THIS WARRANT AND THE SHARES OF COMMONSTOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIESACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THESECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR COLOMBIA CLEAN POWER & FUELS, INC. SHALL HAVE RECEIVED AN OPINIONOF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIESLAWS IS NOT REQUIRED.

**  **

WARRANT TO PURCHASE

 

SHARES OF COMMON STOCK

 

OF

 

COLOMBIA CLEAN POWER & FUELS, INC.

 

Expires May 31, 2016

 

 

FOR VALUE RECEIVED,subject to the provisions hereinafter set forth, the undersigned, Colombia Clean Power & Fuels, Inc., a Nevada corporation(together with its successors and assigns, the “Issuer”), hereby certifies that __________________________ orits registered assigns is entitled to subscribe for and purchase, during the period specified in this Warrant, up to _______________(________) shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessableCommon Stock of the Issuer, at an exercise price per share equal to the Warrant Price subject, however, to the provisions and uponthe terms and conditions hereinafter set forth. Capitalized terms used in this Warrant and not otherwise defined herein shall havethe respective meanings specified in Section 9 hereof.

 

1.          Term.The right to subscribe for and purchase shares of Warrant Stock represented hereby shall commence on the Date of Issuance set forthabove and shall expire at 5:00 p.m., eastern time, on May 31, 2016 (such period being the “Term”).

 

2.          Methodof Exercise Payment; Issuance of New Warrant; Transfer and Exchange.

 

(a)       	Timeof Exercise. The purchase rights represented by this Warrant may be exercised in whole or in part at any time and from timeto time during the Term commencing on the Date of Issuance set forth above.

 

 

(b)         Methodof Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the exerciseform attached hereto duly executed) at the principal office of the Issuer, and by the payment to the Issuer of an amount of considerationtherefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stockwith respect to which this Warrant is then being exercised, payable at such Holder’s election (i) by certified or officialbank check or by wire transfer to an account designated by the Issuer, (ii) by “cashless exercise” in accordance withthe provisions of subsection (c) of this Section 2, or (iii) by a combination of the foregoing methods of payment selected by theHolder of this Warrant.

 

(c)           CashlessExercise. Notwithstanding any provisions herein to the contrary and commencing six (6) months following the Original IssueDate, if the Per Share Market Value of one share of Common Stock is greater than the Warrant Price (at the date of calculationas set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashlessexercise and shall receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrantat the principal office of the Issuer together with the properly endorsed Notice of Exercise in which event the Issuer shall issueto the Holder a number of shares of Common Stock computed using the following formula:

 

 

(d)           Issuanceof Stock Certificates. In the event of any exercise by the Holder of the rights represented by this Warrant in accordance withand subject to the terms and conditions hereof, (i) certificates for the shares of Warrant Stock so purchased shall be dated thedate of such exercise and delivered to the Holder hereof within a reasonable time, not exceeding three (3) Trading Days after suchexercise or, at the request of the Holder, issued and delivered to the Depository Trust Company (“DTC”) accounton the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a reasonabletime, not exceeding three (3) Trading Days after such exercise, and the Holder hereof shall be deemed for all purposes to be theHolder of the shares of Warrant Stock so purchased as of the date of such exercise and (ii) unless this Warrant has expired, anew Warrant representing the number of shares of Warrant Stock, if any, with respect to which this Warrant shall not then havebeen exercised (less any amount thereof which shall have been canceled in payment or partial payment of the Warrant Price as hereinaboveprovided) shall also be issued to the Holder hereof at the Issuer’s expense within such time.

 

 

(e)          Transferabilityof Warrant. Subject to Section 2(g), this Warrant may be transferred by a Holder without the consent of the Issuer. If transferredpursuant to this paragraph, this Warrant may be transferred on the books of the Issuer by the Holder hereof in person or by theHolder’s duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, properly endorsed(by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmentalcharge imposed upon such transfer. This Warrant is exchangeable at the principal office of the Issuer for Warrants for the purchaseof the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of sharesof Warrant Stock as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchangesshall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stockissuable pursuant hereto.

 

(f)          ContinuingRights of Holder. The Issuer will, at the time of or at any time after each exercise of this Warrant, upon the request of theHolder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to whichsuch Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided thatif any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer toafford such rights to such Holder.

