UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report (Date of earliest
event reported): December 10, 2010
GRAN TIERRA ENERGY
INC.
(Exact
name of Registrant as specified in its charter)
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Nevada
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98-0479924
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(State
or other jurisdiction of incorporation)
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(I.R.S.
Employer Identification No.)
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Commission file
number: 000-52594
300, 625
- 11th Avenue S.W.
Calgary,
Alberta, Canada T2R 0E1
(Address
of principal executive offices and zip code)
Registrant's telephone number,
including area code: (403) 265-3221
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
EXPLANATORY
NOTE
This Form
8-K is being filed solely to update Gran Tierra Energy Inc.’s description of its
common stock.
Item
8.01. Other Events.
DESCRIPTION
OF CAPITAL STOCK
Authorized
Capital Stock
Our
articles of incorporation, as amended, authorizes the issuance of 595,000,002
shares of our capital stock, of which 570,000,000 are designated as common
stock, par value $0.001 per share, 25 million are designated as preferred
stock, par value $0.001 per share, one share is designated as Special A Voting
Stock, par value $0.001 per share, and one share is designated as Special B
Voting Stock, par value $0.001 per share.
Capital
Stock Issued and Outstanding
On
December 1, 2010, the following numbers of shares of our capital stock were
outstanding: 257,522,071 shares of our common stock; one share of Special A
Voting Stock, representing 7,811,112 shares of Gran Tierra Goldstrike
Inc. (GTE-Goldstrike Exchangeable Shares), which are exchangeable on a 1-for-1
basis into our common stock (as described below); and one share of
Special B Voting Stock, representing 9,928,369 shares of Gran Tierra Exchangeco
Inc. (GTE-Solana Exchangeable Shares), which are exchangeable on a 1-for-1 basis
into our common stock (as described below). On December 1, 2010,
there were no shares of preferred stock outstanding.
The
following description of our capital stock is derived from various provisions of
our articles of incorporation, our bylaws, and such other documents as relate to
the issuance of the two series of exchangeable shares.
Description
of Common Stock
We are
authorized to issue 570,000,000 shares of common stock, par value $0.001 per
share. Holders of the common stock are entitled to one vote for each share on
all matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. The holders of common stock vote together with the one
share of Special A Voting Stock and one share of Special B Voting Stock on all
matters submitted to stockholders. As described below, the one share
of Special A Voting Stock is entitled to the number of votes as is equal to the
number of shares of GTE-Goldstrike Exchangeable Shares outstanding, and the one
share of Special B Voting Stock is entitled to the number of votes as is equal
to the number of shares of GTE-Solana Exchangeable Shares
outstanding. The trustee holding the one share of Special A Voting
Stock is required to vote as directed by the holders of GTE-Goldstrike
Exchangeable Shares, and the trustee holding the one share of Special B Voting
Stock is required to vote as directed by the holders of GTE-Solana Exchangeable
Shares. Therefore, holders of a majority of the shares collectively
of common stock, GTE-Goldstrike Exchangeable Shares and GTE-Solana Exchangeable
Shares, voting (in the case of the exchangeable shares through the trustees) for
the election of directors can elect all of the directors. Holders of the common
stock, Special A Voting Stock and Special B Voting Stock (collectively, the
“Voting Stock”), representing a majority of the voting power of the capital
stock issued, outstanding and entitled to vote, represented in person or by
proxy, are necessary to constitute a quorum at any meeting of stockholders. A
vote by the holders of a majority of the voting power of the Voting Stock is
required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to the articles of
incorporation.
Holders
of common stock are entitled to share, together with the holders of the
GTE-Goldstrike Exchangeable Shares and the holders of GTE-Solana Exchangeable
Shares, in all dividends that the board of directors, in its discretion,
declares from legally available funds. In the event of a liquidation,
dissolution or winding up, each outstanding share entitles its holder to
participate pro rata, together with the holders of the GTE-Goldstrike
Exchangeable Shares and the holders of GTE-Solana Exchangeable Shares, in all
assets that remain after payment of liabilities and after providing for each
class of stock, if any, having preference over the common stock. Holders of the
common stock have no pre-emptive rights, no conversion rights and there are no
redemption provisions applicable to the common stock.
Preferred
Stock
We are
authorized to issue 25,000,000 shares of “blank check” preferred stock, par
value $0.001 per share. The board of directors is vested with authority to
divide the shares of preferred stock into series and to fix and determine the
relative rights and preferences of the shares of any such series. Once
authorized, the dividend or interest rates, conversion rates, voting rights,
redemption prices, maturity dates and similar characteristics of the preferred
stock will be determined by the board of directors, without the necessity of
obtaining approval of the stockholders.
