Document:

ex4_1.htm

Exhibit 4.1

HOUSTON AMERICAN ENERGY CORP.

Warrant for the Purchase

of Shares of Common Stock

	
Warrant No. [   ]

Original Issue Date: May 8, 2012

	
Number of Shares: [           ]

(subject to adjustment)

FOR VALUE RECEIVED, HOUSTON AMERICAN ENERGY CORP., a Delaware corporation (the “Company”), hereby certifies that  [                       ], its designee or its permitted assigns (the “Holder”), is entitled to purchase from the Company, at any time or from time to time commencing on November 9, 2012 and prior to 5:00 P.M., New York City time, on November 9, 2015 (the “Exercise Period”) up to [__________] ([__]) fully paid and non-assessable shares of common stock, $.001 par value per share, of the Company for $2.68 per share and an aggregate purchase price of $[________].  Hereinafter, (i) said common stock, $.001 par value per share, of the Company, is referred to as the “Common Stock,” (ii) the shares of the Common Stock purchasable hereunder or under any other Warrant (as hereinafter defined) are referred to as the “Warrant Shares,” (iii) the aggregate purchase price payable for the Warrant Shares purchasable hereunder is referred to as the “Aggregate Warrant Price,” and (iv) the price payable for each of the Warrant Shares is referred to as the “Per Share Warrant Price.”  The Aggregate Warrant Price is not subject to adjustment.

This Warrant is one of a series of similar warrants issued pursuant to a Subscription Agreement, dated as of May 2, 2012 (the “Subscription Agreement”), by and between the Company and the Initial Holder.  All such warrants, including this Warrant and all warrants hereafter issued in exchange or substitution for this Warrant and such other similar warrants, are collectively referred to herein as the “Warrants.”  The Holder, together with the holders of all other Warrants, are collectively referred to herein as the “Holders,” and Holders of more than 50% of the outstanding Warrants are referred to as the “Majority of the Holders.”

1.             Exercise of Warrant.

(a)   At the Holder’s option, this Warrant may be exercised, in whole or in part, at any time or from time to time during the Exercise Period, by the Holder upon surrender of this Warrant (with the exercise notice attached as Appendix I hereto duly executed) at the address set forth in Section 10(a) hereof, together with proper payment of the Aggregate Warrant Price, or the proportionate part thereof if this Warrant is exercised in part, with payment for the Warrant Shares made by certified or official bank check payable to the order of the Company.

 

(b)   If this Warrant is exercised in part, this Warrant must be exercised for a number of whole shares of Common Stock and the Holder is entitled to receive a new Warrant covering the Warrant Shares that have not been exercised and setting forth the proportionate part of the Aggregate Warrant Price applicable to such Warrant Shares.

  

  

  

 

(c)   Upon surrender of this Warrant, the Company will (i) issue a certificate or certificates in the name of the Holder for the largest number of whole shares of the Common Stock to which the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu of any fractional share of the Common Stock to which the Holder shall be entitled, pay to the Holder cash in an amount equal to the fair value of such fractional share (determined in such reasonable manner as the Board of Directors of the Company shall determine), and (ii) deliver the other securities and properties receivable upon the exercise of this Warrant, or the proportionate part thereof if this Warrant is exercised in part, pursuant to the provisions of this Warrant.  The Company shall, upon request of the Holder and subsequent to the date on which a registration statement covering the resale of the Warrant Shares has been declared effective by the Securities and Exchange Commission, use its reasonable best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, if available.

 

(d)   Notwithstanding anything contained herein to the contrary, if a registration statement covering the Warrant Shares, or an exemption from registration, is not available for the resale of such Warrant Shares, 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 Warrant Price, 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 arithmetic average of the Closing Sale Prices of the shares of Common Stock 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.

2.             Reservation of Warrant Shares.  The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property, as from time to time shall be issuable upon the exercise of this Warrant.

