STOCK SUBSCRIPTION AGREEMENT
EXHIBIT
10.64
This
STOCK SUBSCRIPTION AGREEMENT ("Agreement") is made
and entered into as of June 2, 2008 ("Subscription Date")
by and between Far East Energy Corporation, a Nevada corporation ("Company"), and
International Finance Corporation ("Purchaser").
Preliminary
Statement
The
Purchaser desires to purchase and the Company desires to offer and sell to the
Purchaser the number of 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") and a
warrant ("Warrant") to purchase
the number of shares of the Company Common Stock set forth opposite the
Purchaser's signature on the last page of this Agreement ("Warrant
Shares").
Agreement
The
parties, intending to be legally bound, agree as follows:
ARTICLE
1
SALE
OF SECURITIES
1.1 Purchase of
Securities. The Purchaser will purchase from the Company the
Shares at a price of U.S. $0.50 per Share in cash (the total price paid for such
Shares, the "Total
Purchase Price"). In consideration therefor and pursuant to
the other terms and conditions of this Agreement, the Company agrees to issue to
the Purchaser a stock certificate for the Shares and a Warrant to purchase the
Warrant Shares. The Purchaser understands that the Company is under
no obligation to sell any Shares or issue any stock certificate or Warrant to
the Purchaser unless the Company accepts and signs this Agreement.
1.2 Registration. The
offering and sale of the Shares and the Warrant (the "Offering") are being
made pursuant to (a) an effective Registration Statement on Form S-3, as
amended (No. 333-132631), which became effective on May 10, 2006 (including
the Base Prospectus, the "Registration
Statement") filed by the Company with the Securities and Exchange
Commission (the "SEC"), (b) if
applicable, certain "free writing prospectuses" (as that term is defined in Rule
405 under the Securities Act of 1933, as amended, the "Securities Act"),
that have or will be filed with the SEC and delivered to the Purchaser on or
prior to the date hereof, and (c) a prospectus supplement containing
certain supplemental information regarding the Shares and terms of the Offering
that will be filed with the SEC (the "Prospectus
Supplement") and delivered, or otherwise made available, to the Purchaser
along with the Company's counterpart to this Agreement.
ARTICLE
2
DEFINITIONS
For
purposes of this Agreement, to the extent not defined below, capitalized terms
shall have the meanings provided therefore in the relevant section where their
usage first appears, and the following terms shall have the meanings and
definitions set forth below:
2.1 "Accounting Standards"
shall mean the generally accepted accounting principles in the United States,
applied consistently, as in effect from time to time.
2.2 "Affiliate" shall
mean, with respect to any Person, any Person directly or indirectly Controlling,
Controlled by or under common Control with, that Person.
2.3 "Annual Monitoring
Report" shall mean the annual monitoring report, in form and substance
satisfactory to the Purchaser and the Company, setting out the specific social,
environmental and developmental impact information to be provided by the Company
in respect of its Operations, as such form of Annual Monitoring Report may be
amended or supplemented from time to time with the Purchaser's
consent.
2.4 "Applicable S&E
Law" shall mean all applicable statutes, laws, ordinances, rules and
regulations of the People's Republic of China, including but not limited to any
license, permit or other governmental Authorization, imposing liability or
setting standards of conduct concerning any environmental, social, labor, health
and safety or security risks of the type contemplated by the Performance
Standards.
2.5 "Articles of
Incorporation" shall mean the Articles of Incorporation of the
Company, as amended.
2.6 "Assignment
Agreements" shall mean the Assignment Agreement-Xxxxxxx PSC, dated
June 17, 2003, by and between Xxxxxxxx China, Inc., a Delaware corporation
and the Company and the Assignment Agreement-Shouyang PSC, dated June 17,
2003, by and between Xxxxxxxx China Inc., a Delaware corporation, and the
Company.
2.7 "Auditors" shall mean
Xxxxx Xxxxx & Xxxxx, P.C. or another independent accounting
firm.
2.8 "Authority" shall mean
any national, supranational, regional or local government or governmental,
administrative, fiscal, judicial, or government-owned body, department,
commission, authority, tribunal, agency or entity, or central bank (or any
Person, whether or not government owned and howsoever constituted or called,
that exercises the functions of a central bank).
2.9 "Authorizations" shall
mean any consent, registration, filing, agreement, notarization, certificate,
license, approval, permit, authority or exemption from, by or with any
Authority, whether given by express action or deemed given by failure to act
within any specified time period and all
corporate, creditors' and stockholders'
approvals or consents.
2.10 "Base Prospectus"
shall mean the prospectus contained in the Registration Statement.
2.11 "Bylaws" shall mean
the Amended and Restated Bylaws of the Company.
2.12 "CAO" shall mean the
Compliance Advisor Ombudsman, the independent accountability mechanism for the
Purchaser that impartially responds to environmental and social concerns of
affected communities and aims to enhance outcomes.
2.13 "CAO's Role" shall
mean the following responsibilities of the CAO: (a) to respond to
complaints by persons who have been or are likely to be directly affected by the
social or environmental impacts of the Purchaser's projects; and (b) to
oversee audits of the Purchaser's social and environmental performance,
particularly in relation to sensitive projects, and to ensure compliance with
the Purchaser's social and environmental policies, guidelines, procedures and
systems.
2.14 "Certificate of Incumbency
and Authority" shall mean a certificate provided to the Purchaser by the
Company in the form of Annex E to this
Agreement.
2.15 "Coercive Practice"
shall have the meaning ascribed to that term in the Anti-Corruption Guidelines
set forth in Annex C to this
Agreement.