Special
A Voting Stock
The one
share of Special A Voting Stock was created to allow the holders of exchangeable
shares, which we refer to as GTE-Goldstrike
Exchangeable Shares, issued by our indirect, wholly-owned subsidiary Gran
Tierra Goldstrike Inc., which we refer to as Goldstrike
Exchangeco, in connection with our combination with Goldstrike, Inc. in
2005, to vote at our stockholder meetings and exercise the other rights that the
holders of our common stock may exercise. The holder of the one share of Special
A Voting Stock is not entitled to receive dividends or distributions, but has
the right to vote on each matter on which holders of our common stock are
entitled to vote and to cast that number of votes equal to the number of
GTE-Goldstrike Exchangeable Shares outstanding that are not owned by us or our
subsidiaries. In connection with the share exchange transaction involving the
former shareholders of Gran Tierra Canada, the share of Special A Voting Stock
was issued to Olympia Trust Company as trustee for the holders of GTE-Goldstrike
Exchangeable Shares, or the Special A
Trustee. The Special A Trustee may only cast votes with respect to the
share of Special A Voting Stock based on instructions received from the holders
of GTE-Goldstrike Exchangeable Shares. The GTE-Goldstrike Exchangeable Shares
are described more fully below.
GTE-Goldstrike
Exchangeable Shares
Each
GTE-Goldstrike Exchangeable Share can be exchanged by the holder for one share
of our common stock at any time, and will receive the same dividends payable on
our common stock. At the time of exchange, taxes may be due from the holders of
the exchange shares. The GTE-Goldstrike Exchangeable Shares have voting rights
through the one share of Special A Voting Stock described above, and the holders
thereof are able to vote on all matters on which the holders of our common stock
are entitled to vote.
In order
to exchange GTE-Goldstrike Exchangeable Shares for shares of common stock, a
holder of GTE-Goldstrike Exchangeable Shares must submit a retraction request to
Goldstrike Exchangeco together with the share certificate representing the
GTE-Goldstrike Exchangeable Shares. 120367 Alberta Inc. is a corporation
incorporated under the laws of Alberta and is a wholly-owned subsidiary of Gran
Tierra Energy. Pursuant to the Voting Exchange and Support Agreement, between
Goldstrike, Inc., 1203647 Alberta Inc., Goldstrike Exchangeco and Olympia Trust
Company, or the Goldstrike Voting
Exchange and Support Agreement, 120367 Alberta Inc. has an overriding
right to purchase any GTE-Goldstrike Exchangeable Shares for which a retraction
request has been submitted by providing the holder of the GTE-Goldstrike
Exchangeable Shares subject to a retraction request with one share of Gran
Tierra Energy common stock for each GTE-Goldstrike Exchangeable Share. Pursuant
to the Goldstrike Voting Exchange and Support Agreement, Gran Tierra Energy is
obligated to deliver shares of its common stock to 120367 Alberta Inc. in order
to satisfy the obligations of 120367 Alberta Inc.
Holders
of GTE-Goldstrike Exchangeable Shares have the right to instruct the Special A
Trustee to cause 120367 Alberta Inc. to purchase GTE-Goldstrike Exchangeable
Shares for shares of Gran Tierra Energy common stock if Goldstrike Exchangeco
becomes insolvent or institutes insolvency proceedings. In addition, 120367
Alberta Inc. will be deemed to have purchased the GTE-Goldstrike Exchangeable
Shares for shares of common stock if we are subject to liquidation, wound up or
dissolved.
The
GTE-Goldstrike Exchangeable Shares are subject to retraction by Goldstrike
Exchangeco for shares of Gran Tierra Energy common stock at the earlier of:
(i) November 10, 2012; (ii) the date that less than 10% of the
issued and outstanding GTE-Goldstrike Exchangeable Shares are held by parties
not affiliated with us; (iii) the date when the holders of GTE-Goldstrike
Exchangeable Shares fail to take action with respect to the approval or
disapproval of a sale of all or substantially all of the assets of Goldstrike
Exchangeco when requested to do so by us; or (iv) if there is a change of
control transaction with respect to us. 120367 Alberta Inc has the right to
purchase all GTE-Goldstrike Exchangeable Shares for common stock on the
occurrence of any of these retraction events or if Goldstrike Exchangeco is
being liquidated. In addition, we have the right to purchase (or to cause 120367
Alberta Inc. to purchase) all GTE-Goldstrike Exchangeable Shares if there is a
change of law that permits holders of GTE-Goldstrike Exchangeable Shares to
exchange their shares for shares of common stock on a basis that will not
require holders to recognize a capital gain for Canadian tax
purposes.
