Document:

Unassociated Document

     

    EXHIBIT
      4.2

     

    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, 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. 

    

    
      	
              Dated:
                June 20, 2006

            	
              Void
                After: June 20, 2011

            

    

    

    

    GRAN
      TIERRA ENERGY, INC.

    

    FORM
      OF
      WARRANT TO PURCHASE COMMON STOCK

    

    Gran
      Tierra Energy, Inc., a Nevada corporation (the “Company”), for value received on
      June 20, 2006 (the “Effective
      Date”),
      hereby issues to [___________]
      (the
“Holder”)
      this
      Warrant (the “Warrant”)
      to
      purchase [__________]
      shares
      (each such share
      as from
      time to time adjusted as hereinafter provided
      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 June
      20,
      2011 (the “Expiration
      Date”),
      all
      subject to the following terms and conditions. Unless otherwise defined in
      this
      Warrant, terms appearing in initial capitalized form shall have the meaning
      ascribed to them in that certain Securities Purchase Agreement of even date
      herewith among the Company and the purchasers signatory thereto pursuant to
      which this Warrant was issued (the “Securities
      Purchase Agreement”).

    

    As
      used
      in this Warrant, (i) “Business
      Day”
means
      any day other than Saturday, Sunday or any other day on which commercial banks
      in the City of New York, New York or Calgary, Canada, are authorized or required
      by law or executive order to close; (ii) “Common
      Stock”
means
      the common stock of the Company, $0.001 par value per share, including
      any securities issued or issuable with respect thereto or into which or for
      which such shares may be exchanged for, or converted into, pursuant to any
      stock
      dividend, stock split, stock combination, recapitalization, reclassification,
      reorganization or other similar event;
      (iii)
“Exercise
      Price”
means
      $1.75 per share of Common Stock, subject to adjustment as provided herein;
      (iv) “Trading
      Day”
means
      any
      day
      on which
      the Common Stock is traded on the primary national or regional stock exchange
      on
      which the Common Stock is listed, or, if not listed, on the Nasdaq National
      Market if quoted thereon, or if not so listed or quoted, the NASD OTC Bulletin
      Board if quoted thereon is
      open
      for the transaction of business; and (v) “Affiliate” means any Person that,
      directly or indirectly, through one or more intermediaries, controls, is
      controlled by, or is under common control with, a Person, as such terms are
      used
      and construed in Rule 144 promulgated
      under the Securities Act of 1933, as amended.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    1.
      DURATION AND EXERCISE OF WARRANTS

    

    (a)
       Exercise
      Period.
      The
      Holder may exercise this Warrant in whole or in part 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. The Holder shall also exercise
      the Warrant earlier on the Mandatory Exercise Date in accordance with Section
      1(b) if applicable, at which time this Warrant shall entitle the Holder only
      to
      the Warrant Shares applicable upon such exercise.

    

    (b) Right
      of Mandatory Exercise by Company.
      

    

    (i)
      If at
      any time from and after the Mandatory
      Effective Date (as defined in the Registration Rights Agreement),
      (i)
      the
      closing
      sales price of the Common Stock for each Trading Day of any 20 consecutive
      Trading Day period preceding the applicable Mandatory Exercise Eligibility
      Date
      equals or exceeds $3.50 per share (subject to equitable adjustment for stock
      splits, stock dividends, combinations, and capital reorganizations, as
      applicable), (ii) the Mandatory Registration Statement has been effective for
      a
      period of 45 Trading Days and remains effective or
      the
      Holder would be entitled to sell the Warrant Shares upon the exercise of the
      Warrant pursuant to the Rule 144(k) promulgated under Securities Act of 1933,
      as
      amended (i.e.,
      including without
      any volume limitations), (iii)
      the
      Common Stock is listed on the New York Stock Exchange or the Amercan Stock
      Exchange, or quoted on the Nasdaq National Market, and (iv) the Company’s
      registration statement on Form SB-2 filed with the SEC on March 10, 2006
(Registration
      No. 333-132352)
      has been
      effective for at least 45 Trading Days
      (the
“Mandatory
      Exercise Eligibility Date”),
      the
      Company shall have the right to require the Holder to exercise this Warrant
      in
      whole or in part, subject to Sections 1(b)(ii) and (iii) below, as designated
      in
      the Mandatory Exercise Notice (as defined below) into fully paid, validly issued
      and nonassessable shares of Common Stock in accordance with the terms of this
      Warrant at the Exercise Price as of the Mandatory Exercise Date (a “Mandatory
      Exercise”).
      The
      Company may exercise its right to require exercise under this Section 1(b)
      by
      delivering within not more than five (5) Trading Days after the end of the
      Mandatory Exercise Eligibility Date a written notice thereof by facsimile and
      overnight courier to all, but not less than all, of the holders of Warrants
      and
      the Transfer Agent (the “Mandatory
      Exercise Notice”
and
      the
      date all of the holders received such notice by facsimile is referred to as
      the
“Mandatory
      Exercise Notice Date”).
      The
      Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice
      shall state (i) the Trading Day selected for the Mandatory Exercise in
      accordance with this Section 1(b)(i),
      which
      Trading Day shall be at least twenty (20) Business Days but not more than sixty
      (60) Business Days following the end of the Mandatory Exercise Notice Date
      (the
“Mandatory
      Exercise Date”),
      (ii)
      the aggregate number of Warrant Shares subject to Mandatory Exercise from the
      Holder and all of the holders of the Warrants pursuant to this Section 1(b)
      and
      (iii) the number of Warrant Shares to be issued to such Holder on the Mandatory
      Exercise Date.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    

    (ii) If
      the
      Company elects to cause exercise of any amount of this Warrant pursuant to
      Section 1(b)(i), then it must simultaneously take the same action in the same
      proportion with respect to all Warrants that contain a similar provision. All
      amounts exercised by the Holder after the Mandatory Exercise Notice Date shall
      reduce the amount of this Warrant required to be converted on the Mandatory
      Exercise Date. If the Company has elected a Mandatory Exercise, the mechanics
      of
      exercise set forth in Section 1(c) shall apply, to the extent applicable, as
      if
      the Company and the Transfer Agent had received from the Holder on the Mandatory
      Exercise Date an Exercise Notice with respect to the amount of this Warrant
      being converted pursuant to the Mandatory Exercise.

