REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is effective as of _____________, 2003, by and between
HOUSTON AMERICAN ENERGY CORP., a Delaware corporation (the "Company") and
_____________, a ______ corporation (the "Holder").
WHEREAS, on even date herewith the parties executed that certain
Subscription Agreement (the "Subscription Agreement") whereby the Company is
proposing to issue and sell newly issued shares of the Company's common stock
(the "Company Shares") to the Holder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Registration Rights Available. Pursuant to the terms and conditions
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contained herein, and in the Subscription Agreement, the Company agrees to
provide the Holder or any permitted assignee of the Holder (collectively, the
"Holder") with the following registration rights with respect to the Company
Shares and any other securities issued or issuable at any time or from time to
time in respect of the Company Shares as a result of a stock split, stock
dividend, merger, reorganization, recapitalization or other similar event
involving the Company (collectively, the "Registrable Securities"): (a) one
demand registration right by means of a shelf registration pursuant to Rule 415
promulgated under the Securities Act of 1933, as amended (the "Securities Act")
(the "Shelf Registration Right"), and (b) the right to "piggyback" on a firm
commitment underwritten offering of any securities of the Company (an
"Underwritten Public Offering") other than the Registrable Securities (the
"Piggyback Registration Rights"). The Shelf Registration Right and the
Piggyback Registration Rights are hereinafter sometimes collectively referred to
as the "Registration Rights."
2. Shelf Registration Right. With respect to the Shelf Registration
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Right, the parties agree as follows:
(a) Subject to the restrictions of Paragraph 2(b) below, within 60
days from the date hereof, the Company shall file with the United States
Securities and Exchange Commission (the "SEC") a registration statement on an
appropriate form relating to the offer and sale of the Registrable Securities
owned by the Holder (the "Registration Statement"). The Company agrees to cause
the Registration Statement to become effective within 180 days from the date of
its filing with the SEC. The Company further agrees to provide the Holder with
notice of the filing of the Registration Statement and of the filing of any
amendments or supplements thereto.
(b) The Company agrees to maintain any Registration Statement with
respect to the Shelf Registration Right in effect for nine months or completion
of the offering, whichever is earlier.
(c) In any offering pursuant to this paragraph that becomes
effective and in which the Holder participates, the Company shall file all
amendments and supplements under the Securities Act required for that purpose.
In any offering pursuant to this paragraph, the
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Company will effect such qualification and compliance as may be so requested and
as would permit or facilitate the distribution of the Registrable Securities,
including, without limitation, registration under the Securities Act,
appropriate qualifications under applicable blue sky or other state securities
laws, appropriate compliance with any other governmental requirements and
listing on a national securities exchange on which the Registrable Securities
are then listed or any inter-dealer quotation system upon which the Registrable
Securities may be quoted.
3. Piggyback Registration Rights. With respect to the Piggyback
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Registration Rights, the parties agree as follows:
(a) Subject to Paragraph 3(b), the Company will (i) promptly give
to the Holder written notice of any registration relating to an Underwritten
Public Offering, and (ii) include in such registration (and related
qualification under blue sky laws or other compliance) such of the Holder's
Registrable Securities as are specified in the Holder's written request or
requests, mailed in accordance with the terms of this Agreement within 30 days
after the date of such written notice from the Company.
(b) The right of the Holder to registration pursuant to the
Registration Rights shall be conditioned upon the Holder's participation in such
underwriting, and the inclusion of the Registrable Securities in the
underwriting shall be limited to the extent provided herein. The Holder shall
(together with the Company) enter into an underwriting agreement in customary
form with the managing underwriter selected for the Underwritten Public Offering
by the Company. Notwithstanding any other provision of this Agreement, if the
managing underwriter determines that marketing factors require a limitation of
the number of the Registrable Securities to be underwritten, the managing
underwriter may limit some or all of the Registrable Securities that may be
included in the registration and the Underwritten Public Offering as follows:
the number of the Registrable Securities that may be included in the
registration and the Underwritten Public Offering by the Holder shall be
determined by multiplying the number of the shares of the Registrable Securities
of all selling stockholders of the Company which the managing underwriter is
willing to include in such registration and the Underwritten Public Offering
times a fraction, the numerator of which is the number of the Registrable
Securities requested to be included in such registration and the Underwritten
Public Offering by the Holder, and the denominator of which is the total number
of the Registrable Securities which all selling stockholders of the Company have
requested to be included in such registration and the Underwritten Public
Offering. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocable to any such
person to the nearest 100 shares. If the Holder disapproves of the terms of any
such underwriting, it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter, delivered not less than seven days before
the effective date of the Underwritten Public Offering. Any of the Registrable
Securities excluded or withdrawn from the Underwritten Public Offering shall be
withdrawn from such registration, and shall not be transferred in a public
distribution prior to 60 days after the effective date of the Registration
Statement relating thereto, or such other shorter period of time as the
underwriters may require.
