Exhibit 2.3
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, THIS WARRANT AND
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE COMPANY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY
BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE SECURITIES ACT, THE SECURITIES LAWS OF ANY STATE, OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER.
HOUSTON AMERICAN ENERGY CORP.
STOCK PURCHASE WARRANT
EXPIRING JULY 19, 2004
750,000 Shares Houston, Texas
THIS IS TO CERTIFY that, for value received, MILLENNIUM SEISMIC, INC., a
Texas corporation (the "Holder"), is entitled at any time from the date hereof,
but prior to July 19, 2004 (the "Expiration Date"), subject to the terms and
conditions contained herein, to purchase up to 750,000 fully paid and
non-assessable shares (the "Warrant Shares") of the common stock, par value
$0.001 per share (the "Common Stock"), of HOUSTON AMERICAN ENERGY CORP., a
Delaware corporation (the "Company"), at a purchase price of $1.00 (the
"Exercise Price") per share (such number of Warrant Shares and the Exercise
Price being subject to adjustment as provided herein). This Warrant shall be
void and of no effect and all of the Holder's rights hereunder shall cease at
5:00 p.m., Houston, Texas time on the Expiration Date, except to the extent
theretofore exercised; provided that in the case of the earlier dissolution of
the Company, this Warrant shall become void on the date fixed for such
dissolution.
1. Warrant. This Warrant has been issued by the Company to the Holder in
connection with (a) that certain Exchange Agreement dated of even date herewith
(the "Exchange Agreement"), between the Company and the Holder, and (b) that
certain License Agreement dated of even date herewith (the "License Agreement"),
between the Company and the Holder, whereby the Holder agreed to grant the
Company a no fee license to utilize certain of the Holder's seismic data in
exchange for 1,000,000 shares of the Common Stock and the issuance of the
Warrant.
2. Covenants of the Company. The Company covenants that, while this Warrant
is exercisable (a) it will reserve from its authorized and unissued Common Stock
a sufficient number of shares thereof to provide for the delivery of the Warrant
Shares pursuant to any exercise of this Warrant, and (b) that all Warrant Shares
which may be issued upon the exercise
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of this Warrant shall, upon the issuance thereof, be fully paid and
non-assessable shares of the Common Stock.
3. Protection Against Dilution, Etc. In any of the following events,
occurring after the date of the issuance of this Warrant, appropriate adjustment
shall be made in the number of Warrant Shares exercisable pursuant to this
Warrant and the Exercise Price per share to be paid, so as to maintain the
proportionate interest of the Holder as of the date hereof: (a) any capital
reorganization of the Company or reclassification of the capital stock of the
Company, including, without limitation, any split-up or reverse split of the
outstanding shares of the Common Stock into a greater or lesser number, as the
case may be; (b) the Company's declaration of a dividend on the outstanding
shares of the Common Stock, payable in shares thereof or other securities of the
Company convertible into shares of the Common Stock; or (c) any of the events
described in Section 4.
4. Merger, Etc. In case the Company shall be consolidated or merged with
and into another company, or substantially all of its assets shall be sold to
another company in exchange for stock, cash or other property with the view to
distributing such stock, cash or other property to its shareholders, the company
formed by such consolidation or merger or the company purchasing such assets, as
applicable, shall execute and deliver to the Holder a supplemental warrant
containing terms substantially similar to this Warrant and which provides that
the Holder of such supplemental warrant shall thereafter have the right (until
the stated expiration of such supplemental warrant, which shall be the same as
the expiration of this Warrant) to receive, upon exercise of such supplemental
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation, merger or sale of the Company's
assets, as applicable, by a holder of the number of shares of the Common Stock
for which this Warrant might have been exercised immediately before such
consolidation, merger or sale.
5. Notice of Certain Events. Upon the happening of any event requiring an
adjustment of the Warrant Shares and the Exercise Price, the Company shall
forthwith give written notice thereof to the Holder stating the adjusted
Exercise Price and the adjusted number of Warrant Shares purchasable hereunder
resulting from such event and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The Board of
Directors of the Company shall determine the computation made hereunder. In the
case of (a) any consolidation, merger, or sale affecting the Company and calling
for the payment of cash or the delivery of property to the shareholders of the
Company, or (b) any voluntary or involuntary dissolution, liquidation, or
winding up of the Company shall at any time be proposed, the Company shall give
at least 20 days' prior written notice thereof to the Holder, which shall
include the date on which such event is to take place and the date (which shall
be at least 20 days after the giving of such notice) as of which the holders of
record of shares of the Common Stock shall be entitled to participate in the
event disclosed in such notice.
