Document:

ex10_1.htm

Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

Houston American Energy Corp.

801 Travis

Suite 1425

Houston, Texas  77002

 

Gentlemen:

 

The undersigned (the “Investor”) hereby confirms its agreement with Houston American Energy Corp., a Delaware corporation (the “Company”), as follows:

 

1.             This Subscription Agreement, including the Terms and Conditions for Purchase of Units attached hereto as Annex I (collectively, this “Agreement”), is made as of the date set forth below between the Company and the Investor.

 

2.             The Company represents and warrants that it has authorized the sale and issuance to certain investors of up to an aggregate of 14,814,815 units (the “Units”), each Unit consisting of (i) one share (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), (ii) a Class A Common Stock Warrant to purchase 0.5 shares of Common Stock at an exercise price of $0.81 per share and with a term of exercise of 6 months (the “Class A Warrants”) and (iii) a Class B Common Stock Warrant to purchase 0.5 shares of Common Stock at an exercise price of $0.90 per share and with a term of exercise of 3 years (the “Class B Warrants” and together with the Class A Warrants, the “Warrants”), for a purchase price of $0.675 per Unit (the “Purchase Price”).  The shares of Common Stock issuable upon exercise of the Warrants are referred to as the “Warrant Shares” and the Shares, the Warrants and the Warrant Shares are referred to as the “Securities”.

 

3.             The Company represents and warrants that the offering and sale of the Securities (the “Offering”) are being made pursuant to (a) an effective Registration Statement on Form S-3 (Registration No. 333-161319) (the “Registration Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”), including the Prospectus contained therein (the “Base Prospectus”), (b) a preliminary prospectus supplement to the Base Prospectus (including the Base Prospectus as so supplemented), that describes the Securities and the offering thereof, which omits certain information permitted to be omitted under Rule 430B of the Securities Act of 1933, as amended (the “Act”) that was used prior to the filing of the Final Prospectus Supplement (as defined below) (the “Preliminary Prospectus”), (C) if applicable, certain “free writing prospectuses” (as that term is defined in Rule 405), that have been or will be filed with the Commission and delivered to the Investor on or prior to the date hereof (the “Issuer Free Writing Prospectus”), containing certain supplemental information regarding the Securities, the terms of the Offering and the Company, and (d) a final prospectus supplement (the “Final Prospectus Supplement” and, together with the Base Prospectus, the “Prospectus”) containing certain supplemental information regarding the Securities and terms of the Offering that has been or will be (i) filed with the Commission, and (ii) delivered to the Investor (or made available to the Investor by the filing by the Company of an electronic version thereof with the Commission). The Company further represents and warrants that it shall maintain the effectiveness of the Registration Statement (or a suitable replacement) while any of the Warrants are outstanding; provided, however, that the Company may suspend the use of the Registration Statement for a period of not more than 30 days (a “Blackout Period”) upon the advice of counsel that such Blackout Period is necessary because of some material non-public information in the Company’s possession.

 

  

  

  

4.             The Company and the Investor agree that the Investor will purchase from the Company and the Company will issue and sell to the Investor the Units set forth below for the aggregate purchase price set forth below.  The Units shall be purchased pursuant to the Terms and Conditions for Purchase of Units attached hereto as Annex I and incorporated herein by this reference as if fully set forth herein.  The Investor acknowledges that the Offering is not being underwritten by the C. K. Cooper & Company, Inc., placement agent with respect to the Units (the “Placement Agent”) and that there is no minimum offering amount.

 

5.             The manner of settlement of Units purchased by the Investor shall be as follows:

 

A.           Shares of Common Stock (check one)

 

	
  

	
_____  (1)

	
Delivery by crediting the account of the Investor’s prime broker (as specified by such Investor on Exhibit A annexed hereto) with the Depository Trust Company (“DTC”) through its Deposit/Withdrawal At Custodian (“DWAC”) system, whereby Investor’s prime broker shall initiate a DWAC transaction on the Closing Date using its DTC participant identification number, and released by Standard Registrar and Transfer Company, Inc., the Company’s transfer agent (the “Transfer Agent”), at the Company’s direction.  If Investor selects this option, Investor shall fill out the Investor Questionnaire attached as Exhibit A to Annex I.  NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

 

	
  

	
(I)

	
DIRECT THE BROKER DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND

 

	
  

	
(II)

	
REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:

 

Bank Name: JPMorgan Chase Bank, N.A.

ABA # 111000614

Account Name: Houston American Energy Corp.

Account Number: 801497553

  

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____  (2)

	
Delivery versus payment (“DVP”) through DTC: on the Closing Date, the Company shall deliver Shares registered in the Investor's name and address as set forth below and released by the Transfer Agent to the Investor through DTC at the Closing directly to the account(s) with the Placement Agent identified by the Investor; upon receipt of such Shares, the Placement Agent shall promptly electronically deliver such Shares to the Investor, and simultaneously therewith payment shall be made by the Placement Agent wire transfer to the Company.  NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

 

	
  

	
(I)

	
NOTIFY PLACEMENT AGENT OF THE ACCOUNT OR ACCOUNTS AT PLACEMENT AGENT TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH INVESTOR, AND

 

	
  

	
(II)

	
CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT PLACEMENT AGENT TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR.

 

IT IS THE INVESTOR'S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DWAC OR DVP IN A TIMELY MANNER.  IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES MAY NOT BE DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING ALTOGETHER.

 

B.           Warrants.  Warrants in the name of the Investor shall be delivered to the address provided by the Investor below within two business days after the Closing.

 

6.             The Investor represents that, except as set forth below, (a) it has had no material relationship (exclusive of any investments by the Investor in the Company's securities) within the past three years with the Company or persons known to it to be affiliates of the Company, (b) it is not a FINRA member or an Associated Person of a FINRA member (as such term is defined under the NASD Membership and Registration Rules Section 1011) as of the Closing, and (c) neither the Investor nor any group of Investors (as identified in a public filing made with the Commission) of which the Investor is a part in connection with the Offering of the Units, acquired, or obtained the right to acquire, 20% or more of the Common Stock (or securities convertible into or exercisable for Common Stock) or the voting power of the Company on a post-transaction basis.  Exceptions:

 

  

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The representations above are made to the knowledge of the signatory below.