4. Registration Procedure. With respect to the Registration Rights,
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the following provisions shall apply:
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(a) The Holder shall be obligated to furnish to the Company and
the underwriters such information regarding the Registrable Securities and the
proposed manner of distribution of the Registrable Securities as the Company and
the underwriters may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein and shall
otherwise cooperate with the Company and the underwriters in connection with
such registration, qualification or compliance.
(b) With a view to making available the benefits of certain rules
and regulations of the SEC which may at any time permit the sale of any
Restricted Securities as defined in Rule 144 ("Rule 144") promulgated under the
Securities Act to the public without registration, the Company agrees to use its
best lawful efforts to:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144 at all times during which the
Company is subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act");
(ii) File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at all times during which the Company is subject to such reporting
requirements); and
(iii) So long as the Holder owns any Restricted Securities,
to furnish to the Holder upon request a written statement from the Company as to
its compliance with the reporting requirements of Rule 144 and with regard to
the Securities Act and the Exchange Act (at all times during which the Company
is subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as the Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing the Holder to sell any Restricted Securities
without registration.
(c) The Company agrees that it will furnish to the Holder such
number of prospectuses meeting the requirements of Section 10(a)(3) of the
Securities Act, offering circulars or other documents incident to any
registration, qualification or compliance referred to herein as provided or, if
not otherwise provided, as the Holder from time to time may reasonably request.
(d) All expenses (except for any underwriting and selling
discounts and commissions and legal fees for the Holder's attorneys) of any
registrations permitted pursuant to this Agreement and of all other offerings by
the Company (including, but not limited to, the expenses of any qualifications
under the blue sky or other state securities laws and compliance with
governmental requirements of preparing and filing any post-effective amendments
required for the lawful distribution of the Registrable Securities to the public
in connection with such registration, of supplying prospectuses, offering
circulars or other documents) will be paid by the Company.
(e) In connection with the preparation and filing of any
Registration Statement under the Securities Act pursuant to this Agreement, the
Company will give
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the Holder and the Holder's attorneys and accountants the opportunity to
participate in the preparation of any Registration Statement, each prospectus
included therein or filed with the SEC, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and records and
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary to conduct a reasonable investigation within the meaning of
the Securities Act.
(f) The Company shall notify each Holder of Registrable Securities
covered by a Registration Statement, during the time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
5. Blackout Period. At any time after the effective date of the
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Registration Statement, if the Company gives to the Holder a notice pursuant to
Paragraph 4(f) hereof and stating that the Company requires the suspension by
the Holder of the distribution of any of the Registrable Securities, then the
Holder shall cease distributing the Registrable Securities for such period of
time (the "Blackout Period"), not to exceed 120 days from the time notice is
sent until the Company informs the Holder that the Blackout Period has been
terminated. Upon notice by the Company to the Holder of such determination, the
Holder will (a) keep the fact of any such notice strictly confidential, (b)
promptly halt any offer, sale, trading or transfer of any of the Registrable
Securities for the duration of the Blackout Period, and (c) promptly halt any
use, publication, dissemination or distribution of each prospectus included
within the Registration Statement, and any amendment or supplement thereto by it
and any of its affiliates for the duration of the Blackout Period.
6. Lock-Up. In connection with any Underwritten Public Offering, the
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Holder agrees, if requested, to execute a lock-up letter addressed to the
managing underwriter in customary form agreeing not to sell or otherwise dispose
of the Registrable Securities owned by the Holder (other than any that may be
included in the offering) for a period not exceeding 180 days.