6. Shareholders' Rights. Until the valid exercise of this Warrant, the
Holder shall not be entitled to any rights of a shareholder with respect to the
Warrant Shares covered by this Warrant; but immediately upon the exercise of
this Warrant and upon payment as provided herein, the Holder shall be deemed a
record holder of the shares of the Common Stock so purchased by the Holder.
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7. Manner of Exercise. In order to exercise this Warrant, the Holder shall
surrender this Warrant, duly endorsed or assigned to the Company or, in blank,
at the office of the Company, accompanied by (a) written notice to the Company
of the number of Warrant Shares the Holder elects to purchase, and (b) payment
of the Exercise Price for the Warrant Shares to be purchased on such exercise,
in cash or by cashier's or certified check.
This Warrant shall be deemed to have been exercised immediately prior to
the close of business on the day of surrender of this Warrant for exercise in
accordance with the foregoing provisions, and at such time the person or persons
entitled to receive the Warrant Shares issuable upon exercise shall be treated
for all purposes as the record holder or holders of that number of shares of the
Common Stock at such time. As promptly as practicable on or after the exercise
date, the Company shall issue and deliver to the Holder a certificate or
certificates for the number of full Warrant Shares issuable upon such exercise.
In case this Warrant is exercised in part only, upon such exercise the
Company shall execute and deliver to the Holder thereof, at the expense of the
Company, a new warrant (in a form substantially similar hereto) to purchase, in
the aggregate, the number of Warrant Shares exercisable pursuant to the
unexercised portion of this Warrant.
8. Covenants of the Holder. The Holder understands that this Warrant has
not been registered under the Securities Act, or any other applicable securities
law. The Holder covenants that this Warrant has been purchased for investment
only and not with a view to distribution or resale, and may not be sold,
pledged, hypothecated or otherwise transferred unless this Warrant or the
Warrant Shares represented hereby are registered under the Securities Act, and
any other applicable securities law, or the Company has received an opinion of
counsel or such other evidence satisfactory to it that such registration is not
required. A legend in substantially the following form will be placed on any
certificates or other documents evidencing the Common Stock to be issued upon
any exercise of this Warrant:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. WITHOUT SUCH
REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR
SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS
MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER
SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
SECURITIES LAW OF ANY STATE, OR ANY RULE OR REGULATION PROMULGATED
THEREUNDER.
Further, stop transfer instructions to the transfer agent of the Common
Stock have been or will be placed with respect to the Warrant Shares so as to
restrict the resale, pledge, hypothecation or other transfer thereof, subject to
the further items hereof, including the
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provisions of the legend set forth in this Section. Notwithstanding the
foregoing, the Company hereby agrees that the Holder may, subject to compliance
with all applicable securities laws, assign all or a portion of its rights under
this Warrant to up to two persons without the requirement of obtaining the
Company's prior written consent; provided, however, no such assignment of the
Holders rights shall be permitted unless the assignee thereof is a holder of
shares of the capital stock of Millennium Seismic, Inc. as of the date of any
such assignment.
9. Fractional Warrants. Upon the exercise of this Warrant, no fractional
shares shall be issued; but fractional Warrants shall be delivered, entitling
the Holder, upon surrender with other fractional Warrants aggregating one or
more full Warrant Shares, to purchase such full Warrant Shares.
10. Registration Obligation. The Company has not agreed to file and the
Company does not anticipate the filing of a registration statement under the
Securities Act to allow a public resale of this Warrant. However, pursuant to
that certain Registration Rights Agreement attached hereto as Appendix A (which
is incorporated herein by this reference), the Company has agreed to grant
certain registration rights to the Holder with respect to the resale of the
Warrant Shares issuable upon the exercise of this Warrant.
11. Loss, Theft, Destruction of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
receipt of an indemnity agreement from the Holder in form reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall issue and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new warrant of
like tenor.