 

(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)

 

7.             The Investor represents that it has received (or otherwise had made available to it by the filing by the Company of an electronic version thereof with the Commission) the Base Prospectus which is a part of the Company's Registration Statement, the Preliminary Prospectus, the documents incorporated by reference therein and any Issuer Free Writing Prospectus (collectively, the “Disclosure Package”), prior to or in connection with the receipt of this Agreement.  The Investor acknowledges that, prior to the delivery of this Agreement by the Investor to the Company, the Investor will receive certain additional information regarding the Offering, including pricing information (the “Offering Information”).  Such information may be provided to the Investor by any means permitted under the Act, including the Final Prospectus Supplement, a free writing prospectus and oral communications.

 

8.             The Investor acknowledges that the Company has made available to the Investor such materials relating to the business, finances and operations of the Company's Colombian operators, Hupecol, LLC and S-K Innovation Co. LTD, as requested by the Investor and available to the Company.  The Investor acknowledges that the Company's Colombian assets consist exclusively of minority, non-operator project interests in certain Colombian assets owned and operated by Hupecol, LLC, and a 37.5% non-operated working interest in certain Colombian assets owned and operated by S-K Innovation Co. LTD.  Investor acknowledges that the Company's passive investments in such Colombian assets constitute the principal assets and operations of the Company, and as a result, the Company's financial results are directly affected by the independent strategies and decisions of Hupecol, LLC and S-K Innovation Co. LTD.

 

9.             No offer by the Investor to buy Units will be accepted and no part of the Purchase Price will be delivered to the Company until the Investor has received the Offering Information and the Company has accepted such offer by countersigning a copy of this Agreement, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to the Company (or Placement Agent on behalf of the Company) sending (orally, in writing or by electronic mail) notice of its acceptance of such offer.  An indication of interest will involve no obligation or commitment of any kind until the Investor has been delivered the Offering Information and this Agreement is accepted and countersigned by or on behalf of the Company.

 

[Remainder of Page Left Blank Intentionally.  Signature Page Follows.]

 

  

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Number of Units: ___________________

 

Purchase Price Per Unit: $____________

 

Aggregate Purchase Unit: $ __________

 

 

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.

 

	  	
Dated as of October __, 2012

	  	  	  
	  	  
	  	
INVESTOR

	  
	  	
By:

	  
	  	
Printed name:

	  
	  	
Title:

	  
	  	
Address:

	  
	  	  
	  	
Email:

	  
	  	
Phone:

	  

 

 

Agreed and Accepted

 

the ___ day of October, 2012:

 

	
HOUSTON AMERICAN ENERGY CORP.

	  
	
By:

	  	  
	
Name:

	  	  
	
Title:

	  	  

  

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ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF UNITS

 

1.             Authorization and Sale of the Units.  Subject to the terms and conditions of this Agreement, the Company has authorized the sale of the Units.

 

2.             Agreement to Sell and Purchase the Units; Placement Agent.

 

2.1           At the Closing (as defined in Section 3.1), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions set forth herein, the number of Units set forth on the last page of the Agreement to which these Terms and Conditions for Purchase of Units are attached as Annex I (the “Signature Page”) for the aggregate purchase price therefor set forth on the Signature Page.

 

2.2           The Company proposes to enter into substantially this same form of Subscription Agreement with certain other investors (the “Other Investors”) and expects to complete sales of Units to them.  The Investor and the Other Investors, if any, are hereinafter sometimes collectively referred to as the “Investors,” and this Agreement and the Subscription Agreements executed by the Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”

 

2.3           Investor acknowledges that the Company has agreed to pay the Placement Agent a fee (the “Placement Fee”) in respect of the sale of Units to the Investor.

 

2.4           The Company has entered into a Placement Agency Agreement, dated October ___, 2012 (the “Placement Agreement”), with the Placement Agent that contains representations, warranties, covenants and agreements of the Company that may be relied upon by the Investor, which shall be a third party beneficiary thereof.  The Company represents and warrants that a true and correct copy of the Placement Agreement is attached hereto as Exhibit B.  Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Placement Agreement and any other documents or agreements contemplated hereby or thereby, the Company confirms that neither it nor any other person acting on its behalf has provided the Investor or any Other Investor or its respective agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information.  The Company understands and confirms that the Investor will rely on the foregoing representations in effecting transactions in securities of the Company.

 

3.             Closings and Delivery of the Units and Funds.

 

3.1           Closing.  The completion of the purchase and sale of the Units (the “Closing”) shall occur at a place and time (the “Closing Date”) to be specified by the Company and the Placement Agent, and of which the Investors will be notified in advance by the Placement Agent, in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  In accordance with paragraph 5 of the Subscription Agreement, (a) the Company shall cause to be delivered to the Investor the Units set forth on the Signature Page registered in the name of the Investor or, if so indicated on the Investor Questionnaire attached hereto as Exhibit A, in the name of a nominee designated by the Investor and (b) the aggregate purchase price for the Units being purchased by the Investor will be delivered by or on behalf of the Investor to the Company.

 

  

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3.2           Conditions to the Obligations of the Parties.

 

(a)           Conditions to the Company's Obligations.  The Company's obligation to issue and sell the Units to the Investor shall be subject to: (i) the delivery by the Investor, in accordance with the provisions of this Agreement, of the purchase price for the Units being purchased hereunder as set forth on the Signature Page and (ii) the accuracy of the representations and warranties made by the Investor in this Agreement and the fulfillment of those undertakings of the Investor in this Agreement to be fulfilled prior to the Closing Date.