7. Delay of Registration. The Holder shall have any right to obtain or
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seek an injunction restraining or otherwise delaying any registration of the
Registrable Securities as the result of any controversy that might arise with
respect to the interpretation or implementation of this Agreement.
8. Indemnification by the Company. In the event of any registration of
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the Registrable Securities of the Company under the Securities Act, pursuant to
the terms of this Agreement, the Company agrees to indemnity and hold harmless
the Holder and each other person who participates as an underwriter in the
offering or sale of the Registrable Securities against any and all claims,
demands, losses, costs, expenses, obligations, liabilities, joint or several,
damages, recoveries and deficiencies, including interest, penalties and
attorneys' fees (collectively the "Claims"), to which the Holder or any such
underwriter may become subject under the Securities Act or otherwise, insofar as
the Claims or actions or proceedings, whether commenced or threatened, in
respect thereto arise out of or are based on any untrue statement or alleged
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untrue statement of any material fact contained in any Registration Statement
under which the Holder's Registrable Securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse the Holder and each such underwriter for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any Claim or action or proceeding in respect thereto; provided that
the Company shall not be liable in any such case to the extent that any Claim or
action or proceeding in respect thereof or expense arises out of or is based on
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance on and in
conformity with written information furnished to the Company through an
instrument duly executed by the Holder specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Holder or any
such underwriter and survive the transfer of the Registrable Securities by the
Holder.
9. Indemnification by the Holder. The Company may require, as a
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condition to including the Registrable Securities in any Registration Statement
filed pursuant to this Agreement, that the Company shall have received an
undertaking satisfactory to it from the Holder, to indemnify and hold harmless
(in the same manner and to the same extent as set forth in Paragraph 8 hereof)
the Company, each director and officer of the Company and each other person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from the Registration Statement, any preliminary prospectus contained therein,
or any amendment or supplement thereto, if such statement or alleged statement
or omission or alleged omission was made in reliance on and in conformity with
written information furnished to the Company through an instrument duly executed
by the Holder specifically stating that it is for use in the preparation of the
Registration Statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Notwithstanding the foregoing, the maximum
liability hereunder which the Holder shall be required to suffer shall be
limited to the net proceeds to the Holder from the Registrable Securities sold
by the Holder in any such offering. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling person and shall survive the
transfer of the Registrable Securities by the Holder.
10. Notice of Claims. Promptly after receipt by an indemnified party
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of notice of the commencement of any action or proceeding involving a Claim,
such indemnified party will, if a Claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under this Agreement except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnifying party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of a Claim the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such
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indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of a Claim.
11. Indemnification Payments. The indemnification required by this
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Agreement shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
12. Assignment of Registration Rights. The rights to cause the Company
---------------------------------
to register Registrable Securities pursuant to this Agreement may be assigned by
the Holder to a transferee or assignee of such securities who shall, upon such
transfer or assignment, be deemed a Holder under this Agreement; provided that
the Company is furnished with written notice of the name and address of such
transferee or assignee and the Registrable Securities with respect to which the
Registration Rights are being assigned; provided, further, that such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and that such transferee or assignee is either (a) a member
of the immediate family or a trust for the benefit of any Holder that is an
individual or (b) a transferee or assignee that after the transfer or assignment
holds all of the Registrable Securities.
13. Termination of this Agreement. This Agreement shall terminate with
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respect to the Holder (a) when all of the Registrable Securities have been
registered as provided herein, or (b) two years from the date hereof, whichever
shall occur first.
14. Conflict. Notwithstanding anything herein contained to the
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contrary, in the event of any conflict between the terms of the Subscription
Agreement or this Agreement, the terms of the Subscription Agreement shall
control.
15. Attorney's Fees. In the event that it should become necessary for
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any party entitled hereunder to bring suit against any other party to this
Agreement for enforcement of the covenants herein contained, the parties hereby
covenant and agree that the party who is found to be in violation of said
covenants shall also be liable for all reasonable attorney's fees and costs of
court incurred by the other party hereto.
