EXHIBIT 10.1
EXECUTION COPY
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is entered into this 31st day
of December, 2004 by and between Xxxxxxxxxx Xxxxx ("Gondi"), The Xxxxx Trust and
Far East Energy Corporation, a Nevada corporation (the "Company"). Gondi and the
Company are sometimes individually referred to in this Agreement as the "Party"
and collectively as the "Parties."
WHEREAS, bona fide disputes and controversies exist between the
Parties, both as to liability and the amount thereof arising out of all
compensation and reimbursement of all expenses owing to Gondi by the Company and
its subsidiaries and affiliates;
WHEREAS, by reason of such disputes and controversies the Parties want
to resolve permanently any and all disputes and controversies arising out of
such claims for compensation;
NOW, THEREFORE, without any admission of wrongdoing or liability, and
for the consideration recited herein and other valuable consideration, the
sufficiency and receipt of which hereby is acknowledged, the Parties agree as
follows:
1. PAYMENT. In exchange for, and as part of, the consideration and upon
the terms set forth in this Agreement, the Company shall (a) pay Gondi a total
gross amount of One Hundred Sixty-Five Thousand and no/100 Dollars
($165,000.00), minus all applicable withholding, by wire transfer in immediately
available funds or certified or cashier's check and (b) reimburse Gondi
$3,000.00 in payment of all out-of-pocket incidental miscellaneous expenses
(such as international hotel incoming faxes, telephone calls and business center
charges) incurred by Gondi during 2003 and 2004 (hereinafter collectively
referred to as the "Settlement Payment"). Upon payment of the Settlement
Payment, Gondi waives any claims for and represents and warrants that no salary,
back pay, reinstatement, future pay, front pay, bonuses, vacation pay or any
other compensation, employee retirement, health, and welfare benefits,
out-of-pocket expenses incurred in the capacity as an officer and director or
other employee benefits or other costs and expenses, notes payable or
indebtedness that shall be due or owing to Gondi by the Company or its
subsidiaries.
2. RESIGNATION. Gondi hereby resigns, and the Company hereby accepts
such resignation, as a director, officer, employee or in any other capacity of
the Company and its subsidiaries effective as of the date hereof. Gondi agrees
not to engage in any statements or conduct which would lead any person or entity
to believe that he is an employee, officer, director, consultant, agent or
authorized representative of the Company or any of its subsidiaries. Gondi
agrees that he will not, directly or indirectly, disparage the Company or its
executive officers and directors in communications to any third-party about the
Company's financial condition, prospects, business operations, development
efforts, properties or licenses or the Company's executive officers and
directors.
3. PUBLIC ANNOUNCEMENT. The Parties agree that the Company will file
with the SEC a report on Form 8-K and the Company will issue a press release,
each of which will disclose Gondi's resignation as a director of the Company.
Gondi acknowledges and agrees that he has received and reviewed a copy of the
Form 8-K that will be filed with the SEC concerning his resignation, agrees
fully with the statements made by the Company therein and has not provided and
will not provide to the Company any written correspondence concerning the
circumstances surrounding his resignation. The Parties agree that the
information in the press release concerning Gondi's resignation as a director of
the Company will be substantially the same to the statements made in such report
on Form 8-X. Xxxxx agrees not to issue any press release or make any public
statement concerning his resignation from the Company or its subsidiaries as
provided by Section 2 that would conflict with the statements made by the
Company in the Form 8-K provided to Gondi under this Section.