 

(b)           Conditions to the Investor's Obligations.  The Investor's obligation to purchase the Units will be subject to (i) the delivery by the Company of the Units in accordance with the provisions of this Agreement, (ii) the accuracy of the representations and warranties made by the Company and the fulfillment of those undertakings of the Company to be fulfilled prior to the Closing Date, including without limitation, those contained in the Placement Agreement, (iii) the satisfaction of the conditions to the closing set forth in the Placement Agreement, and to the condition that the Placement Agent, shall not have: (x) terminated the Placement Agreement pursuant to the terms thereof or (y) determined that the conditions to the closing in the Placement Agreement have not been satisfied.  The Investor's obligations are expressly not conditioned on the purchase by any or all of the Other Investors of the Units that they have agreed to purchase from the Company.  The Investor understands and agrees that, in the event that the Placement Agent, in its sole discretion determines that the conditions to closing in the Placement Agreement have not been satisfied or if the Placement Agreement may be terminated for any other reason permitted by the Placement Agreement, then Placement Agent may, but shall not be obligated to, terminate such Placement Agreement, which shall have the effect of terminating this Subscription Agreement pursuant to Section 14 below.

 

3.3           Delivery of Funds.

 

(a)           DWAC Delivery.  If the Investor elects to settle the Shares underlying the Units purchased by such Investor through DTC's Deposit/Withdrawal at Custodian (“DWAC”) delivery system, no later than one (1) business day after the execution of this Agreement by the Investor and the Company, the Investor shall remit by wire transfer the amount of funds equal to the aggregate purchase price for the Units being purchased by the Investor to the following account designated by the Company:

 

Bank Name: JPMorgan Chase Bank, N.A.

ABA # 111000614

Account Name: Houston American Energy Corp.

Account Number: 801497553

 

Such funds shall be held in escrow by the Company until the Closing upon the satisfaction of the conditions set forth in Section 3.2(b) hereof.

 

(b)           Delivery Versus Payment through The Depository Trust Company.  If the Investor elects to settle the Shares underlying the Units purchased by such Investor by delivery versus payment through DTC, no later than one (1) business day after the execution of this Agreement by the Investor and the Company, the Investor shall confirm that the account or accounts to be credited with the Shares underlying the Unit being purchased by the Investor have a minimum balance equal to the aggregate purchase price for the Units being purchased by the Investor.

 

  

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3.4           Delivery of Shares.

 

(a)           DWAC Delivery.  If the Investor elects to settle the Shares purchased by such Investor through DTC's DWAC delivery system, Investor shall fill out the Investor Questionnaire attached hereto as Exhibit A and no later than one (1) business day after the execution of this Agreement by the Investor and the Company, the Investor shall direct the broker-dealer at which the account or accounts to be credited with the Shares being purchased by such Investor are maintained, which broker/dealer shall be a DTC participant, to set up a DWAC instructing the Transfer Agent to credit such account or accounts with the Shares.  Such DWAC instruction shall indicate the settlement date for the deposit of the Shares, which date shall be provided to the Investor by Placement Agent.  At the Closing, the Company shall direct the Transfer Agent to credit the Investor's account or accounts with the Shares pursuant to the information contained in the DWAC.

 

(b)           Delivery Versus Payment through The Depository Trust Company.  If the Investor elects to settle the Shares purchased by such Investor by delivery versus payment through DTC, no later than one (1) business day after the execution of this Agreement by the Investor and the Company, the Investor shall notify Placement Agent of the account or accounts at Placement Agent to be credited with the Shares being purchased by such Investor.  On the Closing Date, the Company shall deliver the Shares to the Investor through DTC directly to the account(s) identified by Investor and simultaneously therewith payment shall be made to the Company.

 

4.            Representations, Warranties and Covenants of the Investor.

 

The Investor acknowledges, represents and warrants (as of the date hereof) to, and agrees with, the Company and the Placement Agent that:

 

4.1           The Investor (a) is knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to, investments in securities presenting an investment decision like that involved in the purchase of the Units, including investments in securities issued by the Company and investments in comparable companies, (b) has answered all questions on the Signature Page and the Investor Questionnaire (if the Investor elects to settle the Units purchased by such Investor through DWAC) and the answers thereto are true and correct as of the date hereof and will be true and correct as of the Closing Date and (c) in connection with its decision to purchase the number of Units set forth on the Signature Page, has received and is relying only upon the Disclosure Package and the documents incorporated by reference therein and the Offering Information and the representations, warranties, covenants and agreements of the Company contained in the Placement Agreement.

 

  

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4.2           (a) No action has been or will be taken in any jurisdiction outside the United States by the Company or the Placement Agent that would permit an offering of the Units, or possession or distribution of offering materials in connection with the issue of the Units in any jurisdiction outside the United States where action for that purpose is required, (b) if the Investor is outside the United States, it will comply with all applicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers Units or has in its possession or distributes any offering material, in all cases at its own expense and (c) the Placement Agent is not authorized to make nor has it made any representation, disclosure or use of any information in connection with the issue, placement, purchase and sale of the Units, except as set forth or incorporated by reference in the Base Prospectus, Preliminary Prospectus, any Issuer Free Writing Prospectus or the Final Prospectus Supplement.

 

4.3           (a) The Investor is either an individual or an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (b) this Agreement constitutes a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as to the enforceability of any rights to indemnification or contribution that may be violative of the public policy underlying any law, rule or regulation (including any federal or state securities law, rule or regulation).  The Investor's execution, delivery and performance of this Agreement and the consummation by it of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Investor's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Investor is subject (including federal and state securities laws and regulations), or by which any property or asset of the Investor is bound or affected.

 

4.4           The Investor understands that nothing in this Agreement, the Prospectus or any other materials presented to the Investor in connection with the purchase and sale of the Units constitutes legal, tax or investment advice.  The Investor has consulted such legal, tax and investment advisors and made such investigation as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Units.

 

4.5           Since September 27, 2012, the Investor has not engaged in any buys or sales involving the securities of the Company (including, without limitation, any Short Sales involving the Company's securities).  The Investor covenants that it will (i) maintain the confidentiality of all information acquired as a result of the transactions contemplated herein and (ii) not engage in any purchases or sales of the securities of the Company (including Short Sales), in each case prior to the time that the transactions contemplated by this Agreement are publicly disclosed.  The Investor agrees that it will not use any of the Units acquired pursuant to this Agreement to cover any short position in the Common Stock if doing so would be in violation of applicable securities laws.  For purposes hereof, “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sales contracts, options, puts, calls, short sales, swaps, and “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act)  (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.

