Exhibit 1.1
PURCHASE AGREEMENT
October 13, 2006
MORGAN KEEGAN & COMPANY,
INC.
50 N. Front Street
Memphis, Tennessee 38103
Ladies and Gentlemen:
INTRODUCTION
Far East Energy Corporation, a
Nevada corporation (the “Company”), proposes to issue
and sell to Morgan Keegan & Company, Inc. (“Morgan
Keegan”) an aggregate of 3,333,333 shares (the
“Shares”) of Common Stock of the Company, par value
$0.001 per share (the “Common Stock”).
The Company has prepared and filed
with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3
(File No. 333-132631). Such registration statement, as
amended, including the financial statements, exhibits and schedules
thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (collectively, the
“Securities Act”), including any information deemed to
be a part thereof pursuant to Rule 430B under the Securities
Act (as of the time specified in Rule 430B), is called the
“Registration Statement.” The base prospectus dated
May 8, 2006 included in the Registration Statement and
including the information incorporated by reference therein and all
supplements delivered in connection therewith is referred to herein
as the “Base Prospectus,” and the final prospectus
supplement relating to the Shares, together with the Base
Prospectus, that is first filed pursuant to Rule 424(b) after the
date and time of the execution and delivery of this Agreement by
the parties hereto and including the information incorporated by
reference therein is referred to herein as the “Final
Prospectus.”
The Company hereby confirms its
agreements with Morgan Keegan as follows:
SECTION 1. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and
warrants to Morgan Keegan as follows:
(a) Compliance with Registration
Requirements.
The Registration Statement has
become effective under the Securities Act. No stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the knowledge of
the Company, are contemplated or threatened by the
Commission.
The Base Prospectus, as of 11:00
a.m., Central time, on the date of this Agreement (the “Time
of Sale”), and the Final Prospectus, when first filed
pursuant to Rule 424(b) under the Securities
Act, on the Closing Date (as defined below),
complied, and will comply, in all material respects with the
Securities Act. The Registration Statement, at the time it became
effective, as of the Time of Sale and as of the Closing Date,
complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Base Prospectus, as of the Time of
Sale, did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The Final Prospectus, as of its
date and as of the Closing Date, did not and will not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the
three immediately preceding sentences do not apply to statements in
or omissions from the Registration Statement or the Final
Prospectus made in reliance upon and in conformity with information
relating to Morgan Keegan furnished to the Company in writing by
Morgan Keegan expressly for use therein.
(b) Distribution of Offering
Material By the Company.
The Company has not distributed and
will not distribute, prior to the completion of Morgan
Keegan’s distribution of the Shares, any written offering
material, including without limitation any free writing prospectus
(as defined in Rule 405 under the Securities Act), in connection
with the offering and sale of the Shares other than the Base
Prospectus, the Final Prospectus or the Registration
Statement.
(c) The Purchase
Agreement.
This Agreement has been duly
authorized, executed and delivered by the Company and constitutes
the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(d) Authorization of the
Shares.
The Shares have been duly authorized
for issuance and sale pursuant to this Agreement and, when issued
and delivered by the Company against payment therefor pursuant to
this Agreement, will be validly issued, fully paid and
nonassessable.
(e) No Material Adverse
Change.
Except as otherwise disclosed in the
Base Prospectus and in the Final Prospectus, subsequent to
June 30, 2006, there has been no material adverse change
in or effect on, or any development that would reasonably be
expected to result in a material adverse change in or effect on,
the condition, financial or otherwise, or the earnings, business,
operations or business prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and
its subsidiaries, considered as one entity (any such change or
effect is called a “Material Adverse
Change”).
(f) Preparation of the Financial
Statements.
The historical financial statements
of the Company included or incorporated by reference in the Base
Prospectus and Final Prospectus present fairly in all material
respects the consolidated financial position of the Company and its
subsidiaries at the dates indicated and the consolidated results of
their operations, cash flows and changes in stockholders’
equity for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes
thereto.
(g) Incorporation and Good Standing
of the Company.
The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation
and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Base
Prospectus and in the Final Prospectus and to enter into and
perform its obligations under this Agreement.
(h) Capitalization and Other Capital
Stock Matters.
As of the date hereof, the
authorized, issued and outstanding capital stock of the Company is
as set forth in the Base Prospectus and in the Final Prospectus
(except for issuances subsequent to June 30, 2006, if any,
pursuant to reservations, agreements or employee benefit plans
referred to in the Base Prospectus and in the Final Prospectus or
pursuant to the exercise of convertible securities, warrants or
options referred to in the Base Prospectus and in the Final
Prospectus or to an investment relation consultant in an amount
consistent with past practices).
(i) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals
Required.
The Company’s execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Final Prospectus
(i) have been duly authorized by all necessary corporate
action and will not result in any violation of the provisions of
the charter or by-laws of the Company or any subsidiary,
(ii) will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, or require the consent of any
other party to, any indenture, mortgage, loan or credit agreement,
note, contract, franchise, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its
subsidiaries is subject, and (iii) will not result in any
violation of any applicable law, administrative regulation or
administrative or court decree applicable to the Company or any
subsidiary. No consent, approval, authorization or other order of,
or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company’s
execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby and by the
Final Prospectus, except such as (i) have been obtained or
made by the Company and are in full force and effect under the
Securities Act, and (ii) may be required by applicable state
securities or blue sky laws.
(j) Morgan Keegan Not a
Fiduciary.
