Exhibit 10.20
[LETTERHEAD OF ZYDECO ENERGY, INC.]
July 31, 1997
Cheniere Energy Operating Co., Inc.
0000 Xxx Xxxxx Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000X0 12
Gentlemen:
I am writing to confirm our agreement.
I have loaned you $500,000 today. To evidence such loan, you have executed
a promissory note maturing on August 29, 1997 and bearing interest at 10% per
annum (the "Note"). As security for such loan, you have executed a Security
Agreement of even date, together with a UCC-1 financing statement. The Security
Agreement and Financing Statement cover a fraction of your interest under the
following agreement (the "Zydeco Agreement"):
That certain Exploration Agreement dated April 4, 1996, between FX Energy,
Inc. and Zydeco Exploration, Inc., as amended by that certain First
Amendment dated May 15, 1996, and that certain Second Amendment dated
August 5, 1996, and that certain Third Amendment dated October 31, 1996,
and that certain Fourth Amendment dated as of November 27, 1996, and that
certain Fifth Amendment dated as of April 28, 1997, and that certain Sixth
Amendment dated as of July 18, 1997, as well as including permits, options
to lease, and leases (collectively, the Lease Interests") acquired
xxxxxxxxxx.xx well as a fraction of your interest in seismic data (the
"Seismic Data") acquired under the Zydeco Agreement, including, without
limitation, that acquired under that certain Master Geophysical Data
Acquisition Agreement between Zydeco Exploration, Inc. and Grant
Geophysical, Inc. dated June 12, 1996 and that certain Master Geophysical
Data Acquisition Agreement with Supplemental Agreement No.1, both dated
March 14, 1997.
The fraction covered of the Seismic Data and Lease Interests is
500,000/13,500,000ths of 50% or 1.8519%; the fraction of your interest in the
Exploration Agreement is that which would correspond to the assignment by you of
500,000/13,500,000 of your interests under the Exploration Agreement.
For convenience, terms defined in the Exploration Agreement shall have the
same terms when used herein.
As reflected in the Sixth Amendment to the Agreement, Seismic Costs and
Excess Costs are expected to be $18,500,000 through the end of 1997.
In consideration of my agreement to extend the loan, you grant me an option
(the "Option")
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to acquire an interest in the Seismic Data, Lease Interests, and Zydeco
Agreement as follows:
a. The interest I acquire upon conversion in Seismic Data and Lease
Interests is determined by dividing the amount due under the Note by
$13,500,000, and multiplying the result by 50% (the "Data Ownership
Percentage"). You would assign me or my designee the Data Ownership
Percentage subject to the terms of the Zydeco Agreement.
b. I would also acquire a portion of your right to receive 100% of
proceeds from the marketing of proprietary seismic data under Section
15(b) of the Zydeco Agreement. The portion I would acquire would be a
fraction double the Data Ownership Percentage.
c. You have an obligation to pay a pro rata portion of Excess Costs. If I
exercise the Option, I recognize and agree to pay a fractional share
of Excess Costs equal to the Data Ownership Percentage.
d. The Option may be exercised only after August 29, 1997. Should the
Note be repaid before such time, the Option would terminate.
e. The Option may be exercised by tender of the Note to you.
f. I may assign the Option.
g. The Option will terminate at the earlier of 180 days from the date
hereof or upon repayment of the Note.
You agree to pay the attorneys fees I incur for this loan and option
agreement.
The general terms and provisions appearing on Exhibit "A" are incorporated
in this letter agreement.
The Exploration Agreement requires the approval of Zydeco Exploration, Inc.
to the pledge of interests under the agreement and assignment of interests in
the Seismic Data, Leases, and Exploration Agreement. I acknowledge such and
shall undertake to obtain Zydeco Exploration, Inc.'s approval at an appropriate
time.
If I have correctly set forth our understandings, kindly so indicate by
executing one counterpart of this letter and returning it to the undersigned.
Yours very truly,
Xxx Xxxxx
ACCEPTED AND AGREED TO THIS
31st DAY OF JULY, 1997.
CHENIERE ENERGY OPERATING CO., INC.
By:
Xxxxxx X. Xxxxxxxx, Vice Chairman
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