    

    (iii) Notwithstanding
      anything to the contrary contained in this Section 1(b) to the contrary, the
      aggregate number of Warrants that the Company shall have the right to call
      at
      any given time under Section 1(b) shall be limited to a number of Warrants
      such
      that number of Warrant Shares issuable upon exercise of the Warrants so called
      does not exceed the total aggregate volume of the Company’s Common Stock traded
      over the 20 consecutive Trading Days prior to the Mandatory Exercise Eligibility
      Date. The Company shall not have the right to deliver more than one Mandatory
      Exercise Notice in any ninety (90) day period.

    

    (c)
       Exercise
      Procedures.

    

    (i) While
      this Warrant remains outstanding and exercisable in accordance with Section
      1(a), in addition to the manner set forth in Section 1(c)(ii) below, the Holder
      may exercise this Warrant in whole or in part
      at any
      time and from time to time
      by:

    

    (A) 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

    

    (B) payment
      of the then
      applicable
      Exercise
      Price per share multiplied by the number of Warrant Shares being purchased
      upon
      exercise of the Warrant (such amount, the “Aggregate
      Exercise Price”)
      made
      in
      the form of cash, or by certified check, bank draft or money order payable
      in
      lawful money of the United States of America
      or in
      the form of a Cashless Exercise
      to the
      extent permitted in Section 1(c)(ii) below.
      

    

    (ii) At
      any
      time when
      a
      registration statement required by the Registration Rights Agreement covering
      the resale of the Warrant Shares by the Holder is not available after the first
      anniversary of the Effective Date,
      the
      Holder may, in its sole discretion, exercise all or any part of the Warrant in a
“cashless” or “net-issue” exercise (a “Cashless
      Exercise”)
      by
      delivering to the Company (1) the Notice of Exercise and (2) the
      Warrant,
      pursuant to which the Holder shall surrender the right to receive upon exercise
      of this Warrant a number of Warrant Shares having a value (as determined below)
      equal to the Aggregate Exercise Price, in which case, the number of Warrant
      Shares to be issued to the Holder upon such exercise shall be calculated using
      the following formula:

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    

           
      Y * (A - B)    

    X
       =       A

    

    with X
      =
 the
      number of Warrant Shares to be issued to the Holder

    

    Y
      = the
      number of Warrant Shares with respect to which the Warrant is being
      exercised

    

    A
      = the
      fair
      value per share of Common
      Stock on
      the
      date of exercise of this Warrant

    

    B
      = the
      then-current Exercise Price of
      the
      Warrant

    

    

    Solely
      for the purposes of this paragraph, “fair value” shall be determined either (A)
      reasonably and in good faith by the Board of Directors of the Company as of
      the
      date which the Notice of Exercise is deemed to have been sent to the Company,
      or
      (B) as the average of the closing sales prices, as quoted on the primary
      national or regional stock exchange on which the Common Stock is listed,
      or,
      if not
      listed,
      on the
      Nasdaq National Market if quoted thereon, or,
      if not
      listed or quoted,
      the NASD
      OTC Bulletin Board if quoted thereon, on the twenty
      (20)
      trading
      days immediately preceding the date on which the Notice of Exercise is deemed
      to
      have been sent to the Company, whichever of (A) or (B) is greater.

    

    (iii) Upon
      the
      exercise of this Warrant in compliance with the provisions of this Section
      1(c)
      or pursuant to a Mandatory Exercise Notice in accordance with 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
(x)
      the
      conditions set forth in Section 1(b) have been satisfied
      in
      connection with a Mandatory Exercise Notice or (y) the conditions set forth
      in
      Section 1(c) have been satisfied, as the case may be.
      On
      or
      before the first Business Day following the date on which the Company has
      received each of the Exercise Notice and the Aggregate Exercise Price (or notice
      of a Cashless Exercise in accordance with Section 1(c)(ii)) (the “Exercise
      Delivery Documents”),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder and the Company’s transfer
      agent (the “Transfer
      Agent”).
      On or
      before the third Business Day following the date on which the Company has
      received all of the Exercise Delivery Documents (the “Share
      Delivery Date”),
      the
      Company shall (X) provided that the Transfer Agent is participating in The
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer Program, upon the request of the Holder, credit
      such aggregate number of shares of Common Stock to which the Holder is entitled
      pursuant to such exercise to the Holder’s or its designee’s balance account with
      DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
      Transfer Agent is not participating in the DTC Fast Automated Securities
      Transfer Program, issue and dispatch by overnight courier to the address as
      specified in the Exercise Notice, a certificate, registered in the Company’s
      share register in the name of the Holder or its designee, for the number of
      shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery of the Exercise Notice and Aggregate Exercise Price
      referred to in Section
      1(c)(i)(A)
      above
      or notification to the Company of a Cashless Exercise referred to in Section
      1(c)(ii), the Holder shall be deemed for all corporate purposes to have become
      the holder of record of the Warrant Shares with respect to which this Warrant
      has been exercised, irrespective of the date of delivery of the certificates
      evidencing such Warrant Shares. If this Warrant is submitted in connection
      with
      any exercise pursuant to this Section 1(a) and the number of Warrant Shares
      represented by this Warrant submitted for exercise is greater than the
actual
      number
      of
      Warrant Shares being acquired upon such an
      exercise, then the Company shall as soon as practicable and in no event later
      than three (3) Business Days after any exercise and at its own expense, issue
      a
      new Warrant (in accordance with Section 1(c))
      of like
      tenor
      representing the right to purchase the number of Warrant Shares purchasable
      immediately prior to such exercise under this Warrant, less the number of
      Warrant Shares with respect to which this Warrant is exercised. No fractional
      shares of Common Stock are to be issued upon the exercise of this Warrant,
      but
      rather the number of shares of Common Stock to be issued shall be rounded up
      to
      the nearest whole number. The Company shall pay any and all taxes which may
      be
      payable with respect to the issuance and delivery of Warrant Shares upon
      exercise of this Warrant.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    

