EXHIBIT 10.8
ESCROW AGREEMENT
This Escrow Agreement dated as of the effective date (the "Effective
Date") set forth on schedule 1 attached hereto ("Schedule 1") by and among the
purchaser identified on Schedule 1 (the "Purchaser"), the seller identified on
Schedule 1 (the "Seller") and X.X. Xxxxxx Trust Company, N.A., as escrow agent
hereunder (the "Escrow Agent").
WHEREAS, the Purchaser and the Seller have agreed to deposit in escrow certain
funds and wish such deposit to be subject to the terms and conditions set forth
herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. APPOINTMENT. The Purchaser and Seller hereby appoint the Escrow Agent as
their escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment under the terms and conditions set forth herein.
2. ESCROW FUND. Simultaneous with the execution and delivery of this Escrow
Agreement, the Purchaser is depositing with the Escrow Agent the sum indicated
as the escrow deposit on Schedule 1 (the "Escrow Deposit"). The Escrow Agent
shall hold the Escrow Deposit and, subject to the terms and conditions hereof,
shall invest and reinvest the Escrow Deposit and the proceeds thereof (the
"Escrow Fund") as directed in Section 3.
3. INVESTMENT OF ESCROW FUND. During the term of this Escrow Agreement, the
Escrow Fund shall be invested and reinvested by the Escrow Agent in the
Investment as indicated and set forth on Schedule 1 or such other investments as
shall be directed in writing by both Purchaser and Seller and as shall be
acceptable to the Escrow Agent. All investment orders involving U.S. Treasury
obligations, commercial paper and other direct investments will be executed
through JPMorgan Xxxxxxx Asset Management (JPMFAM), in the investment management
division of JPMorgan Chase. Subject to principles of best execution,
transactions are effected on behalf of the Escrow Fund through broker-dealers
selected by JPMFAM. In this regard, JPMFAM seeks to attain the best overall
result for the Escrow Fund, taking into consideration quality of service and
reliability. An agency fee will be assessed in connection with each transaction.
Periodic statements will be provided to Purchaser and Seller reflecting
transactions executed on behalf of the Escrow Fund. The Purchaser and Seller,
upon written request, will receive a statement of transaction details upon
completion of any securities transaction in the Escrow Fund without any
additional cost. The Escrow Agent shall have the right to liquidate any
investments held in order to provide funds necessary to make required payments
under this Escrow Agreement. The Escrow Agent shall have no liability for any
loss sustained as a result of any investment in an investment indicated on
Schedule 1 or any investment made pursuant to the instructions of the parties
hereto or as a result of any liquidation of
any investment prior to its maturity or for the failure of the parties to give
the Escrow Agent instructions to invest or reinvest the Escrow Fund.
4. DISPOSITION AND TERMINATION. This Escrow Agreement will fulfill the surety
bond requirement previously contracted for by the Purchaser and Seller in two
farmout agreements (collectively the "Farmout Agreements") entered into on June
17, 2003, one covering the assignment of a participating interest under the
Qinnan PSC and the second covering the assignment of a participating interest
under the Shouyang PSC. Section 6.4 of both Farmout Agreements requires the
Purchaser to provide work performance guarantees in the form of a surety bond of
a total of $1 million for the first phase of the exploration period covering
costs to be incurred as required under Article 6.5 of the Qinnan Farmout and for
the first and second phases of the exploration period covering costs to be
incurred as required under Article 6.7 of the Shouyang Farmout. Such surety bond
must be submitted within thirty (30) days after the Approval Date, which is the
date on which the Ministry of Commerce for the People's Republic of China
approves the assignment of the participating interests as detailed in the
Farmout Agreements. The Approval Date is March 22, 2004 since the Minister of
Commerce approved the assignments on such date, and as a consequence, the surety
bond must be submitted on May 14, 2004, which is also the Effective Date of this
Escrow Agreement.
In the event the Purchaser is in default, as described in Article 8.1 of the
Farmout Agreements, in connection with its obligations under Article 6.5 of the
Qinnan Farmout and/or Article 6.7 of the Shouyang Farmout, the Seller shall have
the right to give written instructions to the Escrow Agent, directing the Escrow
Agent to release to the Seller the amount of the Escrow Funds required to fully
satisfy the remainder of such obligations under the Farmout Agreements. Such
written instructions shall (1) provide the details of the amount and the reasons
for the default under Article 8.1 of the Farmout Agreements and (2) be given by
the Seller by one of the Seller's authorized representatives as set forth on
Schedule 2. Such released Escrow Funds shall be directed and utilized by the
Seller to satisfy the Purchaser's obligations in accordance with Article 6.5 of
the Qinnan Farmout and Article 6.7 of the Shouyang Farmout, and the balance of
the Escrow Funds, if any, shall be refunded to the Purchaser. If the Purchaser
fully satisfies its obligations under the Farmout Agreements, the Escrow Agent
shall release the Escrow Funds to the Purchaser pursuant to the joint written
instructions of the Purchaser by one of Purchaser's authorized representatives
as set forth on Schedule 2 and of the Seller by one of the Seller's authorized
representatives as set forth on Schedule 2. Upon delivery of all of the Escrow
Funds by the Escrow Agent, this Escrow Agreement shall terminate, subject to the
provisions of Section 8.