3.             Protection Against Dilution.

(a)   In case the Company shall hereafter (i) pay a dividend or make a distribution to any holder of its capital stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares or (iv) issue by 

 

  

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reclassification of its Common Stock any shares of capital stock of the Company, the Per Share Warrant Price shall be adjusted to be equal to a fraction, the numerator of which shall be the Aggregate Warrant Price and the denominator of which shall be the number of shares of Common Stock or other capital stock of the Company that the Holder would have owned immediately following such action had such Warrant been exercised immediately prior thereto and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the Aggregate Warrant Price of this Warrant shall remain unchanged.  An adjustment made pursuant to this Subsection 3(a) shall become effective immediately after the record date in the case of a dividend or distribution, and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

(b)   In case of (i) any merger or consolidation to which the Company is a party other than a merger or consolidation in which the Company is the continuing corporation, or (ii) any sale or conveyance to another entity of the property of the Company as an entirety or substantially as a entirety, or (iii) any statutory exchange of securities with, or tender offer by, another corporation (including any exchange effected in connection with a merger of a third corporation into the Company), or (iv) reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 3(a) above), the Holder of this Warrant shall have the right thereafter to receive on the exercise of this Warrant the kind and amount of securities, cash or other property which the Holder would have owned or have been entitled to receive immediately after such reclassification, consolidation, merger, statutory exchange, tender offer, sale or conveyance had this Warrant been exercised immediately prior to the effective date of such reclassification, consolidation, merger, statutory exchange, tender offer, sale or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section 3 with respect to the rights and interests thereafter of the Holder of this Warrant to the end that the provisions set forth in this Section 3 shall thereafter cor­res­pondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the exercise of this Warrant.  The above provisions of this Section 3(b) shall similarly apply to successive reclassifica­tions, consolidations, mergers, statutory exchanges, sales or conveyances.  The Company shall require the issuer of any shares of stock or other securities or property thereafter deliverable on the exercise of this Warrant to be responsible for all of the agreements and obligations of the Company hereunder.  Notice of any such reclassification, consolidation, merger, statutory exchange, tender offer, sale or conveyance and of said provisions so proposed to be made, shall be mailed to the Holders of the Warrants as soon as reasonably practicable prior to such event.  A sale of all or substantially all of the assets of the Company for a consideration consisting primarily of securities shall be deemed a consolidation or merger for the foregoing purposes.

(c)   All calculations under this Section 3 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be.  Anything in this Section 3 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Per Share Warrant Price, in addition to those required by this Section 3, as it in its discretion shall deem to be advisable in order that any stock dividend, subdivision of shares or distribution of rights to purchase stock or securities convertible or exchangeable for stock hereafter made by the Company to its stockholders shall not be taxable.

  

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(d)   Whenever the Per Share Warrant Price is adjusted as provided in this Section 3 and upon any modifi­cation of the rights of a Holder of Warrants in accordance with this Section 3, the Company shall promptly prepare a brief statement of the facts requiring such adjustment or modification and the manner of computing the same and cause copies of such statement to be mailed to the Holders of the Warrants.

(e)   If the Board of Directors of the Company shall declare any dividend or other distribution with respect to the Common Stock other than a cash distribution out of earned surplus, the Company shall mail notice thereof to the Holders of the Warrants not less than 10 days prior to the record date fixed for determining stock­holders entitled to participate in such dividend or other distribution.

(f)            If, as a result of an adjustment made pursuant to this Section 3, the Holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Company, the Board of Directors (whose determination shall be conclusive and shall be described in a written notice to the Holder of any Warrant promptly after such adjustment) shall determine the allocation of the adjusted Per Share Warrant Price between or among shares or such classes of capital stock or shares of Common Stock and other capital stock.

