Warrant Certificate No. _____
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS,
AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
THE EXERCISE OF THIS WARRANT ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTOR SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Dated: [________, 2005] Void After: [________, 2010]
GRAN TIERRA ENERGY, INC.
WARRANT TO PURCHASE COMMON STOCK
Gran Tierra Energy, Inc., a Nevada corporation (the "Company"), for value
received on [________], 2005 (the "Effective Date"), hereby issues to [insert]
(the "Holder") this Warrant (the "Warrant") to purchase [insert] shares (each
such share being a "Warrant Share" and all such shares being the "Warrant
Shares") of the Company's Common Stock (as defined below), at the Exercise Price
(as defined below), as adjusted from time to time as provided herein, on or
before [________, 2010] (the "Expiration Date"), all subject to the following
terms and conditions.
As used in this Warrant, (i) "Common Stock" means the common stock of the
Company, $0.001 par value per share, and such other securities as such class of
common stock may be converted from time to time in the future; and (ii)
"Exercise Price" means $1.25 per share of Common Stock, subject to adjustment as
provided herein.
1. DURATION AND EXERCISE OF WARRANTS
(a) The Holder may exercise this Warrant on any business day on or before
5:00 P.M., Eastern Daylight Time, on the Expiration Date, at which time this
Warrant shall become void and of no value.
(b) While this Warrant remains outstanding and exercisable in accordance
with Section 1(a), the Holder may exercise this Warrant in whole or in part by:
(i) surrender of this Warrant, with a duly executed copy of the
Notice of Exercise attached as Exhibit A, to the Secretary of the Company at its
principal offices or at such other office or agency as the Company may specify
in writing to the Holder; and
(ii) payment of the Exercise Price per share multiplied by the
number of Warrant Shares being purchased upon exercise of the Warrant in lawful
money of the United States of America.
Upon the exercise of this Warrant in compliance with the provisions of
this Section 1(b), the Company shall promptly issue and cause to be delivered to
the Holder a certificate for the Warrant Shares purchased by the Holder. Each
exercise of this Warrant shall be effected immediately prior to the close of
business on the date (the "Date of Exercise") which the conditions set forth in
Section 1(b)(i) and (ii) have been satisfied.
(c) This Warrant shall be exercisable, either as an entirety or, from time
to time, for part only of the number of Warrant Shares referenced by this
Warrant. If this Warrant is exercised in part, the Company shall issue, at its
expense, a new Warrant, in substantially the form of this Warrant, referencing
such reduced number of Warrant Shares which remain subject to this Warrant.
2. ISSUANCE OF WARRANT SHARES
(a) The Company covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be (i) duly authorized, fully paid
and non-assessable, and (ii) free from all liens, charges and security
interests, with the exception of claims arising through the acts or omissions of
any Holder and except as arising from applicable Federal and state securities
laws.
(b) The Company shall register this Warrant upon records to be maintained
by the Company for that purpose in the name of the record holder of such Warrant
from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner thereof for the purpose of any exercise thereof,
any distribution to the Holder thereof and for all other purposes.
(c) The Company will not, by amendment of its certificate of
incorporation, by-laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all the action as may be necessary or appropriate
in order to protect the rights of the Holder to exercise this Warrant.
3. ADJUSTMENTS OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES
(a) The Exercise Price and the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 3(a).
(i) Subdivision or Combination of Stock. In case the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
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(ii) Dividends in Stock, Property, Reclassification. If at any time,
or from time to time, the Holders of Common Stock (or any shares of stock or
other securities at the time receivable upon the exercise of this Warrant) shall
have received or become entitled to receive, without payment therefore:
(A) any shares of stock or other securities which are at any
time directly or indirectly convertible into or exchangeable for Common Stock,
or any rights or options to subscribe for, purchase or otherwise acquire any of
the foregoing by way of dividend or other distribution, or
(B) additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification, combination of
shares or similar corporate rearrangement, (other than shares of Common Stock
issued as a stock split or adjustments in respect of which shall be covered by
the terms of Section 3(a)(i) above),
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clause (ii) above) which such Holder would hold on
the date of such exercise had he been the holder of record of such Common Stock
as of the date on which holders of Common Stock received or became entitled to
receive such shares or all other additional stock and other securities and
property.