2.16 "Collusive Practice"
shall have the meaning ascribed to that term in the Anti-Corruption Guidelines
set forth in Annex C to this
Agreement.
2.17 "Control" shall mean
the possession, directly or indirectly, by a Person of the power to direct or
cause the direction of the management and policies of another Person through the
ownership of voting securities or otherwise; provided that the direct or
indirect ownership of twenty percent (20%) or more of the voting power of the
total share capital of a Person is deemed to constitute control of that
Person.
2.18 "Corrupt Practice"
shall have the meaning ascribed to that term in the Anti-Corruption Guidelines
set forth in Annex C to this
Agreement.
2.19 "Environmental and Social
Action Plan" shall mean the plan developed by the Company, a copy of
which is attached as Annex F to this
Agreement, setting out specific social and environmental measures to be
undertaken by the Company, to enable its Operations to comply with the
Performance Standards, as such Action Plan may be amended or supplemented from
time to time with the Purchaser's consent, which was publicly disclosed on
July 20, 2007.
2.20 "ESHS Management
System" shall mean the Company's environmental, social health, and safety
management system enabling it to identify, assess and manage risks in respect of
its Operations on an ongoing basis.
2.21 "ESRS" shall mean the
environmental and social review summary, agreed by both the Purchaser and the
Company in accordance with the Purchaser's Disclosure Policies, that was
publicly disclosed on July 20, 2007.
2.22 "Exchange Act" shall
mean the Securities Exchange Act of 1934, as amended.
2.23 "Farmout Agreements"
shall mean the Farmout Agreement-Qinnan PSC, dated June 17, 2003, by and
between Xxxxxxxx China Inc., a Delaware corporation, and the Company, as
amended, and Farmout Agreement-Shouyang PSC, dated June 17, 2003, by and
between Xxxxxxxx China Inc., a Delaware corporation, and the
Company.
2.24 "Fraudulent Practice"
shall have the meaning ascribed to that term in the Anti-Corruption Guidelines
set forth in Annex C to this
Agreement.
2.25 "Material Adverse
Effect" shall mean a material adverse effect on the assets, properties,
operations, or financial condition of the Company and its Subsidiaries taken as
a whole.
2.26 "Obstructive Practice"
shall have the meaning ascribed to that term in the Anti-Corruption Guidelines
set forth in Annex C to this
Agreement.
2.27 "Operations" shall
mean the operations, activities and facilities of the Company and the
Subsidiaries (including the design, construction, operation, maintenance,
management and monitoring, as applicable in the United States of America and the
People's Republic of China).
2.28 "Performance
Standards" shall mean the Purchaser's Performance Standards on Social
& Environmental Sustainability, dated April 30, 2006, copies of which
have been delivered to and receipt of which has been acknowledged by the
Company.
2.29 "Production Sharing
Contracts" shall mean the Production Sharing Contract for Exploitation of
Coalbed Methane Resources in Enhong and Laochang, Yunnan Province, the People's
Republic of China, dated January 25, 2002, by and between China United
Coalbed Methane Corp. Ltd. and the Company, and the Production Sharing Contract
for Exploitation of Coalbed Methane Resources for the Qinnan Area in Shanxi
Province, Qinshui Basin, the People's Republic of China, dated April 16,
2002, by and between China United Coalbed Methane Corporation Ltd. and the
Xxxxxxxx China Inc.
2.30 "Project Documents"
shall mean the Production Sharing Contracts, the Farmout Agreements, the
Assignment Agreements and any amendment or supplement thereto, or replacement or
novation thereof.
2.31 "Rules and
Regulations" shall mean the rules and regulations of the
SEC.
2.32 "Sanctionable
Practice" shall mean any Corrupt Practice, Fraudulent Practice, Coercive
Practice, Collusive Practice, or Obstructive Practice, as defined in this
Agreement and interpreted in accordance with the Anti-Corruption Guidelines set
forth in Annex C to this
Agreement.
2.33 "SEC Documents" shall
mean the Registration Statement, the Base Prospectus and any other preliminary
prospectus or prospectus filed with the SEC in connection with the sale and
purchase of the Shares pursuant to this Agreement, and each periodic report on
Form 10-K, 10-Q, or 8-K that the Company has filed under the Securities Act or
the Exchange Act and in accordance with the Rules and Regulations during the
twelve months prior to the Subscription Date; provided, however, that for
purposes of Section 9.4, such term shall mean any and all periodic reports
and any other documents or disclosures filed with the SEC, and any press release
or other public disclosure made by the Company (without regard to a date or time
limitations).
2.34 "Subsidiary" shall
mean with respect to the Company, an Affiliate over fifty percent (50%) of whose
capital is owned, directly or indirectly by the Company.
2.35 "Transaction
Documents" shall mean this Agreement and the Warrant.
2.36 "World Bank" shall
mean the International Bank for Reconstruction and Development, an international
organization established by Articles of Agreement among its member
countries.
ARTICLE
3
CLOSING;
DELIVERY
3.1 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 third business day after the satisfaction or waiver (subject to
applicable law) of the latest to be satisfied or waived of the conditions set
forth in Article 7 of this Agreement (other than those conditions that by their
nature are to be satisfied at the Closing), or at such other time and place as
the Company and the Purchaser mutually agree upon. The date on which the Closing
occurs is hereinafter referred to as the "Closing
Date". On or before the Subscription Date, the Company shall
deliver to the Purchaser an executed Company Certification and Subscription
Request, substantially in the form of Annex D.
