STOCK SUBSCRIPTION AGREEMENT
This STOCK SUBSCRIPTION AGREEMENT ("AGREEMENT") is made and entered
into as of the Subscription Date by and between Far East Energy Corporation, a
Nevada corporation ("COMPANY"), and the individual or entity whose name appears
on the last page of this Agreement ("PURCHASER").
PRELIMINARY STATEMENT
Pursuant to the terms of Article 5 of that certain Stock Subscription
Agreement dated as of December 21, 2004 by and between the Purchaser, the
Company and the other parties named therein, the Purchaser desires to purchase
and the Company desires to offer and sell to the Purchaser the number shares of
the Company's common stock, par value $0.001 per share ("COMPANY COMMON STOCK")
set forth opposite the Purchaser's signature on the last page of this Agreement
(such shares, the "SHARES").
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
SALE OF SHARES
The Purchaser will purchase from the Company the Shares at a price of
U.S. $0.90 per Share in cash (the total price paid for such Shares, the "TOTAL
PURCHASE PRICE"). In consideration therefor the Company agrees to issue to the
Purchaser a stock certificate for the Shares. The Purchaser understands that the
Company is under no obligation to sell any Shares to the Purchaser unless the
Company accepts and signs this Agreement.
ARTICLE 2
CLOSING; DELIVERY
2.1 CLOSING. The closing ("CLOSING") of the purchase and sale of the
Shares to the Purchaser hereunder shall be held at the Company's offices at 000
X. Xxx Xxxxxxx Xxxxxxx X., Xxxxx 000, Xxxxxxx, Xxxxx 00000, on the date upon
which the Company accepts and signs this Agreement (such date, the "SUBSCRIPTION
DATE"), or at such other time and place as the Company and the Purchaser
mutually agree upon.
2.2 DELIVERY. At the Closing, the Purchaser and the Company shall
execute and deliver this Subscription Agreement and the Registration Rights
Agreement in the form attached hereto as EXHIBIT A ("REGISTRATION RIGHTS
AGREEMENT"). At the Closing, the Purchaser shall pay the Company the Total
Purchase Price in immediately available funds. As soon as reasonably practicable
after the Subscription Date, the Company shall deliver or cause the delivery to
each Purchaser of a stock certificate representing the number of Shares
purchased by such Purchaser.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
3.1 ORGANIZATION AND STANDING. The Company is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization. The Company has all requisite power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and as proposed to be conducted. The Company is qualified to do
business as a foreign entity
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in every jurisdiction in which the failure to be so qualified would have a
material adverse effect on the Company's business as now conducted or as
proposed to be conducted.
3.2 POWER. The Company has all requisite power to execute and deliver
this Agreement, to sell and issue the Shares hereunder, and to carry out and
perform its obligations under the terms of this Agreement.
3.3 AUTHORIZATION. The execution, delivery, and performance of this
Agreement by the Company has been duly authorized by all requisite action, and
this Agreement constitutes the legal, valid, and binding obligation of the
Company enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting
the enforcement of creditors' rights.
3.4 CONSENTS AND APPROVALS. The Company need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
3.5 NON-CONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate in any material respect any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company is subject. No
approval, waiver, or consent by the Company under any instrument, contract, or
agreement to which the Company or any of its affiliates is a party is necessary
to consummate the transactions contemplated hereby.
3.6 SHARES. The Shares when issued pursuant to the terms of this
Agreement will be validly issued, fully paid, and nonassessable, and will be
free of any liens or encumbrances caused or created by the Company; provided,
however, that the Shares shall be subject to restrictions on transfer under
state or federal securities laws as set forth in this Agreement, or otherwise
required at the time a transfer is proposed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company with respect to
this purchase as follows:
4.1 ORGANIZATION AND STANDING. The Purchaser is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization. The Purchaser has all requisite power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and as proposed to be conducted. The Purchaser is qualified to do
business as a foreign corporation in every jurisdiction in which the failure to
be so qualified would have a material adverse effect on the Purchaser's business
as now conducted or as proposed to be conducted.