 

(g)          Compliancewith Securities Laws.

 

(i)          TheHolder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Warrant Stock to be issued uponexercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and forinvestment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to beissued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under theSecurities Act and any applicable state securities laws.

 

(ii)         Exceptas provided in paragraph (iii) below, this Warrant and all certificates representing shares of Warrant Stock issued upon exercisehereof shall be stamped or imprinted with a legend in substantially the following form:

 

THIS WARRANT AND THE SHARESOF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIESACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THESECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR COLOMBIA CLEAN POWER & FUELS, INC. SHALL HAVE RECEIVED AN OPINIONOF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIESLAWS IS NOT REQUIRED.

 

 

(iii)        Therestrictions imposed by this subsection (g) upon the transfer of this Warrant or the shares of Warrant Stock to be purchased uponexercise hereof shall terminate (A) when such securities shall have been resold pursuant to an effective registration statementunder the Securities Act, (B) upon the Issuer’s receipt of an opinion of counsel, in form and substance reasonably satisfactoryto the Issuer, addressed to the Issuer to the effect that such restrictions are no longer required to ensure compliance with theSecurities Act and state securities laws or (C) upon the Issuer’s receipt of other evidence reasonably satisfactory to theIssuer that such registration and qualification under the Securities Act and state securities laws are not required. Whenever suchrestrictions shall cease and terminate as to any such securities, the Holder thereof shall be entitled to receive from the Issuer(or its transfer agent and registrar), without expense (other than applicable transfer taxes, if any), new Warrants (or, in thecase of shares of Warrant Stock, new stock certificates) of like tenor not bearing the applicable legend required by paragraph(ii) above relating to the Securities Act and state securities laws.

 

3.          StockFully Paid; Reservation and Listing of Shares; Covenants.

 

(a)          StockFully Paid. The Issuer represents, warrants, covenants and agrees that all shares of Warrant Stock which may be issued uponthe exercise of this Warrant or otherwise hereunder will, upon issuance, be duly authorized, validly issued, fully paid and non-assessableand free from all taxes, liens and charges created by or through Issuer. The Issuer further covenants and agrees that during theperiod within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose ofthe issue upon exercise of this Warrant a number of shares of Common Stock equal to the aggregate number of shares of Common Stockexercisable hereunder to provide for the exercise of this Warrant.

 

(b)          Reservation.If any shares of Common Stock required to be reserved for issuance upon exercise of this Warrant or as otherwise provided hereunderrequire registration or qualification with any Governmental Authority under any federal or state law before such shares may beso issued, the Issuer will in good faith use its best efforts as expeditiously as possible at its expense to cause such sharesto be duly registered or qualified. If the Issuer shall list any shares of Common Stock on any securities exchange or market itwill, at its expense, list thereon, maintain and increase when necessary such listing, of, all shares of Warrant Stock from timeto time issued upon exercise of this Warrant or as otherwise provided hereunder, and, to the extent permissible under the applicablesecurities exchange’s rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as anyshares of Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintainsuch listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrantif at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer.

 

 

(c)          Covenants.The Issuer shall not by any action including, without limitation, amending the Articles of Incorporation or the by-laws of theIssuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or anyother action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times ingood faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriateto protect the rights of the Holder hereof against dilution (to the extent specifically provided herein) or impairment. Withoutlimiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed thethen effective Warrant Price, (ii) not amend or modify any provision of the Articles of Incorporation or by-laws of the Issuerin any manner that would adversely affect the rights of the Holders of the Warrants, (iii) take all such action as may be reasonablynecessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free andclear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and(iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdictionthereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Warrant.

 

(d)          Loss,Theft, Destruction of Warrants. Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft,destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity orsecurity satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, theIssuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representingthe right to purchase the same number of shares of Common Stock.

** **

4.          Adjustmentof Warrant Price and Warrant Share Number. The number of shares of Common Stock for which this Warrant is exercisable, andthe price at which such shares may be purchased upon exercise of this Warrant, shall be subject to adjustment from time to timeas set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustmentpursuant to this Section 4 in accordance with Section 5.