 

  

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5.            Survival of Representations, Warranties and Agreements; Third Party Beneficiary. Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Investor herein and, with respect to the Company, in the Placement Agreement, will survive the execution of this Agreement, the delivery to the Investor of the Units being purchased and the payment therefor.

 

6.            Notices.  All notices, requests, consents and other communications hereunder will be in writing, will be mailed (a) if within the domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and (c) will be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed and (iv) if delivered by facsimile, upon electric confirmation of receipt and will be delivered and addressed as follows:

 

	
  

	
(a)

	
if to the Company, to:

Houston American Energy Corp.

801 Travis

Suite 1425

Houston, Texas  77002

Attention:  John F. Terwilliger

Facsimile No.:  713-222-6440

(b)           if to the Investor, at its address on the Signature Page hereto, or at such other address or addresses as may have been furnished to the Company in writing.

 

7.            Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.  Any modification or amendment to Section 3 (Representations and Warranties of the Company) or Section 6 (Conditions of the Issuance and Sale of the Units and the Obligations of the Placement Agent) of the Placement Agreement, and any modification or amendment to the Placement Agreement that is material and adverse to the Investor, shall require the prior written consent of the Investor.

 

8.            Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and will not be deemed to be part of this Agreement.

 

  

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9.            Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby.

 

10.          Governing Law.  This Agreement will be governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to the principles of conflicts of law that would require the application of the laws of any other jurisdiction.  Except as set forth below, no proceeding may be commenced, prosecuted or continued in any court other than the courts of State of New York located in the City and County of New York or the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the parties hereby consent to the jurisdiction of such courts and personal service with respect thereto.  All parties hereby waive all right to trial by jury in any proceeding (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement.  All parties agree that a final judgment in any such proceeding brought in any such court shall be conclusive and binding upon each party and may be enforced in any other courts in the jurisdiction of which a party is or may be subject, by suit upon such judgment.

 

11.          Counterparts.  This Agreement may be executed in two or more counterparts, each of which will constitute an original, but all of which, when taken together, will constitute but one instrument, and will become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.  Delivery of an executed counterpart by facsimile or portable document format (.pdf) shall be effective as delivery of a manually executed counterpart thereof.

 

12.          Confirmation of Sale.  The Investor acknowledges and agrees that such Investor's receipt of the Company's signed counterpart to this Agreement, together with an Issuer Free Writing Prospectus or the Final Prospectus Supplement (or the filing by the Company of an electronic version thereof with the Commission), shall constitute written confirmation of the Company's sale of Units to such Investor.

 

13.          Press Release.  The Company and the Investor agree that, prior to the opening of the NYSE MKT in New York City on the business day immediately after the date hereof, the Company shall (i) issue a press release announcing the Offering and disclosing all material information regarding the Offering and (ii) file a Current Report on Form 8-K with the Commission disclosing all material information regarding the Offering and including the Placement Agreement and a form of this Agreement as exhibits thereto.  From and after the issuance of such press release and the filing of such Current Report on Form 8-K, the Company shall have publicly disclosed all material, non-public information delivered to any of the Investors by the Company or any person acting on its behalf, including, without limitation, the Placement Agent, in connection with the transactions contemplated by this Agreement, the Placement Agreement and any other documents or agreements contemplated hereby or thereby.  The Company shall not identify the name of any Investor or any affiliate of any investment adviser of such Investor in any press release or public filing, or otherwise publicly disclose the name of any Investor or any affiliate of investment adviser of such Investor, without such Investor's prior written consent, unless required by law or the rules and regulations of a national securities exchange, provided, however, that, if permitted by applicable law, regulation, legal or judicial process, promptly after becoming aware of any request or requirement to so disclose (a “Disclosure Requirement”), and in any event prior to any such disclosure, the Company will provide such Investor with notice of such request or requirement so that such Investor may at its election seek a protective order or other appropriate remedy and the Company will fully cooperate with such Investor's efforts to obtain the same; provided, further, however, if, absent the entry of such a protective order or other remedy, the Company is compelled by applicable law, rule or regulation or a court order, subpoena, similar judicial process, regulatory agency or stock exchange rule to disclose such Investor's name, the Company may disclose only that portion of such information that the Company is so compelled to disclose and will use its reasonable efforts to obtain assurance that confidential treatment will be accorded to that portion of such information that is being disclosed.  As of the date hereof, the Company is not aware of any Disclosure Requirement.

 

  

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14.          Termination.  In the event that the Placement Agreement is terminated by the Placement Agent pursuant to the terms thereof, this Agreement shall terminate without any further action on the part of the parties hereto.

 

15.          Fees and Expenses.  The Company shall reimburse Empery Asset Master Ltd., an Investor (“Empery”) for all costs and expenses incurred in connection with the transactions contemplated by this Agreement and the Warrants (including all legal fees and disbursements in connection therewith), which amount my be withheld by Empery from its Purchase Price a the Closing; provided, that such fee reimbursement shall not exceed $10,000.  Except as set forth above, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

 

  

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EXHIBIT A

 

HOUSTON AMERICAN ENERGY CORP.

 

INVESTOR QUESTIONNAIRE

 

If the Investor elects to settle the Shares purchased by such Investor through DTC's Deposit/Withdrawal at Custodian (“DWAC”) delivery system please provide us with the following information:

 

	
1.       The exact name that your Shares are to be registered in. You may use a nominee name if appropriate:

	 
	
 

	  
	 
	
2.       The relationship between the Investor and the registered holder listed in response to item 1 above:

	 
	
 

	  
	 
	
3.       The mailing address of the registered holder listed in response to item 1 above:

	 
	
 

	  
	 
	
4.       The Social Security Number or Tax Identification Number of the registered holder listed in the response to item 1 above:

	 
	
 

	  
	 
	
5.       Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Shares are maintained):

	 
	
 

	  
	 
	
6.       Participant Number:

	 
	
 

	  
	 
	
7.       Name of Account at DTC Participant being credited with the Shares:

	 
	
 

	  
	 
	
8.       Account Number at DTC Participant being credited with the Shares:

	 
	
 

	  

  

 

  

If you will become a 5% holder as a result of the transaction, or potentially become a 5% holder as a result of the transaction (through exercise of warrants or price resets, for example), then please complete the following additional questionnaire.