Special
B Voting Stock
The one
share of Special B Voting Stock was designated to allow former shareholders of
Solana who elected, pursuant to the terms of the business combination of Gran
Tierra Energy with Solana on November 14, 2008, to receive exchangeable shares,
or GTE-Solana
Exchangeable Shares, of our indirect, wholly-owned subsidiary Gran Tierra
Exchangeco Inc., which we refer to as Solana
Exchangeco, in lieu of shares of Gran Tierra Energy common stock, to vote
at our stockholder meetings. The holder of the one share of Special B Voting
Stock is not entitled to receive dividends or distributions, but has the right
to vote on each matter on which holders of our common stock are entitled to vote
and to cast that number of votes equal to the number of GTE-Solana Exchangeable
Shares outstanding that are not owned by us or our affiliates. In connection
with the Arrangement, and pursuant to the Voting and Exchange Trust Agreement
between Solana Exchangeco, Gran Tierra Energy and Computershare Trust Company of
Canada, or the Exchangeco Voting
and Exchange Trust Agreement, the share of Special B Voting Stock was
issued to Computershare Trust Company of Canada as trustee for the holders of
GTE-Solana Exchangeable Shares, or the Special B
Trustee. The Special B Trustee may only cast votes with respect to the
share of Special B Voting Stock based on instructions received from the holders
of GTE-Solana Exchangeable Shares. The GTE-Solana Exchangeable Shares are
described more fully below.
GTE-Solana
Exchangeable Shares
Under the
terms of the Arrangement Agreement pursuant to which Gran Tierra Energy and
Solana combined, certain Canadian Solana shareholders received GTE-Solana
Exchangeable Shares instead of shares of Gran Tierra Energy common stock. Each
GTE-Solana Exchangeable Share can be exchanged by the holder for one share of
our common stock at any time, and will receive the same dividends payable on our
common stock. At the time of exchange, taxes may be due from the holders of the
exchange shares. The GTE-Solana Exchangeable Shares have voting rights through
the one share of Special B Voting Stock described above, and the holders thereof
are able to vote on all matters on which the holders of our common stock are
entitled to vote.
In order
to exchange the GTE-Solana Exchangeable Shares for shares of Gran Tierra Energy
common stock, a holder of GTE-Solana Exchangeable Shares must submit a
retraction request to Solana Exchangeco together with the share certificate
representing the GTE-Solana Exchangeable Shares to be redeemed. Pursuant to the
GTE-Solana Exchangeable Share Provisions and the Support Agreement, dated
November 14, 2008 between Gran Tierra Energy, Gran Tierra Callco ULC, a
corporation incorporated under the laws of Alberta and a direct wholly-owned
subsidiary of Gran Tierra Energy, or Callco,
and Solana Exchangeco, or the Support
Agreement, Callco has an overriding retraction call right to purchase all
of the GTE-Solana Exchangeable Shares for a price per GTE-Solana Exchangeable
Share equal to one share of corresponding Gran Tierra Energy common stock and
(provided that the GTE-Solana Exchangeable Shares are held on the applicable
dividend record date), on the payment date for any declared and unpaid
dividends, an amount in cash equal to such dividends on that GTE-Solana
Exchangeable Share less any amount withheld on account of tax, or the Purchase
Price. A holder of GTE-Solana Exchangeable Shares may revoke their
retraction request in writing to Solana Exchangeco by close of business on the
business day prior to the date specified in the retraction request; however, in
the event that the retraction request is not revoked by the holder and Callco
does not exercise its right to override the holder’s retraction request, Solana
Exchangeco will redeem the retracted shares on the date specified in the
retraction request.
If, as a
result of solvency requirements or applicable law, Solana Exchangeco is not
permitted to redeem all of the GTE-Solana Exchangeable Shares identified in the
retraction request, and Callco has not exercised its retraction call right,
Solana Exchangeco will redeem only those retracted GTE-Solana Exchangeable
Shares tendered by the holder as would not be contrary to provisions of
applicable law. The Special B Trustee, on behalf of the holder of any retracted
shares not so redeemed by Solana Exchangeco or purchased by Callco, will require
Gran Tierra Energy to purchase the unredeemed retracted shares on the date set
forth in the retraction request.
