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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 11, 1995
FORTUNE PETROLEUM CORPORATION
(Exact Name of Registrant as specified in its charter)
Delaware 1-12334 95-4114732
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
30101 Agoura Court, Suite 110 Agoura Hills, California 91301
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (818) 991-0526
N/A
(Former name, former address and former fiscal year,
if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Asset Acquired. On December 11, 1995, Fortune Petroleum Corporation
("Fortune" or the "Company") acquired a 16-2/3% working interest (12-1/2% net
revenue interest) in a 5,000 acre producing oil and gas property offshore
Louisiana. The property, known as the South Timbalier Block 76 (and referred
to herein as the "Timbalier Block"), includes a producing well, drilling and
production platform and transmission line. The acquisition has an effective
date for oil and gas purposes of July 1, 1995, with Fortune being entitled to
receive the net cash flow from the well to its interest from that date; the
effective date for financial reporting purposes is November 1, 1995.
The well on the Timbalier Block has been on production since 1990 and
is currently producing approximately 16,000 Mcf of natural gas per day plus
1,150 Bbls of oil per day. To date, the well has produced approximately 30 Bcf
of natural gas and 2 million Bbls of high gravity oil. Consolidated Natural Gas
is the operator of the property and owns a 50% working interest in the block;
Oryx Energy Company owns the remaining 33-1/3% working interest in the block.
The well was originally drilled based upon a 2-D seismic survey.
Through the application of advanced 3-D seismic and computer aided exploration
technology, management of Fortune believes the Timbalier Block has additional
exploration and development potential.
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Parties to Transaction. The interest acquired by Fortune was owned by
PetroFina, Inc., which had agreed to sell the interest to Northport Production
Company. In turn, Northport had agreed to sell the property to Mr. Donald L.
Walker. In order to secure the right to purchase the interest, Mr. Walker gave
PetroFina a non-refundable security deposit of $150,000. In order to step into
Mr. Walker's position, Fortune paid Mr. Walker $100,000 in cash, agreed to
issue stock purchase warrants for 150,000 shares of Common Stock and granted
Mr. Walker the option referred to below. (The warrants are exercisable for two
years at the following prices: 50,000 shares at $4.00 per share and 100,000
shares at $6.00 per share.) In addition, Fortune gave an additional security
deposit to PetroFina of $100,000.
Purchase Price. Fortune paid a total of $2.9 million for its interest
in the Timbalier Block. Of that amount, approximately $560,000 was paid out of
the net cash flow from Fortune's interest in the property between the July 1
effective date and approximately mid-October 1995. In addition, the $150,000
deposit paid by Mr. Walker and the $100,000 deposit paid by Fortune were
applied to the purchase price. At the closing of the transaction, the net cash
paid by Fortune for its interest in the timbalier Block was approximately
$2,090,000.
Fortune has granted Pendragon Resources, a Texas limited liability
company owned by Donald L. Walker, the right, exercisable until March, 1996, to
acquire a 4-1/6% working interest in Block 76 for approximately $790,000. If
Pendragon does not exercise its option, Fortune will reimburse Mr. Walker for
his $150,000 deposit given to PetroFina (and which was applied to the purchase
price for the property).
ITEM 5. OTHER EVENTS.
In order to finance the acquisition of the Timbalier Block and also to
provide the Company with additional working capital, Fortune issued 1,321,117
shares of its Common Stock to a group of European investors in a transaction
which qualified for an exemption from the registration requirements of the
Securities Act of 1933 under Regulation S. The shares were sold for an average
price of $3.22 per share, approximately 75% of the average closing bid price of
the Common Stock on the two trading days prior to the financing. From this
sale, the Company netted approximately $3,602,000 after payment of expenses of
the offering. The balance of $1,306,000 remaining after payment of the
purchase price for the Timbalier Block interest has been added to working
capital and will be used for general corporate purpose.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of businesses acquired. To be filed by
amendment within the time permitted by the Commission's rules.
(b) Pro form financial information. To be filed by amendment
within the time permitted by the Commission's rules.
(c) Exhibits.
2.1 Acquisition Agreement dated December 6, 1995, among
Donald L. Walker, Pendragon Resources, LLC and
Registrant
2.2 Agreement dated December 7, 1995, between Northport
Production Company and Registrant
2.3 Assignment of Record title In Oil and Gas Lease and
Bill of Sale and Conveyance from Northport Production
Company to Registrant
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2.4 Assignment of Record title In Oil and Gas Lease and
Bill of Sale and Conveyance from Northport Production
Company to Registrant
10.1 Agreement dated December 8, 1995, between
Whitechappel Management Ltd. and Registrant to act as
distributor of the Common Stock under Regulation S
10.2 Regulation S Subscription Agreements and related
Joint Escrow Instructions for the sale of 627,450
shares of Common Stock
10.3 Offshore Securities Subscription Agreements and
related Joint Escrow Instructions for the sale of
693,667 shares of Common Stock
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FORTUNE PETROLEUM CORPORATION
Date: December 26, 1995 By: /s/ TYRONE J. FAIRBANKS
----------------------------------
Tyrone J. Fairbanks, President,
Chief Executive Officer,
Chief Accounting Officer
and Chief Financial Officer
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EXHIBIT 2.1
ACQUISITION AGREEMENT
This Agreement, dated December 6, 1995, is entered into by and between
Donald L. Walker, an individual ("Walker"); Pendragon Resources, L.L.C., a
Texas limited liability company wholly owned by Walker; Northport Production
Company ("Northport"); and Fortune Petroleum Corporation, a Delaware
corporation ("Fortune") with its principal securities publicly traded on the
American Stock Exchange. This Agreement shall supersede any previous agreement
between the Parties with respect to the subject matter hereof.
WHEREAS, Pendragon has purchased an option to acquire an undivided
16-2/3% working interest and 12-1/2% net revenue interest in and to certain
oil, gas and mineral rights currently owned by PetroFina (the "PetroFina
Interest") in South Timbalier Block 76, offshore Louisiana ("Block 76")
consisting of a producing well, a platform, a transmission line and
approximately 5,000 acres (the "Acquisition") from Northport, which has entered
into a purchase and sale agreement with PetroFina to acquire the PetroFina
Interest; and
WHEREAS, Pendragon desires to assign its right to complete the
Acquisition to Fortune, whereupon Fortune will acquire the PetroFina Interest
from Northport on terms identical to those contained in the purchase and sale
agreement between PetroFina and Northport, including the conveyance to Fortune
of the representations and warranties received by Northport from PetroFina; and
WHEREAS, Walker, on behalf of Pendragon, made a non-refundable option
payment of $150,000 to PetroFina to extend the Northport - PetroFina purchase
and sale agreement expiration date, which may be credited to the purchase price
of Block 76 or which shall be forfeited to PetroFina if the Acquisition is not
completed; and
WHEREAS, Fortune has made an additional non-refundable deposit of
$100,000 to PetroFina to further extend the Northport - PetroFina purchase and
sale agreement expiration date through December 11, 1995, which may be credited
to the purchase price of Block 76 or which shall be forfeited to PetroFina if
the Acquisition is not completed; and
WHEREAS, Fortune's purchase price of the PetroFina Interest from
Northport is $2,900,000 with an effective purchase date of July 1, 1995; and
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WHEREAS, Fortune has agreed to pay Pendragon $100,000 for its services
herein and has further agreed with Pendragon that Pendragon shall be
responsible for paying any compensation to finders or other third parties
involved in the Acquisition; and
WHEREAS, Pendragon desires to acquire an option to purchase from
Fortune, within 90 days from the closing date of the Acquisition, 25% of the
16-2/3% PetroFina Interest in Block 76 (representing a 4-1/6% working interest
and a 3-1/8% net revenue interest, hereinafter referred to as the "Walker
Interest") for $790,000; and
WHEREAS, Fortune requires and has received an approval from
Consolidated Natural Gas as operator of Block 76 of the assignment of its
working interest from PetroFina and Northport; and
WHEREAS, Fortune intends to privately issue 1,250,000 shares of common
stock (the "Shares") under the provisions of Regulation S of the Securities Act
of 1933 in order to fund the Acquisition.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
and dependent covenants hereinafter set forth, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Parties hereto agree as follows:
1. Fortune shall be assigned, from Northport, the entire PetroFina
Interest (16-2/3% working interest and 12-1/2% net revenue interest) in Block 76
to be obtained by Northport from PetroFina, effective July 1, 1995, subject to
the rights of Walker and Pendragon to exercise their option to acquire the
Walker Interest as hereinafter provided. In the event the full option exercise
price is not received by Fortune within the term of the option, then any
portion of the Walker Interest not yet assigned to Pendragon under the
provisions of paragraph 3, below, shall be retained by Fortune and no further
assignment of such interest shall be required to Pendragon.
2. Fortune hereby grants to Walker and Pendragon an option to
acquire the Walker Interest at any time within ninety (90) days of the closing
date of the Acquisition upon the payment to Fortune by Walker and Pendragon of
the sum of $790,000. Upon such payment, Fortune shall assign the Walker
Interest to Pendragon, effective January 1, 1996. In the event the option
payment is not received by Fortune within the 90-day term of
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the option, the option shall terminate and the entire PetroFina Interest shall
be the sole property of Fortune.
3. At any time prior to the expiration of the option to acquire
the Walker Interest, Walker or Pendragon may make partial option payments to
Fortune, and Fortune shall make an assignment to Pendragon of its pro-rata
share of the Walker Interest in relation to the percentage of the option
payment which is remitted.
4. In the event that no portion of the option to acquire the
Walker Interest is exercised, Fortune shall remit to Walker his $150,000
non-refundable deposit to PetroFina which was used as part of the purchase
price paid by Fortune for the Acquisition. In the event any partial option
payments were made by Walker or Pendragon prior to the expiration of the option
but the entire option amount was not exercised, then Fortune shall retain a
proportional amount of Walker's $150,000 deposit to PetroFina and shall remit
the balance to Walker.
5. Upon closing of the Acquisition, Fortune agrees to issue Walker
50,000 private common stock purchase warrants exercisable at the market price
of Fortune's stock on the date of closing the Acquisition and an additional
100,000 private common stock purchase warrants exercisable at $6.00 per share.
6. The obligation of Fortune to proceed with the transaction
contemplated hereby is conditioned upon and subject to the sale by Fortune of
its common stock in a private placement under the provisions of Regulation S of
the Securities Act of 1933, in an amount and manner acceptable to Fortune in
its sole discretion. This Agreement is also contingent upon executing any
appropriate modifications which are required to the escrow held by Cole &
Turet.
7. Time is of the essence of this Agreement and each and every
provision hereof.
8. This Agreement contains the entire agreement between the
Parties pertaining to the Acquisition and supersedes any and all prior
agreements, representations and understandings of the Parties, written or oral.
9. This Agreement and the obligations of the Parties hereunder
shall be interpreted, construed and enforced in accordance with the laws of the
State of California.
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The Parties hereby consent to jurisdiction in the state and federal courts in
the State of California and to venue in the courts in Los Angeles, California.
10. No consent or waiver, express or implied, by any party to, or
of any breach or default by any other party in, the performance of its
obligations hereunder shall be deemed or construed to be a consent to or waiver
of any other breach or default in the performance by such other party of the
same or any other obligations hereunder. Failure on the part of a party to
complain of any act of the other party to declare a party in default,
irrespective of how long such failure continues, shall not constitute a waiver
of such party of its rights hereunder.
11. This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns. This Agreement, or any right
or interest hereunder, shall not be assignable by any party hereto without the
written consent of any other party hereto.
12. This Agreement may be executed in one or more counterparts, any
one of which, if originally executed, shall be binding upon each of the parties
signing thereon, and all of which taken together shall constitute one and the
same instrument.
13. Each party agrees and covenants that it will at any time and
from time to time, upon the request of the other, execute, acknowledge, deliver
or perform all such further acts, deeds, assignments, transfers, conveyances
and assurances as may be required to carry out the terms and provisions of
this Agreement.
14. No person shall have any rights whatsoever under this Agreement
unless such person is a party to this Agreement, and only in such capacities as
such person is a party hereto.
15. Each party represents and warrants that in executing this
Agreement: (i) such party has had the opportunity to obtain independent
accounting, financial, investment, legal, tax, and other appropriate advice;
(ii) the terms of the Agreement have been carefully read by such party and its
consequences explained to such party by his or its independent advisors; (iii)
such party fully understands the terms and consequences of this Agreement; (iv)
such party has not relied on any inducements, promises or representations made
by the other party (except those expressly set forth herein) or the
accountants, attorneys or other
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agents representing or serving any other party; and (v) its execution of this
Agreement is free and voluntary.
16. In the event of any dispute between parties to this Agreement,
the prevailing party shall be entitled to immediate payment of all costs
incurred by such party in such dispute, including, but not limited to, court
costs and reasonable attorneys' fees.
17. No provisions of this Agreement or any of the documents
referred to herein may be amended, modified, supplemented, changed, waived,
discharged, or terminated, except by a writing signed by or on behalf of each
party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
PENDRAGON RESOURCES, L.L.C.
By: /s/ DONALD L. WALKER /s/ DONALD L. WALKER
------------------------------ --------------------------------
DONALD L. WALKER, Owner DONALD L. WALKER, an individual
FORTUNE PETROLEUM CORPORATION
By:
------------------------------
TYRONE J. FAIRBANKS,
President and CEO
5
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EXHIBIT 2.2
[LOGO]
FORTUNE PETROLEUM CORPORATION
December 7, 1995
VIA FACSIMILE TRANSMISSION
(405) 840-2528
Tony Viele, President
Northport Production Company
2601 N.W. Expressway Street, Suite 902-E
Oklahoma City, Oklahoma 73112
Re: Fortune Petroleum Corporation/PetroFina Acquisition: Our file
no. 552.18
Dear Tony:
This letter will serve to confirm the agreement between Fortune and
Northport whereby Fortune will acquire that undivided 16-2/3% working interest
(12-1/2% net revenue interest) in South Timbalier Block 76, offshore Louisiana,
currently owned by PetroFina but to be acquired by Northport. The purchase
price is to be $2,900,000, subject to offsets attributable to production
revenue and expenses subsequent to the effective date of July 1, 1995. This
transaction is also subject to the retention by Northport of an overriding
royalty interest which shall not reduce the net revenue interest to Fortune
below that specified above.