 

As you are aware, the NYSE MKT routinely performs due diligence on investors who have entered into transactions with NYSE MKT-listed companies.  In an effort to expedite this process, please respond as accurately as possible to the questions listed below.

 

	
1.       Specify whether the investor is a domestic or offshore entity.

	 
	
 

	  	  
	 	 	 
	
2.       Provide the country of domicile or registry of the investor.

	 
	
 

	  	  
	 	 	 
	
3.       Is the investor a private equity fund, investment manager or other?

	 
	
 

	  	  
	 	 	 
	
4.       List all officers, directors, controlling shareholders and individuals with dispositive power and voting control over the additional shares/securities.

	 
	  	
a)

	
 

	 	 	 
	  	
b)

	
 

	 	 	 
	  	
c)

	
 

	 	 	 
	  	
d)

	
 

	 	 	 
	  	
e)

	
 

	 	 	 
	  	
f)

	
 

	 	 	 
	  	
g)

	
 

	 	 	 
	  	
h)

	
 

	 	 	 
	
5.       The bank from which the investor has wired or will wire the funds from.

	 
	
 

	  	  
	 	 	 
	
6.       Does the investor intend to hold the shares in its own name or street name?

	 
	
 

	  	  
	 	 	 
	
7.       Which brokerage firm will the investor use to hold the shares, if any?

	 
	
 

	  	  
	 	 	 
	
8.       Is there any affiliation to any other investors, directly or indirectly?

	 
	
 

	  	  
	 	 	 
	
9.       How was the investor contacted for an investment in the Company?

	 
	
 

	  	  

  

 

  

EXHIBIT B

 

PLACEMENT AGREEMENT

 

 

- 15 -ex4_6.htm

Exhibit 4.10

WARRANT

 

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  SUBJECT TO SECTION 6 BELOW, AND EXCEPT IN COMPLIANCE WITH RULE 144 UNDER THE ACT, NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR HOLDER, SATISFACTORY TO COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

 

WARRANT TO PURCHASE 39,346 COMMON SHARES

 

THIS CERTIFIES THAT, for value received, GE Capital Equity Investments, Inc. (“Holder”) is entitled to subscribe for and purchase thirty-nine thousand three hundred forty-six (39,346) shares of fully paid and nonassessable shares of Common Stock of XOMA Corporation, a Delaware corporation (“Company”), at the Warrant Price (as hereinafter defined), subject to the provisions and upon the terms and conditions hereinafter set forth.  As used herein, the term “Common Stock” shall mean Company’s presently authorized common shares, US$0.0075 par value per share, and any shares into which such common shares may hereafter be converted or exchanged and the term “Warrant Shares” shall mean the shares of Common Stock which Holder may acquire pursuant to this Warrant and any other shares into which such shares of Common Stock may hereafter be converted or exchanged.

 

1.             Warrant Price.  The “Warrant Price” shall initially be three and 54/100 dollars ($3.54) per share, subject to adjustment as provided in Section 7 below; provided that at no time shall the Warrant Price be less than the then current par value of any Common Stock to be issued hereunder.

 

2.             Conditions to Exercise.  The purchase right represented by this Warrant may be exercised at any time, or from time to time, in whole or in part during the term commencing on the date hereof and ending at 5:00 P.M. Pacific time on the fifth anniversary of the date of this Warrant (the “Expiration Date”).

 

3.             Method of Exercise or Conversion; Payment; Issuance of Shares; Issuance of New Warrant.

 

(a)           Cash Exercise.  Subject to Section 2 hereof, the purchase right represented by this Warrant may be exercised by Holder hereof, in whole or in part, by the surrender of the original of this Warrant (together with a duly executed Notice of Exercise in substantially the form attached hereto) at the principal office of Company (as set forth in Section 18 below) and by payment to Company, by certified or bank check, or wire transfer of immediately available funds, of an amount equal to the then applicable Warrant Price per share multiplied by the number of Warrant Shares then being purchased (the “Aggregate Purchase Price”).  In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be in the name of, and delivered to, Holder hereof, or as such Holder may direct (subject to the terms of transfer contained herein and upon payment by such Holder hereof of any applicable transfer taxes).  Such delivery shall be made within 30 days after exercise of this Warrant and at Company’s expense and, unless this Warrant has been fully exercised or expired, a new Warrant having terms and conditions substantially identical to this Warrant and representing the portion of the Warrant Shares, if any, with respect to which this Warrant shall not have been exercised, shall also be issued to Holder hereof within 30 days after exercise of this Warrant.

 

  

  

  

 

(b)           Cashless Exercise.  Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price (with the consideration for such exercise being Holder’s surrender of a portion of this Warrant equal to the difference between “A” and the “Net Number” set forth below), elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

	
Net Number =

	
(A x B) - (A x C)

B

 

For purposes of the foregoing formula:

 

A = the total number of shares with respect to which this Warrant is then being exercised.

 

B = the Weighted Average Price of the shares of Common Stock (as reported by Bloomberg) for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.

 

C = the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

(c)            Certain Definitions.  For the purpose of this Warrant: “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on The Nasdaq Global Market (the “Principal Market”) during the period beginning at 9:30:01 a.m., New York Time (or such other time as the Principal Market publicly announces as the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its “Volume at Price” function, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations are to be appropriately adjusted for any share dividend, share split, share combination or other similar transaction during the applicable calculation period.  “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).

 

  

  

  

 

(d)           Automatic Exercise.  To the extent this Warrant is not previously exercised, it shall be deemed to have been automatically converted in accordance with Sections 3(b) and 3(c) hereof (even if not surrendered) as of immediately before its expiration, involuntary termination or cancellation (including pursuant to Section 3(e)(ii)) if the then-Weighted Average Price of a Warrant Share exceeds the then-Warrant Price, unless Holder notifies Company in writing to the contrary prior to such automatic exercise.

 

(e)           Treatment of Warrant Upon Acquisition of Company.