(iii) Reorganization, Reclassification, Consolidation, Merger or
Sale. If any recapitalization, reclassification or reorganization of the capital
stock of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or other assets or property (an
"Organic Change"), then, as a condition of such Organic Change, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented by this Warrant) such shares of
stock, securities or other assets or property as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable assuming the full exercise of the rights represented
by this Warrant. In the event of any Organic Change, appropriate provision shall
be made by the Company with respect to the rights and interests of the Holder of
this Warrant to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the number
of shares purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, in relation to any shares of stock, securities or
assets thereafter deliverable upon the exercise hereof. The Company will not
effect any such consolidation, merger or sale unless, prior to the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or the corporation purchasing such assets shall assume by
written instrument reasonably satisfactory in form and substance to the Holders
executed and mailed or delivered to the registered Holder hereof at the last
address of such Holder appearing on the books of the Company, the obligation to
deliver to such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase.
(b) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 3, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such holder, furnish or cause to be furnished to
such holder a like certificate setting forth: (i) such adjustments and
readjustments; and (ii) the number of shares and the amount, if any, of other
property which at the time would be received upon the exercise of the Warrant.
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(c) Certain Events. If any event occurs as to which, in the opinion of the
Company, the other provisions of this Section 3 are not strictly applicable but
the lack of any adjustment would not in the opinion of the Company fairly
protect the purchase rights of the Holder under this Warrant in accordance with
the basic intent and principles of such provisions, or if strictly applicable
would not fairly protect the purchase rights of the Holder under this Warrant in
accordance with the basic intent and principles of such provisions, then the
Company shall make the adjustments which the board of directors described
therein.
4. TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES
(a) Registration of Transfers and Exchanges. Subject to Section 4(c), upon
the Holder's surrender of this Warrant, with a duly executed copy of the
Assignment Notice attached as Exhibit B, to the Secretary of the Company at its
principal offices or at such other office or agency as the Company may specify
in writing to the Holder, the Company shall register the transfer of all or any
portion of this Warrant. Upon such registration of transfer the Company shall
issue a new Warrant, in substantially the form of this Warrant, evidencing the
acquisition rights transferred to the transferee and a new Warrant, in similar
form, evidencing the remaining acquisition rights not transferred, to the Holder
requesting the transfer.
(b) Warrant Exchangeable for Different Denominations. The Holder may
exchange this Warrant for a new Warrant or Warrants, in substantially the form
of this Warrant, evidencing in the aggregate the right to purchase the number of
Warrant Shares which may then be purchased hereunder, each of such new Warrants
to be dated the date of such exchange and to represent the right to purchase
such number of Warrant Shares as shall be designated by the Holder. The Holder
shall surrender this Warrant with duly executed instructions regarding such
re-certification of this Warrant to the Secretary of the Company at its
principal offices or at such other office or agency as the Company may specify
in writing to the Holder.
(c) Restrictions on Transfers. This Warrant may not be transferred at any
time without (i) registration under the Act or (ii) an exemption from such
registration and a written opinion of legal counsel addressed to the Company
that the proposed transfer of the Warrant may be effected without registration
under the Act, which opinion will be in form and from counsel reasonably
satisfactory to the Company.
5. MUTILATED OR MISSING WARRANT CERTIFICATE
If this Warrant is mutilated, lost, stolen or destroyed, upon request by
the Holder, the Company will issue, in exchange for and upon cancellation of the
mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant,
a new Warrant, in substantially the form of this Warrant, representing the right
to acquire the equivalent number of Warrant Shares, provided however, as a
prerequisite to the issuance of a substitute Warrant, the Company may require
satisfactory evidence of loss, theft or destruction as well as an indemnity from
the Holder of a lost, stolen or destroyed Warrant.
6. PAYMENT OF TAXES
The Company will pay all transfer and stock issuance taxes attributable to
the preparation, issuance and delivery of this Warrant and the Warrant Shares
including, without limitation, all documentary and stamp taxes; provided,
however, that the Company shall not be required to pay any tax in respect of the
transfer of this Warrant, or the issuance or delivery of certificates for
Warrant Shares or other securities in respect of the Warrant Shares to any
person or entity other than the Holder.
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7. FRACTIONAL WARRANT SHARES
No fractional Warrant Shares shall be issued upon exercise of this
Warrant. The Company, in lieu of issuing any fractional Warrant Share, shall
round up the number of Warrant Shares issuable to nearest whole share.
8. NO STOCK RIGHTS AND LEGEND
No holder of this Warrant Certificate, as such, shall be entitled to vote
or be deemed the holder of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained herein be
construed to confer upon the holder of this Warrant Certificate, as such, the
rights of a stockholder of the Company or the right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as provided herein), or
to receive dividends or subscription rights or otherwise (except as provide
herein).