The Company acknowledges and agrees
that (i) the purchase and sale of the Shares pursuant to this
Agreement is an arm’s-length commercial transaction between
the Company and Morgan Keegan, (ii) in connection therewith,
Morgan Keegan is acting as a principal and not the agent or
fiduciary of the Company, and (iii) Morgan Keegan has not
assumed any advisory responsibility in favor of the Company with
respect to the offering contemplated hereby or the process leading
thereto (irrespective of whether Morgan Keegan has advised or is
currently advising the Company on other matters) or any other
obligation to the Company except the obligations expressly set
forth in this Agreement.
Any certificate signed by an officer
of the Company and delivered to Morgan Keegan or to counsel for
Morgan Keegan shall be deemed to be a representation and warranty
by the Company to Morgan Keegan as to the matters set forth
therein.
The Company acknowledges that Morgan
Keegan will rely upon the accuracy and truthfulness of the
foregoing representations and hereby consents to such
reliance.
SECTION 2. PURCHASE, SALE AND
DELIVERY OF THE SHARES.
The Company agrees to issue and sell
to Morgan Keegan the Shares upon the terms herein set forth. On the
basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein
set forth, Morgan Keegan agrees to purchase from the Company all of
the Shares. The purchase price per Share to be paid by Morgan
Keegan to the Company shall be $0.873 per share (representing a
public offering price of $0.90 per share, less a discount of $0.027
per share).
Delivery of the Shares to be
purchased by Morgan Keegan and payment therefor shall be made at
10:00 a.m., New York City time, on October 18, 2006 or such
other time and date as Morgan Keegan shall designate by notice to
the Company (the time and date of such delivery for the Shares are
called the “Closing Date”).
Morgan Keegan hereby advises the
Company that Morgan Keegan intends to offer the Shares for sale as
disclosed in the Final Prospectus as soon after this Agreement has
been executed as Morgan Keegan, in its sole judgment, has
determined is advisable and practicable.
Payment for the Shares shall be made
at the Closing Date by wire transfer of immediately available funds
to the order of the Company.
The Company shall deliver, or cause
to be delivered, to Morgan Keegan, a stock certificate representing
the Shares at the Closing Date registered in such name as Morgan
Keegan shall specify in writing, against receipt of a wire transfer
of immediately available funds for the amount of the purchase price
therefor.
SECTION 3. ADDITIONAL COVENANTS OF
THE COMPANY AND MORGAN KEEGAN.
The Company covenants and agrees as
follows:
(a) Morgan Keegan’s Review of
Proposed Amendments and Supplements.
During such period beginning on the
date hereof and ending on the later of the Closing Date or such
date, as in the opinion of counsel for Morgan Keegan, the Final
Prospectus is no longer required by law to be delivered in
connection with sales by Morgan Keegan (the “Prospectus
Delivery Period”), prior to amending or supplementing the
Registration Statement or the Final Prospectus, the Company shall
furnish to Morgan Keegan for review a copy of each such proposed
amendment or supplement and shall permit Morgan Keegan a reasonable
opportunity to comment thereon, and shall consider in good faith
any comments made by, or changes requested by, or objections to the
filing of any such amendment or supplement communicated within
three business days to the Company by, Morgan Keegan or its
attorneys or advisors.
(b) Amendments and Supplements to
the Prospectus and Other Securities Act Matters.
If, during the Prospectus Delivery
Period, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Final Prospectus
in order to make the statements therein, in the light of the
circumstances under which they were made or then prevailing, not
misleading, or if in the opinion of Morgan Keegan or counsel for
Morgan Keegan it is otherwise necessary to amend or supplement the
Final Prospectus to comply with applicable law, the Company agrees
to promptly prepare (subject to Section 3(a) hereof), file
with the Commission and furnish at its own expense to Morgan
Keegan, amendments or supplements to the Final Prospectus so that
the statements in the Final Prospectus as so amended or
supplemented will not, in the light of the circumstances under
which they were made or then prevailing, be misleading or so that
the Final Prospectus, as amended or supplemented, will comply with
applicable laws.
(c) Blue Sky Compliance.
The Company shall cooperate with
Morgan Keegan and counsel for Morgan Keegan to qualify or register
the Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws of those
jurisdictions designated by Morgan Keegan, shall comply with such
laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of
the Shares. The Company shall not be required to qualify as a
foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a
foreign corporation.
(d) Earnings Statement.
As soon as practicable, but not
later than the Availability Date (as defined below), the Company
will make generally available, including, but not limited to, by
filing on EDGAR, to its security holders an earnings statement of
the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the
rules and regulations thereunder. “Availability Date”
means the dates such information is required to be filed with the
Securities and Exchange Commission.
(e) Free Writing
Prospectuses.
The Company agrees that, unless it
obtains the prior consent of Morgan Keegan, it will not make any
communication that would constitute a free writing prospectus (as
defined in Rule 405 under the Securities Act) with respect to the
Shares.
SECTION 4. PAYMENT OF
EXPENSES.
The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of
its obligations hereunder and in connection with the transactions
contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Shares
(including all printing and engraving costs), (ii) all fees
and expenses of the registrar and transfer agent of the Common
Stock, (iii) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Shares by it
to Morgan Keegan, (iv) all fees and expenses of the
Company’s counsel, independent public or certified public
accountants and other advisors, and the reasonable expenses of
counsel for Morgan Keegan, (v) all costs and expenses incurred
in connection with the preparation, printing, filing, and
distribution