    (iv) If
      the
      Company shall fail for any reason or for no reason to issue to the Holder within
      three (3) Business Days of receipt of the Exercise Delivery Documents, a
      certificate for the number of shares of Common Stock to which the Holder is
      entitled and register such shares of Common Stock on the Company’s share
      register or to credit the Holder’s balance account with DTC for such number of
      shares of Common Stock to which the Holder is entitled upon the Holder’s
      exercise of this Warrant, and if on or after such Business Day the Holder
      purchases (in an open market transaction or otherwise) shares of Common Stock
      to
      deliver in satisfaction of a sale by the Holder of shares of Common Stock
      issuable upon such exercise that the Holder anticipated receiving from the
      Company (a “Buy-In”),
      then
      the Company shall, within three (3) Business Days after the Holder’s request and
      in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
      to the Holder’s total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased (the “Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such shares of Common Stock) shall terminate, or (ii) promptly honor its
      obligation to deliver to the Holder a certificate or certificates representing
      such shares of Common Stock and pay cash to the Holder in an amount equal to
      the
      excess (if any) of the Buy-In Price over the product of (A) such number of
      shares of Common Stock, times (B) the closing bid price on
      the
      date of exercise. 

    

    (c) Partial
      Exercise.
      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.

    

    (d) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 15.

    
      
        
        

      

      
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    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,
      or
      against impairment of such rights.

    

    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 (whether
      by way of stock dividend, stock split or otherwise) 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
      the
      Warrant Shares shall be proportionately increased,
      and
      conversely, in case the outstanding shares of Common Stock of the Company shall
      be combined (whether
      by way of stock combination, reverse stock split or otherwise) into
      a
      smaller number of shares, the Exercise Price in effect immediately prior to
      such
      combination shall be proportionately increased
      and the
      number of Warrant Shares shall be proportionately decreased. The Exercise Price
      and the Warrant Shares, as so adjusted, shall be readjusted in the same manner
      upon the happening of any successive even or events described in this Section
      3(a)(i).

    

       (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:

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    

       (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 Exercise
      Price and the number of Warrant Shares to be obtained upon exercise of this
      Warrant shall be adjusted proportionately, and 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.
      The
      Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted
      in
      the same manner upon the happening of any successive even or events described
      in
      this Section 3(a)(ii).

     

       (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 merger
      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. In
      any
      event, the successor corporation (if other than the Company) resulting from
      such
      consolidation or merger or the corporation purchasing such assets shall be
      deemed to assume such obligation to deliver to such Holder such shares of stock,
      securities or assets even in the absence of a written instrument assuming such
      obligation to the extent such assumption occurs by operation of
      law.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    

    (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
      promptly 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.

    

    (c) Certain
      Events.
      If any
      event occurs as to which the other provisions of this Section 3 are not strictly
      applicable but the lack of any adjustment would not 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.

    

    (d) Adjustment
      of Exercise Price Upon Issuance of Additional Shares of Common
      Stock.
      In the
      event
      the
      Company shall at any time prior to the eighteenth month anniversary of the
      Effective Date issue Additional Shares of Common Stock, as defined below,
      without consideration or for a consideration per share less than the Exercise
      Price in effect immediately prior to such issue, then the Exercise Price shall
      be reduced, concurrently with such issue, to a price (calculated to the nearest
      cent) determined by multiplying such Exercise Price by a fraction, (A) the
      numerator of which shall be (1) the number of shares of Common Stock outstanding
      immediately prior to such issue plus (2) the number of shares of Common Stock
      which the aggregate consideration received or to be received by the Company
      for
      the total number of Additional Shares of Common Stock so issued would purchase
      at such Exercise Price; and (B) the denominator of which shall be the number
      of
      shares of Common Stock outstanding immediately prior to such issue plus the
      number of such Additional Shares of Common Stock so issued; provided
      that,
      (i) for the purpose of this Section 3(d), all shares of Common Stock issuable
      upon conversion or exchange of convertible securities outstanding immediately
      prior to such issue shall be deemed to be outstanding, and (ii) the number
      of
      shares of Common Stock deemed issuable upon conversion or exchange of such
      outstanding convertible securities shall be determined without giving effect
      to
      any adjustments to the conversion or exchange price or conversion or exchange
      rate of such convertible securities resulting from the issuance of Additional
      Shares of Common Stock that is the subject of this calculation. For purposes
      of
      this Warrant, “Additional Shares of Common Stock” shall mean all shares of
      Common Stock issued by the Company after the Effective Date (including without
      limitation any shares of Common Stock issuable upon conversion or exchange
      of
      any convertible securities or upon exercise of any option or warrant, on an
      as-converted basis), other than: (i) shares of Common Stock issued or
      issuable upon conversion or exchange of any convertible securities or exercise
      of any options outstanding on the Effective Date; (ii) shares of Common
      Stock issued or issuable by reason of a dividend, stock split, split-up or
      other
      distribution on shares of Common Stock that is covered by Sections 3(a)(i)
      through 3(a)(iii) above; or (iii) shares of Common Stock (or options with
      respect thereto) issued or issuable to employees or directors of, or consultants
      to, the Company or any of its subsidiaries pursuant to a plan, agreement or
      arrangement approved by the Board of Directors of the Company. The provisions
      of
      this Section 3(d) shall not operate to increase the Exercise Price.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    

    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.

    

    (d) Permitted
      Transfers and Assignments.
      Notwithstanding any provision to the contrary in this Section 4, the Holder
      may
      transfer, with or without consideration, this Warrant or any of the Warrant
      Shares (or a portion thereof) to the Holder’s Affiliates without obtaining the
      opinion from counsel that may be required by Section 4(c)(ii),
      provided that the Holder delivers to the Company and its counsel certification,
      documentation, and other assurances reasonably required by Company’s counsel to
      enable Company’s counsel to render an opinion to the Company’s transfer agent
      that such transfer does not violate applicable securities laws.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    5.
      MUTILATED OR MISSING WARRANT CERTIFICATE

    

    If
      this
      Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder,
      the
      Company will,
      at its
      expense,
      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
(and
      replacement Warrants) 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 to the Holder or its
      transferee.