4.2 POWER. The Purchaser has all requisite power to execute and deliver
this Agreement and to carry out and perform its obligations under the terms of
this Agreement.
4.3 AUTHORIZATION. The execution, delivery, and performance of this
Agreement by the Purchaser has been duly authorized by all requisite action, and
this Agreement constitutes the legal, valid, and binding obligation of the
Purchaser enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting
the enforcement of creditors' rights.
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4.4 CONSENTS AND APPROVALS. The Purchaser need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
4.5 NON-CONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate in any material respect any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Purchaser is subject. No
approval, waiver, or consent by the Purchaser under any instrument, contract, or
agreement to which the Purchaser or any of its affiliates is a party is
necessary to consummate the transactions contemplated hereby.
4.6 PURCHASE FOR INVESTMENT ONLY. The Purchaser is purchasing the
Shares for the Purchaser's own account for investment purposes only and not with
a view to, or for resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended ("ACT"). By executing this
Agreement, the Purchaser further represents that it does not have any contract,
undertaking, agreement, or arrangement with any person to sell, transfer, or
grant participation to such person or to any third person, with respect to any
of the Shares. The Purchaser understands that the Shares have not been
registered under the Act or any applicable state securities laws by reason of a
specific exemption therefrom that depends upon, among other things, the bona
fide nature of the investment intent as expressed herein.
4.7 RECEIPT OF INFORMATION. The Purchaser has had an opportunity to
review the Company's filings under the Act and the Securities Exchange Act of
1934, as amended ("EXCHANGE ACT") (including risks factors set forth therein).
The Purchaser has received all such information that the Purchaser deems
necessary and appropriate to enable the Purchaser to evaluate the financial risk
inherent in making an investment in the Shares. The Purchaser has received
satisfactory and complete information concerning the business and financial
condition of the Company in response to the Purchaser's inquiries.
4.8 RISK OF INVESTMENT. The Purchaser realizes that the purchase of the
Shares will be a highly speculative investment. The Purchaser is able, without
impairing the Purchaser's financial condition, to hold such Shares for an
indefinite period of time and to suffer a complete loss of the Purchaser's
investment. The Purchaser understands all of the risks related to the purchase
of the Shares. By virtue of the Purchaser's experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company, the Purchaser is capable of evaluating the merits and risks of
the Purchaser's investment in the Company and has the capacity to protect the
Purchaser's own interests.
4.9 ADVISORS. The Purchaser has reviewed with its own tax advisors the
federal, state, and local tax consequences of this investment and the
transactions contemplated by this Agreement. The Purchaser acknowledges that it
has had the opportunity to review this Agreement and the Registration Rights
Agreement and the transactions contemplated by this Agreement with the
Purchaser's own legal counsel. The Purchaser is relying solely on its legal
counsel and tax advisors and not on any statements or representations of the
Company or any of the Company's agents for legal or tax advice with respect to
this investment or the transactions contemplated by this Agreement.
4.10 FINDER. The Purchaser is not obligated and will not be obligated
to pay any broker commission, finders' fee, success fee, or commission in
connection with the transactions contemplated by this Agreement.
4.11 RESTRICTED SHARES. The Purchaser understands that the Shares must
be held indefinitely unless subsequently registered under the Act or unless an
exemption from registration is otherwise
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available. Moreover, the Purchaser understands that except as set forth in the
Registration Rights Agreement, the Company is under no obligation to register
the Shares. The Purchaser is aware of Rule 144 promulgated under the Act that
permits limited resales of securities purchased in a private placement subject
to the satisfaction of certain conditions. The Purchaser understands that the
Shares will be imprinted with a legend, which prohibits the transfer of the
Shares unless they are registered or such registration is not required in the
opinion of counsel for the Company.
4.12 LEGEND. It is understood by the Purchaser that each certificate
representing the Shares shall be endorsed with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."
The Company need not register a transfer of Shares unless the conditions
specified in the foregoing legend are satisfied. The Company may also instruct
its transfer agent not to register the transfer of any of the Shares unless the
conditions specified in the foregoing legend are satisfied.