If the foregoing is consistent with your understanding of the terms of
this transaction, please confirm that fact by signing and dating in the space
below and return a copy of this letter to the undersigned by facsimile
transmission at (310) 477-7663.
Very truly yours,
DEAN W. DRULIAS
DEAN W. DRULIAS
Secretary
ACCEPTED AND AGREED TO THIS
7TH day of December, 1995.
NORTHPORT PRODUCTION COMPANY
By: TONY VIELE
------------------------
TONY VIELE
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EXHIBIT 2.3
ASSIGNMENT OF RECORD TITLE IN OIL AND GAS LEASE
AND BILL OF SALE AND CONVEYANCE
UNITED STATES OF AMERICA --
-- KNOW ALL MEN BY THESE PRESENTS:
OUTER CONTINENTAL SHELF --
THAT NORTHPORT PRODUCTION COMPANY, AN OKLAHOMA CORPORATION 2601 NW
EXPRESSWAY, SUITE 902E, OKLAHOMA CITY, OKLAHOMA 73112-7208 (herein called
"ASSIGNOR"), for and in consideration of the sum of Ten Dollars ($10.00), cash
in hand paid, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, has transferred and assigned and
by these presents does hereby transfer and assign to the parties in the
following proportions:
<TABLE>
<S> <C> <C>
Fortune Petroleum Corporation Working Int. Net Rev. Int.
30101 Agoura Ct., Suite #110 .166666 .125000
Agoura Hills, CA 91301
======= =======
Total .166666 .125000
</TABLE>
(hereinafter called "ASSIGNEE") all of ASSIGNOR'S right, title and interest in
and to the Oil and Gas Lease described on Exhibit "A" which is attached hereto
and made a part hereof for all purposes, together with all of ASSIGNOR'S right,
title and interest in and to the well, wellbore, gathering systems, platform,
processing facilities, pipe, tubing, casing, and equipment located on such Oil
and Gas Lease or used or obtained directly in connection with operations
conducted on such Oil and Gas Lease, and any and all personal property described
in Exhibit "A", and all of ASSIGNOR'S right, title and interest in and to any
contracts, agreements, rights-of-way, easements, pipeline use agreements and
other agreements and interest connected therewith, but only insofar as the
foregoing relate to such Oil and Gas Lease and only insofar as the same are
assignable or partially assignable.
The Oil and Gas Lease, as described in Exhibit "A", shall hereinafter
sometimes be referred to as the "Subject Lease", and the lands described therein
shall hereinafter sometimes be referred to as the "Subject Lands." The
interests conveyed by ASSIGNOR to ASSIGNEE hereunder in the Subject Lease and
the interests in agreements and the personal property, fixtures, moveables,
immovables, equipment and well described above, and on Exhibit "A", shall
sometimes be referred to hereinafter as the "Assets."
This Assignment is expressly made subject, however, to the following
reservation of overriding royalty interest, terms, covenants, and conditions:
I. LEASE OBLIGATIONS. ASSIGNEE does hereby covenant and agree
to perform and comply with all express and implied obligations with respect to
the Subject Lease, insofar as they affect and apply to the interest herein
conveyed.
II. EXISTING AGREEMENTS. This Assignment is expressly made in
conformance with and subject to the terms, covenants, and conditions of that
certain Purchase and Sale Agreement ("Purchase and Sale Agreement") effective
July 1, 1995, ("Effective Time") between the parties which is hereby
incorporated herein by reference for all purposes. Additionally, ASSIGNOR'S
interest in the Assets is subject to the terms, covenants and conditions of the
agreement and other documents referenced on Exhibit "A".
III. APPROVAL. This Assignment is subject to approval by the
Minerals Management Service of the U.S. Department of Interior, under the
provisions of Title 30, Section 256.62 CFR, or any other governmental agency
having jurisdiction. In connection with all operations on the Subject Lease,
ASSIGNEE, by its acceptance hereof, agree to comply with all applicable rules,
regulations, and laws pertaining to the Subject Lease and Subject Lands.
IV. SPECIAL WARRANTY. This Assignment is made and accepted
without warranty of title, either express or implied, except that, ASSIGNOR
warrants title to the Subject Lease in the amount of the working interest and
revenue interest shown as conveyed on Exhibit "A", by , through and under
ASSIGNOR, but not otherwise.
<PAGE> 2
V. RIGHTS OF AUDIT AND OFFSET. This Assignment does not convey
to ASSIGNEE and ASSIGNOR expressly retains any rights of audit or offset
accruing prior to the Effective Time which may exist in favor of ASSIGNOR.
VI. RESERVATION OF OVERRIDE OF ASSIGNOR. As shown on Exhibit
"A", ASSIGNOR does hereby reserve unto itself, its successors and assigns and
Overriding Royalty Interest of 1.38889% of 8/8ths of all the oil, gas, other
hydrocarbons, and all other minerals produced, saved and sold, if as and when
produced, saved and sold from the Subject Lease and Subject Lands. This
Overriding Royalty Interest shall be free of all development, production,
marketing and operating expenses. It is the express intention of the parties
that the ASSIGNEE receive a 12.5% net revenue interest as a result of this
Assignment and that the ASSIGNOR retain and reserve unto itself, its successors
and assigns, as an Overriding Royalty Interest, all net revenue interest it
owns prior to this Assignment in excess of 12.5%.
TO HAVE AND TO HOLD the same unto the ASSIGNEE, their successors and
assigns, forever and according to the terms, covenants, and conditions of the
Subject Lease, the ASSIGNEE to perform all such terms, covenants, and
conditions thereof as to the Subject Lands, as well as all of the terms,
covenants, and conditions hereof.
The reservations, terms, covenants and conditions hereof shall be
binding upon and inure to the benefit of ASSIGNOR and ASSIGNEE, their
respective successors and assigns, and shall attach to and run with the Subject
Lease and the Subject Lands and with each transfer or assignment thereof.
This Assignment may be executed in several counterparts and the
signature pages assembled to form one original.
WITNESS THE EXECUTION HEREOF on this, the 14th day of November, 1995,
but effective as of July 1, 1995.
ASSIGNOR
WITNESSES: NORTHPORT PRODUCTION COMPANY
/s/ By: /s/ TONY VIELE
- ------------------------- -----------------------------
Tony Viele, President
/s/
- ------------------------- ASSIGNEE
WITNESSES: FORTUNE PETROLEUM CORPORATION
/s/ By: /s/ TYRONE J. FAIRBANKS
- ------------------------- -----------------------------
Tyrone J. Fairbanks
/s/ President
- -------------------------
<PAGE> 3
ACKNOWLEDGMENTS
STATE OF TEXAS |
|
COUNTY OF DALLAS |
BEFORE ME, the undersigned, a Notary Public in and for said County and
state on this 14th day of November, 1995 personally appeared Tony Viele to me
known to be the identical person who executed the within and foregoing
instrument as the President of Northport Production Company, and acknowledged
to me that he executed the same as his free and voluntary act and deed and the
free and voluntary act and deed of such corporation for the uses and purposes
therein set forth.
Given under my hand and seal of office the day and year last above
written.
ALAN CHRISTIAN AGEE
My commision expires Notary Public, State of Texas /s/ ALAN CHRISTIAN AGEE
My Commission Expires 3-07-99 ------------------------
Notary Public
STATE OF TEXAS |
|
COUNTY OF DALLAS |
BEFORE ME, the undersigned, a Notary Public in and for said County and
State on this ____ day of November, 1995 personally appeared Tyrone J.
Fairbanks known to be the identical person who executed the within and
foregoing instrument as the President of Fortune Petroleum Corporation, and
acknowledged to me that he executed the same as his free and voluntary act and
deed and the free and voluntary act and deed of such corporation for the uses
and purposes therein set forth.
Given under my hand and seal of office the day and year last above
written.
My commission expires:
------------------- -----------------------------
Notary Public
<PAGE> 4
EXHIBIT "A"
Attached to and made a part of that certain Assignment of Record Title In Oil
and Gas Lease and Bill of Sale and Conveyance, dated effective as of July 1,
1995, between Northport Production Company, as Assignor and Fortune Petroleum
Corporation, as Assignee.
SUBJECT LEASE AND SUBJECT LANDS:
Oil and Gas Lease of Submerged Lands effective November 1, 1980,
bearing Serial Number OCS-G 4460 issued by the United States of America to CNG
Producing Company and Sun Oil Company (Delaware) covering all of Block 76,
South Timbalier Area, as shown on OCS Leasing Map, Louisiana Map No. 6,
containing 5,000 acres, more or less.
Block 76 constitutes the Subject Lands covered hereby.
AGREEMENTS AND DOCUMENTS AFFECTING SOUTH TIMBALIER BLOCK 76:
Joint Operating Agreement dated May 20, 1981 covering Block 76 between
CNG Producing Company, Operator and Sun Oil Company, Non-Operator, including
all amendments and supplement thereto.
Well Participation Agreement Amendment to Operating Agreement and
Ratification of Operating Agreement dated July 17, 1985, pertaining to Block
76.
Assignment from Sun Exploration & Production Company to Petrodel
Exploration, Inc. executed November 4, 1985, covering all of Block 76, South
Timbalier Area.
South Timbalier Blocks 76 and 77 Condensate Handling Agreement
effective September 19, 1990 by and between CNG Producing Company and Santa Fe
Energy Operating Partners, L.P., the working interest owners in South Timbalier
Block 76 and CNG Producing Company, Petrofina Delaware Incorporated and Oryx
Energy Company, the working interest owners in South Timbalier Block 76 and CNG
Producing Company, the Operator of both Blocks S.T. 76 and S.T. 77.
<PAGE> 5
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT No. 5907
State of California
--------------------------
County of Los Angeles
-------------------------
On 12/12/95 before me, Michelle Corey, Notary
--------------- ------------------------------------------
DATE NAME, TITLE OF OFFICER E.G.,
"JANE DOE, NOTARY PUBLIC"
personally appeared Tyrone J. Fairbanks
-----------------------------------------------------
NAME(S) OF SIGNER(S)
[X] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person whose name is
subscribed to the within instrument and
acknowledged to me that he executed the
same in his authorized capacity, and that
by his signature on the instrument the
person, or the entity upon behalf of
which the person acted, executed the
MICHELLE M. COREY instrument.
COMM. #996578
[SEAL] Notary Public - California WITNESS my hand and official seal.
LOS ANGELES COUNTY
My Comm. Expires JUL 2, 1997 /s/ MICHELLE M. COREY
----------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[ ] INDIVIDUAL
[ ] CORPORATE OFFICER ------------------------------------
TITLE OR TYPE OF DOCUMENT
--------------------------------
TITLE(S) ------------------------------------
NUMBER OF PAGES
[ ] PARTNER(S) [ ] LIMITED
[ ] GENERAL ------------------------------------
[ ] ATTORNEY-IN-FACT DATE OF DOCUMENT
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR ------------------------------------
[ ] OTHER: SIGNER(S) OTHER THAN NAMED ABOVE
---------------------------
--------------------------------
--------------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
- ------------------------------------
- ------------------------------------
(c) 1993 NATIONAL NOTARY ASSOCIATION - 8236 Remmet Ave., P.O. Box 7184 .
Canoga Park, Ca 91309-7184
<PAGE> 1
EXHIBIT 2.4
ASSIGNMENT OF RECORD TITLE IN OIL AND GAS LEASE
AND BILL OF SALE AND CONVEYANCE
UNITED STATES OF AMERICA S
S KNOW ALL MEN BY THESE PRESENTS:
OUTER CONTINENTAL SHELF S
THAT PETROFINA DELAWARE, INCORPORATED, 14950 Heathrow Forest Parkway,
Suite 300, Houston, Texas 77032 (herein called "ASSIGNOR"), for and in
consideration of the sum of Ten Dollars ($10.00), cash in hand paid, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, has transferred and assigned and by these presents does hereby
transfer and assign unto NORTHPORT PRODUCTION COMPANY, an Oklahoma corporation,
with an office at 2601 N.W. Expressway Street, Suite 902 East, Oklahoma City,
Oklahoma 73112-7208 (herein called "ASSIGNEE"), all of ASSIGNOR'S right, title,
and interest in and to the Oil and Gas Lease described on Exhibit "A" which is
attached hereto and made a part hereof for all purposes, together with all of
ASSIGNOR'S right, title and interest in and to the well, wellbore, gathering
systems, platform, processing facilities, pipe, tubing, casing, and equipment
located on such Oil and Gas Lease or used or obtained directly in connection
with operations conducted on such Oil and Gas Lease, and any and all personal
property described in Exhibit "A", and all of ASSIGNOR'S right, title and
interest in and to any contracts, agreements, rights-of-way, casements, pipeline
use agreements and other agreements and interests connected therewith, but only
insofar as the foregoing relate to such Oil and Gas Lease and only insofar as
the same are assignable or partially assignable.
The Oil and Gas Lease, as described in Exhibit "A", shall hereinafter
sometimes by referred to as the "Subject Lease", and the lands described therein
shall hereinafter sometimes be referred to as the "Subject Lands." The interests
conveyed by ASSIGNOR to ASSIGNEE hereunder in the Subject Lease and the
interests in agreements and the personal property, fixtures, moveables,
immoveables, equipment and well described above, and on Exhibit "A", shall
sometimes be referred to hereinafter as the "Assets."