 

(i)           Certain Definitions.  For the purpose of this Warrant: “Acquisition” means any sale, license, assignment, or other disposition of all or substantially all of the assets of Company, or any reorganization, consolidation, amalgamation or merger of Company, or sale of outstanding Company securities by holders thereof, where the holders of Company's securities as of immediately before the transaction beneficially own less than a majority of the outstanding voting securities of the successor or surviving entity as of immediately after the transaction.  For purposes of this Section 3(e), “Affiliate” shall mean any person or entity that owns or controls directly or indirectly ten percent (10%) or more of the voting capital stock of Company, any person or entity that controls or is controlled by or is under common control with such persons or entities, and each of such person’s or entity’s officers, directors, joint venturers or partners, as applicable.  Company shall provide Holder with written notice of any proposed Acquisition not later than ten (10) business days prior to the closing thereof setting forth the material terms and conditions thereof, and shall provide Holder with copies of the draft transaction agreements and other documents in connection therewith and with such other information respecting such proposed Acquisition as may reasonably be requested by Holder.

 

(ii)          Acquisition for Cash.  Holder agrees that, in the event of an Acquisition in which the sole consideration is cash, this Warrant shall be automatically exercised (or terminate) as provided in Section 3(d) on and as of the closing of such Acquisition to the extent not previously exercised.

 

(iii)         Asset Sale.  In the event of an Acquisition that is an arms length sale of all or substantially all of Company’s assets (and only its assets) to a third party that is not an Affiliate of Company (a “True Asset Sale”), Holder may either (a) exercise its conversion or purchase right under this Warrant and such exercise will be deemed effective immediately prior to the consummation of such Acquisition, or (b) permit the Warrant to continue until the Expiration Date if Company continues as a going concern following the closing of any such True Asset Sale.

 

(iv)         Assumption of Warrant.  Upon the closing of any Acquisition other than as particularly described in Section 3(e)(ii) or 3(e)(iii) above, Company shall, unless Holder requests otherwise, cause the surviving or successor entity to assume this Warrant and the obligations of Company hereunder, and this Warrant shall, from and after such closing, be exercisable for the same class, number and kind of securities, cash and other property as would have been paid for or in respect of the shares issuable (as of immediately prior to such closing) upon exercise in full hereof as if such shares had been issued and outstanding on and as of such closing, at an aggregate Warrant Price equal to the aggregate Warrant Price in effect as of immediately prior to such closing (and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant).

 

  

  

  

 

4.             Representations and Warranties of Holder and Company.

 

(a)           Representations and Warranties by Holder.  Holder represents and warrants to Company with respect to this purchase as follows:

 

(i)           Evaluation.  Holder has substantial experience in evaluating and investing in private placement transactions of securities of companies similar to Company so that Holder is capable of evaluating the merits and risks of its investment in Company and has the capacity to protect its interests.

 

(ii)          Resale.  Except for transfers to an affiliate of Holder, Holder is acquiring this Warrant and the Warrant Shares issuable upon exercise of this Warrant (collectively the “Securities”) for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof.  Holder understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Act”) by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

 

(iii)         Rule 144.  Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available.  Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

(iv)         Accredited Investor.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

(v)          Opportunity To Discuss.  Holder has had an opportunity to discuss Company’s business, management and financial affairs with its management and an opportunity to review Company’s facilities.  Holder understands that such discussions, as well as the written information issued by Company, were intended to describe the aspects of Company’s business and prospects which Company believes to be material but were not necessarily a thorough or exhaustive description.

 

(b)           Representations and Warranties by Company.   Company hereby represents and warrants to Holder that the statements in the following paragraphs of this Section 4(b) are true and correct (a) as of the date hereof and (b) except where any such representation and warranty relates specifically to an earlier date, as of the date of any exercise of this Warrant.

 

(i)           Corporate Organization and Authority.  Company (a) is a corporation duly organized, validly existing, and in good standing in its jurisdiction of incorporation, (b) has the corporate power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted; and (c) is qualified as a foreign corporation in all jurisdictions where such qualification is required, except where failure to so qualify would not reasonably be expected to have a material adverse effect on Company and its subsidiaries, taken as a whole.

 

(ii)          Corporate Power .  Company has all requisite legal and corporate power and authority to execute, issue and deliver this Warrant, to issue the Warrant Shares issuable upon exercise or conversion of this Warrant, and to carry out and perform its obligations under this Warrant.

 

(iii)         Authorization; Enforceability.  All corporate action on the part of Company, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of its obligations under this Warrant and for the authorization, issuance and delivery of this Warrant and the Warrant Shares issuable upon exercise of this Warrant has been taken and this Warrant constitutes the legally binding and valid obligation of Company enforceable in accordance with its terms.

 

  

  

  

 

(iv)         Valid Issuance of Warrant and Warrant Shares.  This Warrant has been validly issued and is free of restrictions on transfer other than restrictions on transfer set forth herein and under applicable state and federal securities laws. The Warrant Shares issuable upon exercise or conversion of this Warrant, when issued, sold and delivered in accordance with the terms of this Warrant for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Warrant and under applicable state and federal securities laws.  Subject to applicable restrictions on transfer, the issuance and delivery of this Warrant and the Warrant Shares issuable upon exercise or conversion of this Warrant are not subject to any preemptive or other similar rights or any liens or encumbrances except as specifically set forth in Company’s Certificate of Incorporation  (“Certificate of Incorporation”) or this Warrant.  Assuming the accuracy of the representations and warranties of Holder set forth in Section 4(a) hereof, the offer, sale and issuance of the Warrant Shares, as contemplated by this Warrant, are exempt from the prospectus and registration requirements of applicable United States federal and state securities laws, and neither Company nor any authorized agent acting on its behalf has or will take any action hereafter that would cause the loss of such exemption.

 

(v)          No Conflict.  The execution, delivery, and performance of this Warrant will not result in (a) any violation of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice (1) any provision of Company’s Certificate of Incorporation or Bylaws; (2) any provision of any judgment, decree, or order to which Company is a party, by which it is bound, or to which any of its material assets are subject; (3) any contract, obligation, or commitment to which Company is a party or by which it is bound; or (4) any statute, rule, or governmental regulation applicable to Company, or (b) the creation of any lien, charge or encumbrance upon any assets of Company except, in the case of clauses (a)(3) and (a)(4), to the extent that such violation, conflict or default would not reasonably be expected to have a material adverse effect on Company and its subsidiaries, taken as a whole.