3.2 Delivery. At
the Closing, on the basis of the representations and warranties contained in,
and subject to the terms and conditions of, this Agreement, the Purchaser shall
pay the Company the Total Purchase Price in immediately available
funds. As soon as practicable, and in any case on or before three (3)
business days after the Closing, the Company shall deliver or cause the delivery
to the Purchaser a stock certificate representing the number of Shares purchased
by such Purchaser and a Warrant for the purchase of the Warrant
Shares. Time shall be of the essence, and delivery at the time and
place specified or otherwise agreed pursuant to this Agreement is a further
condition of the obligation of the Purchaser hereunder. At the
Closing, the Company shall also deliver the documents and instruments required
to be delivered pursuant to Article 7 hereof.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Purchaser that, as of the Subscription
Date, except as set forth in the disclosure schedule delivered to the Purchaser
and signed by the Company in connection with the execution and delivery of this
Agreement (the "Company Disclosure
Schedule"), the following representations and warranties are true and
correct:
4.1 Organization and
Standing. The Company and each of its Subsidiaries have been
duly incorporated or formed, as applicable, and are validly existing, and in
good standing under the laws of their respective jurisdiction of incorporation
or formation. The Company and each of its Subsidiaries have all
requisite power and authority to own and operate its properties and assets and
to carry on their business as presently conducted. The Company and
each of its Subsidiaries are qualified to do business as a foreign entity in
every jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect. Other than Far East Energy (Bermuda), Ltd., none of
the Company's Subsidiaries are a "significant subsidiary" as such term is
defined in Rule 405 of the Rules and Regulations.
4.2 Power. The
Company has all requisite power and authority to execute and deliver the
Transaction Documents and to carry out and perform its obligations under the
terms of the Transaction Documents.
4.3 Validity. The
execution, delivery, and performance of the Transaction Documents by the Company
have been duly authorized by all requisite action, and each of the Transaction
Documents 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.
4.4 No Conflict. The
execution and delivery of the Transaction Documents, the issuance, sale and
delivery of the Shares and the Warrant by the Company under this Agreement, the
performance by the Company of its obligations under the Transaction Documents
and/or the consummation of the transactions contemplated hereby and the
application of the proceeds from the sale of the Shares, as described under "Use
of Proceeds" in the most recent prospectus relating to the sale of the Shares,
will not conflict with, result in the breach or violation of, or constitute
(with or without the giving of notice or the passage of time or both) a
violation of, or default under, (a) any material bond, debenture, note or
other evidence of indebtedness, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument or under any material
lease, license, franchise, permit, to which the Company is a party or by which
it or its properties may be bound or affected, (b) the Articles of
Incorporation or the Bylaws, or (c) any statute or law, judgment, decree,
rule, regulation, ordinance or order of any Authority applicable to the Company,
any of its Subsidiaries or their respective properties, except in the case of
clause (c) for such conflicts, breaches, violations or defaults that would
not be likely to have a Material Adverse Effect.
4.5 Status of
Authorizations. Except for the filings with the SEC and as required by
any "blue sky" laws and for Authorizations set forth in Section 4.5 of the
Company Disclosure Schedule, the Company need not give any notice to, make any
filing with, or obtain any Authorization of any Authority in order to consummate
the transactions contemplated by this Agreement. The Company and its
Subsidiaries possess all necessary Authorizations from any Authority that are
necessary for the operation of their respective business as currently conducted,
except where such failure to possess could not reasonably be expected to have a
Material Adverse Effect and except for those not yet required to be obtained in
which the failure to possess could reasonably be expected to have a Material
Adverse Effect, which the Company and its Subsidiaries intend to obtain in due
course. Neither the Company nor any of its Subsidiaries has received
any written notice of proceedings relating to the revocation or modification of
any such Authorization which, if the subject of an unfavorable decision, ruling
or finding, could reasonably be expected to have a Material Adverse
Effect.
4.6 No
Amendments. Neither the Articles of Incorporation nor the
Bylaws have been amended since March 15, 2005.
4.7 Authorized Capital.
The authorized, subscribed and paid-in capital and options and warrants of the
Company at the time immediately prior to the Closing and immediately after the
Closing are set forth in Section 4.7 of the Company Disclosure Schedule,
subject to any exercise of warrants, options or other right to purchase or
otherwise acquire equity securities of the Company outstanding on the
Subscription Date. All of the issued and outstanding shares of Common
Stock were validly issued, fully paid and nonassessable. All
subscriptions, warrants, options, convertible securities, and other rights
(contingent or other) to purchase or otherwise acquire equity securities of the
Company issued and outstanding as of the Subscription Date, or material
contracts, commitments, understandings, or arrangements by which the Company or
any of its Subsidiaries is or may be obligated to issue shares of Common Stock,
or securities or rights convertible or exchangeable for shares of Common Stock,
are in all material respects as set forth in the SEC
Documents. Except as set forth in the SEC Documents, or as a result
of exercises of stock options pursuant to the Company's stock option and
incentive plans, no Common Stock nor any subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
otherwise acquire equity securities of the Company is outstanding on the
Subscription Date.
4.8 Shares Duly
Authorized. The Shares are duly and validly authorized and when issued
and delivered against payment pursuant to the terms of this Agreement will be
duly and validly issued, fully paid, and nonassessable, and will be free of any
liens or encumbrances with respect to the issuance thereof; provided, however,
that the transfer of the Shares shall be subject to federal securities laws at
the time a transfer is proposed. The Shares will conform to the
description of the material terms thereof contained in the Base Prospectus under
the caption "Description of Capital Stock".