This Assignment is expressly made subject, however, to the following
terms, covenants, and conditions:
I. LEASE OBLIGATIONS: ASSIGNEE does hereby covenant and agree to
perform and comply with all express and implied obligations with respect to
the Subject Lease, insofar as they affect and apply to the interest herein
conveyed.
II. EXISTING AGREEMENTS: This Assignment is expressly made in
conformance with and subject to the terms, covenants, and conditions of that
certain Purchase and Sale Agreement ("Purchase and Sale Agreement") dated July
10, 1995, but effective June 1, 1995, ("Effective Time") between Petrofina
Delaware, Incorporated and Northport Production Company, which is hereby
incorporated herein by reference for all purposes. Additionally, ASSIGNOR'S
interest in the Assets is subject to the terms, covenants and conditions of the
agreements and other documents referenced on Exhibit "A".
III. APPROVAL: This Assignment is subject to the approval by the
Minerals Management Service of the U.S. Department of Interior, under the
provisions of Title 30, Section 256.62 CFR, or any other governmental agency
having jurisdiction. In connection with all operations on the Subject Lease,
ASSIGNEE, by its acceptance hereof, agrees to comply with all applicable rules,
regulations, or laws pertaining to the Subject Lease and Subject Lands.
<PAGE> 2
IV. SPECIAL WARRANTY: This Assignment is made and accepted
without warranty of title, either express or implied, except that, ASSIGNOR
warrants title to the Subject Lease in the amount of the working interest and
revenue interest shown on Exhibit "A", by, through and under ASSIGNOR, but not
otherwise.
V. RIGHTS OF AUDIT AND OFFSET: This Assignment does not convey
to ASSIGNEE and ASSIGNOR expressly retains any rights of audit or offset
accruing prior to the Effective Time which may exist in favor of ASSIGNOR.
TO HAVE AND TO HOLD the same unto the ASSIGNEE, its successors and
assigns, forever and according to the terms, covenants, and conditions of the
Subject Lease, the ASSIGNEE to perform all such terms, covenants, and
conditions thereof as to the Subject Lands, as well as all of the terms,
covenants, and conditions hereof.
The reservations, terms, covenants, and conditions hereof shall be
binding upon the inure to the benefit of ASSIGNOR and ASSIGNEE, their
respective successors and assigns, and shall attach to and run with the Subject
Lease and the Subject Lands and with each transfer or assignment thereof.
This Assignment may be executed in several counterparts and the
signature pages assembled to form one original.
WITNESS THE EXECUTION HEREOF on this the 27 day of October, 1995, but
effective as of June 1, 1995 ("Effective Time").
"ASSIGNOR"
WITNESSES: PETROFINA DELAWARE, INCORPORATED
/s/ By: /s/ YVES BARCY
- ----------------------------- ------------------------------
Yves Barcy
/s/ Title: Vice-President
- ----------------------------- Administration & Finance
"ASSIGNEE"
WITNESSES:
/s/ By: /s/ TONY VIELE
- ----------------------------- ------------------------------
Tony Viele
/s/
- ----------------------------- Title: President
<PAGE> 3
STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
BEFORE ME, personally appeared Tony Viele, to me known to be the
identical person who executed the within and foregoing instrument as
the President of Northport Production Company, and acknowledged to me that he
executed the same as the free and voluntary act and deed of such corporation
for the uses and purposes therein set forth.
GIVE UNDER MY OFFICIAL SEAL, this ______ day of October, 1995.
My Commission Expires: /s/
----------------------------------
Notary Public in and for
6/9/96 Oklahoma County, OKLAHOMA
- -----------------
[ S E A L ]
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, personally appeared Yves Barcy, to me known to be the
identical person who executed the within and foregoing instrument as
the Vice President of PETROFINA DELAWARE, INCORPORATED, and acknowledged to me
that he executed the same as the free and voluntary act and deed of such
corporation for the uses and purposes therein set forth.
GIVE UNDER MY OFFICIAL SEAL, this 27 day of October, 1995.
----
My commission expires: 6/4/99 /s/
--------------------------------------
Notary Public in and for
- ----------------------- Dallas County, T E X A S
[ S E A L]
<PAGE> 4
EXHIBIT "A"
Attached to and made a part of that certain Assignment of Record Title in Oil
and Gas Lease and Bill of Sale, dated July 10, 1995, between Petrofina
Delaware, Incorporated, as Assignor, and Northport Production Company, as
Assignee.
SUBJECT LEASE AND SUBJECT LANDS:
Oil and Gas Lease of Submerged Lands effective November 1, 1980,
bearing Serial Number OCS-G 4460 issued by the United States of
America to CNG Producing Company and Sun Oil Company (Delaware)
covering all of Block 76, South Timbalier Area, as shown on OCS Leasing
Map, Louisiana Map No. 6, containing 5,000 acres, more or less.
Block 76 constitutes the Subject Lands covered hereby.
ASSIGNOR'S INTEREST IN THE LEASE: WORKING REVENUE
INTEREST INTEREST
OCS-G 4460 16.666666% 13.888889%
ASSIGNOR'S INTEREST IN THE WELL: WORKING REVENUE
INTEREST INTEREST
OCS-G 4460 (D-1 Well) 16.666666% 13.888889%
AGREEMENTS AND DOCUMENTS AFFECTING SOUTH TIMBALIER BLOCK 76:
Joint Operating Agreement dated May 20, 1981 covering Block 76
between CNG Producing Company, Operator and Sun Oil Company,
Non-Operator, including all amendments and supplement thereto.
Well Participation Agreement Amendment to Operating Agreement and
Ratification of Operating Agreement dated July 17, 1985, pertaining
to Block 76.
Assignment from Sun Exploration & Production Company to Petrodal
Exploration, Inc. executed November 4, 1985, covering all of
Block 76, South Timbalier Area.
South Timbalier Blocks 76 and 77 Condensate Handling Agreement
effective September 19, 1990 by and between CNG Producing Company and
Santa Fe Energy Operating Partners, L.P., the working interest owners
in South Timbalier Block 76 and CNG Producing Company, Petrofina
Delaware, Incorporated and Oryx Energy Company, the working interest
owners in South Timbalier Block 76 and CNG Producing Company, the
Operator of both Blocks S.T. 76 and S.T. 77.
Letter Agreement dated September 21, 1995 between Northport
Production Company and Petrofina Delaware, Incorporated.
Letter Agreement dated October 12, 1995 between Northport
Production Company and Petrofina Delaware, Incorporated.
<PAGE> 1
EXHIBIT 10.1
Fortune Petroleum Corporation
30101 Agoura Court, Suite 110
Agoura, California 91301
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 Annex III to
<PAGE> 2
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 Krieger &
Prager, 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
<PAGE> 3
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
3
<PAGE> 4
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 Annex III 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
4
<PAGE> 5
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/
----------------------------------
AGREED & ACCEPTED:
FORTUNE PETROLEUM CORPORATION
By: Tyrone J. Fairbanks
---------------------------------
Its President and CEO
-----------------------------
5
<PAGE> 1
EXHIBIT 10.2
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
FORTUNE PETROLEUM CORPORATION
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS
SUBSCRIPTION AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
This Regulation S Securities Subscription Agreement (the "Agreement") is
executed by the undersigned (the "Subscriber") in connection with the offer and
the subscription of the undersigned to purchase an aggregate of 313,725 shares
(the "Shares") of common stock, par value $.01 per share (the "Common Stock"),
of FORTUNE PETROLEUM CORPORATION, a Delaware corporation (the "Company"), at a
price of US $3.1875 per share (collectively, the "Initial Shares"). This
Subscription and, if accepted by the Company, the offer and sale of the Initial
Shares and the potential issuance of additional shares pursuant to the
provisions of Section 1 (the "Adjustment Shares") (collectively with the
Initial Shares, the "Securities"), are being made in reliance upon the
provisions of Regulation S ("Regulation S") under the Securities Act of 1933,
as amended (the "Act"). The Subscriber, in order to induce the Company to
enter into the transaction contemplated hereby and acknowledging that the
Company will rely thereon represents, warrants and agrees as follows:
1. Offer to Subscribe; Purchase Price. The Subscriber hereby
offers to purchase and subscribes for the Securities at a price
of $1,000,000. The Adjustment Shares, if any, shall be
distributed to the Subscriber following the expiration of the
Restricted Period (hereinafter defined) according to the
following formula:
(a) If the number of shares of Common Stock
obtained by dividing (i) $1,000,000 by the product of (x) .75
and (y) the average closing bid price of the Common Stock on
the American Stock Exchange as reported by the Bloomberg
Financial Market Commodities News over the 30 consecutive
calendar days commencing on the 40th day after the date of the
Closing and expiring on the 70th day thereafter), is greater
than 313,725, such excess number of Adjustment Shares shall be
delivered to the Subscriber within three business days after
the expiration of the 30-calendar day measuring period. All
such Adjustment Shares will be issued without any restrictive
legend or stop transfer instructions. The above calculation
will be adjusted accordingly to reflect the effect of any stock
dividends or stock splits which may occur after the Closing
Date.
<PAGE> 2
(b) If the result obtained from the calculation
described in clause (a) above is zero or a negative number, no
Adjustment Shares shall be issuable to the Subscriber.
The closing of the transactions contemplated hereby
(the "Closing") shall be deemed to occur when this Agreement
has been executed by both Subscriber and Company. Payment
shall be made at the Closing by delivering immediately
available funds in United States dollars by wire transfer for
simultaneous closing by delivery of securities versus payment.
The Company agrees to deliver certificates representing the
Securities subscribed for at the Closing. The date on which
the Closing occurs is hereafter referred to as the Closing
Date.
2. Subscriber Representations; Access to Information; Independent
Investigation
(a) Offshore Transaction. Subscriber represents
and warrants to the Company that (i) Subscriber is not a "U.S.
person" as that term is defined in Rule 902(o) of Regulation S;
(ii) the Subscriber is not, and on the Closing Date will not
be, an affiliate of the Company, (iii) at the same time of
execution of this Subscription Agreement, Subscriber was
outside the United States and no offer to purchase the
Securities was made in the United States; (iv) the Subscriber
agrees that all offers and sales of the Securities prior to the
expiration of a period commencing on the Closing of the
offering of the securities and ending forty (40) days
thereafter (the "Restricted Period") shall not be made to U.S.
persons or for the account or benefit of U.S. persons and shall
otherwise be made in compliance with the provisions of
Regulation S; (v) Subscriber is not a distributor or dealer;
(vi) the transactions contemplated hereby (a) have not been and
will not be pre-arranged by the Subscriber with a purchaser
located in the United States or a purchaser which is a U.S.
Person, and (b) are not and will not be part of a plan or
scheme by the Subscriber to evade the registration provisions
of the Act; (vii) the Subscriber shall take all reasonable
steps to ensure its compliance with Regulation S and shall
promptly send to each purchaser (x) who acts as a distributor,
underwriter, dealer or other person participating pursuant to a
contractual arrangement in the distribution of the Securities
or receiving a selling concession, fee or other remuneration in
respect of any of the Securities, or (y) who purchases prior to
the expiration of the Restricted Period, a confirmation or
other notice to the purchaser stating that the purchaser is
subject to the same restrictions on offers and sales as the
Subscriber pursuant to Section 903(c)(2)(iv) of Regulation S;
and (viii) none of the Subscriber, its affiliates or persons
acting on their behalf have conducted and shall not conduct any
"directed selling efforts" as that term is defined in Rule
902(b) of Regulation S; nor has the Subscriber, its affiliates
or persons acting on their behalf have conducted any general
solicitation relating to the offer and sale of any of the
Securities in the United States or elsewhere.
2
<PAGE> 3
(b) Beneficial Owner. Subscriber is purchasing
the Securities for its own account or for the account of
beneficiaries for whom Subscriber has full investment
discretion with respect to the Securities and whom Subscriber
has full authority to bind, so that each such beneficiary is
bound hereby as if such beneficiary were a direct Subscriber
hereunder and all representations, warranties and agreements
herein were made directly by such beneficiary.
(c) Directed Selling Efforts. Subscriber 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 sold hereunder. To the best knowledge of the
Subscriber, neither the Company nor any person acting for the
Company has conducted any "directed selling efforts" as that
term is defined in Rule 902 of Regulation S.
(d) Short Position. Neither Subscriber nor any
of its affiliates will directly or indirectly maintain any
short position in any securities of the Company until after the
end of the Restricted Period.
(e) Independent Investigation. Subscriber in
electing to subscribe for the Securities hereunder, has
relied solely upon independent investigation made by it and its
representatives, if any, and Subscriber has been given no oral
or written representations or assurance from the Company or any
representation of the Company other than as set forth in this
Agreement or in a document executed by a duly authorized
representative of the Company making reference to this
Agreement.
(f) No Government Recommendation or Approval.
Subscriber understands that no United States federal or
state agency, or similar agency of any other country, has
passed upon or made any recommendation or endorsement of the
Company, this transaction or the purchase of the Securities.
3. The Company Represents, Covenants and Warrants the following:
(a) Reporting Company Status. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is
duly qualified as a foreign corporation in all jurisdictions in
which the failure to so qualify would have a material adverse
effect on the Company and its subsidiaries taken as a whole.
The Company is a "Reporting Issuer" as defined by Rule 902 of
Regulation S. The Company has registered its Common Stock
pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Common Stock is listed
and trades on the American Stock Exchange. The Company has
filed all material required to be filed pursuant to all
reporting obligations under either Section 13(a) or 15(d) of
the Exchange Act for a period of
3
<PAGE> 4
at least twelve (12) months immediately preceding the
offer or sale of the Securities (or for such shorter period
that the Company has been required to file such material).
(b) Concerning the Securities. The issuance, sale
and delivery of the Securities are within the Company's
corporate powers and have been duly authorized by all required
corporate action on the part of the Company and its
stockholders and when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein,
will be duly and validly issued, fully paid and non-assessable.