 

(vi)         Reports.  Company has previously furnished or made available to Holder  complete and accurate copies, as amended or supplemented, of its (a) Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed with the Securities and Exchange Commission (the “SEC”), and (b) all other reports filed by Company under Section 13 or subsections (a) or (c) of Section 14 of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) with the SEC since December 31, 2011 (such reports are collectively referred to herein as the “Company Reports”), provided that notification to Holder by facsimile transmission or electronic transmission of the Company Reports as filed on the Securities and Exchange Commission’s Next-Generation EDGAR System shall have satisfied the notice and delivery requirements of this clause (vi).  The Company Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder when filed.

 

  

  

  

 

5.             Legends.

 

(a)           Legend.  Each certificate representing the Warrant Shares shall be endorsed with substantially the following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED (UNLESS SUCH TRANSFER IS TO AN AFFILIATE OF HOLDER) UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A “NO ACTION” LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR (IF REASONABLY REQUIRED BY COMPANY) AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

Company need not enter into its stock records a transfer of Warrant Shares unless the conditions specified in the foregoing legend are satisfied.  Company may also instruct its transfer agent not to allow the transfer of any of the Warrant Shares unless the conditions specified in the foregoing legend are satisfied.

 

(b)           Removal of Legend and Transfer Restrictions.  The legend relating to the Act endorsed on a certificate pursuant to paragraph 5(a) of this Warrant shall be removed and Company shall issue a certificate without such legend to Holder if (i) the Securities are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available or (ii) Holder provides to Company an opinion of counsel for Holder reasonably satisfactory to Company, a no-action letter or interpretive opinion of the staff of the SEC reasonably satisfactory to Company, or other evidence reasonably satisfactory to Company, to the effect that public sale, transfer or assignment of the Securities may be made without registration and without compliance with any restriction such as Rule 144.

 

6.             Transfers of Warrant.  In connection with any transfer by Holder of this Warrant, Company may require the transferee to provide Company with written representations and warranties that transferee is acquiring this Warrant and the shares of Common Stock to be issued upon exercise for investment purposes only and not with a view to any sale or distribution, and may require Holder to provide a legal opinion, in form and substance satisfactory to Company and its counsel, stating that such transfer is exempt from the registration and prospectus delivery requirements of the Act; provided, that Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder.  Following any transfer of this Warrant, the transferee shall surrender this Warrant to Company in exchange for a new warrant of like tenor and date, executed by Company.  Upon any partial transfer, Company will execute and deliver to Holder a new warrant of like tenor with respect to the portion of this Warrant not so transferred.  Subject to the foregoing, this Warrant is transferable on the books of Company at its principal office by the registered Holder hereof upon surrender of this Warrant properly endorsed.  Holder shall not have any right to transfer any portion of this Warrant to any direct competitor of Company.

 

7.             Adjustment for Certain Events. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

 

  

  

  

 

(a)           Reclassification or Merger.  In case of (i) any reclassification or change of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any merger or amalgamation of Company with or into another corporation (other than a merger or amalgamation with another corporation in which Company is the acquiring and the surviving or continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or (iii) any sale of all or substantially all of the assets of Company, Company, or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to Holder a new Warrant (in form and substance satisfactory to Holder of this Warrant), or Company shall make appropriate provision without the issuance of a new Warrant, so that Holder shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the Warrant Shares theretofore issuable upon exercise or conversion of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, merger, sale or amalgamation by a holder of the number of shares of Common Stock then purchasable under this Warrant, or in the case of such a merger, sale or amalgamation in which the consideration paid consists all or in part of assets other than securities of the successor or purchasing corporation, at the option of Holder, the securities of the successor or purchasing corporation having a value at the time of the transaction equivalent to the value of the Warrant Shares purchasable upon exercise of this Warrant at the time of the transaction.  Any new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 7.  The provisions of this subparagraph (a) shall similarly apply to successive reclassifications, changes, mergers, amalgamations and transfers.

 

(b)           Subdivision or Combination of Shares.  If Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of Common Stock, the Warrant Price shall be proportionately decreased and the number of Warrant Shares issuable hereunder shall be proportionately increased in the case of a subdivision and the Warrant Price shall be proportionately increased and the number of Warrant Shares issuable hereunder shall be proportionately decreased in the case of a combination.

 

(c)           Stock Dividends and Other Distributions.  If Company at any time while this Warrant is outstanding and unexpired shall (i) pay a dividend with respect to Common Stock payable in Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Common Stock (except any distribution specifically provided for in Sections 7(a) and 7(b)), then, in each such case, provision shall be made by Company such that Holder shall receive upon exercise of this Warrant a proportionate share of any such dividend or distribution as though it were Holder of the Warrant Shares as of the record date fixed for the determination of the shareholders of Company entitled to receive such dividend or distribution.

 

(d)           Adjustment of Number of Shares.  Upon each adjustment in the Warrant Price, the number of Warrant Shares purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Warrant Shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter.

 

  

  

  

 

8.             Notice of Adjustments; Redemption.  Whenever any Warrant Price or the kind or number of securities issuable under this Warrant shall be adjusted pursuant to Section 7 hereof, Company shall prepare a certificate signed by an officer of Company setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and number or kind of shares issuable upon exercise of this Warrant after giving effect to such adjustment, and shall cause copies of such certificate to be mailed (by certified or registered mail, return receipt required, postage prepaid) within thirty (30) days of such adjustment to Holder as set forth in Section 18 hereof.

 

9.             Financial and Other Reports.  If at any time prior to the earlier of the Expiration Date and the complete exercise of this Warrant, Company is no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, Company shall furnish to Holder (a) unaudited consolidated and, if available, consolidating balance sheets, statements of operations and cash flow statements within 30 days of each month end, in a form acceptable to Holder and certified by Company’s president, chief executive officer, chief financial officer or general counsel, (b) Company’s complete annual audited consolidated and, if available, consolidating balance sheets, statements of operations and cash flow statements certified by an independent certified public accountant selected by Company and acceptable to Holder (it being understood that Ernst & Young LLP is acceptable to Holder) within 120 days of the fiscal year end or, if sooner, within 5 business days of Company’s Board of Directors receiving the audit and (c) within 30 days of the end of each calendar quarter, an updated capitalization table of Company in a form mutually acceptable to Holder and Company.  All such annual statements are to be prepared using GAAP and all monthly financial statements delivered to Holder are to be prepared in accordance with historical practices and consistent in form to those financial statements previously provided to Holder.  Company and Holder agree that the forms of balance sheets, statements of operations, cash flow statements and capitalization tables of Company previously accepted by Holder (or any affiliate of Holder) shall be deemed acceptable for the purposes of this Section 9.