 

 

(a)          Recapitalization,Reclassification, Exchange, Substitution, Consolidation, Merger or Sale.

 

In case the Issuer afterthe Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate with ormerge into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger,or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or survivingPerson but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchangedfor Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties orassets to any other Person, or (d) effect a capital reorganization, reclassification, exchange or substitution of its Capital Stock,then, and in the case of each such Triggering Event, proper provision shall be made so that, upon the basis and the terms and inthe manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after theconsummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive atthe Warrant Price in effect at the time immediately prior to the consummation of such Triggering Event in lieu of the Common Stockissuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holderwould have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented bythis Warrant immediately prior thereto (including the right to elect the type of consideration, if applicable), subject to adjustments(subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section4.

 

(b)          StockDividends, Stock Splits and Combinations. If at any time the Issuer shall:

 

(i)          seta record date or take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payablein, or other distribution of, Additional Shares of Common Stock,

 

(ii)         effecta stock split of its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

 

(iii)        combineits outstanding shares of Common Stock into a smaller number of shares of Common Stock,

 

then (1) the number of shares of CommonStock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the numberof shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisableimmediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (2)the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of sharesof Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares ofCommon Stock for which this Warrant is exercisable immediately after such adjustment.

 

	(c)          Formof Warrant after Adjustments. The form of this Warrant need not be changed because of any adjustments in the Warrant Priceor the number and kind of securities purchasable upon exercise of this Warrant.

** **

** **

	(d)          Escrowof Property. If after any property becomes distributable pursuant to this Section 4 by reason of the taking of any record ofthe holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and the Holder exercisesthis Warrant, such property shall be held in escrow for the Holder by the Issuer to be distributed to the Holder upon and to theextent that the event actually takes place, upon payment of the then current Warrant Price. Notwithstanding any other provisionto the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed propertyshall be returned to the Issuer.

 

5.           Noticeof Adjustments. Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4 hereof (for purposesof this Section 5, each an “adjustment”), the Issuer shall cause its Chief Financial Officer to prepare and executea certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the methodby which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder),and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificateto be delivered to the Holder of this Warrant promptly after each adjustment, and in any event within ten (10) days. Any disputebetween the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option ofthe Holder of this Warrant be submitted to a nationally-recognized accounting firm selected by the Holder, provided thatthe Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, inwhich case such Holder shall select another such firm and the Issuer shall have no such right of objection. The firm selected bythe Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such mattersto the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and bindingon the parties hereto.

 

6.           FractionalShares. No fractional shares of Warrant Stock will be issued in connection with and exercise hereof, but in lieu of such fractionalshares, the Issuer shall at its option either (a) make a cash payment therefor equal in amount to the product of the applicablefraction multiplied by the Per Share Market Value then in effect or (b) issue one whole share in lieu of such fractional share.

 

7.           MandatoryExercise.

 

(a)          Onthe earlier of (i) the Mandatory Trigger Date or (ii) the date on which 60% or more of the Warrants shall have been exercised bythe registered holders thereof, the purchase rights represented by this Warrant shall, automatically and without any action onthe part of the holder thereof, be exercised in full pursuant to Section 2(c) hereof to purchase the maximum number of fully paidand non-assessable shares of Common Stock that may then be purchased hereunder. The date this Warrant is automatically exercisedpursuant to this Section 7(a) is referred to as the “Mandatory Exercise Date.”

 

	(b)          Asused herein, “Mandatory Trigger Date” shall mean, the date that the Closing Bid Price (as defined below) ofthe Common Stock equals or exceeds 2.5 times the then-applicable Conversion Price (as defined below) (as may be adjusted pursuantto Section 5 of the Certificate of Designation) for a period of sixty (60) consecutive trading days; provided, that, on the MandatoryTrigger Date, (A) a registration statement under the Securities Act providing for the resale of the shares of Common Stock issuableupon exercise of this Warrant is effective or the shares of Common Stock issuable upon exercise of this Warrant may be offeredfor sale to the public without any volume restrictions, pursuant to Rule 144 under the Securities Act, and (B) trading in the CommonStock shall not have been suspended by the Securities and Exchange Commission or the OTC Bulletin Board (or other exchange or marketon which the Common Stock is then trading).

