any material covenant has occurred and is continuing under Gran Tierra's existing banking and lending agreements.

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3.50   No Shareholders' Rights Protection Plan

Gran Tierra is not a party to, and prior to the Effective Time, Gran Tierra will not implement, a shareholder rights plan or any other form of plan, agreement, contract or instrument that will trigger any rights to acquire Gran Tierra Common Stock or other securities of Gran Tierra or rights, entitlements or privileges in favour of any person upon the entering into of this Agreement or the consummation of the Arrangement.

3.51   Transaction Costs

Gran Tierra's aggregate transaction costs related to the transaction contemplated hereby (including all financial advisory (inclusive of the amounts contemplated by Section 3.43), legal, accounting, engineering, severance or termination payments of management and all other employees, change of control or bonus payments, and any and all other costs and expenses of Gran Tierra relating to the transaction contemplated hereby) shall not exceed $5 million.

3.52   No Guarantees or Indemnities

Neither Gran Tierra nor any Gran Tierra Subsidiary is a party to or bound by any agreement of guarantee, indemnification (other than an indemnification of directors and officers in accordance with the by-laws of each of Gran Tierra and the Gran Tierra Subsidiaries and applicable law and other than standard indemnities in favour of purchasers of assets in purchase and sale agreements and underwriters and agents in connection with offerings of securities, the financial advisor engaged by Gran Tierra for purposes of the transactions contemplated hereby, Gran Tierra's registrar and transfer agent, indemnities and guarantees in favour of Gran Tierra's bankers and indemnities to support Gran Tierra's obligations pursuant to agreements entered into in the ordinary course of business), or any other like commitment of the obligations, liabilities (contingent or otherwise) or indebtedness of any other person.

3.53   Reporting Issuer Status

Gran Tierra is a SEC registrant and is in material compliance with all applicable United States securities laws. The Gran Tierra Common Stock are listed for trading on AMEX and the TSX and Gran Tierra is in material compliance with the rules of AMEX and the TSX.

3.54   No Cease Trade Orders

No securities commission or similar regulatory authority has issued any order preventing or suspending trading of any securities of Gran Tierra or any of the Gran Tierra Subsidiaries and neither Gran Tierra nor any Gran Tierra Subsidiary is in default of any requirement of applicable law that would reasonably be expected to have a Material Adverse Effect on the transactions contemplated by this Agreement.

3.55   Disclosure

No representation or warranty made by Gran Tierra in this Agreement or the Gran Tierra Disclosure Letter, nor any document, written information, statement, financial statement, certificate or Exhibit prepared and furnished or to be prepared and furnished by Gran Tierra or its representatives pursuant hereto or in connection with the transactions contemplated hereby, when taken together, contains or contained (as of the date made) any untrue statement of a material fact when made, or omits or omitted (as of the date made) to state a material fact necessary to make the statements or facts contained herein or therein not misleading, in any material way, in light of the circumstances under which they were made.

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Each of Gran Tierra and Gran Tierra Exchangeco hereby represents and warrants to, and agrees with, Solana that:

4.1   Organization and Standing

a.   Gran Tierra Exchangeco is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, has full requisite power and authority to carry on its business as it is currently conducted, and to own, lease and operate the properties currently owned, leased and operated by it, and is duly qualified or licensed to do business and is in good standing as a foreign corporation or organization authorized to do business in all jurisdictions in which the character of the properties owned or leased or the nature of the business conducted by it would make such qualification or licensing necessary, except where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect on Gran Tierra Exchangeco. Gran Tierra Exchangeco does not own any capital stock or other ownership interest in any other entity.

b.   All shares of capital stock of Gran Tierra Exchangeco are owned by Gran Tierra. There are no options, warrants or other rights, shareholder or unitholder rights plans, agreements or commitments of any character whatsoever requiring the issuance, sale or transfer by any capital stock of Gran Tierra Exchangeco.

