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EXHIBIT 10.1
Fortune Petroleum Corporation
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Gentlemen:
This letter will confirm our mutual agreement with respect to our
engagement as a distributor ("Distributor") to act on behalf of Fortune
Petroleum Corporation ("FPX" or the "Company") in connection with the offer and
sale on a best efforts basis of up to 1,250,000 Common Shares (the "Shares") of
the Company pursuant to Regulation S promulgated under the Securities Act of
1933, as amended (the "Act").
1. The engagement hereunder shall be for a term of twenty
business days commencing upon the execution of this letter by the Company. You
represent that no other offering under Regulation S is presently in progress by
the Company which has not been disclosed to us.
2. (a) The Distributor shall be entitled to a placement fee
of 6% of the principal amount of the Common Shares sold. Other than the
placement fee payable hereunder, the Distributor shall not be entitled to any
additional compensation from the Company, nor shall Distributor be reimbursed
for its expenses. The Distributor shall assume the Escrow Agent's (as defined
below) fee of 1/2 of 1% of the aggregate amount subscribed by all purchasers
and accepted by the Company.
(c) Each purchaser will, within five business days after
acceptance by the Company of an Offshore Securities Subscription Agreement (the
"Agreement") in the form annexed hereto as Exhibit A, pay the purchase price
for the Shares in escrow to the Escrow Agent. The Escrow Agent is authorized
to release the funds of each purchaser after both
(i) the Company approves such purchaser and
subscription documents (in the form of an
exhibit hereto) which have been submitted and
signed by the purchaser, and
(ii) the Company has caused to be delivered to the
Escrow Agent or his designee, one or more
Certificates for Shares purchased by such
purchaser and the opinion of counsel attached
as Xxxxx XXX to
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the Agreement.
The restricted period referred to in Rule 903 ("Restricted
Period") for each purchaser shall commence on the date (the "Closing Date")
that such purchaser's purchase funds are received by the Company from the
Escrow Agent.
(d) The Distributor (i) represents and warrants, and will
provide confirmatory documentation, that each purchaser is either purchasing
the Shares for its own account, or is a fiduciary which has full, exclusive and
irrevocable investment discretion with respect to the Shares which investment
discretion cannot be revoked prior to the 180th day after the Closing Date, and
(ii) represents and warrants that no purchaser is an affiliate of Distributor.
To the best of Distributor's knowledge, all representations and warranties by
purchasers are true and correct.
(e) The Company shall have the right in its sole
discretion to disapprove any person or entity which is proposed by the
Distributor to be a purchaser of any Shares.
3. The Company will cause the Shares to be delivered to Xxxxxxx &
Xxxxxx, Esqs. as escrow agent (the "Escrow Agent") pursuant to the terms of the
Joint Escrow Instructions attached as Annex II to the Agreement.
4. (a) The Distributor represents, warrants and agrees that
(i) each purchaser of the Shares will be qualified to purchase the Shares under
the laws of the jurisdiction in which such person resides and that the offer
and sale of the Shares will not violate the securities or other laws of such
jurisdiction and (ii) each purchaser will agree that neither it nor any of its
affiliates will directly or indirectly maintain any short position in
securities of the Company during the Restricted Period.
(b) The Distributor understands that the Shares have not
been registered under the Act and may not be offered or sold within the United
States or to, or for the account or benefit of, United States persons except in
accordance with Regulation S under the Act or pursuant to an exemption from the
registration requirements of the Act.
5. (a) The Distributor further agrees that:
(i) no offer or sale of the Shares will be made
by the Distributor to, or accepted by the
Distributor from, any U.S. person or for the
account or benefit of a U.S. person;
(ii) all offers and sales of the Shares prior to
the expiration of the applicable Restricted
Period made by the Distributor shall be made
only in accordance with the provisions of
Rule 903 or Rule 904, pursuant to
registration of the Shares under the Act, or
pursuant to an available exemption from the
registration requirements of the
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Act;
(iii) all offering materials and documents used in
connection with offers and sales of the
Shares prior to the expiration of the
engagement period shall be approved in
advance by the Company, and shall on the
first page thereof include statements to the
effect that the Shares have not been
registered under the Act and that neither the
purchaser, nor any direct or indirect
purchaser of the Shares from such purchaser,
may directly or indirectly offer or sell the
Shares in the United States or to U.S.
persons unless the Shares are registered
under the Act, or an exemption from the
registration requirements of the Act is
available; and
(iv) it will not engage in any activity for the
purpose of, or that could reasonably be
expected to have the effect of, conditioning
the market in the United States for any of
the securities of the Company.
