Purchase Option Agreements (warrants)

EXHIBIT 10(u)


THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN PROVIDED.


NOT EXERCISABLE PRIOR TO SEPTEMBER 14, 1994. VOID AFTER 5:00 P.M. EASTERN TIME, SEPTEMBER 14, 1998.


PURCHASE OPTION


For the Purchase of 97,500 Shares of Common Stock


OF


AMERICAN NATURAL ENERGY CORPORATION


(An Oklahoma Corporation)


1. Purchase Option.


THIS CERTIFIES THAT, in consideration of $0.001 per share duly paid by or on behalf of GAINES, BERLAND, INC. (the "Holder"), as registered owner of this Purchase Option, to American Natural Energy Corporation (the "Company"), Holder is entitled, at any time or from time to time at or after September 14, 1994, and at or before 5:00 p.m., Eastern Time, September 14, 1998, but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to 97,500 shares (the "Shares") of common stock of the Company, $0.01 par value, (the "Common Stock"). If September 14, 1998, is a day on which banking institutions are authorized by law to close, then this Purchase Option may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending September 14, 1998, the Company agrees not to take any action that would terminate the Purchase Option. This Purchase Option is initially exercisable at $5.70 per Share so purchased; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Option, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term "Exercise Price" shall mean the initial exercise price or the adjusted exercise price, depending on the context, of a Share.


2. Exercise.


2.1 Exercise Form. In order to exercise this Purchase Option, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Option and payment of the Exercise Price for the Shares being 2 purchased. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on September 14, 1998, this Purchase Option shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.


2.2 Legend. Each certificate for securities purchased under this Purchase Option shall bear a legend as follows unless such securities have been registered under the Act.


"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). The
securities may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from
registration under the Act."


2.3 Conversion Right.


2.3.1 Determination of Amount. In lieu of the payment of the Exercise Price, the Holder shall have the right (but not the obligation), to require the Company to convert this Purchase Option, in whole or in part, into Shares ("Conversion Right") as provided for in this Section. Upon exercise of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price) that number of Shares equal to the quotient obtained by dividing (x) the "Value" (as defined below) of the portion of the Purchase Option being converted at the time the Conversion Right is exercised by (y) the Market Price (as defined in Section 6.2.6) immediately prior to the exercise of the Conversion Right. The "Value" of the portion of the Purchase Option being converted shall mean the difference between (i) the Exercise Price and (ii) the Market Price, multiplied by the number of Shares being converted.


2.3.2 Exercise of Conversion Right. The Conversion Right may be exercised by the Holder on any business day between (i) September 14, 1994 and (ii) September 14, 1998 by delivering the Purchase Option with a duly executed exercise form attached hereto with the conversion section completed to the Company, exercising the Conversion Right and specifying the total number of Shares the Holder will purchase pursuant to such conversion.


3. Transfer.


3.1 General Restrictions. The registered Holder of this Purchase Option, by its acceptance hereof, agrees that it will not sell, transfer or assign or hypothecate this Purchase Option prior to September 14, 1994, to anyone other than (i) an officer or partner of such Holder, (ii) an officer or partner of Gaines,


2 3 Berland Inc. ("Underwriter") or any other underwriter or Selected Dealer in connection with the Company's public offering of shares of Common Stock underwritten by the Underwriter, or ( iii ) any underwriter or Selected Dealer. On and after September 14, 1994, transfers to others may be made. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Option and payment of all transfer taxes, if any, payable in connection therewith. The Company shall immediately transfer this Purchase Option on the books of the Company and shall execute and deliver a new Purchase Option or Purchase Options of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.


3.2 Restrictions Imposed by the Act. The securities shall not be transferred unless and until (i) the Company has received the opinion of counsel for the Holder that the securities may be sold pursuant to an exemption from registration under the Securities Act of 1933, as amended (the "Act"), the availability of which is established to the reasonable satisfaction of the Company, or (ii) a registration statement relating to such securities has been filed by the Company and declared effective by the Securities and Exchange Commission.