4.2   Agreement Authorized and its Effect on Other Obligations

a.   Gran Tierra Exchangeco has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the Arrangement and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement by Gran Tierra Exchangeco and the consummation by Gran Tierra Exchangeco of the Arrangement and the other transactions contemplated hereby have been unanimously approved by the board of directors of Gran Tierra Exchangeco and have been duly authorized by all other necessary corporate action on the part of Gran Tierra Exchangeco. This Agreement has been duly executed and delivered by Gran Tierra Exchangeco and is a valid and binding obligation of Gran Tierra Exchangeco, enforceable in accordance with its terms, except that such enforceability may be subject to: (i) bankruptcy, insolvency, reorganization or other similar laws affecting or relating to enforcement of creditors’ rights generally; and (ii) general equitable principles.

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b.   Neither the execution, delivery or performance of this Agreement or the Arrangement by Gran Tierra Exchangeco, nor the consummation of the transactions contemplated hereby or thereby by Gran Tierra Exchangeco nor compliance with the provisions hereof or thereof by Gran Tierra Exchangeco will: (i) conflict with, or result in any violations of, the Articles of Incorporation or bylaws of Gran Tierra Exchangeco, (ii) result in any breach of or cause a default (with or without notice or lapse of time, or both) under, (iii) give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in, or the loss of any material benefit or incurrence of any material cost (including, but not limited to, seismic data transfer fees) under, or (iv) result in the creation of any Encumbrance upon any of the material properties or assets of Gran Tierra Exchangeco under, any term, condition or provision of any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Gran Tierra Exchangeco or any of its properties or assets.

5.1   Agreements of Gran Tierra and Solana

Gran Tierra and Solana agree to take the following actions after the date hereof:

a.   Each party will promptly execute and file or join in the execution and filing of any application or other document that may be necessary to obtain the authorization, approval or consent of any Governmental Entity which may be reasonably required, or which the other party may reasonably request, in connection with the consummation of the transactions contemplated by this Agreement. Each party will use its commercially reasonable efforts to promptly obtain such authorizations, approvals and consents. Without limiting the generality of the foregoing, as promptly as practicable after the execution of this Agreement, each party shall make such filings as are necessary under the Colombian merger control regime;

b.   Each party will allow the other and its agents reasonable access to the files, books, records, offices and officers of itself and its subsidiaries, including any and all information relating to such party’s tax matters, contracts, leases, licenses and real, personal and intangible property and financial condition. Each party will cause its accountants to cooperate with the other in making available to the other party all financial information reasonably requested, including the right to examine all working papers pertaining to tax matters and financial statements prepared or audited by such accountants. Notwithstanding the foregoing, except as expressly provided for herein, neither party shall be obligated to make available to the other any of their respective board of directors’ materials relating to the assessment or evaluation of the transactions contemplated hereby or any alternative transactions nor any information supplied by any of their respective officers, directors, employees, financial advisors, legal advisors, representatives and agents in connection therewith.

c.   Gran Tierra and Solana shall cooperate in the preparation and prompt filing by Gran Tierra of the Joint Proxy Statement and the Registration Statement with the SEC;

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d.   Each of Gran Tierra and Solana will promptly notify the other in writing: (i) of any event occurring subsequent to the date of this Agreement which would render any representation and warranty of such party contained in this Agreement untrue or inaccurate in any material respect; (ii) of any event, change or effect having, or likely to have, a Material Adverse Effect on such party; and (iii) of any breach by such party of any material covenant or agreement contained in this Agreement; and

e.   Each of Gran Tierra and Solana will use its commercially reasonable efforts to satisfy or cause to be satisfied as soon as reasonably practicable all the conditions precedent that are set forth in Article 6 hereof, and each of Gran Tierra and Solana will use its commercially reasonable efforts to cause the Arrangement and the other transactions contemplated by this Agreement to be consummated as soon as reasonably practicable.

5.2   Additional Agreements of Solana

Solana agrees that, except as expressly contemplated by this Agreement or as otherwise agreed to in writing by Gran Tierra, from the date hereof to the earlier of the Effective Date or the termination of this Agreement pursuant to Article 7 (the “ Pre-Closing Period ”), it will, and will cause each of the Solana Subsidiaries, to:

a.   Other than as contemplated by this Agreement, operate its business only in the usual, regular and ordinary manner and, to the extent consistent with such operation, use all commercially reasonable efforts to preserve intact its present business organization, keep available the services of its present officers and employees, and preserve its relationships with customers, suppliers, distributors and others having business dealings with it;

b.   Maintain all of its property and assets in customary repair, order, and condition, reasonable wear and use and damage by fire or unavoidable casualty excepted;