    

    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:

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    “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 Warrants and the Warrant Shares for resale under
      the Act on the terms and subject to the conditions set forth in Section 2 of
      the
      Registration Rights Agreement between the Company and each of the Purchasers
      listed on Schedule 1 to the Securities Purchase Agreement (the “Purchase
      Agreement”),
      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) with a copy to McGuireWoods LLP, 1345
      Avenue of the Americas, 7th
      Floor,
      New York, New York 10105, Attention Louis W. Zehil.

    

    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.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    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 the State of
New
      York
      without
      regard to conflicts of laws principles that would require the application of
      any
      other law.

    

    15.
      DISPUTE RESOLUTION  

    

    In
      the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two Business Days submit via facsimile (a) the disputed determination
      of
      the Exercise Price to an independent, reputable investment bank selected by
      the
      Company and approved by the Holder or (b) the disputed arithmetic calculation
      of
      the Warrant Shares to the Company’s independent, outside accountant. The Company
      shall cause at its expense the investment bank or the accountant, as the case
      may be, to perform the determinations or calculations and notify the Company
      and
      the Holder of the results no later than ten (10) Business Days from the time
      it
      receives the disputed determinations or calculations. Such investment bank’s or
      accountant’s determination or calculation, as the case may be, shall be binding
      upon all parties absent demonstrable error. 

    

    16.
      NOTICES OF RECORD DATE

    

    Upon
      (a)
      any establishment by the Company of a record date of the holders of any class
      of
      securities for the purpose of determining the holders thereof who are entitled
      to receive any dividend or other distribution, or right or option to acquire
      securities of the Company, or any other right, or (b) any capital
      reorganization, reclassification, recapitalization, merger or consolidation
      of
      the Company with or into any other corporation, any transfer of all or
      substantially all the assets of the Company, or any voluntary or involuntary
      dissolution, liquidation or winding up of the Company, or the sale, in a single
      transaction, of a majority of the Company’s voting stock (whether newly issued,
      or from treasury, or previously issued and then outstanding, or any combination
      thereof), the Company shall mail to the Holder at least ten (10) Business Days,
      or such longer period as may be required by law, prior to the record date
      specified therein, a notice specifying (i) the date established as the record
      date for the purpose of such dividend, distribution, option or right and a
      description of such dividend, option or right, (ii) the date on which any such
      reorganization, reclassification, transfer, consolidation, merger, dissolution,
      liquidation or winding up, or sale is expected to become effective and (iii)
      the
      date, if any, fixed as to when the holders or record of Common Stock shall
      be
      entitled to exchange their shares of Common Stock for securities or other
      property deliverable upon such reorganization, reclassification, transfer,
      consolation, merger, dissolution, liquidation or winding up.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    17.
      RESERVATION OF SHARES

    

    The
      Company shall reserve and keep available out of its authorized but unissued
      shares of Common Stock for issuance upon the exercise of this Warrant, free
      from
      preemptive rights, such number of shares of Common Stock for which this Warrant
      shall from time to time be exercisable.

    

    18.
      NO
      THIRD PARTY RIGHTS

    

    This
      Warrant is not intended, and will not be construed, to create any rights in
      any
      parties other than the Company and the Holder, and no person or entity may
      assert any rights as third-party beneficiary hereunder.

    

    

    [SIGNATURE
      PAGE FOLLOWS]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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:
              SecretaryUnassociated Document

     

    EXHIBIT
      4.3

    
      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, 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. 

      

      

      
        
          	Dated: June 20, 2006	
                  Void
                    After: June 20,
                    2011

                

        

      

      GRAN
        TIERRA ENERGY INC.

      

      WARRANT
        TO PURCHASE COMMON STOCK

      

      Gran
        Tierra Energy Inc., a Nevada corporation (the “Company”), for value received on
        June 20, 2006 (the “Effective
        Date”),
        hereby issues to CD Investment Partners, Ltd. (the “Holder”)
        this
        Warrant (the “Warrant”)
        to
        purchase 333,334 shares (each such share as from time to time adjusted as
        hereinafter provided 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 June
        20,
        2011 (the “Expiration
        Date”),
        all
        subject to the following terms and conditions. Unless
        otherwise defined in this Warrant, terms appearing in initial capitalized
        form
        shall have the meaning ascribed to them in that certain Securities Purchase
        Agreement of even date herewith between the Company and the Holder pursuant
        to
        which this Warrant was issued (the “Securities
        Purchase Agreement”).

      

      As
        used
        in this Warrant, (i) “Business
        Day”
means
        any day other than Saturday, Sunday or any other day on which commercial
        banks
        in the City of New York, New York or Calgary, Canada, are authorized or required
        by law or executive order to close; (ii) “Common
        Stock”
means
        the common stock of the Company, $0.001 par value per share, including
        any securities issued or issuable with respect thereto or into which or for
        which such shares may be exchanged for, or converted into, pursuant to any
        stock
        dividend, stock split, stock combination, recapitalization, reclassification,
        reorganization or other similar event;
        (iii)
“Exercise
        Price”
means
        $1.75 per share of Common Stock, subject to adjustment as provided herein;
        (iv) “Trading
        Day”
means
        any
        day
        on which
        the Common Stock is traded on the primary national or regional stock exchange
        on
        which the Common Stock is listed, or, if not listed, on the Nasdaq National
        Market if quoted thereon, or if not so listed or quoted, the NASD OTC Bulletin
        Board if quoted thereon
        is open
        for the transaction of business; and (v) “Affiliate” means any Person that,
        directly or indirectly, through one or more intermediaries, controls, is
        controlled by, or is under common control with, a Person, as such terms are
        used
        and construed in Rule 144 promulgated
        under the Securities Act of 1933, as amended.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      1.
        DURATION AND EXERCISE OF WARRANTS

      

      (a)
         Exercise
        Period.
        The
        Holder may exercise this Warrant in whole or in part 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. The Holder shall also exercise
        the Warrant earlier on the Mandatory Exercise Date in accordance with Section
        1(b) if applicable, at which time this Warrant shall entitle the Holder only
        to
        the Warrant Shares applicable upon such exercise.