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4. STANDSTILL. Gondi and The Xxxxx Trust agree that, for a period of
two (2) years after the date of this Agreement, without the prior written
consent of the Company, Gondi and The Xxxxx Trust will not, and will cause each
of his affiliates not to, singly or as part of a group, directly or indirectly,
through one or more intermediaries or otherwise to:
(a) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are
defined or used in Regulation 14A of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) with respect to any Securities (as defined
below) (including by the execution of action by
written consent), become a "participant" in any
"election contest" (as such terms are defined or used
in Rule 14a-11 of the Exchange Act) with respect to
the Company, stand for election as a director of the
Company, accept appointment as an officer or director
of the Company, seek to advise, encourage or
influence any person or entity with respect to the
voting of any Securities or demand a copy of the
stock ledger, list of stockholders or other books and
records of the Company; provided that this Section
4(a) shall not be deemed to prohibit Gondi from
exercising any rights as a stockholder of the Company
to inspect the corporate records of the Company under
applicable law in the event Gondi shall become the
subject of any investigation or legal proceeding by a
governmental authority or agency and he reasonably
believes such documents are relevant to his defense
in such an investigation or legal proceeding;
(b) participate in or encourage the formation of any
group which owns or seeks or offers to acquire
beneficial ownership of securities of the Company or
any assets owned by the Company or rights to acquire
such securities or which seeks or offers to effect
control or to effect a change of control of the
Company or for the purpose of circumventing any
provisions of this Agreement;
(c) otherwise act, alone or in concert with others
(including by providing financing to another party),
to seek or offer to control, to change or to change
the control of, in any manner, the management, board
of directors or policies of the Company; or
(d) solicit, seek or offer to effect, negotiate with or
provide any information to any person with respect
to, or make any statement, proposal or inquiry,
whether written or oral, either alone or in concert
with others, to the board of directors of the
Company, to any director or officer of the Company or
to any stockholder or securityholder of the Company
or otherwise make any public announcement or proposal
or offer whatsoever with respect to (i) any form of
business combination or other acquisition transaction
involving the Company including, without limitation,
a merger, consolidation, tender or exchange offer,
sale or purchase of assets or securities, or
dissolution or liquidation of the Company, or (ii)
any form of restructuring, recapitalization or
similar transaction with respect to the Company.
For purposes of this Section and Section 5, the (i) terms "person," "group" and
"beneficial owner" shall have the meanings ascribed to those terms in Rule 13d-3
under the Exchange Act and (ii) the term "Securities" shall mean the shares of
capital stock or other voting securities of the Company and its subsidiaries and
affiliates, and any and all other shares or securities issued or issuable in
respect thereof, now or hereafter controlled, directly or indirectly, by Gondi,
The Xxxxx Trust or their respective affiliates or with respect to which Gondi or
The Xxxxx Trust is a beneficial owner. Solely for purposes of clauses (a)
through (d) this Section 5, the term "Company" shall mean Far East Energy
Corporation and its subsidiaries and affiliates.
5. PROXY. On the date of this Agreement, Gondi will execute and deliver
to the Company, or cause to be executed and delivered to the Company, one or
more proxies in substantially the form of Exhibit A
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attached hereto (collectively, the "Proxy") naming the members of the board of
directors of the Company who are not officers of the Company or members of the
Company's audit committee, as the agents and proxies, with full power of
substitution and resubstitution, to vote any and all Securities (including any
additional shares of capital stock issued in respect of such Securities incident
to a stock split, stock dividend, recapitalization, consolidation, merger or
other reorganization or like transaction). Any determination to use any Proxy
shall be made by the majority of such directors of the Company. The Proxy shall
expire on the second anniversary of this Agreement. During such period, the
Proxy shall be irrevocable and coupled with an interest and shall be irrevocable
and shall survive the insolvency, incapacity, death or liquidation of Gondi or
any other person granting the Proxy. The Company and any proxyholder named in
the Proxy shall have the right from time to time to designate any member of the
board of directors of the Company who are not officers of the Company or members
of the Company's audit committee in substitution or resubstitution of a
proxyholder. None of Gondi, The Xxxxx Trust or any other person granting a Proxy
shall retain any authority to vote the Securities. The Proxy shall provide that
the Proxy, at the discretion of the proxyholders named therein, may be used for
the purpose of establishing a quorum. The Proxy shall further provide that, if
and to the extent the proxyholders named in the Proxy vote any Securities, such
proxyholders shall vote such Securities in the same proportion as the votes cast
by all other holders of the Company's voting capital stock. Upon the execution
hereof, Gondi and The Xxxxx Trust agree that all prior proxies given by Gondi,
The Xxxxx Trust or their respective affiliates with respect to the Securities
are hereby revoked as of the date hereof and no subsequent proxies will be given
until such time as the Proxy shall be terminated in accordance with its terms.