c.   Maintain its books of account and records in the usual, regular and ordinary manner, in accordance with generally accepted accounting principles applied on a consistent basis;

d.   Duly comply in all material respects with all laws applicable to it and to the conduct of its business;

e.   Not: (i) enter into any contracts of employment which: (A) cannot be terminated on notice of 60 days or less; (B) provide for any severance payments or benefits covering a period beyond the termination date of such employment contract, except as may be required by law; (C) increase the compensation of any officer of Solana; or (D) make any payment to any officer, director or employee of Solana outside of the ordinary course of business; or (ii) amend or make any contributions to any employee benefit plan or stock option plan, except as may be required for compliance with this Agreement or applicable law;

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f.   Not, directly or indirectly, do or permit to occur any of the following: (i) sell, pledge, dispose of or encumber any assets, except for production in the ordinary course, for consideration in excess of $500,000 individually or $2,000,000 in the aggregate; (ii) expend or commit to expend more than $500,000 individually or $2,000,000 in the aggregate with respect to any capital expenditures except to the extent that such expenditures are set forth in the capital budget of Solana disclosed to Gran Tierra prior to the date hereof; (iii) expend or commit to expend any amounts with respect to any operating expenses other than in the ordinary course of business or pursuant to the Arrangement; (iv) reorganize, amalgamate, merge or otherwise combine Solana or any of the Solana Subsidiaries with any other person; (v) acquire (by merger, amalgamation, consolidation or acquisition of shares or assets) any corporation, trust, partnership or other business organization or division thereof which is not a Solana Subsidiary or affiliate of Solana, or make any investment therein either by purchase of shares or securities, contributions of capital or property transfer; (vi) acquire any assets with an acquisition cost in excess of $500,000 individually or $2,000,000 in the aggregate; (vii) incur any indebtedness for borrowed money in excess of existing credit facilities, or any other material liability or obligation or issue any debt securities or assume, guarantee, endorse or otherwise become responsible for, the obligations of any other individual or entity, or make any loans or advances, other than in respect of fees payable to legal, financial and other advisors in the ordinary course of business or in respect of the Arrangement; (viii) authorize, recommend or propose any release or relinquishment of any material contract right; (ix) waive, release, grant or transfer any material rights of value or modify or change in any material respect any existing material license, lease, contract, production sharing agreement, government land concession or other material document; (x) pay, discharge or satisfy any material claims, liabilities or obligations other than as reflected or reserved against in the Solana Canadian Securities Reports or otherwise in the ordinary course of business; (xi) enter into or terminate any hedges, swaps or other financial instruments or like transactions; (xii) enter into any agreements for the sale of production having a term of more than thirty (30) days; (xiii) enter into any material consulting or contract operating agreement that cannot be terminated on thirty (30) days or less notice without penalty; or (xiv) authorize or propose any of the foregoing, or enter into or modify any contract, agreement, commitment or arrangement to do any of the foregoing;

g.   Not sell, dispose of, or encumber, any property or assets, except for sales, dispositions or Encumbrances in the ordinary course of business consistent with prior practice;

h.   Not amend its charter documents or bylaws or other organizational documents or merge or consolidate with or into any other entity or change in any manner the rights of its capital stock or the character of its business;

i.   Not issue or sell (except upon the exercise of outstanding Solana Options and Solana Warrants), or issue options or rights to subscribe to, or enter into any contract or commitment to issue or sell, any shares of its capital stock or subdivide or in any way reclassify any shares of its capital stock, or acquire, or agree to acquire, any shares of its capital stock;

j.   Not, directly or indirectly, do or permit to occur any of the following: (i) redeem, purchase or otherwise acquire any of the outstanding Solana or Solana Subsidiaries’ common shares or other securities; (ii) split, combine or reclassify any of the Solana or Solana Subsidiaries’ common shares or other securities; (iii) adopt a plan of liquidation or resolutions providing for Solana or any Solana Subsidiary’s liquidation, dissolution, merger, consolidation or reorganization; or (iv) enter into or modify any contract, agreement, commitment or arrangement with respect to any of the foregoing;