 

 

	(c)          Theterm “Closing Bid Price” shall mean, for any security as of any date, the last closing bid price of such securityon the OTC Bulletin Board or other principal exchange on which such security is traded as reported by Bloomberg, or, if no closingbid price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or,if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers forsuch security as reported in the “pink sheets” by the National Quotation Bureau, Inc. If the Closing Bid Price cannotbe calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such dateshall be the fair market value as mutually determined by the Issuer and the holders of Warrants that are the beneficial ownersof a majority of the shares of Common Stock issuable upon exercise of the outstanding Warrants.

 

(d)          Onthe Mandatory Exercise Date, this Warrant shall be exercised automatically without any further action by the holder hereof andwhether or not this Warrant is surrendered to the Issuer or its Transfer Agent; provided, however, that the Issuer shall not beobligated to issue the shares of Common Stock issuable upon exercise of this Warrant unless this Warrant is either delivered tothe Issuer or the holder notifies the Issuer that this Warrant has been lost, stolen or destroyed, and executes an agreement reasonablysatisfactory to the Issuer to indemnify the Issuer from any loss incurred by it in connection therewith. Upon the exercise of thisWarrant pursuant to this Section 7, the holder of this Warrant shall surrender this Warrant to the Issuer and the Issuer shallcause its Transfer Agent to deliver the shares of Common Stock issuable upon such exercise (in the same manner set forth in Section2(d)) to the holder within three (3) business days of the holder’s delivery of this Warrant to the Issuer.

 

(e)          TheIssuer shall issue a press release for publication on the Dow Jones News Service or Bloomberg Business News (or if either suchservice is not available, another broadly disseminated news or press release service selected by the Issuer) prior to the openingof business on the first Trading Day following the Mandatory Conversion Date, announcing such mandatory exercise of the Warrants.The Company shall also give notice of the mandatory exercise by mail or by publication (with subsequent prompt notice by mail)to the holders of the Warrants not more than four Business Days after the date of the press release announcing the automatic exerciseof the Warrants.

 

8.          IntentionallyOmitted.

 

9.          Definitions.For the purposes of this Warrant, the following terms have the following meanings:

 

 

“AdditionalShares of Common Stock” means all shares of Common Stock issued by the Issuer after the Original Issue Date, and allshares of Other Common, if any, issued by the Issuer after the Original Issue Date, except for Permitted Issuances.

 

“Articlesof Incorporation” means the Articles of Incorporation of the Issuer as in effect on the Original Issue Date, and as hereafterfrom time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicablelaw.

 

“Board”shall mean the Board of Directors of the Issuer.

 

“CapitalStock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (howeverdesignated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests(whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability companyinterests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

 

“Certificateof Designation” means the Certificate of Designation of the Relative Rights and Preferences of the Series A ConvertiblePreferred Stock of the Company.

 

“CommonStock” means the Common Stock, par value $.001 per share, of the Issuer and any other Capital Stock into which such stockmay hereafter be changed.

 

“ConversionPrice” means Conversion Price as defined in the Certificate of Designation.

 

“GovernmentalAuthority” means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission,board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign.

 

“Holders”mean the Persons who shall from time to time own any Warrant. The term “Holder” means one of the Holders.

 

“IndependentAppraiser” means a nationally recognized or major regional investment banking firm or firm of independent certified publicaccountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) thatis regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns,and which is not affiliated with either the Issuer or the Holder of any Warrant.

 

“Issuer”means Colombia Clean Power & Fuels, Inc., a Nevada corporation, and its successors.

 

 

“MajorityHolders” means at any time the Holders of Warrants exercisable for a majority of the shares of Warrant Stock issuableunder the Warrants at the time outstanding.

 

“OriginalIssue Date” means the Date of Issuance set forth on the first page hereof.

 

	“OTC BulletinBoard” means the over-the-counter electronic bulletin board.

 

“OtherCommon” means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the dateof this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assetsof the Issuer without limitation as to amount.