(g)   In case any event shall occur as to which the other provisions of this Section 3 are not strictly applicable but as to which the failure to make any adjustment would not fairly protect the purchase rights represented by this Warrant in accordance with the essential intent and principles hereof then, in each such case, the Board of Directors of the Company shall in good faith determine the adjustment, if any, on a basis consistent with the essential intent and principles established herein, necessary to preserve the purchase rights represented by the Warrants.  Upon such determination, the Company will promptly mail a copy thereof to the Holder of this Warrant and shall make the adjustments described therein.

4.             Fully Paid Stock; Taxes.  The shares of the Common Stock represented by each and every certificate for Warrant Shares delivered upon the exercise of this Warrant shall at the time of such delivery, be duly authorized, validly issued and outstanding, fully paid and nonassessable, and not subject to preemptive rights or rights of first refusal, and the Company will take all such actions as may be necessary to assure that the par value, if any, per share of the Common Stock is at all times equal to or less than the then Per Share Warrant Price.  The Company shall pay all documentary, stamp or similar taxes and other similar governmental charges that may be imposed with respect to the issuance or delivery of any Warrant Shares upon exercise of the Warrants (other than income taxes); provided, however, that if the Warrant Shares are to be delivered in a name other than the name of the Holder, no such delivery shall be made unless the person requesting the same has paid to the Company the amount of transfer taxes or charges incident thereto, if any.

  

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5.             Loss, etc., of Warrant.  Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver to the Holder a new Warrant of like date, tenor and denomination.

6.             Warrant Holder Not Stockholder.  This Warrant does not confer upon the Holder any right to vote on or consent to or receive notice as a stockholder of the Company, as such, in respect of any matters whatsoever, nor any other rights or liabilities as a stockholder, prior to the exercise hereof; this Warrant does, however, require certain notices to Holders as set forth herein.

7.             Communication.  No notice or other communication under this Warrant shall be effective unless, but any notice or other communication shall be effective and shall be deemed to have been given if, the same is in writing and is mailed by first-class mail, postage prepaid, addressed to:

(a)   the Company at:

Houston American Energy Corp.

801 Travis Street, Suite 1425

Houston, Texas 77002

Facsimile: 713.222.6440

 or such other address as the Company has designated in writing to the Holder, or

(b)   the Holder at [                                           ], Attn: [                                ] or other such address as the Holder has designated in writing to the Company.

8.             Headings.  The headings of this Warrant have been inserted as a matter of convenience and shall not affect the construction hereof.

9.             Applicable Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to the principles of conflicts of law thereof.

10.           Amendment, Waiver, etc.  Except as expressly provided herein, neither this Warrant nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought; provided, however, that any provisions hereof may be amended, waived, discharged or terminated upon the written consent of the Company and the Majority of the Holders. Notwithstanding the foregoing, (i) this Warrant may be amended and the observance of any term hereunder may be waived without the written consent of the Holder only in a manner which applies to all Warrants in the same fashion and (ii) the number of Warrant Shares subject to this Warrant, the Per Share Warrant Price, and the provisions of Sections 1, 2 and 10 hereof, may not be amended, and the right to exercise this Warrant may not be waived, without the written consent of the Holder (it being agreed that an amendment to or waiver under any 

 

  

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of the provisions of Section 3 of this Warrant shall not be considered an amendment of the number of Warrant Shares or the Per Share Warrant Price).  The Company shall give prompt written notice to the Holder of any amendment hereof or waiver hereunder that was effected without such Holder’s written consent.  No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

*****remainder of page intentionally left blank—signature page to follow*****

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed this 8th day of May, 2012.

 

 

	 	
HOUSTON AMERICAN ENERGY CORP.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name 	 	 
	 	Title 	 	 
	 	 	 	 

 

  

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APPENDIX I

 

Form of Exercise Notice

 

(To be executed by the Holder to exercise the right to purchase shares

of Common Stock under the foregoing Warrants)

 

To:          Houston American Energy Corp.

801 Travis Street, Suite 1425

Houston, Texas 77002

 

(1)           The undersigned is the Holder of Warrant No. __________ (the “Warrant”) issued by Houston American Energy Corp. a Delaware corporation (the “Company”).  Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.