Gondi and The Xxxxx Trust agree to cause to be revoked all proxies (other than
the Proxy) with respect to the Securities now or hereafter controlled or
beneficially owned, directly or indirectly, by Gondi, The Xxxxx Trust or his or
its affiliates. Gondi and The Xxxxx Trust agree, and agree to cause, any
certificates representing Securities to be legended to assure the enforceability
of this Agreement and the Proxy, by bearing the following legend on the reverse
side of the certificate (as well as a reference in bold-face type to such legend
on the face of the certificate):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF AN IRREVOCABLE PROXY DATED DECEMBER 31, 2004 NAMING
CERTAIN MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY AS THE AGENTS
AND PROXIES. THE COMPANY WILL FURNISH A COPY OF SUCH PROXY TO THE
RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE. SUCH
PROXY SHALL BE SUBJECT TO THE TERMS AND CONDITIONS OF THE SETTLEMENT
AGREEMENT DATED DECEMBER 31, 2004 AMONG THE COMPANY, XXXXXXXXXX XXXXX
AND THE XXXXX TRUST."
Each certificate, if any, evidencing the Securities issued upon any disposition,
gift or other transfer shall bear the legend set forth in this Section 5, unless
(a) such Securities will be sold in accordance with the provisions of paragraphs
(f) and (g) of Rule 144 promulgated under the Securities Act of 1933, as amended
(regardless of the availability of 144(k)) or (b) the Company otherwise agrees
in writing to the removal of such legend. In connection with any such
disposition or transfer, the Company shall have the right, but not the
obligation, to require the execution and delivery of a seller's representation
letter by the holder of such Securities and/or the execution and delivery of a
broker's letter by the broker effecting such transfer or disposition, which
broker shall be of prominent national or international reputation and recognized
standing with multiple offices in the United States (such as, for example,
Xxxxxxx Xxxxx, X.X. Xxxxxxx, Xxxxx Xxxxxx, Credit Suisse First Boston, Xxxxxxxx,
Xxxxxxxx & Xxxxxx or others of similar national or international prominence), in
form and substance satisfactory to the Company. In furtherance of, but subject
to compliance with the provisions of this Section 5, the Parties agree that the
intent of this Section 5 is that the legend set forth in this Section 5 shall be
removed in connection with such a disposition or transfer to a Person unknown to
and unsolicited by the holder of the Securities through a brokerage firm in an
open market transaction. The Company shall use commercially reasonable efforts
to process or cause its stock transfer agent to process such disposition or
transfer made in compliance with applicable law as soon as reasonably
practicable following its or its stock transfer agent's receipt of all documents
required under this Section 5 or under the Securities Act of 1933 and other
applicable law. Upon removal of the legend on the certificates evidencing any
Securities and the disposition of such
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Securities, in each case, as set forth in and in compliance with this Section 5,
such Securities shall thereafter cease to be subject to the Proxy. Gondi and The
Xxxxx Trust represent and warrant to the Company that no Securities are
controlled directly or indirectly, by Gondi, The Xxxxx Trust or their respective
affiliates or with respect to which Gondi or The Xxxxx Trust is a beneficial
owner except for those Securities subject to the Proxy.
6. FURTHER ASSURANCE. Each Party agrees to execute and deliver such
documents, resignations, proxies and take such other action as will be
reasonably required to carry out the provisions or the intent of this Agreement.
7. CHOICE OF LAW/FORUM SELECTION. This Agreement shall be governed by,
construed and enforced in accordance with, and subject to, the laws of the State
of Texas, except to the extent the laws of the State of Nevada apply to matters
of corporate governance of the Company. Venue of any claim relating in any way
to this Agreement shall be proper only in state court in Xxxxxx County, Texas
and, by execution and delivery of this Agreement, each Party hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each Party hereby irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any such action or proceeding in such respective
jurisdictions.
8. ENTIRE AGREEMENT. It is expressly understood and agreed that this
Agreement embodies the entire agreement between the Parties with respect to the
subject matter of this Agreement and, unless otherwise indicated, supersedes any
and all prior agreements, arrangements or understandings between and among the
Parties. This Agreement may not be changed by oral representations and may only
be amended by written instrument executed by a duly authorized representative of
each of the Company and Gondi and, with respect to an amendment to Sections 4
through 14 of this Agreement, The Xxxxx Trust, or their respective authorized
successors or assigns.