There are no preemptive rights of any shareholder of the
Company.
(c) Offshore Transaction. The Company has not
offered or sold the Securities to any person in the United
States, or, to the best knowledge of the Company, any
identifiable groups of U.S. citizens abroad, or any U.S. person
as that term is defined in Regulation S. At the time the buy
order was originated the Company and/or its agents reasonably
believed Subscriber was outside the United States and was not a
U.S. person.
(d) Prearranged Sale. The Company and/or its
agents believe that the transaction contemplated hereby has not
been pre-arranged with a buyer in the United States.
(e) No Directed Selling Efforts. The Company has
not conducted any "directed selling efforts" as that term is
defined in Rule 902 of Regulation S nor has Company conducted
any general solicitation relating to the offer and sale of the
Securities to persons resident within the United States or any
other U.S. person as that term is defined in Rule 902 of
Regulation S.
(f) Subscription Agreement. This Agreement has
been duly authorized, validly executed and delivered on behalf
of the Company and is a valid and binding agreement enforceable
against the Company in accordance with its terms, subject to
general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally.
(g) Non-contravention. The execution and delivery
of this Agreement and the consummation of the issuance of the
Securities and the transactions contemplated by this Agreement
do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a
default under, the articles of incorporation or by-laws of the
Company, or any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a
party or by which it or any of its properties or assets are
bound, or any existing applicable law, rule or regulation of
the United States of any State thereof or any applicable
decree, judgment or order of any Federal or State court,
Federal or State regulatory
<PAGE> 5
body, administrative agency or other United States governmental
body having jurisdiction over the Company or any of its
properties or assets.
(h) Litigation. There is no action, suit or
proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending or, to the knowledge of
the Company, threatened, against or affecting the Company, or
any of its properties, which might result in any material
adverse change in the condition (financial or otherwise) or in
the earnings, business affairs or business prospects of the
Company, or which might materially and adversely affect the
properties or assets thereof.
(i) No Default. The Company is not in default in
the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other material instrument or
agreement to which it is a party or by which it or its property
may be bound, and neither the execution, nor the delivery by
the Company, nor the performance by the Company of its
obligations under this Agreement or the Securities will
conflict with or result in the breach or violation of any of
the terms or provisions of, or constitute a default or result
in the creation or imposition of any lien or charge on any
assets or properties of the Company under, any material
indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which it is
bound or any statute or the Certificate of Incorporation or
Bylaws of the Company, or any decree, judgment, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties.
(j) SEC Filings. None of the Company's filings
with the Securities and Exchange Commission since January 1,
1995 contains any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statement therein in light of the
circumstances under which they were made, not misleading. The
Company has since January 1, 1995 timely filed all requisite
forms, reports and exhibits thereto with the Securities and
Exchange Commission.
(k) Full Disclosure. There is no fact known to the
Company (other than general economic conditions known to the
public generally) that has not been disclosed in writing to the
Subscriber that (i) could reasonably be expected to have a
material adverse effect on the condition (financial or
otherwise) or in the earnings, business affairs, business
prospects, properties or assets of the Company or (ii) could
reasonably be expected to materially and adversely affect the
ability of the Company to perform its obligations pursuant
to this Agreement.
5
<PAGE> 6
4. Covenants of the Company. For a period of two years following
the Closing or for so long as any Securities held by
the Subscriber remain outstanding, whichever is less, the
Company covenants and agrees with the Subscriber that:
(a) It will maintain the listing of its Securities
on the American Stock Exchange.
(b) It will not issue stop transfer instructions to
its transfer agent with respect to and, except as otherwise
expressly provided herein, will not place a restrictive legend
on the certificates representing the Securities.
5. Securities to be Issued Without Restrictive Legend. After
the expiration of the Restricted Period, all Securities
issued pursuant to this Agreement shall be issued without
restrictive legend or stop transfer instructions, in the name
of the Subscriber or such non-U.S. Persons as may be designated
by the Subscriber prior to the Closing. The Company warrants
that no instructions with respect to transfers to U.S. Persons
of the certificates representing such Securities have been
given or will be given and that the Securities shall be freely
transferable on the books and records of the Company. Nothing
in this Section 5, however, shall affect in any way the
Subscriber's obligations and agreements to comply with all
applicable securities laws upon resale of the Securities.
Prior to the expiration of the Restricted Period, all
certificates representing the Securities shall bear the
following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO A SAFE
HARBOR FROM REGISTRATION UNDER REGULATION S ("REGULATION
S") PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN
REGULATION S) UNLESS THE SECURITIES ARE REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH
OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND THOSE LAWS."
Following the expiration of the Restricted Period, the
Subscriber shall be entitled to obtain replacement certificates
representing the Securities without any restrictive legend,
such replacement certificates to be issued within three
business days of delivery of the original certificates to the
Company.
6
<PAGE> 7
6. Legal Opinion. On or before the date hereof, the Company has
delivered to the Subscriber a form of legal opinion from
the Company's counsel (the "Legal Opinion") which, upon
the expiration of the Restricted Period, the Company will cause
its counsel to deliver to the Company's transfer agent which
authorizes the issuance of Securities free of any restrictive
legend or stop transfer instructions in accordance with the
provisions of the foregoing paragraph.
7. Reliance on Representations. The Subscriber understands that
the offer and sale of the Securities are not being registered
under the Act. The Company and the Subscriber are relying
on the rules governing offers and sales made outside the
United States pursuant to Regulation S.
8. Resales. Subscriber acknowledges and agrees that the
Securities may only be resold (a) in compliance with
Regulation S; (b) pursuant to a Registration Statement under
the Act; or (c) pursuant to an exemption from registration
under the Act other than Regulation S.
9. Confidentiality. Each of the Company and the Subscriber agrees
to keep confidential and not to disclose to or use for the
benefit of any third party the terms of this Agreement or any
other information which at any time is communicated by the
other party as being confidential without the prior written
approval of the other party, provided, however, that this
provision shall not apply to information which, at the time of
disclosure, is already part of the public domain (except by
breach of this Agreement) and information which is required to
be disclosed by law.
10. Indemnification. Each of the Company and the Subscriber agrees
to indemnify the other and to hold the other harmless from
and against any and all losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees) which the other
may sustain or incur in connection with the breach by the
indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
11. Issuance of Additional Securities. Until the expiration of
the 70th day following the Closing, the Company will not
issue any shares of Common Stock pursuant to Regulation S
which, when aggregated with the Securities (excluding the
Adjustment Shares), would upon issuance thereof (or conversion
thereof in the case of convertible securities) exceed 1,300,000
shares.
12. Registration. After the expiration of the Restricted Period,
if the Company fails to issue to the Subscriber or the
Subscriber's transferees certificates for shares of Common
Stock bearing no restrictive legend for any reason other than
the Company's reasonable good faith belief that the
representations and warranties made by the Subscriber in this
Agreement were untrue when made, then the Company shall be
required, at the request of the Subscriber and at the Company's
expense, to effect the
<PAGE> 8
registraton of the Securities under the Act, and relevant Blue
Sky laws as promptly as is practicable. The Company and the
Subscriber shall cooperate in good faith in connection with the
furnishing of information required for such registration and
the taking of such other actions as may be legally or
commercially necessary in order to effect such registration.
The Company shall file a registration statement within 30 days
of Subscriber's written demand therefor and shall use its best
efforts to cause such registration statement to become
effective as soon as practicable thereafter. Such best efforts
shall include, but not be limited to, promptly responding to
all comments received from the staff of the Securities and
Exchange Commission, providing Subscriber's counsel with a
contemporaneous copy of all written communications from and to
the staff of the Securities and Exchange Commission with
respect to such registration statement and promptly preparing
and filing amendments to such registration statement and which
are responsive to the comments received from the staff of the
Securities and Exchange Commission. Once declared effective by
the Securities and Exchange Commission, the Company shall cause
such registration statement to remain effective until the
earlier of (i) the sale by the Subscriber of all Securities
registered or (ii) 120 days after the effective date of such
registration statement. In the event that the Company is
required to effect a registration pursuant to the provisions of
this Section but has not registered the Securities under the
Act and relevant Blue Sky Laws within 90 days after the date of
the Subscriber's demand therefor, the Company shall pay to the
Subscriber by wire transfer, as liquidated damages for such
failure and not as a penalty, an amount in cash equal to
$100,000. Such payment shall be made to the Subscriber
immediately upon expiration of the 90-day period referenced in
the preceding sentence if the registration of the Securities is
not effected by such date; provided, however, that the payment
of such liquidated damages shall not relieve the Company from
its obligations to register the Securities pursuant to this
Section 12.
13. Notices. Any notice to be given or to be served upon any party
to this Agreement in connection with this Agreement must be in
writing and will be deemed to have been given and received one
(1) day after it has been submitted for delivery by Federal
Express or an equivalent carrier, charges prepaid and addressed
to the following addresses with a confirmation of delivery or
upon confirmation of receipt if sent by facsimile transmission
to the following fax numbers:
The Company:
Fortune Petroleum Corporation
30101 Agoura Court
Suite 110
Agoura Hills, California 91301
Attention: Mr. Tyrone J. Fairbanks
President and Chief Executive Officer
Fax No.: (818) 991-4315
8
<PAGE> 9
The Subscriber:
T.H.C. Inc.
1183 Finch Avenue West
North York, M3J262
Canada
Any party may, at any time by giving notice to the other party,
designate any other address in substitution of an address
established pursuant to the foregoing to which such notice will
be given.
14. Multiple Counterparts. This Agreement may be executed in
several counterparts, each of which will be deemed to be an
original but all of which will constitute one in the same
instrument. However, in enforcing any party's rights under this
Agreement it will be necessary to produce only one copy of this
Agreement signed by the party to be charged.
15. Governing Law. This Agreement will be construed and enforced
in accordance with and governed by the laws of the State of New
York, except for matters arising under the Act or the Exchange
Act, without reference to principles of conflicts of law. Each
of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the State of New
York or the state courts of the State of New York in connection
with any dispute arising under this Agreement and hereby waives,
to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of
any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in
the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby
waives any defenses available to it under local law and agrees
to the enforcement of such a judgment. Each party to this
Agreement irrevocably consents to the service of process in any
such proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to such party at its address
set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 10
The undersigned hereby subscribes 313,725 of Initial Shares and pay
herewith funds in the amount of One Million Dollars ($1,000,000).
The undersigned acknowledges that this subscription shall not be
effective unless accepted by the Company as indicated below.
Dated this 8th day of December, 1995
T.H.C. INC.
By: /s/
--------------------------
Name:
Title:
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 8TH DAY OF
DECEMBER, 1995.
FORTUNE PETROLEUM CORPORATION
By: TYRONE J. FAIRBANKS
--------------------------
Name:
Title: President & CEO
<PAGE> 11
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
FORTUNE PETROLEUM CORPORATION
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS
SUBSCRIPTION AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
This Regulation S Securities Subscription Agreement (the "Agreement")
is executed by the undersigned (the "Subscriber") in connection with the offer
and the subscription of the undersigned to purchase an aggregate of 313,725
shares (the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of FORTUNE PETROLEUM CORPORATION, a Delaware corporation (the
"Company"), at a price of US $3.1875 per share (collectively, the "Initial
Shares"). This Subscription and, if accepted by the Company, the offer and
sale of the Initial Shares and the potential issuance of additional shares
pursuant to the provisions of Section 1 (the "Adjustment Shares")
(collectively with the Initial Shares, the "Securities"), are being made in
reliance upon the provisions of Regulation S ("Regulation S") under the
Securities Act of 1933, as amended (the "Act"). The Subscriber, in order to
induce the Company to enter into the transaction contemplated hereby and
acknowledging that the Company will rely thereon represents, warrants and agrees
as follows:
1. Offer to Subscribe; Purchase Price. The Subscriber hereby
offers to purchase and subscribes for the Securities at a price
of $1,000,000. The Adjustment Shares, if any, shall be
distributed to the Subscriber following the expiration of the
Restricted Period (hereinafter defined) according to the
following formula:
(a) If the number of shares of Common Stock
obtained by dividing (i) $1,000,000 by the product of (x) .75
and (y) the average closing bid price of the Common Stock on
the American Stock Exchange as reported by the Bloomberg
Financial Market Commodities News over the 30 consecutive
calendar days commencing on the 40th day after the date of the
Closing and expiring on the 70th day thereafter), is greater
than 313,725, such excess number of Adjustment Shares shall be
delivered to the Subscriber within three business days after
the expiration of the 30-calendar day measuring period. All
such Adjustment Shares will be issued without any restrictive
legend or stop transfer instructions. The above calculation
will be adjusted accordingly to reflect the effect of any stock
dividends or stock splits which may occur after the Closing
Date.
<PAGE> 12
(b) If the result obtained from the calculation
described in clause (a) above is zero or a negative number, no
Adjustment Shares shall be issuable to the Subscriber.
The closing of the transaction contemplated hereby (the
"Closing") shall be deemed to occur when this Agreement has
been executed by both Subscriber and Company. Payment
shall be made at the Closing by delvering immediately available
funds in United States dollars by wire transfer for
simultaneous closing by delivery of securities versus payment.
The Company agrees to deliver certificates representing the
Securities subscribed for at the Closing. The date on which
the Closing occurs is hereafter referred to as the Closing
Date.