Each certificate for Warrant Shares initially issued upon the exercise of
this Warrant Certificate, and each certificate for Warrant Shares issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN
EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS."
9. REGISTRATION UNDER THE SECURITIES ACT OF 1933
The Company agrees to register the Warrant Shares for resale under the Act
on the terms and subject to the conditions set forth in Section 1.2 of the
Registration Rights Agreement between the Company and each of the investors in
the Private Placement Offering (the "PPO"), pursuant to which this Warrant was
issued.
10. NOTICES
All notices, consents, waivers, and other communications under this
Warrant must be in writing and will be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting equipment; (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
if to the registered Holder hereof; or (d) seven days after the placement of the
notice into the mails (first class postage prepaid), to the Holder at the
address, facsimile number, or e-mail address furnished by the registered Holder
to the Company in accordance with the Purchase Agreement utilized in connection
with the PPO, or if to the Company, to it at Tenth Floor, 610 - 8th Avenue S.W.,
Calgary, Alberta, Canada T2P 1G5, Attention: Dana Coffield (or to such other
address, facsimile number, or e-mail address as the Holder or the Company as a
party may designate by notice the other party).
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11. SEVERABILITY
If a court of competent jurisdiction holds any provision of this Warrant
invalid or unenforceable, the other provisions of this Warrant will remain in
full force and effect. Any provision of this Warrant held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
12. BINDING EFFECT
This Warrant shall be binding upon and inure to the sole and exclusive
benefit of the Company, its successors and assigns, the registered Holder or
Holders from time to time of this Warrant and the Warrant Shares.
13. SURVIVAL OF RIGHTS AND DUTIES
This Warrant Certificate shall terminate and be of no further force and
effect on the earlier of 5:00 P.M., Eastern Daylight Time, on the Expiration
Date or the date on which this Warrant has been exercised.
14. GOVERNING LAW
This Warrant will be governed by and construed under the laws of Nevada
without regard to conflicts of laws principles that would require the
application of any other law.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized as of the date hereof.
Gran Tierra Energy, Inc.
By: ___________________________
Name: Louis W. Zehil
Title: Secretary
EXHIBIT A
EXERCISE FORM
(To be executed by the Holder of Warrant if such Holder
desires to exercise Warrant)
To Gran Tierra Energy, Inc.:
The undersigned hereby irrevocably elects to exercise this Warrant and to
purchase thereunder, ___________________ full shares of Gran Tierra Energy, Inc.
common stock issuable upon exercise of the Warrant and delivery of $_________
(in cash as provided for in the foregoing Warrant) and any applicable taxes
payable by the undersigned pursuant to such Warrant.
The undersigned requests that certificates for such shares be issued in the name
of:
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(Please print name, address and social security or federal employer
identification number (if applicable)
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If the shares issuable upon this exercise of the Warrant are not all of the
Warrant Shares which the Holder is entitled to acquire upon the exercise of the
Warrant, the undersigned requests that a new Warrant evidencing the rights not
so exercised be issued in the name of and delivered to:
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(Please print name, address and social security or federal employer
identification number (if applicable)
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Name of Holder (print): ______________________________________
(Signature): ______________________________________
(By:) ______________________________________
(Title:) ______________________________________
Dated: ______________, ____
EXHIBIT B
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, ___________________________________ hereby sells,
assigns and transfers to each assignee set forth below all of the rights of the
undersigned under the Warrant (as defined in and evidenced by the attached
Warrant) to acquire the number of Warrant Shares set opposite the name of such
assignee below and in and to the foregoing Warrant with respect to said
acquisition rights and the shares of Gran Tierra Energy, Inc. issuable upon
exercise of the Warrant:
Name of Assignee Address Number of Warrant Shares
- ------------------ --------------------------- -------------------------
- ------------------ --------------------------- -------------------------
- ------------------ --------------------------- -------------------------
- ------------------ --------------------------- -------------------------
- ------------------ --------------------------- -------------------------
If the total of the Warrant Shares are not all of the Warrant Shares
evidenced by the foregoing Warrant, the undersigned requests that a new Warrant
evidencing the right to acquire the Warrant Shares not so assigned be issued in
the name of and delivered to the undersigned.
Name of Holder (print): ________________________________________
(Signature): ________________________________________
(By:) ________________________________________
(Title:) ________________________________________
Dated: ______________, ____