4. New Purchase Options to be Issued.


4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Option may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Option for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any transfer tax, the Company shall cause to be delivered to the Holder without charge a new Purchase Option of like tenor to this Purchase Option in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Purchase Option has not been exercised or assigned.


4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Option and of reasonably satisfactory indemnification, the Company shall execute and deliver a new Purchase Option of like tenor and date. Any such new Purchase Option executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute an additional contractual obligation on the part of the Company.


5. Registration Rights.


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5.1 Demand Registration.


5.1.1 Grant of Right. The Company, upon written demand ("Initial Demand Notice") of the Holder(s) of at least 51% of the Purchase Options and/or the underlying Shares ("Majority Holders"), agrees to register on one occasion, all or any portion of the Purchase Options requested by the Majority Holders in the Initial Demand Notice and all of the securities underlying such Purchase Options, including the Shares (collectively the "Registerable Securities"). On such occasion, the Company will file a Registration Statement covering the Registrable Securities within sixty days after receipt of the Initial Demand Notice and use its best efforts to have such registration statement declared effective promptly thereafter. The demand for registration may be made at any time during a period of four years beginning one year from the Effective Date. The Company covenants and agrees to give written notice of its receipt of any Initial Demand Notice by any Holder(s) to all other registered Holders of the purchase Options and/or the Registerable Securities within ten days from the date of the receipt of any such Initial Demand Notice.


5.1.2 Terms. The Company shall bear all fees and expenses attendant to registering the Registrable Securities, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. The Company agrees to use its prompt best efforts to cause the filing required herein to become effective and to qualify or register the Registrable Securities in such States as are reasonably requested by the Holder(s); provided, however, that in no event shall the Company be required to register the Registrable Securities in a State in which such registration would cause (i) the Company to be obligated to do business in such State, or (ii) the principal stockholders of the Company to be obligated to escrow their shares of capital stock of the Company. The Company shall cause any registration statement filed pursuant to the demand rights granted under Section 5.1.1 to remain effective for a period of at least nine consecutive months from the effective date of such registration statement.


5.2 "Piggy-Back" Registration.


5.2.1 Grant of Right. In addition to the demand right of registration, the Holders of the Purchase Options shall have the right, for a period of six years beginning one year from the Effective Date, to include the Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145 (as promulgated under the Act or pursuant to Form S-8 or equivalent form).


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5.2.2 Terms. The Company shall bear all fees and expenses attendant to registering the Registrable Securities, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than thirty days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities have been registered and sold. The holders of the Registrable Securities shall exercise the "piggy-back" rights provided for herein by giving written notice, within twenty days of the receipt of the Company's notice of its intention to file a registration statement. The Company shall cause any registration statement filed pursuant to the above "piggyback" rights to remain effective for at least nine months from the date that the Holders of the Registrable Securities are first given the opportunity to sell all of such securities.


5.3 General Terms.


5.3.1 Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the Underwriter contained in Section 5 of the Underwriting Agreement. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in Section 5 of the Underwriting Agreement pursuant to which the Underwriter has agreed to indemnify the Company.


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5.3.2 Exercise of Purchase Options. Nothing contained in this Purchase Option shall be construed as requiring the Holder(s) to exercise their Purchase Options prior to or after the initial filing of any registration statement or the effectiveness thereof.


5.3.3 Exclusivity. The Company shall not permit the inclusion of any securities other than the Registerable Securities be included in any registration statement filed pursuant to Section 5.1 hereof without the prior written consent of the Majority Holders of the Registrable Securities.


5.3.4 Documents Delivered to Holders. The Company shall furnish to each Holder participating in any of the foregoing offerings and to each underwriter of any such offering, if any, a signed counterpart, addressed to such Holder or underwriter, of (i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public of ...