10.           Currency.  All references to “dollars” and the sign “$” in this Warrant shall be to the lawful money of the United States of America.

 

11.           No Fractional Shares.  No fractional share of Common Stock will be issued in connection with any exercise or conversion hereunder, but rather the number of shares of Common Stock to be issued shall rounded up to the nearest whole number.

 

12.           Charges, Taxes and Expenses.  Issuance of certificates for shares of Common Stock upon the exercise or conversion of this Warrant shall be made without charge to Holder for any United States or state of the United States documentary stamp tax or other incidental expense with respect to the issuance of such certificate, all of which taxes and expenses shall be paid by Company, and such certificates shall be issued in the name of Holder.

 

13.           No Shareholder Rights Until Exercise.  Except as expressly provided herein, this Warrant does not entitle Holder to any voting rights or other rights as a shareholder of Company prior to the exercise hereof.

 

14.           Registry of Warrant.  Company shall maintain a registry showing the name and address of the registered Holder of this Warrant.  This Warrant may be surrendered for exchange or exercise, in accordance with its terms, at such office or agency of Company, and Company and Holder shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

 

  

  

  

 

15.           Loss, Theft, Destruction or Mutilation of Warrant.  Upon receipt by Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and cancellation of this Warrant, Company will execute and deliver a new Warrant, having terms and conditions substantially identical to this Warrant, in lieu hereof.

 

16.           Miscellaneous.

 

(a)           Issue Date.  The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by Company on the date hereof.

 

(b)           Successors.  This Warrant shall be binding upon any successors or assigns of Company.

 

(c)           Headings.  The headings used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

 

(d)           Saturdays, Sundays, Holidays.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

 

(e)           Attorney’s Fees.   In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorney’s fees.

 

17.           No Impairment.  Company will not, by amendment of its Certificate of Incorporation or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of Holder hereof against impairment.

 

18.           Addresses.  Any notice required or permitted hereunder shall be in writing and shall be mailed by overnight courier, registered or certified mail, return receipt requested, and postage prepaid, or otherwise delivered by hand or by messenger, addressed as set forth below, or at such other address as Company or Holder hereof shall have furnished to the other party in accordance with the delivery instructions set forth in this Section 18.

 

	
If to Company:

	
XOMA Corporation

	  	
2910 Seventh Street

	  	
Berkeley, CA 94710

	  	
Attention: Legal Department

	  	  
	
If to Holder:

	
GE Capital Equity Investments, Inc.

	  	
c/o GE Healthcare Financial Services, Inc.

	  	
Two Bethesda Metro Center, Suite 600

	  	
Bethesda, Maryland 20814

	  	
Attn:    Senior Vice President of Risk – Life Science Finance

	
With copies to:

	
GE Healthcare Financial Services, Inc.

	  	
Two Bethesda Metro Center, Suite 600

	  	
Bethesda, Maryland 20814

	  	
Attn:    General Counsel

	 	 
	  	
and

	 	 
	  	
GE Equity

	  	
201 Merritt 7

	  	
Norwalk, Connecticut  06851

	  	
Attn: Team Leader –HFS/XOMA

  

  

  

 

If mailed by registered or certified mail, return receipt requested, and postage prepaid, notice shall be deemed to be given five (5) days after being sent, and if sent by overnight courier, by hand or by messenger, notice shall be deemed to be given when delivered (if on a business day, and if not, on the next business day).

 

19.           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS WARRANT OR THE WARRANT SHARES.

 

20.           GOVERNING LAW.  THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[Remainder of page intentionally left blank]

 

  

  

  

 

IN WITNESS WHEREOF, Company has caused this Warrant to be executed by its officer thereunto duly authorized.

 

	  	
XOMA CORPORATION

	  
	  	  	  	  
	  	
By:

	
/s/ Fred Kurland

	  
	  	
Name:

	
Fred Kurland

	  
	  	
Title:

	
Vice President, Finance and Chief Financial Officer

	  
	  	  	  	  
	  	Dated as of: September 27, 2012	  

  

  

  

 

NOTICE OF EXERCISE

 

To:

XOMA Corporation

2910 Seventh Street

Berkeley, CA 94710

Attention: Legal Department

	
1.

	
The undersigned warrantholder (“Holder”) elects to acquire common shares (the “Common Stock”) of XOMA Corporation (the “Company”), pursuant to the terms of the Warrant dated September 27, 2012 (the “Warrant”).

 

	
2.

	
Holder exercises its rights under the Warrant as set forth below:

 

	
  

	
(           )

	
Holder elects to purchase _____________ shares of Common Stock as provided in Section 3(a) and tenders herewith a check in the amount of $___________ as payment of the purchase price.

 

	
  

	
(           )

	
Holder elects a Cashless Exercise (as defined in the Warrant) with respect to __________ shares of Common Stock as provided in Section 3(b) of the Warrant.

 

	
3.

	
Holder surrenders the Warrant with this Notice of Exercise.

 

Holder represents that it is acquiring the aforesaid shares of Common Stock for investment and not with a view to or for resale in connection with distribution and that Holder has no present intention of distributing or reselling the shares.

 

Please issue a certificate representing the shares of the Common Stock in the name of Holder or in such other name as is specified below:

 

	
Name:

	 	  
	
Address:

	 	  
	
Taxpayer I.D.: 

	 	  

	 	
GE CAPITAL EQUITY INVESTMENTS, INC.

	 	  	  	  
	 	
By:

	  
	 	  	
Name:

	 
	 	  	
Title:

	  
	 	  	  	  
	 	
Date:

	
_______ ___, 20___

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}]]