2. Subscriber Representations; Access to Information; Independent
Investigation
(a) Offshore Transaction. Subscriber represents and
warrants to the Company that (i) Subscriber is not a "U.S.
person" as that term is defined in Rule 902(o) of Regulation S;
(ii) the Subscriber is not, and on the Closing Date will not be,
an affiliate of the Company, (iii) at the same time of
execution of this Subscription Agreement, Subscriber was
outside the United States and no offer to purchase the
Securities was made in the United States; (iv) the Subscriber
agrees that all offers and sales of the Securities prior to the
expiration of a period commencing on the Closing of the
offering of the Securities and ending forty (40) days
thereafter (the "Restricted Period") shall not be made to U.S.
persons or for the account or benefit of U.S. persons and shall
otherwise be made in compliance with the provisions of
Regulation S; (v) Subscriber is not a distributor or dealer;
(vi) the transactions contemplated hereby (a) have not been and
will not be pre-arranged by the Subscriber with a purchaser
located in the United States or a purchaser which is a U.S.
Person, and (b) are not and will not be part of a plan or
scheme by the Subscriber to evade the registration provisions
of the Act; (vii) the Subscriber shall take all reasonable
steps to ensure its compliance with Regulation S and shall
promptly send to each purchaser (x) who acts as a distributor,
underwriter, dealer or other person participating pursuant to a
contractual arrangement in the distribution of the Securities
or receiving a selling concession, fee or other remuneration in
respect of any of the Securities, or (y) who purchases prior to
the expiration of the Restricted Period, a confirmation or
other notice to the purchaser stating that the purchaser is
subject to the same restrictions on offers and sales as the
Subcriber pursuant to Section 903(c)(2)(iv) of Regulation S;
and (viii) none of the Subscriber, its affiliates or persons
acting on their behalf have conducted and shall not conduct any
"directed selling efforts" as that term is defined in Rule
902(b) of Regulation S; nor has the Subscriber, its affiliates
or persons acting on their behalf have conducted any general
solicitation relating to the offer and sale of any of the
Securities in the United States or elsewhere.
2
<PAGE> 13
(b) Beneficial Owner. Subscriber is purchasing the
Securities for its own account or for the account of
beneficiaries for whom Subscriber has full investment
discretion with respect to the Securities and whom Subscriber
has full authority to bind, so that each such beneficiary is
bound hereby as if such beneficiary were a direct Subscriber
hereunder and all representations, warranties and agreements
herein were made directly by such beneficiary.
(c) Directed Selling Efforts. Subscriber 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 sold
hereunder. To the best knowledge of the Subscriber, neither
the Company nor any person acting for the Company has conducted
any "directed selling efforts" as that term is defined in Rule
902 of Regulation S.
(d) Short Position. Neither Subscriber nor any of
its affiliates will directly or indirectly maintain any short
position in any securities of the Company until after the end
of the Restricted Period.
(e) Independent Investigation. Subscriber in
electing to subscribe for the Securities hereunder, has relied
solely upon independent investigation made by it and its
representatives, if any, and Subscriber has been given no oral
or written representations or assurance from the Company or any
representation of the Company other than as set forth in this
Agreement or in a document executed by a duly authorized
representative of the Company making reference to this
Agreement.
(f) No Government Recommendation or Approval.
Subscriber understands that no United States federal or state
agency, or similar agency of any other country, has passed upon
or made any recommendation or endorsement of the Company, this
transaction or the purchase of the Securities.
3. The Company Represents, Covenants and Warrants the following:
(a) Reporting Company Status. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly
qualified as a foreign corporation in all jurisdictions in
which the failure to so qualify would have a material adverse
effect on the Company and its subsidiaries taken as a whole.
The Company is a "Reporting Issuer" as defined by Rule 902 of
Regulation S. The Company has registered its Common Stock
pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Common Stock is listed
and trades on the American Stock Exchange. The Company has
filed all material required to be filed pursuant to all
reporting obligations under either Section 13(a) or 15(d) of
the Exchange Act for a period of
3
<PAGE> 14
at least twelve (12) months immediately preceding the
offer or sale of the Securities (or for such shorter period
that the Company has been required to file such material).
(b) Concerning the Securities. The issuance, sale
and delivery of the Securities are within the Company's
corporate powers and have been duly authorized by all required
corporate action on the part of the Company and its
stockholders and when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein,
will be duly and validly issued, fully paid and non-assessable.
There are no preemptive rights of any shareholder of the
Company.
(c) Offshore Transaction. The Company has not
offered or sold the Securities to any person in the United
States, or, to the best knowledge of the Company, any
identifiable group of U.S. citizens abroad, or any U.S. person
as that term is defined in Regulation S. At the time the buy
order was originated the Company and/or its agents reasonably
believed Subscriber was outside the United States and was not a
U.S. person.
(d) Prearranged Sale. The Company and/or its
agents believe that the transaction contemplated hereby has not
been pre-arranged with a buyer in the United States.
(e) No Directed Selling Efforts. The Company has
not conducted any "directed selling efforts" as that term is
defined in Rule 902 of Regulation S nor has Company conducted
any general solicitation relating to the offer and sale of the
Securities to persons resident within the United States or any
other U.S. person as that term is defined in Rule 902 of
Regulation S.
(f) Subscription Agreement. This Agreement has
been duly authorized, validly executed and delivered on behalf
of the Company and is a valid and binding agreement enforceable
against the Company in accordance with its terms, subject to
general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally.
(g) Non-contravention. The execution and delivery
of this Agreement and the consummation of the issuance of the
Securities and the transactions contemplated by this Agreement
do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a
default under, the articles of incorporation or by-laws of the
Company, or any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a
party or by which it or any of its properties or assets are
bound, or any existing applicable law, rule or regulation of
the United States of any State thereof or any applicable decree
judgment or order of any Federal or State court, Federal or
State regulatory
4
<PAGE> 15
body, administrative agency or other United States governmental
body having jurisdiction over the Company or any of its
properties or assets.
(h) Litigation. There is no action, suit or
proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending or, to the knowledge of
the Company, threatened, against or affecting the Company, or
any of its properties, which might result in any material
adverse change in the condition (financial or otherwise) or in
the earnings, business affairs or business prospects of the
Company, or which might materially and adversely affect the
properties or assets thereof.
(i) No Default. The Company is not in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other material instrument or
agreement to which it is a party or by which it or its property
may be bound; and neither the execution, nor the delivery by
the Company, nor the performance by the Company of its
obligations under this Agreement or the Securities will
conflict with or result in the breach or violation of any of
the terms or provisions of, or constitute a default or result
in the creation or imposition of any lien or charge on any
assets or properties of the Company under, any material
indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which it is
bound or any statute or the Certificate of Incorporation or
Bylaws of the Company, or any decree, judgment, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties.
(j) SEC Filings. None of the Company's filings
with the Securities and Exchange Commission since January 1,
1995 contains any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statement therein in light of the
circumstances under which they were made, not misleading. The
Company has since January 1, 1995 timely filed all requisite
forms, reports and exhibits thereto with the Securities and
Exchange Commission.
(k) Full Disclosure. There is no fact known to the
Company (other than general economic conditions known to the
public generally) that has not been disclosed in writing to the
Subscriber that (i) could reasonably be expected to have a
material adverse effect on the condition (financial or
otherwise)or in the earnings, business affairs, business
prospects, properties or assets of the Company or (ii) could
reasonably be expected to materially and adversely affect the
ability of the Company to perform its obligations pursuant to
this Agreement.
5
<PAGE> 16
4. Covenants of the Company. For a period of two years
following the Closing or for so long as any Securities
held by the Subscriber remain outstanding, whichever is less,
the Company covenants and agrees with the Subscriber that:
(a) It will maintain the listing of its Securities
on the American Stock Exchange.
(b) It will not issue stop transfer instructions to
its transfer agent with respect to and, except as otherwise
expressly provided herein, will not place a restrictive legend
on the certificates representing the Securities.
5. Securities to be Issued Without Restrictive Legend. After
the expiration of the Restricted Period, all Securities
issued pursuant to this Agreement shall be issued without
restrictive legend or stop transfer instructions, in the name
of the Subscriber or such non-U.S. Persons as may be designated
by the Subscriber prior to the Closing. The Company warrants
that no instructions with respect to transfers to U.S. Persons
of the certificates representing such Securities have been
given or will be given and that the Securities shall be freely
transferable on the books and records of the Company. Nothing
in this Section 5, however, shall affect in any way the
Subscriber's obligations and agreements to comply with all
applicable securities laws upon resale of the Securities.
Prior to the expiration of the Restricted Period, all
certificates representing the Securities shall bear the
following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO A SAFE
HARBOR FROM REGISTRATION UNDER REGULATION S ("REGULATION
S") PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN
REGULATION S) UNLESS THE SECURITIES ARE REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH
OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND THOSE LAWS."
Following the expiration of the Restricted Period, the
Subscriber shall be entitled to obtain replacement certificates
representing the Securities without any restrictive legend,
such replacement certificates to be issued within three
business days of delivery of the original certificates to the
Company.
6
<PAGE> 17
6. Legal Opinion. On or before the date hereof, the Company has
delivered to the Subscriber a form of legal opinion from
the Company's counsel (the "Legal Opinion") which, upon
the expiration of the Restricted Period, the Company will cause
its counsel to deliver to the Company's transfer agent which
authorizes the issuance of Securities free of any restrictive
legend or stop transfer instructions in accordance with the
provisions of the foregoing paragraph.
7. Reliance on Representations. The Subscriber understands that
the offer and sale of the Securities are not being registered
under the Act. The Company and the Subscriber are relying
on the rules governing offers and sales made outside the
United States pursuant to Regulation S.
8. Resales. Subscriber acknowledges and agrees that the
Securities may only be resold (a) in compliance with
Regulation S; (b) pursuant to a Registration Statement under
the Act; or (c) pursuant to an exemption from registration
under the Act other than Regulation S.
9. Confidentiality. Each of the Company and the Subscriber agrees
to keep confidential and not to disclose to or use for the
benefit of any third party the terms of this Agreement or any
other information which at any time is communicated by the
other party as being confidential without the prior written
approval of the other party; provided, however, that this
provision shall not apply to information which, at the time of
disclosure, is already part of the public domain (except by
breach of this Agreement) and information which is required to
be disclosed by law.
10. Indemnification. Each of the Company and the Subscriber agrees
to indemnify the other and to hold the other harmless from
and against any and all losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees) which the other
may sustain or incur in connection with the breach by the
indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
11. Issuance of Additional Securities. Until the expiration of
the 70th day following the Closing, the Company will not
issue any shares of Common Stock pursuant to Regulation S
which, when aggregated with the Securities (excluding the
Adjustment Shares), would upon issuance thereof (or conversion
thereof in the case of convertible securities) exceed 1,300,000
shares.
12. Registration. After the expiration of the Restricted Period,
if the Company fails to issue to the Subscriber or the
Subscriber's transferees certificates for shares of Common
Stock bearing no restrictive legend for any reason other than
the Company's reasonable good faith belief that the
representations and warranties made by the Subscriber in this
Agreement were untrue when made, then the Company shall be
required, at the request of the Subscriber and at the Company's
expense, to effect the
7
<PAGE> 18
registration of the Securities under the Act, and relevant Blue
Sky laws as promptly as is practicable. The Company and the
Subscriber shall cooperate in good faith in connection with the
furnishing of information required for such registration and the
taking of such other actions as may be legally or commercially
necessary in order to effect such registration. The Company
shall file a registration statement within 30 days of
Subscriber's written demand therefor and shall use its best
efforts to cause such registration statement to become effective
as soon as practicable thereafter. Such best efforts shall
include, but not be limited to, promptly responding to all
comments received from the staff of the Securities and Exchange
Commission, providing Subscriber's counsel with a
contemporaneous copy of all written communications from and to
the staff of the Securities and Exchange Commission with respect
to such registration statement and promptly preparing and filing
amendments to such registration statement which are responsive
to the comments received from the staff of the Securities and
Exchange Commission. Once declared effective by the Securities
and Exchange Commission, the Company shall cause such
registration statement to remain effective until the earlier of
(i) the sale by the Subscriber of all Securities registered or
(ii) 120 days after the effective date of such registration
statement. In the event that the Company is required to effect a
registration pursuant to the provisions of this Section but has
not registered the Securities under the Act and relevant Blue
Sky Laws within 90 days after the date of the Subscriber's
demand therefor, the Company shall pay to the Subscriber by wire
transfer, as liquidated damages for such failure and not as a
penalty, an amount in cash equal to $100,000. Such payment shall
be made to the Subscriber immediately upon expiration of the
90-day period referenced in the preceding sentence if the
registration of the Securities is not effected by such date;
provided, however, that the payment of such liquidated damages
shall not relieve the Company from its obligations to register
the Securities pursuant to this Section 12.
13. Notices. Any notice to be given or to be served upon any party
to this Agreement in connection with this Agreement must be in
writing and will be deemed to have been given and received one
(1) day after it has been submitted for delivery by Federal
Express or an equivalent carrier, charges prepaid and addressed
to the following addresses with a confirmation of delivery or
upon confirmation of receipt if sent by facsimile transmission
to the following fax numbers:
The Company:
Fortune Petroleum Corporation
30101 Agoura Court
Suite 110
Agoura Hills, California 91301
Attention: Mr. Tyrone J. Fairbanks
President and Chief Executive Officer
Fax No.: (818) 991-4315
8
<PAGE> 19
The Subscriber:
Newsun Limited
c/o ABN AMRO Trust Company
80 Rue du Rhone
1204 Geneva, Switzerland
Attention: Mrs. Lanz
Any party may, at any time by giving notice to the other party,
designate any other address in substitution of an address
established pursuant to the foregoing to which such notice will
be given.
14. Multiple Counterparts. This Agreement may be executed in
several counterparts, each of which will be deemed to be an
original but all of which will constitute one in the same
instrument. However, in enforcing any party's rights under this
Agreement it will be necessary to produce only one copy of this
Agreement signed by the party to be charged.