(2)           The undersigned hereby exercises its right to purchase __________ Warrant Shares pursuant to the Warrant.

  

(3)            The Holder shall pay the sum of $_______ in immediately available funds to the Company in accordance with the terms of the Warrant.

(4)           Pursuant to this Exercise Notice, the Company shall deliver to the Holder _____________ Warrant Shares in accordance with the terms of the Warrant.

 

 

Dated:_______________, _____

 

 

Name of Holder: ________________________________________                                                                          

 

 

By: _________________________________________                                                                          

Name: _______________________________________                                                                                    

Title: ________________________________________                                                                          

(Signature must conform in all respects to name of

Holder as specified on the face of the Warrant)

  

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ASSIGNMENT

FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers unto ____________________ the foregoing Warrant and all rights evidenced thereby, and does irrevocably constitute and appoint _____________________, attorney, to transfer said Warrant on the books of Houston American Energy Corp.

	 
Dated:_______________, 20___

	Name of Holder:  ____________________________________	 
	 	 	 	 
	 	
By: 

	_____________________________________________	 
	 	Name 	_____________________________________________	 
	 	Title 	_____________________________________________	 
	 	
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

	 

 

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED _______________ hereby assigns and transfers unto ____________________ the right to purchase _______ shares of Common Stock, par value $.001 per share, of Houston American Energy Corp. covered by the foregoing Warrant, and a proportionate part of said Warrant and the rights evidenced thereby, and does irrevocably constitute and appoint ____________________, attorney, to transfer such part of said Warrant on the books of the Company.

 

	Dated:_______________, 20___	Name of Holder:  ____________________________________	 
	 	 	 	 
	 	
By: 

	_____________________________________________	 
	 	Name 	_____________________________________________	 
	 	Title 	_____________________________________________	 
	 	
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

	 

 

 

9ex10_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 six million two hundred thousand (6,200,000) units (the "Units"), each Unit consisting of one share of its Common Stock, par value $0.001 per share (the "Common Stock") and one warrant to purchase one share of Common Stock (each whole warrant, a “Warrant”), for a purchase price of $2.12 per unit (the "Purchase Price").

3.           The Company represents and warrants that the offering and sale of the Units (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) if applicable, certain "free writing prospectuses" (as that term is defined in Rule 405 under the Securities Act of 1933, as amended (the "Act")), 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 Units, the terms of the Offering and the Company, and (c) a Prospectus Supplement (the "Prospectus Supplement" and, together with the Base Prospectus, the "Prospectus") containing certain supplemental information regarding the Units 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 placement agents (the "Placement Agents") named in the Prospectus Supplement and that there is no minimum offering amount.

5.           The manner of settlement of the 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.  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 UNITS ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE UNITS, 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

	
                              

	
____

	
(2)

	
Delivery versus payment ("DVP") through DTC: on the Closing Date, the Company shall deliver Units 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) at Canaccord Genuity, Inc. ("Canaccord") identified by the Investor; upon receipt of such Units, Canaccord shall promptly electronically deliver such Units to the Investor, and simultaneously therewith payment shall be made by Canaccord by 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 CANACCORD OF THE ACCOUNT OR ACCOUNTS AT CANACCORD TO BE CREDITED WITH THE UNITS BEING PURCHASED BY SUCH INVESTOR, AND

	
                                                              

	
(II)

	
CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT CANACCORD TO BE CREDITED WITH THE UNITS 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 UNITS MAY NOT BE DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING ALTOGETHER.