9. COMPETENCE. Each of the Parties represents that they each are
legally competent and has all requisite power and authority to execute this
Agreement. Gondi represents that he is not relying upon the Company or its
attorneys in any way regarding the tax consequences of entering into this
Agreement. Gondi acknowledges that he is solely responsible for payment of any
and all taxes due on such amounts. Gondi understands that the Company has signed
this Agreement in reliance upon (a) that this Agreement is written in plain
English and (b) that he has been advised to consult with an attorney prior to
executing this Agreement, and Gondi fully understands, his rights under all
applicable laws and the ramifications and consequences of Gondi's execution of
this Agreement. The Parties acknowledge that they have executed this Agreement
freely and without duress, having an opportunity to consult with the attorney(s)
of their choice. The consideration given in this Agreement is not to be
construed as an admission of liability by the Company or its subsidiaries or any
officer or director of the Company or its subsidiaries.
10. NOTICES. All notices, requests, demands, claims and other
communications under this Agreement shall be in writing. Any notice, request,
demand, claim or other communication hereunder shall be deemed duly given if
(and then seven business days after) it is sent by (a) confirmed facsimile; (b)
overnight delivery; or (c) registered or certified mail, return receipt
requested, postage prepaid, and addressed, to the respective address of such
Party specified opposite its or his signature below. Either Party may send any
notice, request, demand, claim or other communication hereunder to the intended
recipient at the address set forth above using any other means (including
personal delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail or electronic mail), but no such notice, request, demand, claim or
other communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Either Party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice in the manner
provided in this Agreement. Each Party irrevocably consents to service of
process in connection with disputes arising out of this Agreement or
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otherwise in the manner provided for notices in this Section. Nothing in this
Agreement will affect the right of any Party to serve process in any other
manner permitted by law.
11. SEVERABILITY. Should any provision of this Agreement be held
invalid or unenforceable, such provision shall be ineffective to the extent of
such invalidity or unenforceability, without invalidating the remainder of such
provision or the remaining portions of this Agreement.
12. NO ASSIGNMENT. Gondi represents and warrants that he has made no
assignment, and will make no assignment, of any claim, action, or right of any
kind whatsoever, embodied in any of the matters referred to in this Agreement,
and that no person or entity of any kind had or has any interest in any of the
obligations, claims, costs or expenses referred to in this Agreement. If Gondi,
The Xxxxx Trust or any other person granting a Proxy transfers or disposes of
any Securities, Section 5 and the Proxy shall continue to be enforceable by or
against such transferee of such Securities, unless the Company is required or
agrees to remove the legend on the certificates evidencing such Securities in
accordance with Section 5.
13. COSTS AND EXPENSES. The Parties shall pay their respective fees,
disbursements and expenses of their attorneys in connection with the negotiation
and preparation of this Agreement; provided that the Company agrees to pay Gondi
the reasonable attorney fees incurred by him in connection with the negotiation
of this Agreement not to exceed an amount equal to $7,000.
14. INTERPRETATION. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
words, "include" and "including" shall mean including without limitation. The
Parties participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring either of the
Parties regarding the authorship of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by as of the day and year first above written.
/s/ Xxxxxxxxxx Xxxxx
------------------------------------
Date: December 30, 2004 Xxxxxxxxxx Xxxxx
Address:
-------
Xxxxxxxxxx Xxxxx
00 Xxxxxxxxxxx
Xxxxx, Xxxxx, XX XX00 0XX
Telephone No. (00) 0000-000000
Fax No.: (00) 0000-000000
email: xxxxxx@xxxx.xx
Date: December 31, 2004 FAR EAST ENERGY CORPORATION
Address:
-------
By: /s/ Xxxxx X. Xxxx
---------------------------------
Far East Energy Corporation Xxxxx X. Xxxx
400 N. Xxx Houston Pkwy E., Ste 205 Chief Financial Officer
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax No. (000) 000-0000
The undersigned has executed this Agreement to evidence its agreement to be
bound solely by Sections 4 through 14 of this Agreement and shall be deemed to
be a Party for purposes thereof.