4.9 No Immunity. Neither
the Company nor any of its Subsidiaries nor any of its or their properties
enjoys any right of immunity from set off, suit or execution with respect to the
Company's obligations under any Transaction Document or otherwise.
4.10 Financial Condition.
Except as the Company may have publicly disclosed (and then solely to the extent
so disclosed) in the SEC Documents, press releases or in other "public
disclosures" as such term is defined in Section 101(e) of Regulation FD of
the Exchange Act, in each case, filed or made through and including the date
hereof, since March 31, 2008, there has not been any Material Adverse
Effect.
4.11 Financial Statements.
The consolidated financial statements of the Company and its Subsidiaries and
the related notes thereto included in the SEC Documents present fairly, in all
material respects, the financial position and the liabilities of the Company and
its Subsidiaries as of the dates indicated and the results of operations and
cash flows for the periods therein specified subject, and in the case of
unaudited statements only, to normal year-end audit
adjustments. Except as set forth in such financial statements (or the
notes thereto), such financial statements (including the related notes) have
been prepared in accordance with the Accounting Standards.
4.12 Taxes. The Company
and each of its Subsidiaries has timely filed all federal, state, local and
foreign income and franchise and other tax returns required to be filed by any
jurisdiction to which it is subject and has paid all taxes due in accordance
therewith, except where the failure to so timely file or pay would not be likely
to result in a Material Adverse Effect.
4.13 Litigation. Except
as disclosed in the SEC Documents, neither the Company nor its Subsidiaries are
engaged in any litigation, action, suit or proceeding before any court,
governmental agency or body, domestic or foreign, now pending or, to the actual
knowledge of the Company, threatened in writing against the Company or its
Subsidiaries wherein an unfavorable decision, ruling or finding would reasonably
be expected to have a Material Adverse Effect.
4.14 Compliance. Neither
the Company nor any of its Subsidiaries (a) is in violation of its
Articles of Incorporation or Bylaws (or other applicable governing
documents) (b) is in default, and no event has occurred which, with notice
or lapse of time or both, would constitute a default, in the due performance or
observance of terms and conditions contained in any material indenture, mortgage
deed of trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets is
subject or (c) is in violation of any law, ordinance, rule or regulation of
any foreign, federal, state or local government or any agency thereof, or any
writ, order or decree, to which it or its property or assets may be subject or
has failed to obtain any Authorization necessary to the ownership of its
properties or the conduct of its business, except, in the case of clause
(b) and (c) where such default, violation failure would not be likely
to result in a Material Adverse Effect.
4.15 Environmental
Matters. To the best of the Company's knowledge and belief, there are no
material social or environmental risks or issues in respect of its Operations
other than those identified by the disclosed ESRS. The Company has
not received nor is aware of (a) any existing or threatened complaint,
order, directive, claim, citation or notice from any Authority or (b) any
material written communication from any Person, in either case, concerning the
failure of its Operations to comply with any matter covered by the Performance
Standards, which has, or could reasonably be expected to have, a Material
Adverse Effect or any material adverse impact on the implementation or conduct
of the Operations in accordance with the Performance Standards.
4.16 Sanctionable
Practices. The Company has not committed or engaged in nor has
it authorized its Affiliates or any person acting on the Company's or its
Affiliate's behalf to commit or engage in, with respect to the transactions
contemplated by the Transaction Documents and the Project Documents, any
Sanctionable Practices.
4.17 Insurance. The
Company's insurance policies cover such risks and contain such policy limits,
types of coverage and deductibles as are, in the Company's judgment, adequate to
insure fully against the material risks to which the Company and its
Subsidiaries and its or their employees, business, properties and other assets
would reasonably be expected to be exposed in the operation of the business as
currently conducted. All of the Company's insurance policies are
valid and enforceable policies, all premiums due and payable under such policies
have been paid and the Company is otherwise in compliance in all material
respects with the terms of such policies and bonds. The Company has
no knowledge or belief of any threatened termination of, or material premium
increase with respect to, any of such policies.
4.18 Registration
Statement. The Registration Statement is effective under the Securities
Act and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the Base
Prospectus and the Prospectus Supplement has been issued by the SEC and no
proceedings for that purpose have been instituted or, to the knowledge of the
Company, are threatened by the SEC.
4.19 Project
Documents. Each Project Document is a valid and binding
agreement, enforceable against the Company and its Subsidiaries, as applicable,
in accordance with its terms, except as such enforceability (a) may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) is subject to general principles of
equity (regardless of whether enforceability is considered in a proceeding at
equity or at law) and, except to the extent described in any SEC Document, the
Company and any Subsidiary of the Company are not in any material default and
have no knowledge of any material default of the counterparties thereto, under
any such Project Document.