  B.           Warrants

 

	
 

	

A Warrant 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 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 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 Columbian operators, Hupecol, LLC and S-K Energy 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 Energy 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 Energy 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 Agents 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: $2.12

Aggregate Purchase Price: $ __________

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 May 2, 2012

	 
	 	 	 
	 	_______________________________________	 
	 	INVESTOR	 
	 	 	 
	 	
By:  ____________________________________

	 
	 	Printed name:  ____________________________	 
	 	Title: ___________________________________	 
	 	Address: ________________________________	 
	 	_______________________________________	 
	 	Email: __________________________________	 
	 	Phone: _________________________________	 

 

Agreed and Accepted

the 3rd day of May, 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 Agents.

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 Canaccord Genuity, Inc. and Pareto Securities AS (the "Placement Agents") 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 May 2, 2012 (the "Placement Agreement"), with the Placement Agents that contains certain 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 Agents, and of which the Investors will be notified in advance by the Placement Agents, 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 number of 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.

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.

  

A-1

  

 

(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 Agents, 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 Canaccord Genuity, Inc., as lead 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 Canaccord Genuity, Inc., as lead placement agent, may, but shall not be obligated to, terminate such 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 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 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 at Canaccord Genuity to be credited with the Units being purchased by the Investor have a minimum balance equal to the aggregate purchase price for the Units being purchased by the Investor.

3.4           Delivery of Units.

(a)           DWAC Delivery.  If the Investor elects to settle the Units purchased by such Investor through DTC's 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 direct the broker-dealer at which the account or accounts to be credited with the Units being purchased by such Investor are maintained, which broker/dealer shall be a DTC participant, to set up a DWAC instructing Standard Registrar and Transfer Company, Inc., the Company's Transfer Agent, to credit such account or accounts with the Units.  Such DWAC instruction shall indicate the settlement date for the deposit of the Units, which date shall be provided to the Investor by Canaccord Genuity.  At the Closing, the Company shall direct the Transfer Agent to credit the Investor's account or accounts with the Units pursuant to the information contained in the DWAC.

(b)           Delivery Versus Payment through The Depository Trust Company.  If the Investor elects to settle 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 notify Canaccord Genuity of the account or accounts at Canaccord Genuity to be credited with the Units being purchased by such Investor.  On the Closing Date, the Company shall deliver the Units to the Investor through DTC directly to the account(s) at Canaccord Genuity identified by Investor and simultaneously therewith payment shall be made by Canaccord Genuity by wire transfer to the Company.

  

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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 Agents that:

4.1           The Investor (a) is knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to, investments in units 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 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.

4.2           (a) No action has been or will be taken in any jurisdiction outside the United States by the Company or the Placement Agents 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) none of the Placement Agents is authorized to make or has 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, any Issuer Free Writing Prospectus or the 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 the time at which a Placement Agent first contacted the Investor about the Offering, the Investor has not disclosed any information regarding the Offering to any third parties (other than its legal, accounting and other advisors) and has not engaged in any transactions 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, "put equivalent positions" (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (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 Agents, 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 2 (Representations and Warranties of the Company), Section 5 (Conditions of Placement Agents' Obligations), Section 6(f) (Representations and Agreements to Survive Delivery), or Section 10 (Persons Entitled to Benefit of Agreement) 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.

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.

  

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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 the 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 Amex 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 Agents, 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.

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

15.        Fees and Expenses.  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

Pursuant to Section 3 of Annex I to the Agreement, please provide us with the following information:

	
1.

	
The exact name that your Units 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 Units are maintained):

 

	
 

 

__________________________________________

	
6.

	
DTC Participant Number:

 

	
__________________________________________

	
7.

	
Name of Account at DTC Participant being credited with the Units:

 

	
 

__________________________________________

	
8.

	
Account Number at DTC Participant being credited with the Units:

 

	
 

__________________________________________

	
9.

	
EIN Number:

	
___________________________________________

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 Amex routinely performs due diligence on investors who have entered into transactions with NYSE Amex-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.

 

	
 

__________________________________________

 

  

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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?

	
 

___________________________________________

 

  

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EXHIBIT B

PLACEMENT AGREEMENT

 

 

 

 

 

 A-8

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