 

“PermittedIssuances” means (i) the issuance of the Warrant Stock; (ii) issuance of Series A Preferred Stock pursuant to thePurchase Agreement, or Common Stock issued upon conversion thereof; (iii)  warrants to purchase up to 720,000 shares of CommonStock at an exercise price of $2.00 per share issued to any placement agent or its designee for the transactions contemplated bythe Purchase Agreement and the shares of Common Stock issued upon exercise thereof.

 

“Person”means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization,joint venture, Governmental Authority or other entity of whatever nature.

 

“PerShare Market Value” means on any particular date (a) the closing bid price for a share of Common Stock in the over-the-countermarket, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated or similar organization or agencysucceeding to its functions of reporting prices) at the close of business on such date, or (b) if the Common Stock is not thenreported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeedingto its functions of reporting prices), then the average of the “Pink Sheet” quotes for the Common Stock on such date,or (c) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock on such date as determinedby the Board in good faith; provided, however, that the Majority Holders, after receipt of the determination by theBoard, shall have the right to select, jointly with the Issuer, an Independent Appraiser, in which case, the fair market valueshall be the determination by such Independent Appraiser; and provided, further that all determinations of the PerShare Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during theperiod between the date as of which such market value was required to be determined and the date it is finally determined. Thedetermination of fair market value shall be based upon the fair market value of the Issuer determined on a going concern basisas between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shallbe final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shallbe given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or tothe existence or absence of, or any limitations on, voting rights.

 

 

“PurchaseAgreement” means the Securities Purchase Agreement dated as of June 1, 2011 among the Issuer and the investors aparty thereto.

 

“Securities”means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeablefor Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. “Security”means one of the Securities.

 

“SecuritiesAct” means the Securities Act of 1933, as amended, or any similar federal statute then in effect.

 

“Subsidiary”means any corporation at least 50% of whose outstanding Voting Stock, and a limited liability company at least 50% of whose membershipinterests, shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries.

 

“Term”has the meaning specified in Section 1 hereof.

 

“TradingDay” means (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or (b) if the Common Stock is nottraded on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the NationalQuotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided,however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then TradingDay shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutionsin the State of New York are authorized or required by law or other government action to close.

 

“TriggeringEvent” has the meaning specified in Section 4(a) hereof.

 

“VotingStock” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated)having ordinary voting power for the election of a majority of the members of the Board of Directors (or other governing body)of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

 

“Warrants”means the Warrants issued and sold pursuant to the Purchase Agreement, including, without limitation, this Warrant, and any otherwarrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)hereof or of any of such other Warrants.

 

 

“WarrantPrice” initially means U.S. $0.01, as such price may be adjusted from time to time as shall result from the adjustmentsspecified in this Warrant, including Section 4 hereto.

 

“WarrantShare Number” means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased uponexercise of this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be madeunder the terms hereof.

 

“WarrantStock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrantor Warrants.

 

10.         OtherNotices. In case at any time:

 

(A)         theIssuer shall make any distributions to the holders of Common Stock; or

 

(B)         theIssuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of CapitalStock of any class or other rights; or

 

(C)         thereshall be any reclassification of the Capital Stock of the Issuer; or

 

(D)         thereshall be any capital reorganization by the Issuer; or

 

(E)         thereshall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantiallyall of the Issuer’s property, assets or business (except a merger or other reorganization in which the Issuer shall be thesurviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation,merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or

 

(F)         thereshall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issueror distribution to holders of Common Stock;

 

then, in each of such cases, the Issuershall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be takenfor such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition,dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of whichthe holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitledto exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification,consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. Such notice shall be given at leasttwenty (20) days prior to the action in question and not less than twenty (20) days prior to the record date or the date on whichthe Issuer’s transfer books are closed in respect thereto. The Holder shall have the right to send two (2) representativesselected by it to each meeting, who shall be permitted to attend, but not vote at, such meeting and any adjournments thereof. ThisWarrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributedto the holders of the Common Stock.

 

 

11.         Amendmentand Waiver. Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived(either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instrumentsexecuted by the Issuer and the Majority Holders; provided, however, that no such amendment or waiver shall reducethe Warrant Share Number, increase the Warrant Price, shorten the period during which this Warrant may be exercised or modify anyprovision of this Section 11 without the consent of the Holder of this Warrant.