15. Governing Law. This Agreement will be construed and enforced
in accordance with and governed by the laws of the State of New
York except for matters arising under the Act or the Exchange
Act, without reference to principles of conflicts of law. Each
of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the State of New
York or the state courts of the State of New York in connection
with any dispute arising under this Agreement and hereby waives,
to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of
any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in
the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby
waives any defenses available to it under local law and agrees
to the enforcement of such a judgment. Each party to this
Agreement irrevocably consents to the service of process in any
such proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to such party at its address
set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE> 20
The undersigned hereby subscribes 313,725 of Initial Shares and pay
herewith funds in the amount of One Million Dollars ($1,000,000).
The undersigned acknowledges that this subscription shall not be
effective unless accepted by the Company as indicated below.
Dated this 8th day of December, 1995
NEWSUN LIMITED
By: /s/
----------------------------------
Name:
Title:
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 8TH DAY OF
DECEMBER, 1995.
FORTUNE PETROLEUM CORPORATION
By: TYRONE J. FAIRBANKS
----------------------------------
Name:
Title: President & CEO
10
<PAGE> 21
JOINT ESCROW INSTRUCTIONS
Jeffrey E. LaGueux, Esq.
Patterson, Belknap, Webb & Tyler, L.L.P.
1133 Avenue of the Americas
New York, New York 10036
RE: Acquisition of Fortune Petroleum Corporation Shares by
T.H.C. Inc. and Newsun Limited
Dear Mr. LaGueux:
As escrow agent for both Fortune Petroleum Corporation, a Delaware
corporation (the "Company"), and T.H.C. Inc. and Newsun Limited (the
"Purchaser"), purchasers of Shares of the Company, you (the "Escrow Agent") are
hereby authorized and directed to hold the documents and funds (together with
any interest thereon, the "Escrow Funds") delivered to the Escrow Agent
pursuant to the terms of the Agreement in accordance with the following
instructions:
1. Upon its acceptance of the Subscription Agreement, the Company
shall deliver or cause to be delivered to Escrow Agent, common stock share
certificates ("Share Certificates") for 313,725 Shares each, as provided in the
Subscription Agreement.
2. The Escrow Agent shall, as promptly as feasible, notify the
Company of receipt of the purchase price from the Purchaser, and notify the
Purchaser (or such agent as the Purchaser may designate in writing) of receipt
of certificates for the Shares (each a "Certificate" and collectively the
"Certificates"). As promptly as feasible upon receipt of notice (whether oral
or in written form) from the Company and the Purchaser that the respective
conditions precedent to the purchase and sale have been satisfied (which notice
shall not be unreasonably withheld), the Escrow Agent shall release the Escrow
Funds to or upon the order of the Company and shall release the Certificates to
the Purchaser. If such Certificates are not deposited with the Escrow Agent
within ten (10) days after receipt by the Company of notice of receipt by the
Escrow Agent of the funds from the Purchaser, Escrow Agent shall notify the
Purchaser and Purchaser shall be entitled to cancel the
<PAGE> 22
subscription and demand repayment of the funds. If the Company or the
Purchaser notifies the Escrow Agent that on the Closing Date (as defined in the
Agreement) the conditions precedent to the obligations of the Company or the
Purchaser, as the case may be, under the Agreement were not satisfied or
waived, then the Escrow Agent shall return the Escrow Funds to the Purchaser
and shall return the Certificates to the Company. Prior to return of the
Escrow Funds to the Purchaser, the Purchaser shall furnish such tax reporting
or other information as shall be appropriate for the Escrow Agent to comply
with applicable United States' laws.
3. The Share Certificates delivered to the Escrow Agent pursuant
hereto shall be deposited for safekeeping with the Escrow Agent (the "Escrow
Agent"). During the Escrow Period (hereinafter defined), none of the Share
Certificates deposited in the Escrow Account shall become the property of
Purchaser or any other entity or be subject to the debts of investor or any
other entity except as expressly provided herein, and the Escrow Agent shall
neither make nor permit any disbursements or deliveries from the Escrow Account
except as expressly provided herein.
4. The Escrow Period shall begin on the effective date of the
Subscription Agreement and, except as otherwise provided herein, shall continue
until terminated on the 70th day after the Closing Date, or as otherwise
provided in the Subscription Agreement. Notwithstanding the foregoing, if
there remain Share Certificates in the Escrow Account, all such Share
Certificates then remaining in the Escrow Account shall forthwith be forwarded
to the Company upon written request given to Escrow Agent by the Company.
5. The Company shall deliver to the Escrow Agent appropriate
written notice of any extension or amendment to the Subscription Agreement.
6. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, the Purchaser and
the Escrow Agent.
7. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be
personally liable for any act the Escrow Agent may do or omit to do hereunder
as Escrow Agent while acting in good faith, and any act done or omitted by the
Escrow Agent pursuant to the advice of the Escrow Agent's attorneys-at-law
shall be conclusive evidence of such good faith.
8. The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to
2
<PAGE> 23
comply with and obey orders, judgments or decrees of any court. In case the
Escrow Agent obeys or complies with any such order, judgment or decree, the
Escrow Agent shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
9. The Escrow Agent shall not be liable in any respect on account
of the identity, authorities or rights of the parties executing or delivering
or purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
10. The Escow Agent shall be entitled, at its own expense, to
employ such legal counsel and other experts as the Escrow Agent may deem
necessary properly to advise the Escrow Agent in connection with the Escrow
Agent's duties hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor. The Escrow Agent has acted as
legal counsel for Purchaser and may continue to act as legal counsel for
Purchaser, from time to time, notwithstanding its duties as Escrow Agent
hereunder.
11. The Escrow Agent's responsibilities as Escrow Agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Purchaser. In the event of any such resignation, the Purchaser
and the Company shall appoint a successor Escrow Agent.
12. If the Escrow Agent reasonably requires other or further
instruments in connection with these Joint Escrow Instructions or obligations
in respect hereto, the necessary parties hereto shall join in furnishing such
instruments.
13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
documents or Escow Funds held by the Escrow Agent hereunder, the Escrow Agent
is authorized and directed in the Escrow Agent's sole discretion (a) to retain
in the Escrow Agent's possession without liability to anyone all or any part of
said documents or Escrow Funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned or by a final
order, decree or judgment of a court of competent jurisdiction after the time
for appeal has expired and no appeal has been perfected, but the Escrow Agent
shall be under no duty whatsoever to institute or defend any such proceedings,
or (b) to deliver the Escrow Funds and any other property and documents held by
the Escrow Agent hereunder to a state or federal court having competent
subject matter jurisdiction and located in the State and City of New York in
accordance with the applicable procedure therefor.
14. The Company and the Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent from any and all claims,
liabilities, costs or expenses in any way arising from or relating to the
duties or performance of the Escrow Agent
3
<PAGE> 24
hereunder other than any such claim, liability, cost or
expense to the extent the same shall have been determined by
final, unappealable judgment of a court of competent
jurisdiction to have resutled from the gross negligence or
willful misconduct of the Escrow Agent.
15. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall
be deemed effectively given upon personal delivery or
three business days after deposit in the United States Postal
Service, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses
as a party may designate by ten days advance written notice to
each of the other parties hereto.
COMPANY: Fortune Petroleum Corporation
30101 Agoura Court, Suite 110
Agoura, California 91301
Attn: General Cunsel
PURCHASER:
ESCROW AGENT: Jeffrey E. LaGueux, Esq.
Patterson, Belknap, Webb & Tyler, L.L.P.
1133 Avenue of the Americas
New York, New York 10036
16. By signing these Joint Escrow Instructions, the Escrow Agent
becomes a party hereto only for the purpose of these
Joint Escrow Instructions; the Escrow Agent does not become a
party to the Agreement. The Company and the purchaser have
become parties hereto by their execution and delivery of the
Agreement, as provided therein.
17. This instrument shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and
permitted assigns and shall be governed by the laws of the
State of New York without giving effect to principles governing
the conflicts of laws. A facsimile transmission of these
instructions signed by the Escrow Agent shall be legal and
binding on all parties hereto.
18. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided in the
Agreement.
4
<PAGE> 25
19. The rights and obligations of any party hereto are not
assignable without the written consent of the other parties hereto.
FORTUNE PETROLEUM CORPORATION T.H.C. INC.
By: /s/ By: /s/
------------------------------ ------------------------------
DEAN W. DRULLAS
Secretary NEWSUN LIMITED
By: /s/
------------------------------
ACCEPTED BY ESCROW AGENT:
By: /s/
------------------------------
Date
-----------------------------
5
<PAGE> 1
EXHIBIT 10.3
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement is executed in
reliance upon the transaction exemption afforded by Regulation S ("Regulation
S") as promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended ("1933 Act").
This Agreement has been executed by the undersigned in connection with
the private placement of shares of Common Stock (hereinafter referred to as the
"Shares") of
FORTUNE PETROLEUM CORPORATION
30101 Agoura Court
Agoura Hills, California 91301
TRADING SYMBOL ("FPX"), a corporation organized under the laws of
Delaware, United States of America (hereinafter referred to as the "ISSUER").
The undersigned
NAME: ISRAEL MANDEL
ADDRESS: 21 SOKOLOFF STREET
BNAI BRAK
[a Corporation organized under the laws of ISRAEL, a non USA Jurisdiction]
(hereinafter referred to as the "PURCHASER") hereby represents and warrants
to, and agrees with ISSUER as follows:
1. AGREEMENT TO SUBSCRIBE; ADJUSTMENTS.
a. The undersigned hereby subscribes for sixty one
thousand eight hundred thirty five (61,835) Shares
at a Price Per Share of $3.234375, payable in
United States Dollars for a total of $200,000
("Gross Purchase Price").
<PAGE> 2
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement is executed in
reliance upon the transaction exemption afforded by Regulation S ("Regulation
S") as promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended ("1933 Act").
This Agreement has been executed by the undersigned in connection with
the private placement of shares of Common Stock (hereinafter referred to as the
"Shares") of
FORTUNE PETROLEUM CORPORATION
30101 Agoura Court
Agoura Hills, California 91301
TRADING SYMBOL ("FPX"), a corporation organized under the laws of
Delaware, United States of America (hereinafter referred to as the "ISSUER").
The undersigned
NAME: M.M. BEGUN
ADDRESS: ALAMEVA FRANCO 760/61
SAO PAUL, BRAZIL
[a Corporation organized under the laws of BRAZIL, a non USA Jurisdiction]
(hereinafter referred to as the "PURCHASER")
hereby represents and warrants to, and agrees with ISSUER as follows:
1. AGREEMENT TO SUBSCRIBE; ADJUSTMENTS.
a. The undersigned hereby subscribes for one hundred
fifty four thousand five hundred eighty nine
(154,589) Share of $3.234375, payable in United
States Dollars for a total of $500,000 ("Gross
Purchase Price").
<PAGE> 3
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement is executed in
reliance upon the transaction exemption afforded by Regulation S ("Regulation
S") as promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended ("1933 Act").
This Agreement has been executed by the undersigned in connection with
the private placement of shares of Common Stock (hereinafter referred to as the
"Shares") of
FORTUNE PETROLEUM CORPORATION
30101 Agoura Court
Agoura Hills, California 91301
TRADING SYMBOL ("FPX"), a corporation organized under the laws of
Delaware, United States of America (hereinafter referred to as the "ISSUER").
The undersigned
NAME: SHULSMITH PRITAKER
ADDRESS: 28 RECHON DOV SADAAN
PISGAT ZEV MIZRACH
JERUSALEM, ISRAEL
[a Corporation organized under the laws of ISRAEL, a non USA Jurisdiction]
(hereinafter referred to as the "PURCHASER")
hereby represents and warrants to, and agrees with ISSUER as follows:
1. AGREEMENT TO SUBSCRIBE; ADJUSTMENTS.
a. The undersigned hereby subscribes for two hundred
thirty-one thousand eight hundred eighty four
(231,884) Shares at a Price Per Share of $3.234375,
payable in United States Dollars for a total of
$750,000 ("Gross Purchase Price").
<PAGE> 4
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement is executed in
reliance upon the transaction exemption afforded by Regulation S ("Regulation
S") as promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended ("1933 Act").
This Agreement has been executed by the undersigned in connection with
the private placement of shares of Common Stock (hereinafter referred to as the
"Shares") of
FORTUNE PETROLEUM CORPORATION
30101 Agoura Court
Agoura Hills, California 91301
TRADING SYMBOL ("FPX"), a corporation organized under the laws of
Delaware, United States of America (hereinafter referred to as the "ISSUER").
The undersigned
NAME: YAAKOV BARBER
ADDRESS: 386 NORTH ROAD
ORMUND, MELBOURNE 3204
AUSTRALIA
[a Corporation organized under the laws of AUSTRALIA, a non USA Jurisdiction]
(hereinafter referred to as the "PURCHASER")
hereby represents and warrants to, and agrees with ISSUER as follows:
1. AGREEMENT TO SUBSCRIBE; ADJUSTMENTS.
a. The undersigned hereby subscribes for one hundred
fifty four thousand five hundred eighty nine (154,589)
Shares at a Price Per Share of $3.234375, payable in
United States Dollars for a total of $500,000 ("Gross
Purchase Price").