4.20 All Material Facts
Disclosed. The Registration Statement, Base Prospectus, and Prospectus
Supplement filed with the SEC and the documents incorporated therein
(a) conform in all material respects to the requirements of the Securities
Act and the Rules and Regulations, and (b) do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
ARTICLE
5
COVENANTS
OF THE COMPANY
The
Company covenants with the Purchaser as follows:
5.1 Environmental. The
Company and its Subsidiaries shall:
(a) undertake
its Operations in compliance with the Environmental and Social Action Plan and
otherwise comply with the Performance Standards, and use its reasonable efforts,
including exercising any voting or approval rights it might have under any
Project Document or other agreement governing construction or operations
relating to the Company's properties or assets to ensure that its agents,
contractors and subcontractors comply with the Performance Standards the
Environmental, Health and Safety Guidelines of the World Bank Group, and
Applicable S&E Law;
(b) periodically
review the form of the Annual Monitoring Report and advise the Purchaser as to
whether revision of the form is necessary or appropriate in light of changes to
the Operations, or in light of environmental or social risks identified by the
ESHS Management System, and revise the form of the Annual Monitoring Report as
agreed with the Purchaser;
(c) use all
reasonable efforts to ensure the continuing operation of the ESHS Management
System to assess and manage the social and environmental performance of the
Operations and to comply with the Performance Standards;
(d) not amend
the Environmental and Social Action Plan in any material respect without the
prior written consent of the Purchaser;
(e) not
undertake, or invest in any Person engaged in, any of the activities set forth
on Annex B
to this Agreement;
(f) within
ninety (90) days after the end of each calendar year end, deliver to the
Purchaser the Annual Monitoring Report in a form and substance substantially
satisfactory to the Purchaser and the Company consistent with the requirements
of this Agreement confirming compliance with the Environmental and Social Action
Plan, the social and environmental covenants of this Agreement and Applicable
S&E Law or, as the case may be, identifying any non-compliance or failure,
and the actions being taken to remedy any such deficiency; and
(g) within
three (3) business days after its occurrence and discovery thereof by any
executive officer of the Company or any other Company employee that (i) has
primary management responsibilities or primary oversight responsibility for the
implementation and monitoring of the ESHS Management System or (ii) is
designated under the ESHS Management System as having primary responsibility for
any such matter, notify the Purchaser, of any social, labor, health and safety,
security or environmental incident, accident or circumstance having, or which
could reasonably be expected to have, any material adverse impact on the
implementation or operation of the Operations in compliance with the Performance
Standards or a Material Adverse Effect, specifying in each case the nature of
the incident, accident, or circumstance and the impact or effect arising or
likely to arise therefrom, and the measures the Company is taking or plans to
take to address them and to prevent any future similar event and keep the
Purchaser informed of the on-going implementation of those
measures.
(h) publicly
disclose any new concession areas acquired by the Company or any of its
Subsidiaries, to the extent not otherwise included in the SEC
Documents or the Company's other public disclosures.
5.2 Access. Upon
the Purchaser's request, and with reasonable prior notice to the Company, the
Company shall permit representatives of the Purchaser and the CAO, during normal
office hours, to (a) visit any of the sites and premises where the business
of the Company or its Subsidiaries is conducted; (b) inspect any of the
sites, facilities, plants and equipment of the Company or its Subsidiaries;
(c) have access to the books of account and all records of the Company and
its Subsidiaries; and (d) have access to those employees, agents,
contractors and subcontractors of the Company and its Subsidiaries who have or
may have knowledge of matters with respect to which the Purchaser seeks
information; provided that no such reasonable notice shall be required in the
event of a default under or breach of any Transaction Document; provided,
further, that in the case of the CAO, such access shall only be for the purpose
of carrying out the CAO's Role.
5.3 Sanctionable
Practices. The Company agrees not to engage in (and the
Company shall not authorize or permit any Affiliate or any other Person acting
on its behalf to engage in) with respect to any transaction contemplated by the
Transaction Documents and the Project Documents, any Sanctionable
Practice. The Company further covenants that should the Purchaser
notify the Company of its concern that there has been a violation of the
provisions of this paragraph, the Company shall cooperate in good faith with it
and its representatives in determining whether such a violation has occurred,
and shall respond promptly and in reasonable detail to any notice from the
Purchaser, and shall furnish documentary support for such response upon the
Purchaser's request.
5.4 Insurance. The
Company shall insure and keep insured with financially sound and reputable
insurers, all its assets and business, including all of the Operations, against
material risks, including the insurances specified in Annex A, under
forms of policies and with insurers reasonably acceptable to the Purchaser;
provided, however that the obligations under this Section 5.4 will not apply to
the insurance coverage described in Sections 1(a) and (c) of Annex A to this
Agreement until such time as the Company begins production outtake at the xxxxx
covered by the Project Documents.
5.5 Use of
Proceeds. The Company shall not use the proceeds of the
Offering in reimbursement of, or for expenditures in the territories of any
country which is not a member of the World Bank or for goods produced in or
services supplied from any such country.
5.6 Information Rights and
Reporting. The Company agrees as follows:
(a) As long
as the Company has a class of equity securities registered under
Section 12(g) of the Exchange Act or is subject to Section 15(d) of
the Exchange Act, the Company shall file electronically with the SEC or
otherwise make publicly available, all quarterly and annual financial statements
that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K.
(b) As long
as the Company does not have a class of equity securities registered under
Section 12(g) of the Exchange Act or is not subject to Section 15(d)
of the Exchange Act, then the Company shall provide to the Purchaser:
(i) within one hundred and twenty (120) days after the end of each fiscal
year, audited annual financial statements (a balance sheet as of the end of such
financial year and the related statements of income, stockholders' equity and
cash flows for the financial year then ended) for the Company on a consolidated
basis, prepared in accordance with the Accounting Standards and certified by the
Auditors; and (ii) within sixty (60) days after the end of each quarter of
each fiscal year (excluding the fourth quarter of each fiscal year) quarterly
financial statements (a balance sheet as of the end of such quarter and the
related statements of income, stockholders' equity and cash flows for the
quarter then ended) for the Company on a consolidated basis, prepared in
accordance with the Accounting Standards (other than the inclusion of footnotes
and subject to customary year end adjustments).