 

12.         GoverningLaw. **THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVINGEFFECT TO PRINCIPLES OF CONFLICTS OF LAW.**

 

13.         Notices.Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing andshall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is deliveredvia facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., eastern time, on a Trading Day, (ii) theTrading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephonenumber specified for notice later than 5:00 p.m., eastern time, on any date and earlier than 11:59 p.m., eastern time, on suchdate, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service or (iv) actualreceipt by the party to whom such notice is required to be given. The addresses for such communications shall be with respect tothe Holder of this Warrant or of Warrant Stock issued pursuant hereto, addressed to such Holder at its last known address or facsimilenumber appearing on the books of the Issuer maintained for such purposes, or with respect to the Issuer, addressed to:

 

Colombia Clean Power & Fuels,Inc.

245 Sir Francis Drake Boulevard

San Anselmo, CA 94960

Attention: Chief Financial Officer

Tel. No.: (415) 460-1165

Fax No.: (415) 532-1357

 

 

with a copy to:	

 

Pryor Cashman LLP

7 Times Square

New York, New York 10036-6569

Attention: Eric M. Hellige, Esq.

Tel. No.: (212) 326-0846

Fax No.: (212) 798-6830

 

[Copies of notices to the Holder shallbe sent to Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036, Attention: John Bessonette,Tel No.: (212) 715-9100, Fax No.: (212) 715-8000.] Any party hereto may from time to time change its address for notices by givingat least ten (10) days written notice of such changed address to the other party hereto.

 

14.         WarrantAgent. The Issuer may, by written notice to each Holder of this Warrant, appoint an agent having an office in New York, NewYork for the purpose of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2hereof or Section 7 hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or replacing this Warrant pursuantto subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as thecase may be, shall be made at such office by such agent.

 

15.         Remedies.The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened defaultby the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that,to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of anyagreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

 

16.         Successorsand Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successorsand assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto,and shall be enforceable by any such Holder or Holder of Warrant Stock.

 

17.         Modificationand Severability. If, in any action before any court or agency legally empowered to enforce any provision contained herein,any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to makeit enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceabilityof such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceableprovision had never been contained herein.

 

18.         Headings.The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed apart of this Warrant.

 

 

IN WITNESS WHEREOF,the Issuer has executed this Warrant as of the day and year first above written.

 

 

[SIGNATURE PAGE TO COMMON STOCK PURCHASEWARRANT]

 

 

COMMON STOCK PURCHASE WARRANT

EXERCISE FORM

**______________**

 

The undersigned _______________,pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of Colombia Clean Power& Fuels, Inc. covered by the within Warrant.

  

 

 

Number of shares of Common Stock beneficiallyowned or deemed beneficially owned by the Holder on the date of Exercise: _________________________

 

The undersigned is an “accredited investor” as definedin Regulation D under the Securities Act of 1933, as amended.

 

The undersigned intends thatpayment of the Warrant Price shall be made as (check one):

 

Cash Exercise_______

 

Cashless Exercise_______

 

If the Holder has elected a Cash Exercise,the Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordancewith the terms of the Warrant.

 

If the Holder has elected a Cashless Exercise,a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculationset forth below, which is ___________.

 

X = Y - (A)(Y)

   B

 

Where:

 

The number ofshares of Common Stock to be issued to the Holder __________________(“X”).

 

The number of shares of Common Stock purchasableupon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised___________________________ (“Y”).

 

The WarrantPrice ______________ (“A”).

 

The Per Share Market Value of one shareof Common Stock _______________________ (“B”).

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED,_________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced therebyand does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within namedcorporation.

 

 

 

PARTIAL ASSIGNMENT

 

FOR VALUE RECEIVED,_________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of WarrantStock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________,attorney, to transfer that part of the said Warrant on the books of the within named corporation.

 

 

 

FOR USE BY THE ISSUER ONLY:

 

This Warrant No. W-___ canceled (or transferredor exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, WarrantNo. W-_____ issued for ____ shares of Common Stock in the name of _______________.

 

 

**SCHEDULE OF WARRANTS**

**Issued with Series A Preferred Stock**

** **