5. ESCROW AGENT. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no duties shall be implied. The Escrow Agent
shall have no liability under and no duty to inquire as to the provisions of any
agreement other than this Escrow Agreement. The Escrow Agent may rely upon and
shall not be liable for acting or refraining from acting upon any written
notice, instruction or request furnished to it hereunder and believed by it to
be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall be under no duty to inquire into or
investigate the validity, accuracy or content of any such document. The Escrow
Agent shall have no duty to solicit any payments which may be due it or the
Escrow Fund. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith except to the extent that a court of competent
jurisdiction determines that the Escrow Agent's gross negligence or willful
misconduct was the primary cause of any loss to the Purchaser or Seller. The
Escrow Agent may execute any of its powers and perform any of its duties
hereunder directly or through agents or attorneys (and shall be liable only for
the careful selection of any such agent or attorney) and may consult with
counsel, accountants and other skilled persons to be selected and retained by
it. The Escrow Agent shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons. In the event that the Escrow
Agent shall be uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any party hereto which, in its opinion,
conflict with any of the provisions of this Escrow Agreement, it shall be
entitled to refrain from taking any action and its sole obligation shall be to
keep safely all property held in escrow until it shall be directed otherwise in
writing by all of the other parties hereto or by a final order or judgment of a
court of competent jurisdiction. Anything in this Escrow Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
6. SUCCESSION. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving 10 days advance notice in writing of such
resignation to the other parties hereto specifying a date when such resignation
shall take effect. The Escrow Agent shall have the right to withhold an amount
equal to any amount due and owing to the Escrow Agent, plus any actual costs and
expenses incurred by the Escrow Agent in connection with the termination of the
Escrow Agreement. Any corporation or association into which the Escrow Agent may
be merged or converted or with which it may be consolidated, or any corporation
or association to which all or substantially all the escrow business of the
Escrow Agent's corporate trust line of business may be transferred, shall be the
Escrow Agent under this Escrow Agreement without further act.
7. FEES. The Purchaser agrees to (i) pay the Escrow Agent upon execution of this
Escrow Agreement and from time to time thereafter reasonable compensation for
the services to be rendered hereunder, which unless otherwise agreed in writing
shall be as described in Schedule 1 attached hereto, and (ii) pay or reimburse
the Escrow Agent upon request for all expenses, disbursements and advances,
including reasonable attorney's fees and expenses, incurred or made by it in
connection with the preparation, execution, performance, delivery, modification
and termination of this Escrow Agreement.
8. INDEMNITY. The Purchaser and the Seller shall jointly and severally
indemnify, defend and save harmless the Escrow Agent and its directors,
officers, agents and employees (the "indemnitees") from all loss, liability or
expense (including the fees and expenses of in house or outside counsel) arising
out of or in connection with (i) the Escrow Agent's execution and performance of
this Escrow Agreement, except in the case
of any indemnitee to the extent that such loss, liability or expense is due to
the gross negligence or willful misconduct of such indemnitee, or (ii) its
following any instructions or other directions from the Purchaser or the Seller,
except to the extent that its following any such instruction or direction is
expressly forbidden by the terms hereof. The parties hereto acknowledge that the
foregoing indemnities shall survive the resignation or removal of the Escrow
Agent or the termination of this Escrow Agreement. The parties hereby grant the
Escrow Agent a lien on, right of set-off against and security interest in the
Escrow Fund for the payment of any claim for indemnification, compensation,
expenses and amounts due hereunder.