4.13 REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. It is understood by
the Purchaser that the legend relating to the Act endorsed on a stock
certificate pursuant to SECTION 4.12 of this Agreement and the stop transfer
instructions with respect to the Shares represented by such certificate shall
not be removed until such Shares are sold pursuant to an effective registration
statement, or the holder of such Shares provides to the Company an opinion of
counsel for such holder of the Shares reasonably satisfactory to the Company or
a no-action letter or interpretive opinion of the staff of the SEC to the effect
that a public sale, transfer, or assignment of such Shares may be made without
registration and without compliance with any restriction such as Rule 144. Any
legend imposed by state securities laws will be removed if the state agency
imposing such legend has consented to its removal.
4.14 INVESTOR QUALIFICATION. The Purchaser qualifies as an "accredited
investor" as defined in Rule 501(a) of Regulation D under the Act.
ARTICLE 5
MISCELLANEOUS
5.1 SURVIVAL. The representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the sale of the Shares.
5.2 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement may not be
assigned by either party without the prior written consent of the other party.
This Agreement and all provisions thereof shall be binding upon, inure to the
benefit of, and are enforceable by the parties hereto and their respective
successors and permitted assigns.
5.3 NOTICES. All notices, requests, and other communications hereunder
shall be in writing and will be deemed to have been duly given and received (a)
when personally delivered, (b) when sent by facsimile upon confirmation of
receipt, (c) one business day after the day on which the same has been delivered
prepaid to a nationally recognized courier service, or (d) five business days
after the deposit in the United States mail, registered or certified, return
receipt requested, postage prepaid, in each case addressed to the Company at 000
X. Xxx Xxxxxxx Xxxxxxx X., Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attn: Chief
Executive Officer, facsimile number, (000) 000-0000 with a copy to Xxxx
Xxxxxxxx, Esq.,
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Xxxxx & XxXxxxxx LLP, 2300 Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000, facsimile number, (000) 000-0000, and as to the Purchaser at the address
and facsimile number set forth below the Purchaser's signature on the last page
of this Agreement. Any party hereto from time to time may change its address,
facsimile number, or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto. The
Purchaser and the Company may each agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures reasonably approved by it; provided that approval of such procedures
may be limited to particular notices or communications.
5.4 GOVERNING LAW; JURISDICTION.
(a) This Agreement, and the provisions, rights, obligations, and
conditions set forth herein, and the legal relations between the parties hereto,
including all disputes and claims, whether arising in contract, tort, or under
statute, shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to its conflict of law provisions.
(b) Any and all disputes arising out of, or in connection with, the
interpretation, performance, or nonperformance of this Agreement or any and all
disputes arising out of, or in connection with, transactions in any way related
to this Agreement and/or the relationship between the parties shall be litigated
solely and exclusively before the United States District Court for the Southern
District of New York. The parties consent to the in personam jurisdiction of
said court for the purposes of any such litigation, and waive, fully and
completely, any right to dismiss and/or transfer any action pursuant to 28
U.S.C. ss.1404 or 1406 (or any successor statute). In the event the United
States District Court for the Southern District of New York does not have
subject matter jurisdiction of said matter, then such matter shall be litigated
solely and exclusively before the appropriate state court of competent
jurisdiction located in New York, New York.
5.5 SEVERABILITY. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid, or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid, or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
5.6 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction, or effect.
5.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
5.8 ENTIRE AGREEMENT. This Agreement embodies the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Purchaser has caused this Agreement to be signed by the
undersigned, thereto duly authorized, as of the Subscription Date.
U.S. $ ----------------------------------
---------------------------
Amount of Investment
(U.S. $0.90 per Share)
By:
-----------------------------
Name:
--------------------------------- ---------------------------
(Number of Shares)
Title:
--------------------------
Address:
-------------------------
Facsimile No:
--------------------
E-mail Address:
------------------
This Agreement is hereby confirmed and accepted by the Company as of
_______________, 2005.
FAR EAST ENERGY CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
[SEE ATTACHED]