16. Governing law; Jurisdiction. This Agreement shall be governed by
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and construed in accordance with the laws of the State of Texas, without regard
to any conflicts of laws provisions thereof. Each party hereby irrevocably
submits to the personal jurisdiction of the United States District Court in
▇▇▇▇▇▇ County, Texas, as well as of the District Courts of the State of Texas in
▇▇▇▇▇▇ County, Texas over any suit, action or proceeding arising out of or
relating to this Agreement. Each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such mediation, arbitration, suit, action
or proceeding brought in any such county and any claim that any such
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mediation, arbitration, suit, action or proceeding brought in such county has
been brought in an inconvenient forum.
17. Arbitration. Any controversy or claim arising out of or relating
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to this Agreement, or the breach, termination, or validity thereof, 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 Agreement. 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 the
arbitration shall be Houston, Texas. Upon the application of either party to
this Agreement, 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 Agreement, 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
Agreement. Any order or judgment rendered by the arbitrator may be entered and
enforced by any court having competent jurisdiction.
18. Benefit. All the terms and provisions of this Agreement shall be
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binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective successors and permitted assigns. Notwithstanding
anything herein contained to the contrary, the Company shall have the right to
assign this Agreement to any party without the consent of the Holder.
19. Notices. All notices, requests and other communications hereunder
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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 electronic 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 ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇, fax
(▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; and if to the Holder,
addressed to Mr. _____ at _________, telephone (___) ________, fax (___)
_________, and e-mail ____@_____.com; 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.
20. Construction. Words of any gender used in this Agreement shall be
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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 Agreement 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.
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21. General Assurances. The parties agree to execute, acknowledge, and
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deliver all such further instruments, and do all such other acts, as may be
necessary or appropriate in order to carry out the intent and purposes of this
Agreement.
22. Construction of Agreement. The parties hereto acknowledge and
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agree that neither this Agreement nor any of the other documents executed in
connection herewith shall be construed more favorably in favor of one than the
other based upon which party drafted the same, it being acknowledged that each
of the parties hereto contributed substantially to the negotiation and
preparation of this Agreement and the documents executed in connection herewith.
23. No Third Party Beneficiaries. Except as otherwise expressly forth
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in this Agreement, no person or entity not a party to this Agreement shall have
rights under this Agreement as a third party beneficiary or otherwise.
24. Incorporation by Reference. Any agreement referred to herein is
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hereby incorporated into this Agreement by this reference.
25. Waiver. No course of dealing on the part of any party hereto or
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its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right, power or privilege shall not preclude any
later exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
26. Cumulative Rights. The rights and remedies of any party under this
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Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
27. Invalidity. In the event any one or more of the provisions
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contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
28. Excusable Delay. None of the parties hereto shall be obligated to
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perform and none shall be deemed to be in default hereunder, if the performance
of a non-monetary obligation is prevented by the occurrence of any of the
following, other than as the result of the financial inability of the party
obligated to perform: acts of God, strikes, lock-outs, other industrial
disturbances, acts of a public enemy, acts of terrorists, wars or war-like
action (whether actual, impending or expected and whether de jure or de facto),
arrest or other restraint of government (civil or military), blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
hurricanes, storms, floods, washouts, sink holes, civil disturbances,
explosions, breakage or accident to equipment or machinery, confiscation or
seizure by any government of public authority, nuclear reaction or radiation,
radioactive contamination or other causes, whether of the
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kind herein enumerated, or otherwise, that are not reasonably within the control
of the party claiming the right to delay performance on account of such
occurrence.
29. Time of the Essence. Time is of the essence of this Agreement.
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30. Headings. The headings used in this Agreement are for convenience
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and reference only and in no way define, limit, simplify or describe the scope
or intent of this Agreement, and in no way effect or constitute a part of this
Agreement.
31. Multiple Counterparts. This Agreement may be executed in one or
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more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
32. Entire Agreement. This instrument, together with the Subscription
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Agreement, contains the entire understanding of the parties and may not be
changed orally, but only by an instrument in writing signed by the party against
whom enforcement of any waiver, change, modification, extension, or discharge is
sought.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first written above.
HOUSTON AMERICAN ENERGY CORP.
By
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President
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By
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__________________, President
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