      

      (b) Right
        of Mandatory Exercise by Company.
        

      

      (i)
        If
        at any
        time from and after the Mandatory
        Effective Date (as defined in the Registration Rights Agreement),
        (A)
        the
        closing
        sales price of the Common Stock for each Trading Day of any 20 consecutive
        Trading Day period equals or exceeds $3.50 per share (subject to equitable
        adjustment for stock splits, stock dividends, combinations, and capital
        reorganizations, as applicable, (B) the Mandatory Registration Statement
        has
        been effective for a period of 45 Trading Days and remains effective
or
        the
        Holder would be entitled to sell the Warrant Shares upon the exercise of
        the
        Warrant pursuant to the Rule 144(k) promulgated under the Securities Act
        of
        1933, as amended (i.e.,
        including without
        any volume limitations), (C)
        the
        Common Stock is listed on the New York Stock Exchange or the American Stock
        Exchange, or quoted on the Nasdaq National Market, and (D) the Company’s
        registration statement on Form SB-2 filed with the SEC on March 10, 2006
        (Registration
        No. 333-132352)
        has been
        effective for at least 45 Trading Days
        (each
        such date on which all of the foregoing conditions in clauses (A)-(D) are
        satisfied being a “Mandatory
        Exercise Eligibility Date”),
        the
        Company shall have the right to require the Holder to exercise this Warrant
        in
        whole or in part, subject to Sections 1(b)(ii) and 1(b)(iii) below and Section
        16 below, as designated in the Mandatory Exercise Notice (as defined below)
        into
        fully paid, validly issued and nonassessable shares of Common Stock in
        accordance with the terms of this Warrant at the Exercise Price as of the
        Mandatory Exercise Date (a “Mandatory
        Exercise”).
        The
        Company may exercise its right to require exercise under this Section 1(b)
        by
        delivering, within not more than five (5) Trading Days after the end of each
        Mandatory Exercise Eligibility Date, a written notice thereof by facsimile
        and
        overnight courier to all, but not less than all, of the holders of this Warrant
        and the Transfer Agent (the “Mandatory
        Exercise Notice”
and
        the
        date all of the holders received such notice by facsimile is referred to
        as the
“Mandatory
        Exercise Notice Date”).
        The
        Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice
        shall state (i) the Trading Day selected for the Mandatory Exercise in
        accordance with this Section 1(b)(i),
        which
        Trading Day shall be at least twenty (20) Business Days but not more than
        sixty
        (60) Business Days following the end of the applicable Mandatory Exercise
        Notice
        Date (the “Mandatory
        Exercise Date”),
        (ii)
        the aggregate number of Warrant Shares subject to Mandatory Exercise from
        each
        of the holders of this Warrant pursuant to this Section 1(b) and (iii) the
        number of Warrant Shares to be issued to each such holder on the applicable
        Mandatory Exercise Date.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (ii)
         In
        order
        to treat all warrant holders of the Company equitably, if the Company elects
        to
        cause exercise of any amount of this Warrant pursuant to Section 1(b)(i),
        then
        it must simultaneously take the same action in the same proportion with respect
        to all warrants issued by the Company that contain a similar provision. All
        amounts exercised by the Holder after the Mandatory Exercise Notice Date
        shall
        reduce the amount of this Warrant required to be converted on the Mandatory
        Exercise Date. If the Company has elected a Mandatory Exercise, the mechanics
        of
        exercise set forth in Section 1(c) shall apply, to the extent applicable,
        as if
        the Company and the Transfer Agent had received from the Holder on the Mandatory
        Exercise Date an Exercise Notice with respect to the amount of this Warrant
        being converted pursuant to the Mandatory Exercise.

      

      (iii) Notwithstanding
        anything to the contrary contained in Section 1(b)(i), the aggregate number
        of
        warrants under this Warrant that the Company shall have the right to require
        the
        holders of this Warrant to exercise at
        any
        given time under Section 1(b) above, together with all other warrants issued
        by
        the Company that Company has a right to require the exercise thereof pursuant
        to
        a provision similar to Section 1(b), shall be limited to a number such that
        the
        aggregate number of Warrant Shares issuable upon exercise of this Warrant
        pursuant to a Mandatory Exercise, together with the shares of Common Stock
        issuable upon exercise of such other warrants pursuant to a similar mandatory
        exercise, does not exceed the total aggregate volume of the Company’s Common
        Stock traded over the 20 consecutive Trading Days prior to the applicable
        Mandatory Exercise Eligibility Date. The Company shall not have the right
        to
        deliver more than one Mandatory Exercise Notice in any ninety (90) day
        period.

      

        (c)
         Exercise
        Procedures.
        

      

      (i) While
        this Warrant remains outstanding and exercisable in accordance with Section
        1(a), in addition to the manner set forth in Section 1(c)(ii) below, the
        Holder
        may exercise this Warrant in whole or in part
        at any
        time and from time to time
        by:

      

         (A) 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

      

         (B) payment
        of the then
        applicable
        Exercise
        Price per share multiplied by the number of Warrant Shares being purchased
        upon
        exercise of the Warrant (such amount, the “Aggregate
        Exercise Price”)
        made
        in
        the form of cash, or by certified check, bank draft or money order payable
        in
        lawful money of the United States of America
        or in
        the form of a Cashless Exercise
        to the
        extent permitted in Section 1(c)(ii) below.
        