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k.   Not declare or pay any dividend on shares of its capital stock or make any other distribution of assets to the holders thereof;

l.   Promptly notify Gran Tierra of any event or circumstance that could reasonably be expected to result in a Material Adverse Effect on Solana;

m.   Use its reasonable commercial efforts to organize its internal control over financial reporting and disclosure controls and procedures so as to enable Gran Tierra to comply with the applicable provisions of the Sarbanes-Oxley Act of 2002 ;

n.   Deliver to Gran Tierra, within 40 days after the end of each fiscal quarter of Solana beginning June 30, 2008, and through the Effective Date, unaudited consolidated balance sheets and related unaudited statements of income and changes in financial position as of the end of each fiscal quarter of Solana, and as of the corresponding fiscal quarter of the previous fiscal year. Solana hereby represents and warrants that such unaudited consolidated financial statements shall (i) be complete in all material respects except for the omission of notes and schedules contained in audited financial statements, (ii) present fairly in all material respects the financial condition of Solana as at the dates indicated and the results of operations for the respective periods indicated, (iii) shall have been prepared in accordance with Canadian generally accepted accounting principles applied on a consistent basis, except as noted therein, and (iv) shall contain all adjustments which Solana considers necessary for a fair presentation of its results for each respective fiscal period;

o.   Not take any action or permit any action to be taken, inconsistent with this Agreement, which might directly or indirectly interfere or affect the consummation of the Arrangement, and Solana shall take all commercially reasonable actions to give effect to the transactions contemplated by this Agreement and the Arrangement;

p.   Take all actions required, including by the Solana’s Board of Directors calling the Solana Securityholders Meeting and recommending that Solana Securityholders approve this Agreement and the Arrangement;

q.   Immediately cease and cause to be terminated all existing discussions and negotiations (including, without limitation, through any of its officers, directors, employees, advisors, representatives and agents ( “ Solana Representatives ”) on its behalf), if any, with any other person initiated before the date of this Agreement with respect to any Solana Acquisition Proposal (as hereinafter defined) and shall immediately request the return or destruction of all information provided to any third parties which have entered into a confidentiality agreement with Solana relating to an Solana Acquisition Proposal and shall use all reasonable commercial efforts to ensure that such requests are honoured;

r.   Not, directly or indirectly, do or authorize or permit any of the Solana Representatives to do, any of the following:

i.   solicit, facilitate, initiate or encourage or take any action to solicit, facilitate or encourage any Solana Acquisition Proposal;

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ii.   enter into or participate in any negotiations or initiate any discussion regarding an Solana Acquisition Proposal, or furnish to any other person any information with respect to its business, properties, operations, prospects or conditions (financial or otherwise) in connection with an Solana Acquisition Proposal or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt of any other person to do or seek to do any of the foregoing;

iii.   waive, or otherwise forbear in the enforcement of, or enter into or participate in any discussions, negotiations or agreements to waive or otherwise forbear in respect of, any rights or other benefits under confidential information agreements, including, without limitation, any “standstill provisions” thereunder; or

iv.   accept, recommend, approve or enter into an agreement to implement an Solana Acquisition Proposal;

provided, however, that notwithstanding any other provision hereof, Solana and the Solana Representatives may, except in the case of Subsection (vi), Solana and the Solana Representatives shall:

v.   enter into or participate in any negotiations or discussions with a third party who (without any solicitation, initiation or encouragement, directly or indirectly, after the date of this Agreement, by Solana or any of the Solana Representatives) seeks to engage in such negotiations or discussions and, subject to execution of a confidentiality agreement and standstill agreement having terms and provisions substantially similar to the Confidentiality Agreement   (provided that such confidentiality agreement shall provide for disclosure thereof (along with all information provided thereunder) to Gran Tierra as set out below), may furnish to such third party information concerning Solana and its business, properties and assets, in each case if, and only to the extent that:

(A)   the third party has first made a written bona fide Solana Acquisition Proposal which the Solana Board of Directors determines in good faith: (i) is funded, in that funds or other consideration necessary for the Solana Acquisition Proposal are or are likely to be available; (ii) after consultation with its financial advisor would, if consummated in accordance with its terms, result in a transaction financially superior for the Solana Securityholders than the Arrangement (in its then current form) and can be carried out in a reasonable timeframe; and (iii) after receiving the advice of outside counsel, as reflected in minutes of the Solana Board of Directors that the taking of such action is necessary for the Solana Board of Directors to discharge its fiduciary duties under applicable law (an “ Solana Superior Proposal ”) (and for the purposes of this Agreement, a Solana Acquisition Proposal may include a Solana Acquisition Proposal made to Solana by a third party who has entered into an agreement with Solana that contains “standstill provisions”, provided that such Solana Acquisition Proposal has not been solicited, initiated or encouraged by Solana); and