(b) Each other distributor participating in the offering
of the Shares, if any, has agreed or will agree in writing that all offers and
sales of the Shares prior to the expiration of a period commencing on the date
of receipt of funds by the Company and ending 40 days thereafter shall only be
made in compliance with the safe harbor contained in Regulation S, pursuant to
registration of the Shares under the Act or pursuant to an exemption from
registration.
(c) For the purposes of this letter agreement, a U.S.
Person means a U.S. Person as that term is defined in Rule 902(o) under
Regulation S.
6. Distributor is an independent contractor, and is not the agent
of the Company. It is not authorized to bind the Company, or to make any
representations or warranties on behalf of the Company.
7. The Company represents, warrants, and agrees that, in addition
to the warranties to be made by the Company to the purchasers:
(a) the common stock will be registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Company has timely filed all the material required to be filed
pursuant to Section 13(a) or 15(d) of the Exchange Act for a period of at least
twelve months preceding the date hereof, and the Company will continue to file
all such material on a timely basis;
(b) the Shares will be offered and sold in compliance
with the requirements for the exemption from registration pursuant to Section 5
of the Act contained in Rule 903 under Regulation S, and with all other U.S.
securities laws and regulations; it being understood that
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this representation, warranty and agreement is made relying exclusively on the
representations, warranties and agreements made by the Distributor and/or
purchasers herein or in the applicable subscription documents. The Company
will, at its expense, make all filings required under the Act and by the rules
of any applicable domestic securities exchange or trading market, if any;
(c) all information furnished or required to be furnished
to purchasers under Regulation S will not contain any untrue statement of
material fact or omit to state a material fact required to be stated or
necessary to make the statements therein not misleading; provided however, that
this representation and warranty does not extend to written material furnished
to the Company by Distributor relating to Distributor or the distribution
process;
(d) the Company will not for a period of one hundred
eighty (180) days from the date hereof, offer for sale or sell any securities
unless, in the opinion of the Company's counsel, such offer or sale does not
jeopardize the availability of exemptions from the registration and
qualification requirements under all applicable U.S. securities laws with
respect to the Shares. The Company has not engaged in any such offering during
the six months prior to the date of this agreement, except as disclosed to
Distributor;
(e) the Company has all requisite corporate power and
authority to execute and perform this agreement. All corporate action
necessary for the authorization, execution, delivery and performance of this
agreement and the transaction contemplated hereby have been taken. This
agreement constitutes a valid and binding obligation of the Company;
(f) the execution and performance of this agreement by
the Company and the offer and sale of the Shares will not violate any provision
of the Certificate of Incorporation or By-laws of the Company or any material
agreement or other instrument to which the Company is party or by which it is
bound, and which violation(s) would have a material adverse effect on the
business or financial condition of the Company. Any material necessary
approvals, U.S. governmental and private, will be obtained by the Company prior
to the issuance of the Shares; and
(g) the Company makes no other representation or warranty
with respect to the Company, its finances, assets, business or prospects or
otherwise, except as expressly set forth herein or in the Agreement.
Distributor will advise each purchaser and potential purchaser of the
foregoing, and that such purchaser is relying on its own investigation with
respect to all such matters, and that it will be given reasonable access to any
and all material publicly available documents and Company personnel it may
require for such investigation.
9. The Company will provide Escrow Agent with an opinion of
counsel substantially in the form attached as Xxxxx XXX to the Agreement.
10. As more fully described in Exhibit B hereto, which is
incorporated herein by reference, each party hereto will indemnify and hold
the other (including its partners, agents, employees, and controlling persons
within the meaning of Section 15 of the Act or Section 20
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of the Exchange Act) harmless from and against certain claims, liabilities,
losses, damages and expenses incurred, including fees and disbursements of
counsel, related to or arising out of this engagement. Exhibit B will be
executed and delivered simultaneously with this agreement.
11. This Agreement shall be governed by and construed under the
laws of the State of New York without giving effect to principles governing the
conflicts of laws. A facsimile transmission of this signed agreement shall be
legal and binding on all parties hereto. Terms otherwise not defined herein
shall have the meaning ascribed to them in the Agreement.
Dated: December 8, 1995
WHITECHAPEL MANAGEMENT LTD.
By: /s/
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AGREED & ACCEPTED:
FORTUNE PETROLEUM CORPORATION
By: Xxxxxx X. Xxxxxxxxx
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Its President and CEO
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