12. Arbitration. Any controversy or claim arising out of or relating to
this Warrant, or the breach, termination, or validity hereof, shall be settled
by final and binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA Rules") in effect as of the
effective date of this Warrant. The American Arbitration Association shall be
responsible for (a) appointing a sole arbitrator, and (b) administering the case
in accordance with the AAA Rules. The situs of such arbitration shall be
Houston, Texas. Upon the application of either party to this Warrant, and
whether or not an arbitration proceeding has yet been initiated, all courts
having jurisdiction hereby are authorized to (x) issue and enforce in any lawful
manner, such temporary restraining orders, preliminary injunctions and other
interim measures of relief as may be necessary to prevent harm to a party's
interest or as otherwise may be appropriate pending the conclusion of
arbitration proceedings pursuant to this Warrant, and (y) enter and enforce in
any lawful manner such judgments for permanent equitable relief as may be
necessary to prevent harm to a party's interest or as otherwise may be
appropriate following the issuance of arbitral awards pursuant to this Warrant.
Any order or judgment rendered by the arbitrator may be entered and enforced by
any court having competent jurisdiction.
13. Benefit. Except as otherwise provided herein, the terms and provisions
of this Warrant shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns.
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14. Notices. All notices, requests and other communications hereunder shall
be in writing and shall be deemed to have been duly given at the time of receipt
if delivered by hand or communicated by facsimile transmission, or, if mailed,
three days after deposit in the United States mail, registered or certified,
return receipt requested, with postage prepaid and addressed to the party to
receive same, if to the Company, addressed to Mr. John F. Terwilliger, 801
Travis, Suite 2020, Houston, Texas 77002 and facsimile (713) 222-6440; and if to
the Holder, addressed to Mr. Jesse R. Marion, 7751 San Felipe, Suite 100,
Houston, Texas 77063 and facsimile (713) 789-2304; provided, however, that if
either party shall have designated a different address by notice to the other
given as provided above, then any subsequent notice shall be addressed to such
party at the last address so designated.
15. Conflict. Notwithstanding anything herein contained to the contrary, in
the event of any conflict between the terms of this Warrant or the Registration
Rights Agreement, the terms of the Registration Rights Agreement shall control.
16. Incorporation by Reference. Any agreement referred to herein is hereby
incorporated into this Warrant by this reference.
17. Construction. Words of any gender used in this Warrant shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Warrant shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
18. Headings. The headings used in this Warrant are for convenience and
reference only and in no way define, limit, simplify or describe the scope or
intent of this Warrant, and in no way effect or constitute a part of this
Warrant.
19. Law Governing. THIS WARRANT SHALL BE CONSTRUED AND GOVERNED BY THE LAWS
OF THE STATE OF TEXAS, AND ALL OBLIGATIONS HEREUNDER SHALL BE DEEMED PERFORMABLE
IN HARRIS COUNTY, TEXAS.
IN WITNESS WHEREOF, this Warrant has been issued on July 19, 2002.
HOUSTON AMERICAN ENERGY CORP.
By: /s/ John F. Terwilliger
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John F. Terwilliger, President
Attachment:
Appendix A - Registration Rights Agreement
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EXERCISE FORM
(To be executed if the owner desires to exercise the Warrant)
To: Houston American Energy Corp.
801 Travis, Suite 2020
Houston, Texas 77002
Pursuant to the terms of that certain Stock Purchase Warrant (the
"Warrant") of Houston American Energy Corp., a Delaware corporation (the
"Company"), issued to Millennium Seismic, Inc., a Texas corporation, on July 19,
2002, the Holder (as that term is defined in the Warrant) hereby exercises the
right to purchase _____ shares of the common stock, par value $0.001 per share,
of the Company, at the exercise price of $____ per share, for a total purchase
price of $__________. Kindly issue all such shares in the name of the
undersigned, and deliver the certificate representing such shares to the
undersigned at the address indicated below. If such number of shares shall not
be all of the shares purchasable pursuant to the Warrant, please issue a new
warrant of like tenor for the balance of the remaining Warrant Shares (as that
term is defined in the Warrant) purchasable thereunder to be delivered to the
undersigned at the address indicated below.
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(Printed Name)
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Address
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City State Zip Code
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Signature
Dated:
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