The
GTE-Solana Exchangeable Shares are subject to redemption by Solana Exchangeco
for shares of common stock at the earlier of: (i) November 14, 2013; (ii)
the date that there are issued and outstanding less than 25,285,358 GTE-Solana
Exchangeable Shares not held by Gran Tierra Energy or its affiliates, subject to
the approval of the board of directors of Solana Exchangeco; (iii) a Gran Tierra
Energy control transaction, being any merger, amalgamation, tender offer,
material sale of shares or rights or interests therein or thereto or similar
transactions involving Gran Tierra Energy, or any proposal to carry out the
same, and upon the determination of the board of directors of Solana Exchangeco
that such redemption is necessary to effectuate the control transaction; (iv)
any proposal subject to the vote of holders of GTE-Solana Exchangeable Shares,
as shareholders of Solana Exchangeco, the bona fide purpose of which the board
of directors of Solana Exchangeco determines is not practicable, excluding
matters related to the equivalence of the rights of GTE-Solana Exchangeable
Shares and Gran Tierra Energy common stock, and matters in respect of which
holders of GTE-Solana Exchangeable Shares are entitled to vote, or to direct the
Special B Trustee to vote, under the Solana Exchangeco Voting and Exchange Trust
Agreement; or (v) the date when holders of GTE-Solana Exchangeable Shares fail
to approve or disapprove, as applicable, a proposed change in the terms of the
GTE-Solana Exchangeable Shares where the approval or disapproval of such
proposed change is required to maintain their economic equivalence to shares of
common stock.
Callco
has an overriding redemption call right to purchase all of the GTE-Solana
Exchangeable Shares not held by Gran Tierra Energy or its affiliates upon the
occurrence of one of the above described redemption events. Upon
exercise of Callco’s redemption call right, holders of GTE-Solana Exchangeable
Shares will be obligated to sell their GTE-Solana Exchangeable Shares to Callco
and Solana Exchangeco’s right and obligation to redeem the GTE–Solana
Exchangeable Shares will terminate upon payment by Callco of the Purchase Price
for the GTE–Solana Exchangeable Shares.
Gran
Tierra Energy has an overriding right to purchase, or cause Callco to purchase,
all GTE–Solana Exchangeable Shares for common stock in the event of a change of
law that permits holders of GTE-Solana Exchangeable Shares to exchange their
GTE-Solana Exchangeable Shares for shares of common stock on a basis that will
not require holders to recognize a gain or loss for Canadian tax
purposes. In addition, subject to applicable law, Solana Exchangeco
may at any time and from time to time purchase for cancellation all or any part
of the outstanding GTE-Solana Exchangeable Shares.
Holders
of GTE-Solana Exchangeable Shares have the right to instruct the Special B
Trustee to cause Gran Tierra Energy to purchase GTE-Solana Exchangeable Shares
for shares of common stock if Solana Exchangeco becomes insolvent or institutes
insolvency proceedings. In addition, Gran Tierra Energy will be deemed to have
purchased the GTE-Solana Exchangeable Shares for shares of common stock if we
are subject to liquidation, wound up or dissolved.
Options
As of
December 1, 2010, options representing the right to purchase 11,238,355 shares
of common stock are issued and outstanding at a weighted average exercise price
of $3.44. The outstanding options were granted pursuant to our 2007
Equity Incentive Plan, which is an amendment and restatement of our 2005 Equity
Incentive Plan, to certain of our employees, officers and employee-directors and
are exercisable for 10 years from the date of grant, or earlier if granted
in exchange for options granted in connection with our combination with
Solana.
Warrants
As of
December 1, 2010, the following warrants were issued and
outstanding:
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Warrants
representing the right to purchase 151,250 shares of our common
stock. The outstanding warrants were issued on varying dates between
September 2005 and February 2006, and are exercisable for five
years from the date of issuance at an exercise price of $1.25 per
share.
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Warrants
representing the right to purchase 4,011,600 shares of our common stock.
The outstanding warrants are exercisable until June 2012 at an
exercise price of $1.05 per share. The warrants can be called by us if our
common stock trades above $3.50 for 20 consecutive
days.
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Indemnification;
Limitation of Liability
Nevada
Revised Statutes, or NRS, Sections 78.7502 and 78.751 provide us with the
power to indemnify any of our directors and officers. The director or officer
must have conducted himself/herself in good faith and reasonably believe that
his/her conduct was in, or not opposed to our best interests. In a criminal
action, the director, officer, employee or agent must not have had reasonable
cause to believe his/her conduct was unlawful.