      

      (ii) At
        any
        time when
        a
        registration statement required by the Registration Rights Agreement covering
        the resale of the Warrant Shares by the Holder is not available after the
        first
        anniversary of the Effective Date,
        the
        Holder may, in its sole discretion, exercise all or any part of the Warrant
        in a
“cashless” or “net-issue” exercise (a “Cashless
        Exercise”)
        by
        delivering to the Company (1) the Notice of Exercise and (2) the
        Warrant,
        pursuant to which the Holder shall surrender the right to receive upon exercise
        of this Warrant a number of Warrant Shares having a value (as determined
        below)
        equal to the Aggregate Exercise Price, in which case, the number of Warrant
        Shares to be issued to the Holder upon such exercise shall be calculated
        using
        the following formula:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 	Y * (A - B) 
	 	X  = 	 	
                A 

              
	 	 	 	 
	 	with X
                = 	 	the number of Warrant Shares to be
                issued to
                the Holder 
	 	 	 	 
	 	Y = 	 	the number of Warrant Shares with
                respect to
                which the Warrant is being exercised 
	 	 	 	 
	 	A = 	 	the fair value per share of Common
                Stock on
                the date of exercise of this Warrant 
	 	 	 	 
	 	B = 	 	the then-current Exercise Price of
                the Warrant 

      

       

      Solely
        for the purposes of this paragraph, “fair value” shall be determined either (A)
        reasonably and in good faith by the Board of Directors of the Company as
        of the
        date which the Notice of Exercise is deemed to have been sent to the Company,
        or
        (B) as the average of the closing sales prices, as quoted on the primary
        national or regional stock exchange on which the Common Stock is listed,
        or,
        if not
        listed,
        on the
        Nasdaq National Market if quoted thereon, or,
        if not
        listed or quoted,
        the NASD
        OTC Bulletin Board if quoted thereon, on the twenty
        (20)
        trading
        days immediately preceding the date on which the Notice of Exercise is deemed
        to
        have been sent to the Company, whichever of (A) or (B) is greater.

      

        (iii) Upon
        the
        exercise of this Warrant in compliance with the provisions of this Section
        1(c)
        or pursuant to a Mandatory Exercise Notice in accordance with 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
(x)
        the
        conditions set forth in Section 1(b) have been satisfied
        in
        connection with a Mandatory Exercise Notice or (y) the conditions set forth
        in
        Section 1(c) have been satisfied, as the case may be.
        On
        or
        before the first Business Day following the date on which the Company has
        received each of the Exercise Notice and the Aggregate Exercise Price (or
        notice
        of a Cashless Exercise in accordance with Section 1(c)(ii)) (the “Exercise
        Delivery Documents”),
        the
        Company shall transmit by facsimile an acknowledgment of confirmation of
        receipt
        of the Exercise Delivery Documents to the Holder and the Company’s transfer
        agent (the “Transfer
        Agent”).
        On or
        before the third Business Day following the date on which the Company has
        received all of the Exercise Delivery Documents (the “Share
        Delivery Date”),
        the
        Company shall (X) provided that the Transfer Agent is participating in The
        Depository Trust Company (“DTC”)
        Fast
        Automated Securities Transfer Program, upon the request of the Holder, credit
        such aggregate number of shares of Common Stock to which the Holder is entitled
        pursuant to such exercise to the Holder’s or its designee’s balance account with
        DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
        Transfer Agent is not participating in the DTC Fast Automated Securities
        Transfer Program, issue and dispatch by overnight courier to the address
        as
        specified in the Exercise Notice, a certificate, registered in the Company’s
        share register in the name of the Holder or its designee, for the number
        of
        shares of Common Stock to which the Holder is entitled pursuant to such
        exercise. Upon delivery of the Exercise Notice and Aggregate Exercise Price
        referred to in Section
        1(c)(i)(A)
        above
        or notification to the Company of a Cashless Exercise referred to in Section
        1(c)(ii), the Holder shall be deemed for all corporate purposes to have become
        the holder of record of the Warrant Shares with respect to which this Warrant
        has been exercised, irrespective of the date of delivery of the certificates
        evidencing such Warrant Shares. If this Warrant is submitted in connection
        with
        any exercise pursuant to Section 1(a) and the number of Warrant Shares
        represented by this Warrant submitted for exercise is greater than the
actual
        number
        of
        Warrant Shares being acquired upon such an
        exercise, then the Company shall as soon as practicable and in no event later
        than three (3) Business Days after any exercise and at its own expense, issue
        a
        new Warrant (in accordance with Section 1(c))
        of like
        tenor
        representing the right to purchase the number of Warrant Shares purchasable
        immediately prior to such exercise under this Warrant, less the number of
        Warrant Shares with respect to which this Warrant is exercised. No fractional
        shares of Common Stock are to be issued upon the exercise of this Warrant,
        but
        rather the number of shares of Common Stock to be issued shall be rounded
        up to
        the nearest whole number. The Company shall pay any and all taxes which may
        be
        payable with respect to the issuance and delivery of Warrant Shares upon
        exercise of this Warrant.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (iv) If
        the
        Company shall fail for any reason or for no reason to issue to the Holder
        within
        three (3) Business Days of receipt of the Exercise Delivery Documents, a
        certificate for the number of shares of Common Stock to which the Holder
        is
        entitled and register such shares of Common Stock on the Company’s share
        register or to credit the Holder’s balance account with DTC for such number of
        shares of Common Stock to which the Holder is entitled upon the Holder’s
        exercise of this Warrant, and if on or after such Business Day the Holder
        purchases (in an open market transaction or otherwise) shares of Common Stock
        to
        deliver in satisfaction of a sale by the Holder of shares of Common Stock
        issuable upon such exercise that the Holder anticipated receiving from the
        Company (a “Buy-In”),
        then
        the Company shall, within three (3) Business Days after the Holder’s request and
        in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
        to the Holder’s total purchase price (including brokerage commissions, if any)
        for the shares of Common Stock so purchased (the “Buy-In
        Price”),
        at
        which point the Company’s obligation to deliver such certificate (and to issue
        such shares of Common Stock) shall terminate, or (ii) promptly honor its
        obligation to deliver to the Holder a certificate or certificates representing
        such shares of Common Stock and pay cash to the Holder in an amount equal
        to the
        excess (if any) of the Buy-In Price over the product of (A) such number of
        shares of Common Stock, times (B) the closing bid price on
        the
        date of exercise. 

