EXHIBIT 10.64
STOCK SUBSCRIPTION
AGREEMENT
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-Quinnan PSC,
dated June 17, 2003, by and between Phillips China, Inc., a
Delaware corporation and the Company and the Assignment
Agreement-Shouyang PSC, dated June 17, 2003, by and between
Phillips China Inc., a Delaware corporation, and the
Company.
2.7 " Auditors
" shall mean Payne Smith & Jones, 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 Phillips China Inc., a Delaware
corporation, and the Company, as amended, and Farmout
Agreement-Shouyang PSC, dated June 17, 2003, by and between
Phillips 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 Phillips 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 363 N. Sam Houston Parkway E., Suite 380,
Houston, Texas 77060, 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
Envir