(B)   prior to furnishing such information to or entering into or participating in any such negotiations or discussions with such third party, Solana provides prompt notice to Gran Tierra to the effect that it is furnishing information to or entering into or participating in discussions or negotiations with such third party, together with an executed copy of the confidentiality agreement referenced above, and if not previously provided to Gran Tierra, copies of all information provided to such third party concurrently with the provision of such information to such third party, and provided further that, Solana shall notify Gran Tierra orally and in writing of any inquiries, offers or proposals with respect to a Solana Acquisition Proposal (which written notice shall include, without limitation, a copy of such proposal (and any amendments or supplements thereto), the identity of the person making it, if not previously provided to Gran Tierra, copies of all information provided to such third party and all other information reasonably requested by Gran Tierra), within 24 hours of the receipt thereof, shall keep Gran Tierra informed of the status and details of any such inquiry, offer or proposal and answer any questions of Gran Tierra with respect thereto;

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vi.   comply with Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and similar provisions under applicable Canadian securities laws; and

vii.   accept, recommend, approve or enter into an agreement to implement a Solana Superior Proposal from a third party, but only if prior to such acceptance, recommendation, approval or implementation, the Solana Board of Directors shall have concluded in good faith, after considering all proposals to adjust the terms and conditions of this Agreement as contemplated by Subsection (s) below and after receiving the advice of outside counsel as reflected in the minutes of the board of directors of Solana, that the taking of such action is necessary for the board of directors in discharge of its fiduciary duties under applicable law and Solana complies with its obligations set forth in Subsection (iii) below and terminates this Agreement in accordance with Subsection 7.4(c) and concurrently therewith pays the fee to Gran Tierra in accordance with Subsection 7.4(c).

s.   Give Gran Tierra, if Solana receives a Solana Superior Proposal, orally and in writing, at least 72 hours advance notice of any decision by the Solana Board of Directors to accept, recommend, approve or enter into an agreement to implement a Solana Superior Proposal, which notice shall include a summary of the details of the Solana Superior Proposal, including the identity of the third party making the Solana Superior Proposal. During such 72 hour period, Solana agrees not to accept, recommend, approve or enter into any agreement to implement such Solana Superior Proposal and not to release any the party making the Solana Superior Proposal from any standstill provisions and shall not withdraw, redefine, modify or change its recommendation in respect of the Arrangement. In addition, during such 72 hour period, Solana shall and shall cause its financial and legal advisors to, negotiate in good faith with Gran Tierra and its financial and legal advisors to make such adjustments in the terms and conditions of this Agreement and the Arrangement as would enable Solana to proceed with the Arrangement as amended rather than the Solana Superior Proposal. In the event Gran Tierra proposes to amend this Agreement and the Arrangement to provide that the Solana Securityholders shall receive a value per Solana Common Share equal to or greater than the value per Solana Common Share provided in the Solana Superior Proposal and so advises the Solana Board of Directors prior to the expiry of such 72 hour period, the Solana Board of Directors shall not accept, recommend, approve or enter into any agreement to implement such Solana Superior Proposal and shall not withdraw, redefine, modify or change its recommendation in respect of the Arrangement.

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For the purposes of this Agreement, “ Solana Acquisition Proposal ” means, with respect to Solana, the making of any proposal or offer in writing to Solana or the Solana Shareholders from any person or group of persons “acting jointly or in concert” (within the meaning of the Securities Act (Alberta)) which constitutes, or may reasonably be expected to lead to (in either case whether in one transaction or a series of transactions): (i) an acquisition from Solana or the Solana Securityholders of 50% or more of the voting securities of Solana; (ii) any acquisition of substantially all of the assets of Solana; (iii) an amalgamation, arrangement, merger or consolidation involving Solana; (iv) any take-over bid, issuer bid, exchange offer, recapitalization, liquidation, dissolution, reorganization, business combination or similar transaction involving Solana; or (v) any other transaction, the consummation of which would or could reasonably be expected to impede, interfere with, prevent or delay the transactions contemplated by this Agreement or the Arrangement or which would or could reasonably be expected to materially reduce the benefits to Gran Tierra under this Agreement or the Arrangement;