      

      (d)
         Partial
        Exercise.
        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.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (e) Disputes.
        In the
        case of a dispute as to the determination of the Exercise Price or the
        arithmetic calculation of the Warrant Shares, the Company shall promptly
        issue
        to the Holder the number of Warrant Shares that are not disputed and resolve
        such dispute in accordance with Section 15.

      

      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, validly issued, 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, or against impairment
        of such
        rights.

      

      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 (whether
        by way of stock dividend, stock split or otherwise) 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 the
        number of Warrant Shares shall be proportionately increased,
        and
        conversely, in case the outstanding shares of Common Stock of the Company
        shall
        be combined (whether
        by way of stock combination, reverse stock split or otherwise) into
        a
        smaller number of shares, the Exercise Price in effect immediately prior
        to such
        combination shall be proportionately increased
        and the
        number of Warrant Shares shall be proportionately decreased. The Exercise
        Price
        and the Warrant Shares, as so adjusted, shall be readjusted in the same manner
        upon the happening of any successive even or events described in this Section
        3(a)(i).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (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
        therefor:

      

         (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 Exercise
        Price and the number of Warrant Shares to be obtained upon exercise of this
        Warrant shall be adjusted proportionately, and 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.
        The
        Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted
        in
        the same manner upon the happening of any successive even or events described
        in
        this Section 3(a)(ii).

      

         (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 merger
        or
the
        corporation purchasing such assets shall assume by written instrument reasonably
        satisfactory in form and substance to the Holder 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.
In
        any
        event, the successor corporation (if other than the Company) resulting from
        such
        consolidation or merger or the corporation purchasing such assets shall be
        deemed to assume such obligation to deliver to such Holder such shares of
        stock,
        securities or assets even in the absence of a written instrument assuming
        such
        obligation to the extent such assumption occurs by operation of
        law.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (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
        promptly 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.

      

      (c)
         Certain
        Events.
        If any
        event occurs as to which the other provisions of this Section 3 are not strictly
        applicable but the lack of any adjustment would not 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’s board of
        directors will, in good faith, make an appropriate adjustment in the Exercise
        Price and the number of Warrant Shares so as to protect the rights of the
        Holder; provided that no such adjustment pursuant to this Section 3(c) will
        increase the Exercise Price or decrease the number of Warrant Shares as
        otherwise determined pursuant to this Section 3.

      

      (d) Adjustment
        of Exercise Price Upon Issuance of Additional Shares of Common
        Stock.
        In the
        event
        the
        Company shall at any time prior to the eighteenth month anniversary of the
        Effective Date issue Additional Shares of Common Stock, as defined below,
        without consideration or for a consideration per share less than the Exercise
        Price in effect immediately prior to such issue, then the Exercise Price
        shall
        be reduced, concurrently with such issue, to a price (calculated to the nearest
        cent) determined by multiplying such Exercise Price by a fraction, (A) the
        numerator of which shall be (1) the number of shares of Common Stock outstanding
        immediately prior to such issue plus (2) the number of shares of Common Stock
        which the aggregate consideration received or to be received by the Company
        for
        the total number of Additional Shares of Common Stock so issued would purchase
        at such Exercise Price; and (B) the denominator of which shall be the number
        of
        shares of Common Stock outstanding immediately prior to such issue plus the
        number of such Additional Shares of Common Stock so issued; provided
        that,
        (i) for the purpose of this Section 3(d), all shares of Common Stock issuable
        upon conversion or exchange of convertible securities outstanding immediately
        prior to such issue shall be deemed to be outstanding, and (ii) the number
        of
        shares of Common Stock deemed issuable upon conversion or exchange of such
        outstanding convertible securities shall be determined without giving effect
        to
        any adjustments to the conversion or exchange price or conversion or exchange
        rate of such convertible securities resulting from the issuance of Additional
        Shares of Common Stock that is the subject of this calculation. For purposes
        of
        this Warrant, “Additional Shares of Common Stock” shall mean all shares of
        Common Stock issued by the Company after the Effective Date (including without
        limitation any shares of Common Stock issuable upon conversion or exchange
        of
        any convertible securities or upon exercise of any option or warrant, on
        an
        as-converted basis), other than: (i) shares of Common Stock issued or
        issuable upon conversion or exchange of any convertible securities or exercise
        of any options outstanding on the Effective Date; (ii) shares of Common
        Stock issued or issuable by reason of a dividend, stock split, split-up or
        other
        distribution on shares of Common Stock that is covered by Sections 3(a)(i)
        through 3(a)(iii) above; or (iii) shares of Common Stock (or options with
        respect thereto) issued or issuable to employees or directors of, or consultants
        to, the Company or any of its subsidiaries pursuant to a plan, agreement
        or
        arrangement approved by the Board of Directors of the Company. The provisions
        of
        this Section 3(d) shall not operate to increase the Exercise Price.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      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.

      

      (d) Permitted
        Transfers and Assignments.
        Notwithstanding any provision to the contrary in this Section 4, the Holder
        may
        transfer, with or without consideration, this Warrant or any of the Warrant
        Shares (or a portion thereof) to the Holder’s Affiliates without obtaining the
        opinion from counsel that may be required by Section 4(c)(ii), provided that
        the
        Holder delivers to the Company and its counsel certification, documentation,
        and
        other assurances reasonably required by Company’s counsel to enable Company’s
        counsel to render an opinion to the Company’s transfer agent that such transfer
        does not violate applicable securities laws.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      5.
        MUTILATED OR MISSING WARRANT CERTIFICATE

      

      If
        this
        Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder,
        the
        Company will, at its expense, 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
        (and a
        replacement Warrant) 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 to the Holder or its
        transferee.

      

      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 this Warrant and the Warrant Shares for resale
        under
        the Act on the terms and subject to the conditions set forth in Section 2
        of
        that certain Registration Rights Agreement by and between the Company and
        the
        Holder dated as of even date herewith.