(c) The
Company will disclose in its periodic reports on Form 10-K, 10-Q, or 8-K (or
applicable successor reports) filed under the Exchange Act with the SEC or
otherwise made publicly available as contemplated in clause (a) above, or
otherwise prepared and provided in accordance with clause (b) above, all
payments made to the government of the People's Republic of China in all
material respects, which shall include the material tax, royalty and other
material payments made annually by the Company or any Affiliate to local and/or
national governments in the People's Republic of China under any concession
agreement, host country agreement or the Project Documents.
(d) The
Company shall provide to the Purchaser a copy of any management letters
delivered by the Auditors and such other information as the Purchaser from time
to time reasonably requests with regard to any material developments in or
affecting the Company's business.
(e) The
Company shall provide the Purchaser with any annual business plan and any annual
budget of the Company.
(f) The
Company shall provide the Purchaser with any copies of material filings made
with respect to the Company with government agencies, including notification of
material litigation which could reasonably be expected to have a Material
Adverse Effect.
5.7 Anti-Money Laundering
Provision. The Company will institute, maintain and comply with
appropriate internal procedures and controls, satisfactory to Purchaser, and
follow best international banking standards, for the purpose of:
(a) preventing
the Company or any of its affiliates from being used for money laundering, the
financing of terrorist activity, fraud, or other corrupt or illegal purposes or
practices; and
(b) ensuring
that the Company will not enter into any transaction with, or for the benefit
of, any individuals or institutions named on lists of sanctioned persons
promulgated by the United Nations Security Council or its committees resolutions
in connection with money laundering or anti-terrorism matters.
5.8 Provision of
Information. If at any time the Purchaser notifies the Company in writing
that the Purchaser no longer wishes to receive the information or documentation
required to be delivered pursuant to Section 5.1(f), 5.1(g), 5.6(b), 5.6(d)
or 5.6(e), the Company shall immediately discontinue providing such information
and documentation to the Purchaser. Thereafter, if the Purchaser
notifies the Company in writing that it again wishes to begin receiving such
information and documentation, the Company shall immediately again begin
providing such information and documentation to the Purchaser as required by
such Sections.
ARTICLE
6
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The
Purchaser represents and warrants to the Company, as of the Subscription Date,
with respect to the Offering as follows:
6.1 Organization and
Standing. The Purchaser is an international organization,
established by Articles of Agreement among its member
countries.
6.2 Power. The
Purchaser has all requisite power to execute and deliver the Transaction
Documents and to carry out and perform its obligations under the terms of the
Transaction Documents.
6.3 Validity. The
execution, delivery, and performance of the Transaction Documents by the
Purchaser have been duly authorized by all requisite action, and each of the
Transaction Documents 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.
6.4 No Conflict. The
execution and delivery of the Transaction Documents, the performance by the
Purchaser of its obligations under the Transaction Documents and/or the
consummation of the transactions contemplated hereby will not conflict with,
result in the breach or violation of, or constitute (with or without the giving
of notice or the passage of time or both) a violation of, or default under,
(a) the Articles of Agreement of the Purchaser, or (b) any
statute or law, judgment, decree, rule, regulation, ordinance or order of any
Authority applicable to the Purchaser or their respective properties, except in
the case of such conflicts, breaches, violations or defaults that would not be
likely to have a Material Adverse Effect.
6.5 Status of
Authorizations. The Purchaser need not give any notice to,
make any filing with, or obtain any Authorization of any Authority in order to
consummate the transactions contemplated by this Agreement, other than any such
notices or filings that have been made by the Purchaser.
6.6 Underwriter. The
Purchaser is not an "underwriter" within the meaning of Section 2(a)(11) of the
Securities Act in connection with its purchase of the Shares and
Warrant.
6.7 Receipt of Base
Prospectus. Purchaser acknowledges receipt of the Base
Prospectus prior to the date of any "offer" or "sale" (as such terms are defined
in the Securities Act) of the Shares and the Warrant.
6.8 Residence; Accredited
Investor. Purchaser's principal residence is the District of
Columbia, United States. Purchaser is an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D, as presently in
effect.
ARTICLE
7
CONDITIONS
OF PURCHASER'S OBLIGATIONS
The
obligations of the Purchaser to consummate the transactions under this Agreement
shall be subject to the satisfaction of each of the conditions set forth below,
unless waived by the Purchaser, on or prior to the date of the
Closing.
7.1 Agreement. The
Transaction Documents will be entered into and shall be in full force and
effect.
7.2 Representations, Warranties
and Obligations. The representations and warranties of the Company set
forth in Article 4 of this Agreement will be true and correct in all
material respects as the Closing Date and the Subscription Date as though made
on and as of such date; the Company will have performed all obligations and
complied in all material respects with all covenants required to be performed or
complied with by the Company under this Agreement on or prior to the date of the
Closing. The Purchaser shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of the Company to that
effect.
7.3 Authorizations. The
Company has obtained and provided to the Purchaser copies of all necessary
Authorizations listed in Section 4.5 of the Company Disclosure Schedule and
resolutions of the Board of Directors of the Company and/or a committee thereof
relating to transactions contemplated by this Agreement and all of those
Authorizations and resolutions are in full force and effect.
7.4 Opinion of
Counsel. The Purchaser will have received an opinion of
counsel to the Company in form and substance reasonably satisfactory to the
Purchaser.
7.5 Expenses. The
Company shall have paid Purchaser all fees and expenses owing to the Purchaser
which are due on the date of the Closing, and all expenses owing pursuant to
Section 9.1 of this Agreement as of the date of the Closing and for which
the Company has received an invoice.
7.6 Documents. The
Purchaser is satisfied that the Project Documents are fully effective and
unconditional and that there is no default under any of the Project
Documents.