Date: December 31, 2004 THE XXXXX TRUST
Address: By: /s/ Xxxxxx Xxxxx Xxxxx
------- --------------------------------
Name: Xxxxxx Xxxxx Xxxxx
The Xxxxx Trust Title: Director
Xxxxx Xxxxxxxx Stonehage Limited
Xxx Xxxxxx Xxxxxxx Xxxxx
00/00 Xxxxxxxxx By: /s/ Xxxxx Xxxxxxx Xxxxxxx
Xx. Xxxxxx, Xxxxxx, XX0 0XX --------------------------------
Fax No.: (00) 0000 000000 Name: Xxxxx Xxxxxxx Xxxxxxx
Title: Director
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XXXXXXXX XX XXXXXXX XXXXXXXX
XXXXXX
On December 30, 2004, before me personally appeared Xxxxxxxxxx Xxxxx,
who having presented sufficient evidence of identity, acknowledged the signature
on the foregoing instrument as a free, knowing and voluntary act.
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Notary Public in and for the Province of British Columbia, Canada
My commission is for life.
XXXXX XX XXXXX
XXXXXX XX XXXXXX
Xx December 31, 2004, before me personally appeared Xxxxx X. Xxxx, the
authorized representative of Far East Energy Corporation, having presented
sufficient evidence of identity, acknowledged the signature on the foregoing
instrument as a free, knowing and voluntary act on behalf of said company, for
the purposes and consideration therein expressed, and in the capacity stated.
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Notary Public for the State of Texas
My commission expires:
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ISLAND OF JERSEY
PARISH OF SAINT HELIER
On December 31, 2004, before me personally appeared Xxxxxx Xxxxx Xxxxx
and Xxxxx Xxxxxxx Xxxxxxx, the authorized representatives of Xxxxx Xxxxxxxx
Stonehage Limited as trustees of The Xxxxx Trust, having presented sufficient
evidence of identity, acknowledged the signature on the foregoing instrument as
a free, knowing and voluntary act on behalf of said trust, for the purposes and
consideration therein expressed, and in the capacity stated.
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Notary Public for the Island of Jersey
My commission expires:
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EXHIBIT A
IRREVOCABLE PROXY
FAR EAST ENERGY CORPORATION
The undersigned, a stockholder of Far East Energy Corporation (the
"Company"), hereby irrevocably appoints Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxx, and
each of them individually (the "Proxyholders"), as agents and proxies of the
undersigned, to the full extent of the undersigned's rights with respect to the
shares of the Securities, each with full power of substitution and
resubstitution, at any annual or special meeting of the stockholders of the
Company, at any adjournment or postponement thereof, through any written consent
by the stockholders of the Company, and any and all other action and any matter
that includes a vote of the Company's stockholders.
This Proxy is issued pursuant to the Settlement Agreement, dated
December 31, 2004, by and among the Company, Xxxxxxxxxx Xxxxx and The Xxxxx
Trust (the "Settlement Agreement") and shall remain subject to the terms and
conditions thereof. This Proxy is an irrevocable proxy coupled with an interest.
Capitalized terms used but not defined herein shall have the same meanings
ascribed to such terms are defined in the Settlement Agreement. The undersigned
recognizes that the Proxyholders have an interest in said Securities in
connection with Section 5 of the Settlement Agreement.
Any determination to use this Proxy shall be made by a majority of the
Proxyholders. Whenever the Proxyholders determine to vote any of the Securities,
the Proxyholders agree to vote all Securities in the same proportion as the
votes cast by all other holders of the Company's voting stock. At the discretion
of the Proxyholders, this Proxy may be used for the purpose of establishing a
quorum.
This Proxy shall be subject to the terms and conditions of the
Settlement Agreement. Upon execution hereof, the undersigned agrees that all
prior proxies given by the undersigned or his or its affiliates with respect to
the Securities are hereby revoked and no subsequent proxies will be given until
such time as this Proxy shall be terminated in accordance with its terms. The
undersigned hereby waives its right to cancel this Proxy at any time during the
time period described herein. The undersigned hereby agrees and affirms that
this Proxy is irrevocable and shall remain in full force and effect and shall
survive the insolvency, incapacity, death or liquidation of the undersigned.
Please Sign Here, Date and Return Promptly
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By:
-----------------------------------------
Name:
Title:
Date:
Please sign exactly as your name or names
appear on your share certificates. For joint
accounts, each owner should sign. When
signing as executor, administrator,
attorney, trustee or guardian, etc., please
give your full title.
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