9. TINS. The Purchaser and the Seller each represent that its correct Taxpayer
Identification Number ("TIN") assigned by the Internal Revenue Service ("IRS")
or any other taxing authority is set forth ON THE SIGNATURE PAGE HEREOF. In
addition, all interest or other income earned under the Escrow Agreement shall
be allocated and/or paid and reported by the Purchaser to the Internal Revenue
Service or any other taxing authority. Notwithstanding such written directions,
Escrow Agent shall report and, as required withhold any taxes as it determines
may be required by any law or regulation in effect at the time of the
distribution. In the absence of timely direction, all proceeds of the Escrow
Fund shall be retained in the Escrow Fund and reinvested from time to time by
the Escrow Agent as provided in Section 3. In the event that any earnings remain
undistributed at the end of any calendar year, Escrow Agent shall report to the
Internal Revenue Service or such other authority such earnings as it deems
appropriate or as required by any applicable law or regulation or, to the extent
consistent therewith, as directed in writing by the Purchaser. In addition,
Escrow Agent shall withhold any taxes it deems appropriate and shall remit such
taxes to the appropriate authorities.
10. NOTICES. All communications hereunder shall be in writing and shall be
deemed to be duly given and received:
(i) upon delivery if delivered personally or upon confirmed transmittal if
by facsimile;
(ii) on the next Business Day (as hereinafter defined) if sent by
overnight courier; or
(iii) four (4) Business Days after mailing if mailed by prepaid registered
mail, return receipt requested, to the appropriate notice address set
forth on Schedule 1 or at such other address as any party hereto may have
furnished to the other parties in writing by registered mail, return
receipt requested.
Notwithstanding the above, in the case of communications delivered to the Escrow
Agent pursuant to (ii) and (iii) of this Section 10, such communications shall
be deemed to have been given on the date received by the Escrow Agent. In the
event that the Escrow Agent, in its sole discretion, shall determine that an
emergency exists, the Escrow Agent may use such other means of communication as
the Escrow Agent deems appropriate. "Business Day" shall mean any day other than
a Saturday, Sunday or any other day on which the Escrow Agent located at the
notice address set forth on Schedule 1 is authorized or required by law or
executive order to remain closed.
11. SECURITY PROCEDURES. In the event funds transfer instructions are given
(other than in writing at the time of execution of this Escrow Agreement, as
indicated in Schedule 1 attached hereto), whether in writing, by telecopier or
otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to
the person or persons designated on schedule 2 hereto ("Schedule 2"), and the
Escrow Agent may rely upon the confirmation of anyone purporting to be the
person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Escrow Agent. If the Escrow Agent is unable to contact any of the
authorized representatives identified in Schedule 2, the Escrow Agent is hereby
authorized to seek confirmation of such instructions by telephone call-back to
any one or more of your executive officers, ("Executive Officers"), which shall
include the titles of President and CFO, as the Escrow Agent may select. Such
"Executive Officer" shall deliver to the Escrow Agent a fully executed
Incumbency Certificate, and the Escrow Agent may rely upon the confirmation of
anyone purporting to be any such officer. The Escrow Agent and the beneficiary's
bank in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by the Purchaser or the Seller to identify (i) the
beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The
Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even when its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank or an intermediary bank designated. The
parties to this Escrow Agreement acknowledge that these security procedures are
commercially reasonable.
12. MISCELLANEOUS. The provisions of this Escrow Agreement may be waived,
altered, amended or supplemented, in whole or in part, only by a writing signed
by all of the parties hereto. Neither this Escrow Agreement nor any right or
interest hereunder may be assigned in whole or in part by any party, except as
provided in Section 6, without the prior consent of the other parties. This
Escrow Agreement shall be governed by and construed under the laws of the State
of New York. Each party hereto irrevocably waives any objection on the grounds
of venue, forum non-conveniens or any similar grounds and irrevocably consents
to service of process by mail or in any other manner permitted by applicable law
and consents to the jurisdiction of the courts located in the State of New York.
The parties further hereby waive any right to a trial by jury with respect to
any lawsuit or judicial proceeding arising or relating to this Escrow Agreement.
No party to this Escrow Agreement is liable to any other party for losses due
to, or if it is unable to perform its obligations under the terms of this Escrow
Agreement because of, acts of God, fire, floods, strikes, equipment or
transmission failure, or other causes reasonably beyond its control. This Escrow
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
the date set forth in Schedule 1.
TAX CERTIFICATION: Taxpayer ID#: 00-0000000
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Customer is a (check one):
_X_ Corporation ___ Municipality ___ Partnership ___ Non-profit or Charitable Org
___ Individual ___ REMIC ___ Trust ___ Other _________________
Under the penalties of perjury, the undersigned certifies that:
(1) the entity is organized under the laws of the United States or
_____________ (specify country)
(2) the number shown above is its correct Taxpayer Identification Number (or
it is waiting for a number to be issued to it); and
(3) it is not subject to backup withholding because: (a) it is exempt from
backup withholding or (b) it has not been notified by the Internal Revenue
Service (IRS) that it is subject to backup withholding as a result of
failure to report all interest or dividends, or (c) the IRS has notified
it that it is no longer subject to backup withholding.