7.7 No Material Adverse
Effect. Since December 31, 2007, nothing has occurred
which has or may reasonably be expected to have a Material Adverse
Effect.
7.8 Insurance
Requirements. The Purchaser has received copies of all
insurance policies evidencing compliance with the requirements of Annex A to this
Agreement (other than the insurance coverage described in Sections 1(a) and (c)
of Annex A to
this Agreement), including the renewal certificate for the ACE policy and a copy
of the Huatai policy upon receipt by the project company, together with a
certification from the Company's insurers or insurance agents confirming that
all premiums for the following policies have been paid: (a) Control of Well, (b)
Excess Liability and (c) ACE DIC/DIL Foreign Liability.
7.9 Company
Certifications. The Purchaser has received certifications by
the Company, substantially in the form of Annex D to this
Agreement, with respect to the conditions specified and expressed to be
effective as of the date of the Closing.
7.10 Certificate of Incumbency
and Authority. The Purchaser has received a Certificate of
Incumbency and Authority.
ARTICLE
8
CANCELLATION
RIGHT
8.1 Cancellation of Purchaser's
Subscription. Notwithstanding any other provision of this
Agreement, the Purchaser may, by written notice to the Company, cancel the right
of the Company to request a subscription of any of the Shares if at any time
prior to the date of the Closing: (a) in the reasonable opinion of the
Purchaser, a Material Adverse Effect has occurred, (b) there exists any
situation which reasonably demonstrates that performance by the Company of its
obligations under any of the Transaction Documents cannot be expected, or
(c) the date of the Closing has not occurred on or before June 30, 2008
(other than as a result of the Purchaser's breach of this
Agreement). Notwithstanding any other provision of this Agreement,
the Company may, by written notice to the Purchaser, terminate this Agreement if
the date of the Closing has not occurred on or before June 30, 2008 (other than
as a result of the Company's breach of this Agreement).
ARTICLE
9
MISCELLANEOUS
9.1 Expenses. Within
ten (10) days of the receipt of any invoice or other written request, the
Company shall pay to the Purchaser, as the Purchaser may direct, or, as the case
may be, reimburse the Purchaser any amount paid by the Purchaser, on account of:
(a) all taxes, duties, fees or other charges payable on or in connection
with the execution, issue, delivery or registration of this Agreement and any
other documents related to it and (b) the reasonable fees and expenses of
the Purchaser's counsel incurred in connection with the preparation of the
investment by the Purchaser provided for under this Agreement, and the
preparation and/or review, execution and, where appropriate, translation and
registration of this Agreement and any other documents related to
it. In the event that Purchaser brings any action or proceeding, to
enforce the terms and conditions of this Agreement and the Purchaser is the
prevailing party (as determined by the court, agency or other authority before
which such action, proceeding or arbitration is commenced), the reasonable costs
and expenses incurred by the Purchaser in relation to such efforts to enforce or
protect its rights under this Agreement and any other documents related to it,
including reasonable legal and other professional consultants'
fees. The provisions of this Section 9.1 shall survive the
execution and delivery of this Agreement.
9.2 Survival. The
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the sale of the Shares and
Warrant. The covenants herein shall survive the execution and
delivery of this Agreement for so long as the Purchaser "beneficially owns"
(within the meaning of Rule 13d-3 under the Exchange Act) 1,000,000 Shares
(including any Warrant Shares) (the "Threshold
Shares"). The Threshold Shares shall be subject to appropriate
and equitable adjustment in the event of stock splits, dividends, subdivisions,
recapitalizations and similar transactions.
9.3 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.
9.4 Confidentiality. The
Purchaser acknowledges and agrees that it has received and may in the future
receive Confidential Information regarding the Company and the Purchaser's
disclosure of such Confidential Information would cause substantial harm and
damages to the Company and its Subsidiaries. The Purchaser shall hold any
Confidential Information it receives from the Company in confidence, and shall
not, without the consent of the Company, reveal any Confidential Information to
any Person other than the Purchaser's directors, officers, employees, employees
of the World Bank, attorneys, independent auditors, rating agencies, contractors
and consultants (including, without limitation, technical and financial
advisors) who need to know such information in connection with the performance
of their duties for the Purchaser. "Confidential
Information" shall mean any written information concerning the businesses
and affairs of the Company that the Company has provided or shall in the future
provide to the Purchaser that is clearly and conspicuously identified as
"Confidential Information" but excluding information that: (a) in contained in
any SEC Documents; (b) is or becomes available to the public from a source other
than the Purchaser; (c) was available to the Purchaser prior to its disclosure
to the Purchaser by the Company; (d) was or is developed by the Purchaser
independently of, and without reference to, the Confidential Information; (e) is
required to be disclosed by action of any court, tribunal or regulatory
authority or by any requirement of law, legal process, regulation, or
governmental order, decree or rule, or is necessary for the Purchaser to
disclose in connection with any proceeding in any court or tribunal or before
any regulatory authority in order to preserve its rights; (f) the Company agrees
in writing may be disclosed; or (g) is or becomes available to the Purchaser
from sources which to the Purchaser's knowledge are under no obligation of
confidentiality to the Company. In the event that the Purchaser
receives a request or is required to disclose any Confidential Information
pursuant to clause (e) above, the Purchaser shall (to the extent permitted by
law), promptly notify the Company of the existence of such request or
requirement to disclose such Confidential Information.