Under NRS
Section 78.751, advances for expenses may be made by agreement if the
director or officer affirms in writing that he/she believes he/she has met the
standards and will personally repay the expenses if it is determined such
officer or director did not meet the standards.
Our
bylaws include an indemnification provision under which we have the power to
indemnify our directors, officers, employees and former directors, officers and
employees (including heirs and personal representatives) to the fullest extent
permitted under Nevada law.
Our
articles of incorporation and bylaws provide a limitation of liability in that
no director or officer shall be personally liable to Gran Tierra Energy or any
of its shareholders for damages for breach of fiduciary duty as director or
officer involving any act or omission of any such director or officer, provided
there was no intentional misconduct, fraud or a knowing violation of the law, or
payment of dividends in violation of NRS Section 78.300.
Our
employment agreements with certain of our executive officers contain provisions
which require us to indemnify them for costs, charges and expenses incurred in
connection with (i) civil, criminal or administrative actions resulting
from the executive officers service as such and (ii) actions by or on behalf of
Gran Tierra Energy to which the executive officer is made a party. We are
required to provide such indemnification if (i) the executive officer acted
honestly and in good faith with a view to the best interests of Gran Tierra
Energy, and (ii) in the case of a criminal or administrative proceeding or
proceeding that is enforced by a monetary policy, the executive officer had
reasonable grounds for believing that his conduct was lawful.
We have
also entered into an indemnity agreement with all of our officers and directors.
The agreement provides that we will indemnify officers and directors to the
fullest extent permitted by law, including indemnification in third party claims
and derivative actions. The agreement also provides that we will provide an
advancement for expenses incurred by the officers or directors.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted for our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable.
Anti-Takeover
Effects of Provisions of Nevada State Law
We may be
or in the future we may become subject to Nevada’s control share law. A
corporation is subject to Nevada’s control share law if it has more than 200
stockholders, at least 100 of whom are stockholders of record and residents of
Nevada, and if the corporation does business in Nevada or through an affiliated
corporation.
The law
focuses on the acquisition of a “controlling interest” which means the ownership
of outstanding voting shares is sufficient, but for the control share law, to
enable the acquiring person to exercise the following proportions of the voting
power of the corporation in the election of directors: (1) one-fifth or
more but less than one-third, (2) one-third or more but less than a
majority, or (3) a majority or more. The ability to exercise such voting
power may be direct or indirect, as well as individual or in association with
others.
The
effect of the control share law is that the acquiring person, and those acting
in association with it, obtain only such voting rights in the control shares as
are conferred by a resolution of the stockholders of the corporation, approved
at a special or annual meeting of stockholders. The control share law
contemplates that voting rights will be considered only once by the other
stockholders. Thus, there is no authority to take away voting rights from the
control shares of an acquiring person once those rights have been approved. If
the stockholders do not grant voting rights to the control shares acquired by an
acquiring person, those shares do not become permanent non-voting shares. The
acquiring person is free to sell its shares to others. If the buyers of those
shares themselves do not acquire a controlling interest, their shares do not
become governed by the control share law.
If
control shares are accorded full voting rights and the acquiring person has
acquired control shares with a majority or more of the voting power, any
stockholder of record, other than an acquiring person, who has not voted in
favor of approval of voting rights is entitled to demand fair value for such
stockholder’s shares.
Nevada’s
control share law may have the effect of discouraging corporate
takeovers.
In
addition to the control share law, Nevada has a business combination law, which
prohibits certain business combinations between Nevada corporations and
“interested stockholders” for three years after the “interested stockholder”
first becomes an “interested stockholder” unless the corporation’s board of
directors approves the combination in advance. For purposes of Nevada law, an
“interested stockholder” is any person who is (1) the beneficial owner,
directly or indirectly, of ten percent or more of the voting power of the
outstanding voting shares of the corporation, or (2) an affiliate or
associate of the corporation and at any time within the three previous years was
the beneficial owner, directly or indirectly, of ten percent or more of the
voting power of the then outstanding shares of the corporation. The definition
of the term “business combination” is sufficiently broad to cover virtually any
kind of transaction that would allow a potential acquirer to use the
corporation’s assets to finance the acquisition or otherwise to benefit its own
interests rather than the interests of the corporation and its other
stockholders.
The
effect of Nevada’s business combination law is to potentially discourage parties
interested in taking control of Gran Tierra Energy from doing so if it cannot
obtain the approval of our board of directors.
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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Dated: December
10, 2010
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GRAN
TIERRA ENERGY INC.
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By:
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/s/ Martin Eden
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Martin Eden
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Chief
Financial Officer
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