      

      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 Securities Purchase Agreement, 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) with
        a
        copy to McGuireWoods LLP, 1345 Avenue of the Americas, 7th
        Floor,
        New York, New York 10105, Attention Louis W. Zehil.

      

      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 in full.

      

      14.
        GOVERNING LAW

      

      This
        Warrant will be governed by and construed under the laws of the State of
        New
        York without regard to conflicts of laws principles that would require the
        application of any other law.

      

      15.
        DISPUTE RESOLUTION. 

      

      In
        the
        case of a dispute as to the determination of the Exercise Price or the
        arithmetic calculation of the Warrant Shares, the Company shall submit the
        disputed determinations or arithmetic calculations via facsimile within two
        Business Days of receipt of the Exercise Notice giving rise to such dispute,
        as
        the case may be, to the Holder. If the Holder and the Company are unable
        to
        agree upon such determination or calculation of the Exercise Price or the
        Warrant Shares within three Business Days of such disputed determination
        or
        arithmetic calculation being submitted to the Holder, then the Company shall,
        within two Business Days submit via facsimile (a) the disputed determination
        of
        the Exercise Price to an independent, reputable investment bank selected
        by the
        Company and approved by the Holder or (b) the disputed arithmetic calculation
        of
        the Warrant Shares to the Company’s independent, outside accountant. The Company
        shall cause at its expense the investment bank or the accountant, as the
        case
        may be, to perform the determinations or calculations and notify the Company
        and
        the Holder of the results no later than ten (10) Business Days from the time
        it
        receives the disputed determinations or calculations. Such investment bank’s or
        accountant’s determination or calculation, as the case may be, shall be binding
        upon all parties absent demonstrable error. 

      

      16.
        LIMITATIONS ON EXERCISE.

      

      Notwithstanding
        anything to the contrary contained in this Warrant, this Warrant shall not
        be
        exercisable by the Holder hereof to the extent (but only to the extent) that,
        if
        exercisable by the Holder, the Holder, any of its affiliates, or any other
        Person (as defined in the Purchase Agreement) which may be deemed to be
        acting as a group in concert with the Holder or any of its affiliates for
        the
        purposes of Section 13(d) of the Securities Exchange Act of 1934, as
        amended (the “Exchange Act”), and the rules and regulations promulgated
        thereunder, would beneficially own in excess of 4.9% (the “Applicable
        Percentage”) of the outstanding shares of common stock of the Company.
        To the extent the above limitation applies, the determination of whether
        this
        Warrant shall be exercisable (vis-a-vis other convertible, exercisable or
        exchangeable securities owned by the Holder) and of which warrants shall
        be
        exercisable (as among all warrants owned by the Holder) shall, subject to
        such
        Applicable Percentage limitation, be determined by the Holder on the basis
        of
        the first submission to the Company for conversion, exercise or exchange
        (as the
        case may be). No prior inability to exercise this Warrant pursuant to this
        paragraph shall have any effect on the applicability of the provisions of
        this
        paragraph with respect to any subsequent determination of exercisability.
        For the purposes of this paragraph, beneficial ownership and all determinations
        and calculations (including, without limitation, with respect to calculations
        of
        percentage ownership) shall be determined by the Holder in accordance with
        Section 13(d) of the Exchange Act and the rules and regulations promulgated
        thereunder. The provisions of this paragraph shall be implemented in a manner
        otherwise than in strict conformity with the terms this paragraph to correct
        this paragraph (or any portion hereof) which may be defective or inconsistent
        with the intended Applicable Percentage beneficial ownership limitation herein
        contained or to make changes or supplements necessary or desirable to properly
        give effect to such Applicable Percentage limitation. The limitations contained
        in this paragraph shall apply to a successor Holder of this Warrant. The
        holders
        of common stock of the Company shall be third party beneficiaries of
        this paragraph and the Company may not waive this paragraph without the consent
        of holders of a majority of its common stock. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      17.
        NOTICES OF RECORD DATE

      

      Upon
        (a)
        any establishment by the Company of a record date of the holders of any class
        of
        securities for the purpose of determining the holders thereof who are entitled
        to receive any dividend or other distribution, or right or option to acquire
        securities of the Company, or any other right, or (b) any capital
        reorganization, reclassification, recapitalization, merger or consolidation
        of
        the Company with or into any other corporation, any transfer of all or
        substantially all the assets of the Company, or any voluntary or involuntary
        dissolution, liquidation or winding up of the Company, or the sale, in a
        single
        transaction, of a majority of the Company’s voting stock (whether newly issued,
        or from treasury, or previously issued and then outstanding, or any combination
        thereof), the Company shall mail to the Holder at least ten (10) Business
        Days,
        or such longer period as may be required by law, prior to the record date
        specified therein, a notice specifying (i) the date established as the record
        date for the purpose of such dividend, distribution, option or right and
        a
        description of such dividend, option or right, (ii) the date on which any
        such
        reorganization, reclassification, transfer, consolidation, merger, dissolution,
        liquidation or winding up, or sale is expected to become effective and (iii)
        the
        date, if any, fixed as to when the holders or record of Common Stock shall
        be
        entitled to exchange their shares of Common Stock for securities or other
        property deliverable upon such reorganization, reclassification, transfer,
        consolation, merger, dissolution, liquidation or winding up.

      

      18.
        RESERVATION OF SHARES

      

      The
        Company shall reserve and keep available out of its authorized but unissued
        shares of Common Stock for issuance upon the exercise of this Warrant, free
        from
        preemptive rights, such number of shares of Common Stock for which this Warrant
        shall from time to time be exercisable.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      19.
        NO
        THIRD PARTY RIGHTS

      

      Except
        as
        set forth in Section 16 above, this Warrant is not intended, and will not
        be
        construed, to create any rights in any parties other than the Company and
        the
        Holder, and no person or entity may assert any rights as third-party beneficiary
        hereunder. 

      

      [SIGNATURE
        PAGE FOLLOWS]

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      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

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