9.5 Notices. All
notices, requests, and other communications under the Transaction Documents
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., Xxxxx & XxXxxxxx LLP, 2300
Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, facsimile number,
(000) 000-0000, and as to the Purchaser addressed to International Finance
Corporation, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, facsimile
number, (000) 000-0000, Attn: Director, Oil Gas, Mining and Chemicals
Department, with a copy (in the case of communications relating to payments)
sent to the attention of the Director, Department of Financial Operations, at
facsimile number (000) 000-0000. 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 under the Transaction Documents by
electronic communications pursuant to procedures reasonably approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.
9.6 Governing Law;
Jurisdiction.
(a) The
Transaction Documents, and the provisions, rights, obligations, and conditions
set forth therein, and the legal relations between the parties thereto,
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 that
would cause the applications of any other law (other than Section 5-1401 of
the New York General Obligations Law).
(b) For the
exclusive benefit of the Purchaser, the Company irrevocably agrees that any
legal action, suit or proceeding arising out of or relating to the Transaction
Documents may be brought in the courts of the United States of America located
in the Southern District of New York or in the courts of the State of New York
located in the Borough of Manhattan. By the execution of the Transaction
Documents, the Company irrevocably submits to the jurisdiction of any such court
in any such action, suit or proceeding. Final judgment against the Company in
any such action, suit or proceeding shall be conclusive and may be enforced in
any other jurisdiction, including the People's Republic of China, by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of the judgment, or in any other manner provided by law.
(c) Nothing
in the Transaction Documents shall affect the right of the Purchaser to commence
legal proceedings or otherwise xxx the Company in any other appropriate
jurisdiction, or concurrently in more than one jurisdiction, or to serve
process, pleadings and other legal papers upon the Company in any manner
authorized by the laws of any such jurisdiction.
(d) The
Company also irrevocably consents, if for any reason its authorized agent for
service of process of summons, complaint and other legal process in any action,
suit or proceeding is not present in New York, New York, to the service of such
papers being made out of the courts of the United States of America located in
the Southern District of New York and the courts of the State of New York
located in the Borough of Manhattan by mailing copies of the papers by
registered United States air mail, postage prepaid, to the Company at its
address specified pursuant to Section 9.5. In such a case, the
Purchaser shall also send by facsimile, or have sent by facsimile, a copy of the
papers to the Company.
(e) Service
in the manner provided in Sections 9.6(d) in any action, suit or proceeding will
be deemed personal service, will be accepted by the Company as such and will be
valid and binding upon the Company for all purposes of any such action, suit or
proceeding.
(f) The
Company irrevocably waives to the fullest extent permitted by applicable law:
(i) any objection which it may have now or in the future to the laying of
the venue of any action, suit or proceeding in any court referred to in this
Section 9.6; (ii) any claim that any such action, suit or proceeding
has been brought in an inconvenient forum; (iii) its right of removal of
any matter commenced by the Purchaser in the courts of the State of New York to
any court of the United States of America; and (iv) any and all rights to
demand a trial by jury in any such action, suit or proceeding brought against
such party by the Purchaser.
(g) To the
extent that the Company may be entitled in any jurisdiction to claim for itself
or its assets immunity in respect of its obligations under the Transaction
Documents from any suit, execution, attachment (whether provisional or final, in
aid of execution, before judgment or otherwise) or other legal process or to the
extent that in any jurisdiction that immunity (whether or not claimed) may be
attributed to it or its assets, the Company irrevocably agrees not to claim and
irrevocably waives such immunity to the fullest extent permitted now or in the
future by the laws of such jurisdiction.
(h) The
Company hereby acknowledges that the Purchaser shall be entitled under
applicable law, including the provisions of the International Organizations
Immunities Act, to immunity from a trial by jury in any action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby brought against the Purchaser in any court of the United
States of America. The Company hereby waives any and all rights to demand a
trial by jury in any action, suit or proceeding arising out of or relating to
the Transaction Documents or the transactions contemplated by the Transaction
Documents, brought against the Purchaser in any forum in which the Purchaser is
not entitled to immunity from a trial by jury.
(i) To the
extent that the Company may, in any action, suit or proceeding brought in any of
the courts referred to in Section 9.6(b) or any other court in the United
States of America, the People's Republic of China or elsewhere arising out of or
in connection with this Agreement, be entitled to the benefit of any provision
of law requiring the Purchaser in such action, suit or proceeding to post
security for the costs of the Company, or to post a bond or to take similar
action, the Company hereby irrevocably waives such benefit, in each case to the
fullest extent now or in the future permitted under the laws of the United
States of America or any state thereof of the People's Republic of China or, as
the case may be, the jurisdiction in which such court is located.
9.7 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.
9.8 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.
9.9 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. Facsimile or electronic signatures shall
be deemed originals for all purposes hereunder.
9.10 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.
9.11 Further
Assurances. The parties agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent
of this Agreement.
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. $2,250,000.00 | INTERNATIONAL FINANCE CORPORATION | ||
| Amount of Investment | |||
| (U.S. $0.50 per Share) | |||
| 4,500,000 | By: | /s/ Delanson X. Xxxxx | |
| (Number of Shares) | Name: | Delanson X. Xxxxx | |
| Title: | Acting Director Oil, Gas, Mining and Chemicals Department | ||
| 1,575,000 | |||
| (Number of Warrant Shares) | |||
| This Agreement is hereby confirmed, agreed and accepted by the Company as of the Subscription Date. | |||
| FAR EAST ENERGY CORPORATION | |||
| By: | /s/ Xxxxxxx X. Xxxx | ||
| Name: | Xxxxxxx X. Xxxx | ||
| Title: | Chief Financial Officer | ||