t.   Use its reasonable commercial efforts to cause its current insurance (or re-insurance) policies not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance or re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect, and Solana will pay all premiums in respect of such insurance policies that become due after the date hereof;

u.   Not take any action that would render, or may reasonably be expected to render, any representation or warranty made by it in this Agreement untrue in any material respect at any time prior to completion of the Arrangement or termination of this Agreement, whichever first occurs;

v.   Promptly notify Gran Tierra in writing of any Material Adverse Change, or of any change in any representation or warranty provided by Solana in this Agreement which change is or may be of such a nature to render any representation or warranty misleading or untrue in any material respect and Solana shall in good faith discuss with Gran Tierra any change in circumstances (actual, anticipated, contemplated, or to the knowledge of Solana, threatened) which is of such a nature that there may be a reasonable question as to whether notice need to be given to Gran Tierra pursuant to this provision;

w.   Ensure that it has available funds under its lines of credit or other bank facilities to permit the payment of the maximum amount which may be required by Section 7.4 having regard to its other liabilities and obligations, and shall take all such actions as may be necessary to ensure that it maintains such availability to ensure that it is able to pay such amount when required;

x.   Except as disclosed in the Solana Disclosure Letter, use its reasonable commercial efforts to obtain the consent of its bankers (if required) and any other third party consents required for the transactions contemplated hereby and provide the same to Gran Tierra on or prior to the Effective Date;

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y.   Provide notice to Gran Tierra of the Solana Securityholders Meeting and allow Gran Tierra’s representatives to attend such meeting;

z.   Ensure that the Joint Proxy Statement provides Solana Securityholders with information in sufficient detail to permit them to form a reasoned judgment concerning the matters before them, and shall include or incorporate by reference, without limitation: (i) any financial statements in respect of prior acquisitions made by Solana that are required to be included therein in accordance with applicable law; (ii) the unanimous determination of the Solana Board of Directors that the Arrangement is fair to Solana Securityholders and is in the best interests of Solana Securityholders, and include the unanimous recommendation of the Solana Board of Directors that the Solana Securityholders vote in favour of the Arrangement; and (iii) the fairness opinion of Solana’s financial advisor dated as of the date of the Joint Proxy Statement that the consideration to be received by the Solana Securityholders under the Arrangement is fair, from a financial point of view, to Solana Securityholders; provided that, notwithstanding the covenants of Solana in this subsection, prior to the completion of the Arrangement, the Solana Board of Directors may withdraw, modify or change the recommendation regarding the Arrangement if, in the opinion of the Solana Board of Directors acting reasonably, having received the advice of its outside legal counsel which is reflected in minutes of the meeting of the Solana Board of Directors, such withdrawal, modification or change is necessary for the Solana Board of Directors to discharge its fiduciary duties under applicable law and, if applicable, provided the Solana Board of Directors shall have complied with the provisions of Subsections 5.2(r) and (s) and Section 7.4;

aa.   Indemnify and save harmless Gran Tierra and the directors, officers and agents of Gran Tierra, as applicable, from and against any and all liabilities, claims, demands, losses, costs, damages and expenses (excluding any loss of profits or consequential damages) to which Gran Tierra, or any director, officer or agent thereof, may be subject or which Gran Tierra, or any director, officer or agent thereof may suffer, whether under the provisions of any statute or otherwise, in any way caused by, or arising, directly or indirectly, from or in consequence of:

i.   any misrepresentation or alleged misrepresentation in the Joint Proxy Statement respecting Solana or in any material filed by Solana in compliance or intended compliance with any applicable laws;

ii.   any order made or any inquiry, investigation or proceeding by any securities commission or other competent authority based upon any untrue statement or omission or alleged untrue statement or omission of a material fact or any misrepresentation or any alleged misrepresentation in the Joint Proxy Statement respecting Solana or in any material filed by or on behalf of Solana in compliance or intended compliance with applicable Canadian and United States securities laws, which prevents or restricts the trading in the Solana Common Shares; and

iii.   Solana not complying with any requirement of applicable law in connection with the transactions contemplated by this Agreement;

except that Solana shall not be liable in any such case to the extent that any such liabilities, claims, demands, losses, costs, damages and expenses arise out of or are based upon any misrepresentation or alleged misrepresentation of a material fact based solely on the information respecting Gran Tierra provided by Gran Tierra and included in the Joint Proxy Statement or the negligence of Gran Tierra;