(If the entity is subject to backup withholding, cross out the words after the
(3) above.)
Investors who do not supply a tax identification number will be subject to
backup withholding in accordance with IRS regulations.
NOTE: THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
PURCHASER - FAR EAST ENERGY CORPORATION
SIGNATURE: _/S/ XXXXX X. HUFF________________
PRINTED NAME: Xxxxx X. Xxxx
TITLE: Chief Financial Officer
TAX CERTIFICATION: Taxpayer ID#: 00-0000000
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Customer is a (check one):
_X_ Corporation ___ Municipality ___ Partnership ___ Non-profit or Charitable Org
___ Individual ___ REMIC ___ Trust ___ Other _________________
Under the penalties of perjury, the undersigned certifies that:
(1) the entity is organized under the laws of the United States or
____Liberia_____________ (specify country)
(2) the number shown above is its correct Taxpayer Identification Number (or
it is waiting for a number to be issued to it); and
(3) it is not subject to backup withholding because: (a) it is exempt from
backup withholding or (b) it has not been notified by the Internal Revenue
Service (IRS) that it is subject to backup withholding as a result of
failure to report all interest or dividends, or (c) the IRS has notified
it that it is no longer subject to backup withholding.
(If the entity is subject to backup withholding, cross out the words after the
(3) above.)
Investors who do not supply a tax identification number will be subject to
backup withholding in accordance with IRS regulations.
NOTE: THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
SELLER - CONOCOPHILLIPS CHINA INC.
SIGNATURE:___/S/ XXXXX PARK_________
PRINTED NAME: XXXXX XXXX
TITLE: _VICE PRESIDENT_____________________________________
X.X. XXXXXX TRUST COMPANY, N.A.
AS ESCROW AGENT
BY:__JOSIE HIXON_____________________
Authorized Signer
14. Schedule 1
EFFECTIVE DATE: MAY 14, 2004
NAME OF PURCHASER: FAR EAST ENERGY CORPORATION
Seller Notice Address: 000 X. Xxx Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Purchaser TIN: 00-0000000
Wiring Instructions:
NAME OF SELLER: CONOCOPHILLIPS CHINA INC.
Purchaser Notice Address: Primary Address: 000 Xxxxx Xxxxx Xxxxxxx Xx., Xxxxxxx,
XX 00000-0000 Copy to: Room 1201 Millenium Tower, Xx. 00 Xxxxxxx Xxxx,
Xxxxxxxx Xxxxxxxx Xxxxxxx 000000 Xxxxx
Seller TIN: 00-0000000
Wiring Instructions:
15. Escrow Deposit: $1,000,000
INVESTMENT: [specify]
[X] JPMorgan Chase Bank Money Market Account;
[ ] A trust account with JPMorgan Chase Bank;
[ ] A money market mutual fund, including without limitation the
JPMorgan Fund or any other mutual fund for which the Escrow Agent or
any affiliate of the Escrow Agent serves as investment manager,
administrator, shareholder servicing agent and/or custodian or
subcustodian, notwithstanding that (i) the Escrow Agent or an
affiliate of the Escrow Agent receives fees from such funds for
services rendered, (ii) the Escrow Agent charges and collects fees
for services rendered pursuant to this Escrow Agreement, which fees
are separate from the fees received from such funds, and (iii)
services performed for such funds and pursuant to this Escrow
Agreement may at times duplicate those provided to such funds by the
Escrow Agent or its affiliates.
Fund
ESCROW AGENT NOTICE ADDRESS: X.X. Xxxxxx Trust Company, N.A.
000 Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Fax No.: (000) 000-0000
ESCROW AGENT'S COMPENSATION:
SCHEDULE 2
TELEPHONE NUMBER(S) FOR CALL-BACKS AND
PERSON(S) DESIGNATED TO CONFIRM FUNDS TRANSFER INSTRUCTIONS
If to Purchaser:
Name Telephone Number
1. Xxxxx X. Xxxx 000-000-0000
--------------------------------- ----------------------------------
2. Xxxxx Xxxxxx 000-000-0000
--------------------------------- ----------------------------------
3. Xxxx XxXxxxxxx 000-000-0000
--------------------------------- ----------------------------------
If to Seller:
Name Telephone Number
1. Xxxxx X. Xxxxx 000-000-0000
--------------------------------- ----------------------------------
2. Xxxxx X. Xxxx 00-000-0000
--------------------------------- ----------------------------------
3. Xxx X. Xxxxx 8610-8451-8666 ext. 6177
--------------------------------- ----------------------------------
Telephone call-backs shall be made to each Purchaser and Seller if joint
instructions are required pursuant to this Escrow Agreement.
