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Item 1.01
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Entry into a Material Definitive Agreement.
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Subscription Receipt Agreement
On July 8, 2016, Gran Tierra Energy Inc.
(“
Gran Tierra
”) issued 57,835,134 subscription receipts (the “
Subscription Receipts
”)
at a price of US$3.00 per Subscription Receipt to certain institutional investors and certain directors and executive officers
of Gran Tierra for aggregate gross proceeds of US$173,505,402. The Subscription Receipts were issued by Gran Tierra pursuant to
a subscription receipt agreement (the “
Subscription Receipt Agreement
”) by and between Grand Tierra and
Computershare Trust Company of Canada, as subscription receipt agent, providing for the terms and issuance of the Subscription
Receipts. Pursuant to the terms of the Subscription Receipt Agreement, the gross proceeds from the sale and issuance of the Subscription
Receipts (less 50% of the Agency Fee (as defined in the Subscription Receipt Agreement), the “
Escrowed Funds
”),
have been placed in an escrow account.
Each Subscription Receipt evidences the
right of the holder to receive without the payment of additional consideration or further action on the part of the holder and
upon satisfaction of the Escrow Release Condition (as described below) on or before 5:00 p.m. (Toronto time) on October 31, 2016
(the “
Deadline
”), one share of common stock of Gran Tierra (the “
Common Stock
”).
The “
Escrow Release Condition
” will occur if and when, before the Deadline, both of the following two
events occur:
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(i)
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other than payment of the purchase price, all conditions precedent to the completion of the previously
announced acquisition by Gran Tierra of PetroLatina Energy Ltd. (or alternatively, certain entities of PetroLatina Energy Ltd.
owning the interests in the Acordionero oil field (Midas Block) located in Colombia if a permitted reorganization of PetroLatina
Energy Ltd. is effected) (the “
Acquisition
”) as provided for in the agreement governing the Acquisition
(the “
Acquisition Agreement
”), as may be amended from time to time, have been satisfied in accordance
with the terms of the Acquisition Agreement or waived (provided no such amendment or waiver is materially adverse to the holders
of the Subscription Receipts); and
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(ii)
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the parties to the Acquisition Agreement are ready, willing and able to consummate the transactions
contemplated thereby concurrent with the release of the Escrowed Funds.
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In the event that the Escrow Release
Condition is not satisfied prior to the Deadline, the Acquisition Agreement is terminated in accordance with its terms or
Gran Tierra announces that it does not intend to proceed with the Acquisition, the subscription for Common Stock represented
by each Subscription Receipt shall be automatically terminated and cancelled and each holder shall receive an amount equal to
$3.00 per Subscription Receipt held plus such holder’s pro rata share of the Earned Interest (as defined in the
Subscription Receipt Agreement), less applicable withholding taxes, all in the manner and on the terms and conditions set out
in the Subscription Receipt Agreement.
Registration Rights Agreement
In connection with the private placement
of the Subscription Receipts, Gran Tierra agreed to enter into registration rights agreements with each of the subscribers (collectively,
the “
RRAs
”). The form of Registration Rights Agreement is attached hereto as Exhibit 4.2 and is incorporated
herein by reference
.
Pursuant to RRAs, Gran Tierra is required (i) to file with the Securities and Exchange Commission (the
“
SEC
”) as soon as reasonably practicable, but in no event later than August 15, 2016, a shelf registration
statement covering resales of the shares of Common Stock issuable upon conversion of the Subscription Receipts, (ii) to use its
commercially reasonable efforts to cause such shelf registration statement to be declared effective by the SEC as promptly as practicable,
(iii) to use its commercially reasonable efforts to keep such shelf registration statement effective until the earlier of (A) the
sale pursuant to a registration statement of all of the Registrable Securities (as defined in the RRAs) covered by the shelf registration
statement under the U.S. Securities Act of 1933, as amended (the “
Securities Act
”) or pursuant to Rule
144 of all of the Registrable Securities and (B) July 8, 2019, subject to certain extensions as set forth in the RRAs and (iv)
use commercially reasonable efforts to file a prospectus with the applicable Canadian securities commissions in the various provinces
of Canada where the Subscription Receipts are distributed pursuant to the private placement to qualify the distribution of all
of the Common Stock issuable upon conversion of the Subscription Receipts on or before August 15, 2016.
In the event of a Registration Default
(as defined in the RRAs), Gran Tierra will be required to pay the holders of the Subscription Receipts (or shares of Common Stock
issued upon conversion of such Subscription Receipts) 0.0165% of the price at which Gran Tierra sold the Subscription Receipts
multiplied by the aggregate number of Subscription Receipts (or shares of Common Stock issued upon conversion of such Subscription
Receipts) held by such holder.
The foregoing descriptions of the Subscription
Receipt Agreement and the RRAs do not purport to be complete and are qualified in their entirety by reference to the full texts
of such agreements, copies of which are filed as Exhibits 4.1 and 4.2, respectively, hereto and incorporated by reference herein.