<PAGE> 5
b. FORM OF PAYMENT. The PURCHASER shall pay the
purchase price for the Shares by delivering good
funds in United States Dollars to the escrow agent
identified in the Joint Escrow Instructions attached
hereto as ANNEX II (the "Escrow Agent"). Delivery of
such funds to the ISSUER by the Escrow Agent shall be
made against delivery by the ISSUER of one or more
certificates for the Shares in accordance with this
Agreement. Promptly following notice by the Escrow
Agent of receipt of payment from the PURCHASER of the
subscription price for the Shares, the ISSUER shall
determine whether to accept such subscription and, if
so accepted, shall deliver one or more certificates
for the Shares to the Escrow Agent. By signing this
Agreement, the PURCHASER and the ISSUER each agrees
to all of the terms and conditions of, and becomes a
party to, the Joint Escrow Instructions attached
hereto as ANNEX II, all of the provisions of which
are incorporated herein by this reference as if set
forth in full.
c. ADJUSTMENT. (i) In the event that the average of
the daily Market Price (as hereinafter defined) of
the Common Stock during a period of five (5) trading
days, commencing on the last day of the Restricted
Period (as defined in 5) (the "Average Price"), is
less than $3.965 (90% of the Price Per Share), then
the Company shall deliver to the Purchaser, a number
of Additional Shares, if any, determined in
accordance with the following formula:
Gross
Number of Purchase Price
= ---------------------- less No. of Initial Shares
Additional Shares Average Price x .75
For purposes of the foregoing calculation, "Market
Price" shall mean the closing bid price per share of
the Common Stock as reported by the American Stock
Exchange for any trading day, or if no such price is
reported, then the reported closing bid price per
share on the last preceding trading day for which a
trade was reported.
(ii) The Additional Shares, if any, shall be
issued at a closing (the "Additional Closing") to
occur on a date that is mutually agreed to by the
Company and the Purchaser not later than five (5)
business days after the last day of the period used
to calculate the Average Price (the "Additional
Closing Date").
d. (i) In the event that the average of the daily
Market Price (as hereinafter defined) of the Common
Stock during a period of five (5) trading days,
commencing on the last day of the Restricted Period
(the
2
<PAGE> 6
"Average Price"), is greater than $4.487 (110% of the
Price Per Share), then the Escrow Agent shall
re-deliver to the Company prior to the Additional
Closing Date, a number of Initial Shares, if any,
determined in accordance with the following formula:
Gross
Number of Purchase Price
less ---------------------- = Shares to be redelivered
Initial Shares Average Price x .75
For purposes of the foregoing calculation, "Market
Price" shall mean the closing bid price per share of
the Common Stock as reported by the American Stock
Exchange for any trading day, or if no such price is
reported, then the reported closing bid price per
share on the last preceding trading day for which a
trade was reported.
e. METHOD OF PAYMENT. Payment of the purchase price for
the Shares shall be made by wire transfer of
funds to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For Further Credit to A/C# 637-1415554
for credit to the account of Krieger &
Prager, Attorneys - Escrow Account
2. SUBSCRIBER REPRESENTATIONS; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
a. OFFSHORE TRANSACTION. PURCHASER represents and
warrants to ISSUER as follows:
(i) PURCHASER is not a U.S. person as that term
is defined under Regulation S.
(ii) PURCHASER is outside the United States as of
the date of the execution and delivery of
this agreement.
(iii) PURCHASER is purchasing the Shares for its
own account and not on behalf of any U.S.
person, and the sale has not been
pre-arranged with purchaser in the United
States.
3
<PAGE> 7
(iv) PURCHASER represents and warrants and hereby
agrees that all offers and sales of the
Shares prior to the expiration of a period
commencing on the date of the transaction and
ending 40 days thereafter shall only be made
in compliance with the safe harbor contained
in Regulation S, pursuant to registration of
securities under the Securities Act of 1933
or pursuant to an exemption from
registration, and all offers and sales after
the expiration of the 40 day period shall be
made only pursuant to such registration or to
such exemption from registration.
(v) The Shares have not been registered under the
Securities Act of 1933 and may not be offered
or sold in the United States or to U.S.
Persons unless the Shares are registered
under the Securities Act of 1933 or an
exemption from the registration requirements
is available.
(vi) PURCHASER acknowledges that the purchase of
the Shares involves a high degree of risk and
further acknowledges that it can bear the
economic risk of the purchase of the Shares,
including the total loss of its investment.
(vii) PURCHASER understands that the Shares are
being offered and sold to it in reliance on
specific exemptions from the registration
requirements of Federal and State securities
laws and that the ISSUER is relying upon the
truth and accuracy of the representations,
warranties, agreements, acknowledgements and
understandings of PURCHASER set forth herein
in order to determine the applicability of
such exemptions and the suitability of
PURCHASER to acquire the Shares.
(viii) PURCHASER is sufficiently experienced in
financial and business matters to be capable
of evaluating the merits and risks of its
investments, and to make an informed decision
relating thereto.
(ix) In evaluating its investment, PURCHASER has
consulted its own investment and/or legal
and/or tax advisors.
(x) PURCHASER understands that in the view of the
SEC the statutory basis for the exemption
claimed for this transaction would not be
present if the offering of Shares, although
in technical compliance with Regulation S, is
part of a plan or scheme to evade the
registration provisions of the 1933 Act.
PURCHASER is acquiring the Shares for
investment purposes and has no present
intention to sell the Shares in the United
States or to a U.S. Person
4
<PAGE> 8
or for the account or benefit of a U.S.
Person either now or after the expiration of
the Restricted Period.
(xi) PURCHASER is not an underwriter of, or dealer
in, the Shares, and PURCHASER is not
participating, pursuant to a contractual
agreement, in the distribution of Shares.
(xii) During the Restricted Period (as hereinafter
defined), neither PURCHASER nor any of its
affiliates will, directly or indirectly,
maintain any short position in the securities
of the ISSUER.
b. CURRENT PUBLIC INFORMATION. PURCHASER acknowledges
that PURCHASER has been furnished with or has
acquired copies of the Company's most recent Annual
Report on the form 10-K filed with the Securities and
Exchange Commission and the forms 10-Q and 8-K filed
thereafter (collectively the "SEC Filings"), and
other publicly available documents.
c. INDEPENDENT INVESTIGATION; ACCESS. PURCHASER
acknowledges that PURCHASER, in making the decision
to purchase the Shares subscribed for, has relied
upon independent investigations made by it and it's
purchaser representatives, if any, and PURCHASER and
such representative, if any, have, prior to any sale
to it, been given access and the opportunity to
examine all material books and records of the
Corporation, all material contracts and documents
relating to this offering and an opportunity to ask
questions of, and to receive answers from ISSUER or
any person acting on its behalf concerning the terms
and conditions of this offering. PURCHASER and its
advisors, if any, have been furnished with access to
all publicly available materials relating to the
business, finances and operation of the ISSUER and
materials relating to the offer and sale of the
Shares which have been requested. PURCHASER and its
advisors, if any, have received complete and
satisfactory answers to any such inquiries.
d. NO GOVERNMENT RECOMMENDATION OR APPROVAL. PURCHASER
understands that no federal or state agency has
passed on or made any recommendation or endorsement
of the Shares.
e. ENTITY PURCHASERS. If PURCHASER is a partnership,
corporation or trust, the person executing the
Offshore Securities Subscription Agreement on its
behalf represents and warrants that:
(i) He or she has made due inquiry to determine
the truthfulness of the representations and
warranties made pursuant to this Offshore
5
<PAGE> 9
Securities Subscription Agreement.
(ii) He or she is duly authorized (if the
undersigned is a trust, by the trust
agreement) to make this investment and to
enter into and execute this Offshore
Securities Subscription Agreement on behalf
of such entity.
3. ISSUER REPRESENTATIONS.
a. REPORTING COMPANY STATUS. ISSUER is a reporting
issuer as defined by Rule 902 of Regulation S.
ISSUER is in full compliance, to the extent
applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"). ISSUER has registered its common
stock pursuant to Section 12 of the Exchange Act and
the common stock trades on the American Stock
Exchange.
b. OFFSHORE TRANSACTION. ISSUER has not offered these
securities to any person in the United States or to
any U.S. person as that term is defined in
Regulation S.
c. NO DIRECTED SELLING EFFORTS. In regard to this
transaction, ISSUER has not conducted any "direct
selling efforts" as that term is defined in Rule 902
of regulation S nor has ISSUER conducted any general
solicitation relating to the offer and sale of the
within securities to persons resident within the
United States or elsewhere.
d. SHARES. The Shares when issued and delivered will
be duly and validly authorized and issued, fully paid
and non-assessable and will not be subject the
holders thereof to any liability by reason of being
such holders.
e. LEGALITY. The ISSUER has the requisite corporate
power and authority to enter into this Agreement and
to sell and deliver the Shares; this Agreement and
the issuance of the Shares have been duly and validly
authorized by all necessary corporate action by the
ISSUER; this Agreement has been duly and validly
executed and delivered by and on behalf of the
ISSUER, and is a valid and binding agreement of the
ISSUER, enforceable against it in accordance with its
terms, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or
other laws affecting creditors rights generally.
f. NON-CONTRAVENTION. The execution and delivery of
this Agreement and the consummation of the issuance
of the Shares, and the consummation of
6
<PAGE> 10
the transactions contemplated by this Agreement by
the ISSUER do not and will not conflict with or
result in a breach by the ISSUER of any of the terms
or provisions of, or constitute a default under, the
Certificate of Incorporation or by-laws of the
ISSUER, or any material indenture, mortgage, deed of
trust, or other material agreement or instrument to
which the ISSUER is a party or by which it or any of
its properties or assets are bound or (assuming that
the representations and warranties of the PURCHASER in
Section 2 hereof, and the representations and
warranties of the distributor to the ISSUER, are true
and correct), any existing applicable U.S. law, rule,
or regulation or any applicable decrees, judgment or
order of any U.S. court, federal or state regulatory
body, administrative agency or other U.S.
governmental body having jurisdiction over the ISSUER
or any of its properties or assets, the conflict,
breach, violation or default of or under which would
have a material adverse effect on the ISSUER'S
business or financial condition.
g. PRIOR SHARE ISSUES UNDER REGULATION S. ISSUER has
not issued any shares of stock under Regulation S
subsequent to its current SEC filings except for
680,000 Shares on February 24, 1995.
h. FILINGS. The ISSUER undertakes and agrees to make
all necessary filings in connection with the sale of
the Shares as required by United States laws and
regulations or any domestic securities exchange or
trading market.
i. ABSENCE OF CERTAIN CHANGES. Since September 30,
1995, there has been no material adverse development
in the assets, liabilities, business, properties,
operations, financial condition or results of
operations of the ISSUER, except as disclosed in the
SEC filings or in Annex V.
4. SHARE CERTIFICATES.
a. The Company will cause the Certificates representing
the Shares to be delivered in escrow, free of restrictive legend, to Krieger &
Prager, Esqs. ("Escrow Agent") under the form of Joint Escrow Instructions
annexed hereto, until the forty-seventh (47th) day following the Closing.
b. If, solely as a result of the ISSUER'S wrongful
refusal to honor PURCHASER'S instruction, or wrongful refusal or failure to
transfer or issue the Shares, PURCHASER incurs any loss (other than any
consequential, indirect, incidental or special damages), the ISSUER shall
reimburse PURCHASER for such loss unless PURCHASER shall have breached any of
its representations, warranties or covenants set forth in this Agreement, or
otherwise taken or omitted to take actions, which actions or omissions
constitute gross negligence, bad faith or willful misconduct.
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<PAGE> 11
5. EXPIRATION OF RESTRICTED PERIOD.
The transaction restriction in connection with this offshore
offer and sale restricts the PURCHASER from offering and selling to U.S.
persons or for the account or benefit of a U.S. Person for a forty (40) day
period following the Closing Date ("Restricted Period"). The rules do not
require the placement of such a restrictive legend on the share certificate.
Rule 903(c)(2) governs the forty (40) day transaction restriction. In the
event that multiple subscriptions are accepted by the ISSUER, each separate
subscription agreement shall be deemed to be a separate offering under
Regulation S and the forty (40) day restriction period shall begin for each
transaction separately on the date payment is released to the ISSUER for that
specific transaction. Title to the Shares may be transferred by PURCHASERS to
other Non United States persons or entities in accordance with Regulation S.
6. EXEMPTION; RELIANCE ON REPRESENTATION. PURCHASER understands
that the offer and sale of the Shares is not being registered under the 1933
Act. ISSUER is relying on the rules governing offers and sales made outside
the United States pursuant to Regulation S. Rules 901 through 904 of the
Regulation S govern this transaction.
7. [OMITTED]
8. CLOSING DATE AND ESCROW AGENT. The date of the issuance of
the Shares and the sale of the Shares (the "Closing Date") shall be no later
than five (5) business days after execution hereof or such other mutually
agreed to time. Closing shall be effected through delivery of funds and
certificates to the Escrow Agent. PURCHASER shall forthwith deliver the
necessary funds as indicated in Paragraph 1 to the Escrow Agent. Share
Certificates will be delivered at the instructions of the Issuer to the Escrow
Agent, on a delivery versus payment basis.
9. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. PURCHASER
understands that ISSUER'S obligation to sell the Stock is conditioned upon:
a. The receipt and acceptance by ISSUER of this
Subscription Agreement for all of the Shares as
evidenced by execution of this Subscription Agreement
by the President or any Vice President or Treasurer
of the ISSUER. The acceptance of funds by the ISSUER
shall be deemed to be constructive acceptance of this
Subscription Agreement.
b. Delivery to the Escrow Agent by PURCHASER of good
funds as payment in full for the purchase of the
shares.
c. The accuracy on the Closing Date of the
representations and warranties of PURCHASER contained
in this Agreement and the performance by PURCHASER on
or before the Closing Date of all covenants and
agreements of PURCHASER required to be performed on
or before the
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<PAGE> 12
Closing Date.
d. There shall not be in effect any law, rule or
regulation prohibiting or restricting the
transactions contemplated hereby, or requiring any
consent or approval which shall not have been
obtained.
10. CONDITION TO PURCHASER'S OBLIGATION TO PURCHASE. ISSUER
understands that PURCHASER'S obligation to purchase the Stock is conditioned
upon:
a. Acceptance by PURCHASER of a Subscription Agreement
for the sale of Shares;
b. Delivery of shares of common stock to Escrow Agent
without restrictive legend.
c. The accuracy on the Closing Date of the
representations and warranties of the ISSUER
contained in this Agreement and the performance by
the ISSUER on or before the Closing Date of all
covenants and agreements of the ISSUER required to be
performed on or before the Closing Date; and
d. Delivery to the Escrow Agent of an opinion of counsel
for the ISSUER, dated the Closing Date and addressed
to PURCHASER, in the form attached hereto as ANNEX
III.
11. GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of New York without regard to its choice
of law provision. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.
12. REGISTRATION OF THE SECURITIES. ISSUER hereby agrees that,
upon demand of holder of the Securities as a result of a regulatory development
including, but not limited to, an amendment or proposed amendment of Regulation
S, or any "no-action" or interpretive guidance whether oral or written from the
Securities and Exchange Commission, which call into question the ability of
PURCHASER to resell the Securities without registration, ISSUER will file, and
use its reasonable best efforts to cause to become effective a registration
statement on Form S-3 under the 1933 Act covering the resale of the Shares
issuable upon conversion of the Shares. Any such registration statement shall
remain effective for up to twelve (12) months, or until all of the Securities
are sold, whichever is earlier. The ISSUER shall provide the PURCHASER with
such number of copies of the prospectus as shall be reasonably requested to
facilitate the sale of the Shares issuable upon conversion of the Shares. The
ISSUER shall bear and pay all expenses incurred in connection with any such
registration, excluding discounts and commissions.
13. FURTHER OFFERINGS. ISSUER agrees that, for a period of 180
days from the
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<PAGE> 13
Closing Date, it will not offer for sale or sell any securities other than the
Shares issuable upon conversion of the Shares issued to the PURCHASER and to
other purchasers contemporaneously herewith, unless, in the opinion of ISSUER's
counsel, such offer or sale does not jeopardize the availability of exemptions
from the registration and qualification requirements under all applicable
securities laws with respect to the Shares. ISSUER hereby warrants that it has
not engaged in any such offering during the six months prior to the Closing
Date, except as disclosed in ANNEX V hereof.
14. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon personal delivery or three business days after deposit
in the United States Postal Service, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days advance written notice to each of the other parties
hereto.
ISSUER: FORTUNE PETROLEUM CORPORATION
30101 Agoura Court, Suite 110
Agoura Hills, California 91301
PURCHASER: At the address set forth on the first page of this
Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
10
<PAGE> 14
SIGNATURES FOR INDIVIDUAL SUBSCRIBER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that he, she or they have executed this
Subscription Agreement this 7th day of December, 1995.
MENACHEM M. BEGUN MENACHEM M. BEGUN
- ------------------------------------ ------------------------------------
Printed Name Signature
- ------------------------------------ ------------------------------------
Printed Name Signature
11
<PAGE> 15
SIGNATURES FOR INDIVIDUAL SUBSCRIBER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that he, she or they have executed this
Subscription Agreement this 7th day of December, 1995.
___________________________________ ____________________________________
Printed Name Signature
SHULSMITH PRITAKER SHULSMITH PRITAKER
- ----------------------------------- ------------------------------------
Printed Name Signature
11
<PAGE> 16
SIGNATURES FOR INDIVIDUAL SUBSCRIBER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that he, she or they have executed this
Subscription Agreement this ______ day of ______________, 1995.
___________________________________ ____________________________________
Printed Name Signature
YACOV BARBER YACOV BARBER
- ----------------------------------- ------------------------------------
Printed Name Signature
11
<PAGE> 17
SIGNATURES FOR INDIVIDUAL SUBSCRIBER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that he, she or they have executed this
Subscription Agreement this 7th day of December, 1995.
ISRAEL MANDEL ISRAEL MANDEL
- ----------------------------------- ------------------------------------
Printed Name Signature
___________________________________ ____________________________________
Printed Name Signature
11
<PAGE> 18
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the following
statements are true and correct and that it has caused the Subscription
Agreement to be duly executed on its behalf this 7th day of December, 1995.
ISRAEL MANDEL
-------------------------------------
Printed Name of Subscriber
By:
---------------------------------
(Signature of Authorized Person)
-------------------------------------
Printed Name and Title
Accepted this 11th day of the month of December 1995.
FORTUNE PETROLEUM CORPORATION
By: TYRONE J. FAIRBANKS
-----------------------------------
Title: President, CEO and CFO
-----------------------------
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<PAGE> 19
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the following
statements are true and correct and that it has caused the Subscription
Agreement to be duly executed on its behalf this ________ day of
___________________, 1995.
YACOV BARBER
-------------------------------------
Printed Name of Subscriber
By:
---------------------------------
(Signature of Authorized Person)
-------------------------------------
Printed Name and Title
Accepted this 11th day of the month of December 1995.
FORTUNE PETROLEUM CORPORATION
By: TYRONE J. FAIRBANKS
-----------------------------------
Title: President, CEO and CFO
-----------------------------
12
<PAGE> 20
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the following
statements are true and correct and that it has caused the Subscription
Agreement to be duly executed on its behalf this 7th day of December, 1995.
SHULSMITH PRITAKER
-------------------------------------
Printed Name of Subscriber
By:
---------------------------------
(Signature of Authorized Person)
-------------------------------------
Printed Name and Title
Accepted this 11th day of the month of December 1995.
FORTUNE PETROLEUM CORPORATION
By: TYRONE J. FAIRBANKS
-----------------------------------
Title: President, CEO and CFO
-----------------------------
12
<PAGE> 21
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the following
statements are true and correct and that it has caused the Subscription
Agreement to be duly executed on its behalf this 7th day of December, 1995.
MENACHEM M. BEGUN
-------------------------------------
Printed Name of Subscriber
By:
---------------------------------
(Signature of Authorized Person)
-------------------------------------
Printed Name and Title
Accepted this 11th day of the month of December, 1995.
FORTUNE PETROLEUM CORPORATION
By: TYRONE J. FAIRBANKS
-----------------------------------
Title: President, CEO and CFO
-----------------------------
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<PAGE> 22
ANNEX II
JOINT ESCROW INSTRUCTIONS
Dated as of the date of the Offshore
Securities Subscription Agreement to
Which These Joint Escrow
Instructions Are Attached
Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Attention: Samuel M. Krieger, Esq.
RE: _______________________________
(Purchaser)
Dear Mr. Krieger:
As escrow agent for both Fortune Petroleum Corporation, a
______________ corporation (the "Company"), and the Purchaser (the
"Purchaser") of Shares of the Company, who is named in the Offshore Securities
Subscription Agreement (the "Agreement") between the Company and the Purchaser
to which a copy of these Joint Escrow Instructions is attached as Annex I (the
"Agreement"), you (hereafter, the "Escrow Agent") are hereby authorized and
directed to hold the documents and funds (together with any interest thereon,
the "Escrow Funds") delivered to the Escrow Agent pursuant to the terms of the
Agreement in accordance with the following instructions:
1. Upon its acceptance of the Subscription Agreement, the
Company shall deliver or cause to be delivered to Escrow Agent, common stock
share certificates ("Share Certificates") for ____________ Shares in
increments of 50,000 shares each, as provided in the Subscription Agreement.
2. The Escrow Agent shall, as promptly as feasible, notify the
Company of receipt of the purchase price from the Purchaser, and notify the
Purchaser (or such agent as the Purchaser may designate in writing) of receipt
of certificates for the Shares (each a "Certificate"
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<PAGE> 23
and collectively the "Certificates"). As promptly as feasible upon receipt of
notice (whether oral or in written form) from the Company and the Purchaser
that the respective conditions precedent to the purchase and sale have been
satisfied (which notice shall not be unreasonably withheld), the Escrow Agent
shall, after reduction by the amounts referred to in the next succeeding
sentence of this paragraph, release the Escrow Funds to or upon the order of
the Company (it being understood that such notice will be deemed given by the
Purchaser if no such notice is given to the Escrow Agent within two (2)
business days following delivery by telecopy of the photocopied Certificates)
and shall release the Certificates to the Purchaser. After receipt of such
notice, a portion of the Escrow Funds shall be released by the Escrow Agent
as follows: an amount equal to the fees due to Whitechapel Management Ltd.
("Distributor") and 1/2 of 1% of the Escrow Funds to the Escrow Agent, shall
be released to or upon the order of Escrow Agent. If such Certificates are not
deposited with the Escrow Agent within ten (10) days after receipt by the
Company of notice of receipt by the Escrow Agent of the funds from the
Purchaser, Escrow Agent shall notify the Purchaser and Purchaser shall be
entitled to cancel the subscription and demand repayment of the funds. If
the Company or the Purchaser notifies the Escrow Agent that on the Closing
Date (as defined in the Agreement) the conditions precedent to the obligations
of the Company or the Purchaser, as the case may be, under the Agreement were
not satisfied or waived, then the Escrow Agent shall return the Escrow Funds
to the Purchaser and shall return the Certificates to the Company. Prior to
return of the Escrow Funds to the Purchaser, the Purchaser shall furnish such
tax reporting or other information as shall be appropriate for the Escrow
Agent to comply with applicable United States laws. The Escrow Agent shall
deposit all funds received hereunder in the Escrow Agent's attorney escrow
account at The Bank of New York.
3. The Share Certificates delivered to the Escrow Agent pursuant
hereto shall be deposited for safekeeping with the Escrow Agent (the "Escrow
Account"). During the Escrow Period (hereinafter defined), none of the Share
Certificates deposited in the Escrow Account shall become the property of
Investor or any other entity or be subject to the debts of investor or any
other entity except as expressly provided herein, and the Escrow Agent shall
neither make nor permit any disbursements or deliveries from the Escrow
Account except as expressly provided herein.
4. The Escrow Period shall begin on the effective date of the
Subscription Agreement and, except as provided in Section 4 below, shall
continue until terminated on the 47th day after the Closing Date, or as
otherwise provided in Section 1 of the Subscription Agreement
Notwithstanding the foregoing, if there remain Share Certificates in the
Escrow Account, all such Share Certificates then remaining in the Escrow
Account shall forthwith be forwarded to the Company upon written request given
to Escrow Agent by the Company.
5. The Company shall deliver to the Escrow Agent appropriate
written notice of any extension or amendment to the Subscription Agreement.
6. The Escrow Agent's duties hereunder may be altered, amended,
modified or
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<PAGE> 24
revoked only by a writing signed by the Company, the Purchaser and the Escrow
Agent.
7. The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally
liable for any act the Escrow Agent may do or omit to do hereunder as Escrow
Agent while acting in good faith, and any act done or omitted by the Escrow
Agent pursuant to the advice of the Escrow Agent's attorneys-at-law shall be
conclusive evidence of such good faith.
8. The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is
hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with any
such order, judgment or decree, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person, firm or corporation by reason of
such decree being subsequently reversed, modified, annulled, set aside, vacated
or found to have been entered without jurisdiction.
9. The Escrow Agent shall not be liable in any respect on
account of the identity, authorities or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents
or papers deposited or called for hereunder.
10. The Escrow Agent shall be entitled, at its own expense, to
employ such legal counsel and other experts as the Escrow Agent may deem
necessary properly to advise the Escrow Agent in connection with the Escrow
Agent's duties hereunder, may rely upon the advice of such counsel, and may
pay such counsel reasonable compensation therefor. The Escrow Agent has acted
as legal counsel for Purchaser and may continue to act as legal counsel for
Purchaser, from time to time, notwithstanding its duties as Escrow Agent
hereunder.
11. The Escrow Agent's responsibilities as Escrow Agent
hereunder shall terminate if the Escrow Agent shall resign by written notice
to the Company and the Purchaser. In the event of any such resignation, the
Purchaser and the Company shall appoint a successor Escrow Agent.
12. If the Escrow Agent reasonably requires other or further
instruments in connection with these Joint Escrow Instructions or
obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.
13. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
documents or Escrow Funds held by the Escrow Agent hereunder, the Escrow
Agent is authorized and directed in the Escrow Agent's sole discretion (1) to
retain in the Escrow Agent's possession without liability to anyone all or
any part of said documents or Escrow Funds until such disputes shall have been
settled either
3
<PAGE> 25
by mutual written agreement of the parties concerned or by a final order,
decree or judgment of a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or
(2) to deliver the Escrow Funds and any other property and documents held by
the Escrow Agent hereunder to a state or federal court having competent
subject matter jurisdiction and located in the State and City of New York
in accordance with the applicable procedure therefor.
14. The Company and the Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent from any and all claims,
liabilities, costs or expenses in any way arising from or relating to the
duties or performance of the Escrow Agent hereunder other than any such
claim, liability, cost or expense to the extent the same shall have been
determined by final, unappealable judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of the Escrow Agent.
15. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or three business days after deposit in the
United States Postal Service, by registered or certified mail with postage
and fees prepaid, addressed to each of the other parties thereunto entitled
at the following addresses, or at such other addresses as a party may
designate by ten days advance written notice to each of the other parties
hereto.
COMPANY: Fortune Petroleum Corporation
30101 Agoura Court, Suite 110
Agoura, California 91301
ATT: General Counsel
PURCHASER: At the address set forth on the first page of the
Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Telecopier No. (212) 213-2077
16. By signing these Joint Escrow Instructions, the Escrow Agent
becomes a party hereto only for the purpose of these Joint Escrow Instructions;
the Escrow Agent does not become a party to the Agreement. The Company and
the Purchaser have become parties hereto by their execution and delivery of
the Agreement, as provided therein.
17. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns and shall be governed by the laws of the State of New York without
giving effect to principles governing the conflicts of laws. A facsimile
transmission of these instructions signed by the Escrow Agent shall be legal
and binding on all parties hereto.
4
<PAGE> 26
18. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided in the Agreement.
19. The rights and obligations of any party hereto are not
assignable without the written consent of the other parties hereto.
ACCEPTED BY ESCROW AGENT:
KRIEGER & PRAGER
By:
----------------------------------
Date: December 7, 1995
--------------------------------
5