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bb.   Except for proxies and other non-substantive communications with securityholders, furnish promptly to Gran Tierra or Gran Tierra’s counsel, a copy of each notice, report, schedule or other document delivered, filed or received by Solana in connection with: (i) the Arrangement; (ii) the Solana Securityholders Meeting; (iii) any filings under applicable law in connection with the transactions contemplated hereby; and (iv) any dealings with Governmental Entities in connection with the transactions contemplated hereby;

cc.   Solicit proxies to be voted at the Solana Securityholders Meeting in favour of matters to be considered at the Solana Securityholders Meeting, including the Arrangement, provided that Solana may, but shall not be required to, engage a proxy solicitation agent for such purpose;

dd.   Conduct the Solana Securityholders Meeting in accordance with the articles, by-laws, and other constating documents of Solana and any instrument governing the Solana Securityholders Meeting (including, without limitation, the Interim Order), as applicable, and as otherwise required by applicable law;

ee.   Make all necessary filings and applications under applicable law, including applicable Canadian securities laws and U.S. securities laws, required to be made on the part of Solana in connection with the transactions contemplated herein and shall take all reasonable action necessary to be in compliance with such applicable law;

ff.   Promptly advise Gran Tierra in the event that dissent rights are given to Solana Securityholders under the terms of the Interim Order, of the number of Solana Securities for which Solana receives notices of dissent or written objections to the Arrangement and provide Gran Tierra with copies of such notices and written objections;

gg.   Cooperate prior to the Effective Date with Gran Tierra in making application to list the Gran Tierra Shares issuable pursuant to the Arrangement on the TSX and on the AMEX;

hh.   Not take any action or permit any action to be taken, inconsistent with this Agreement, which might reasonably be expected to directly or indirectly interfere or affect the consummation of the Arrangement, and take all commercially reasonable actions to give effect to the transactions contemplated by this Agreement and the Arrangement;

ii.   On or before the Effective Date, amend or terminate any Solana savings plan in a manner satisfactory to Gran Tierra, acting reasonably, such that there shall be no continuing obligations to issue Solana Common Shares; and

jj.   Take such actions as are reasonably necessary to reorganize their respective capital, assets and structure as Gran Tierra may reasonably require, to the extent such planning or structuring proposed by Gran Tierra does not cause prejudice or result in any material additional costs (unless such costs are paid by Gran Tierra) to Solana or a Solana Subsidiary; provided in no circumstances shall Gran Tierra be required to take any action under this Section 5.2 (jj) if the Gran Tierra Board of Directors, in its opinion, acting in good faith, after consulting with outside legal counsel, determines that taking such action would be in breach of applicable laws or would reasonably be likely to result in the board being in breach of its fiduciary obligations under all applicable laws.

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5.3   Additional Agreements of Gran Tierra

Gran Tierra agrees that, except as expressly contemplated by this Agreement or as otherwise agreed to in writing by Solana, during the Pre-Closing Period, it will, and will cause each of the Gran Tierra Subsidiaries to:

a.   Other than as contemplated by this Agreement, operate its business only in the usual, regular and ordinary manner and, to the extent consistent with such operation, use all commercially reasonable efforts to preserve intact its present business organization, keep available the services of its present officers and employees, and preserve its relationships with customers, suppliers, distributors and others having business dealings with it;

b.   Maintain all of its property and assets in customary repair, order, and condition, reasonable wear and use, damage by fire or unavoidable casualty excepted;

c.   Maintain its books of account and records in the usual, regular and ordinary manner, in accordance with generally accepted accounting principles applied on a consistent basis;

d.   Duly comply in all material respects with all laws applicable to it and to the conduct of its business;

e.   Not: (i) enter into any contracts of employment which: (A) cannot be terminated on notice of 60 days or less; (B) provide for any severance payments or benefits covering a period beyond the termination date of such employment contract, except as may be required by law; (C) increase the compensation of any officer of Gran Tierra; or (D) make any payment to any officer, director or employee of Gran Tierra outside of the ordinary course of business; or (ii) amend or make any contributions to any employee benefit plan or stock option plan, except as may be required for compliance with this Agreement or applicable law;

f.   Not, directly or indirectly, do or permit to occur any of the following: (i) sell, pledge, dispose of or encumber any assets, except for production in the ordinary course, for consideration in excess of $500,000 individually or $2,000,000 in the aggregate; (ii) expend or commit to expend more than $500,000 individually or $2,000,000 in the aggregate with respect to any capital expenditures except to the extent that such expenditures are set forth in the capital budget of Gran Tierra disclosed to Solana prior to the date hereof; (iii) expend or commit to expend any amounts with respect to any operating expenses other than in the ordinary course of business or pursuant to the Arrangement; (iv) reorganize, amalgamate, merge or otherwise combine Gran Tierra or any of the Gran Tierra Subsidiaries with any other person; (v) acquire (by merger, amalgamation, consolidation or acquisition of shares or assets) any corporation, trust, partnership or other business organization or division thereof which is not a Gran Tierra Subsidiary or affiliate of Gran Tierra, or make any investment therein either by purchase of shares or securities, contributions of capital or property transfer; (vi) acquire any assets with an acquisition cost in excess of $500,000 individually or $2,000,000 in the aggregate; (vii) incur any indebtedness for borrowed money in excess of existing credit facilities, or any other material liability or obligation or issue any debt securities or assume, guarantee, endorse or otherwise become responsible for, the obligations of any other individual or entity, or make any loans or advances, other than in respect of fees payable to legal, financial and other advisors in the ordinary course of business or in respect of the Arrangement; (viii) authorize, recommend or propose any release or relinquishment of any material contract right; (ix) waive, release, grant or transfer any material rights of value or modify or change in any material respect any existing material license, lease, contract, production sharing agreement, government land concession or other material document; (x) pay, discharge or satisfy any material claims, liabilities or obligations other than as reflected or reserved against in the Gran Tierra Securities Reports or otherwise in the ordinary course of business; (xi) enter into or terminate any hedges, swaps or other financial instruments or like transactions; (xii) enter into any agreements for the sale of production having a term of more than thirty (30) days; (xiii) enter into any material consulting or contract operating agreement that cannot be terminated on thirty (30) days or less notice without penalty; or (xiv) authorize or propose any of the foregoing, or enter into or modify any contract, agreement, commitment or arrangement to do any of the foregoing;

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g.   Not sell, dispose of, or encumber, any property or assets, except for sales, dispositions or Encumbrances in the ordinary course of business consistent with prior practice;

h.   Not amend its charter documents or bylaws or other organizational documents or merge or consolidate with or into any other entity or change in any manner the rights of its capital stock or the character of its business;

i.   Not issue or sell (except upon the exercise of outstanding Gran Tierra Options and Gran Tierra Warrants or exchange of exchangeable shares outstanding), or issue options or rights to subscribe to, or enter into any contract or commitment to issue or sell, any shares of its capital stock or subdivide or in any way reclassify any shares of its capital stock, or acquire, or agree to acquire, any shares of its capital stock;

j.   Not, directly or indirectly, do or permit to occur any of the following: (i) redeem, purchase or otherwise acquire any of the outstanding Gran Tierra or Gran Tierra Subsidiaries’ common shares or other securities; (ii) split, combine or reclassify any of the Gran Tierra or Gran Tierra Subsidiaries’ common shares or other securities; (iii) adopt a plan of liquidation or resolutions providing for Gran Tierra or any Gran Tierra Subsidiary’s liquidation, dissolution, merger, consolidation or reorganization; or (iv) enter into or modify any contract, agreement, commitment or arrangement with respect to any of the foregoing;

k.   Not declare or pay any dividend on shares of its capital stock or make any other distribution of assets to the holders thereof;

l.   Promptly notify Solana of any event or circumstance that could reasonably be expected to result in a Material Adverse Effect on Gran Tierra;

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m.   Deliver to Solana, within 40 days after the end of each fiscal quarter of Gran Tierr