Exhibit 10.6
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR
UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE LAWS OR UPON DELIVERY TO
THE COMPANY OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE COMPANY THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
Warrant to Purchase Common Stock
of
CHENIERE ENERGY, INC.
This Warrant (this "Warrant") to Purchase Common Stock (as defined below)
is issued February 27, 2003, by Cheniere Energy, Inc., a Delaware corporation
(the "Company"), to Freeport LNG Investments, LLC (the "Holder").
1. Issuance of Warrant; Term. The Company hereby grants to Holder, subject
to the provisions hereinafter set forth, the right to purchase 700,000 shares of
common stock, $.003 par value per share, of the Company (the "Common Stock").
The shares of Common Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares." This Warrant shall be exercisable at
any time before 5:00 p.m. (Houston, Texas time) on February 12, 2013 (the
"Exercise Period").
2. Exercise Price. This exercise price per share for which all or any of
the Shares may be purchased pursuant to the terms of this Warrant shall be $2.50
(the "Exercise Price").
3. Exercise
(a) This Warrant may be exercised by Holder, from time to time,
in whole or in part, at any time prior to the expiration of the Exercise Period,
upon Holder's delivery of (i) written notice of intent to the Company at the
address of the Company set forth below its signature or such other address as
the Company shall designate in writing to Holder, (ii) this Warrant and (iii)
payment (in the manner described in Section 3(b) below) for the aggregate
Exercise Price of the Shares so purchased. Upon exercise of this Warrant as
aforesaid, the Company shall as promptly as practicable, but in no event later
than 15 days after delivery of the notice, Warrant and Exercise Price, execute
and deliver to Holder a certificate or certificates for the total number of
whole Shares for which this Warrant is being exercised in such names and
denominations as are requested by Holder. If this Warrant shall be exercised
with respect to less than all of the Shares, Holder shall be entitled to receive
a new Warrant covering the number of Shares in respect of which this Warrant
shall not have been exercised, which new Warrant shall in all other respects be
identical to this Warrant.
(b) Payment for the Shares to be purchased upon exercise of this
Warrant may be made at the election of the Holder by the delivery of (i) a
certified or cashier's check payable to the Company for the aggregate Exercise
Price of the Shares to be purchased or (ii) Shares in lieu of a monetary payment
(a "Cashless Exercise"). If Holder elects a Cashless Exercise, the number of
Shares issuable upon exercise of this Warrant would be reduced by an amount
equal to the aggregate Exercise Price otherwise payable divided by the Fair
Market Value (as defined below) of a Share as of the exercise date. "Fair Market
Value" of
a Share on date of reference shall be the Closing Price (as defined below) of
the Common Stock on the business day immediately preceding such date. For
purposes of this Section 3(b), the "Closing Price" of Common Stock on any
business day shall be: (a) if the Common Stock is listed or admitted for trading
on any United States national securities exchange, the last reported sale price
of the Common Stock on such exchange, as reported in any newspaper of general
circulation; (b) if the Common Stock is quoted on the Nasdaq National Market, or
any similar system of automated dissemination of quotations of securities prices
in common use, the mean between the closing high bid and low asked quotations
for such day of the Common Stock on such system; (c) if neither clause (a) or
(b) is applicable, the mean between the high bid and low asked quotations for
the Common Stock as reported by the National Daily Quotation Service if at least
two securities dealers have inserted both bid and asked quotations for the
Common Stock on at least five of the ten preceding days; (d) in lieu of the
above, if actual transactions in the Common Stock are reported on a consolidated
transaction reporting system, the last sale price of the Common Stock on such
system; or (e) if none of the foregoing apply, the value determined by the Board
of Directors of the Company (the "Board") in its reasonable discretion in a fair
and uniform way.
4. Representations and Warranties of the Company.
(a) Due Incorporation and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full and adequate power to carry on and conduct
its business as presently conducted, and is duly licensed or qualified in all
foreign jurisdictions wherein the failure to be so qualified or licensed would
reasonably be expected to have a material adverse effect on the business of the
Company.
(b) Due Authorization. The Company has full right, power and
authority to enter into, execute and deliver this Warrant and to perform all of
its duties and obligations under this Warrant. The execution and delivery of
this Warrant will not, nor will the observance or performance of any of the
matters and things herein set forth, violate or contravene any provision of the
law or the Company's bylaws or articles of incorporation. All necessary and
appropriate corporate action on the part of the Company has been taken to
authorize the execution and delivery of this Warrant.
(c) Enforceability. This Warrant has been validly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company enforceable against it in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' right and to the
availability of the remedy of specific performance.
(d) Absence of Conflicts. The execution, delivery and performance
by the Company of this Warrant, and the transactions contemplated hereby, do not
constitute a breach or default, or require consents under, any agreement,
permit, contract or other instrument to which the Company is a party, or by
which the Company is bound, or to which any Company assets are subject, or any
judgment, order, writ, decree, authorization or license to which the Company, or
the assets of the Company are bound or subject to, or any rule, regulations or
statues and will not result in the creation of any lien upon any of the assets
of the Company.
(e) Issuance Upon Exercise. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the
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purpose of effecting the exercise of this Warrant, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the exercise of
this Warrant, and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the exercise of the entire
Warrant, in addition to such other remedies as shall be available to the holder
of this Warrant, the Company will use commercially reasonable efforts to take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose. Upon exercise of this Warrant in
accordance with the terms hereof, the Shares shall be validly issued, fully paid
and nonassessable.
5. Covenants and Conditions.
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws ("Blue Sky Laws"). This Warrant and the Shares have been
acquired by the Holder for investment purposes and not with a view to
distribution or resale, and the Shares may not be made subject to a security
interest, pledged, hypothecated, sold or otherwise transferred without an
effective registration statement therefor under the Act and such applicable Blue
Sky Laws or an opinion of counsel (which opinion and counsel rendering same
shall be reasonably acceptable to the Company) that registration is not required
under the Act and under any applicable Blue Sky Laws. The certificates
representing the Shares shall bear substantially the following legend:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT'), OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN
ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE
OFFERED, SOLD OR TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE
ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (II) IN THE OPINION OF COUNSEL (WHICH OPINION AND
COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE COMPANY) REGISTRATION UNDER
THE LAW OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.
Other legends as required by applicable federal and state laws may be
placed on such certificates. Holder and the Company agree to execute such
documents and instruments as counsel for the Company reasonably deems necessary
to effect compliance of the issuance of this Warrant and any Shares issued upon
exercise hereof with applicable federal and state securities laws.
6. Warrantholder not Stockholder. This Warrant does not confer upon
Holder any voting rights or other rights as a stockholder of the Company.
7. Certain Adjustments.
7.1. Capital Reorganizations, Mergers, Consolidations or Sales of
Assets. If at any time there shall be a capital reorganization (other than a
combination or subdivision of Common Stock otherwise provided for herein), a
share exchange (subject to and duly approved by the stockholders of the Company)
or a merger or consolidation of the Company with or into another corporation, or
the sale of the Company's properties and assets as, or substantially as,
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an entirety to any other person, then, as a part of such reorganization, share
exchange, merger, consolidation or sale, lawful provision shall be made so that
Holder shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified in this Warrant and upon payment of the Exercise
Price, the number of shares of stock or other securities or property of the
Company or the successor corporation resulting from such reorganization, share,
exchange, merger, consolidation or sale, to which Holder would have been
entitled under the provisions of the agreement in such reorganization, share
exchange, merger, consolidation or sale if this Warrant had been exercised
immediately before that reorganization, share exchange, merger, consolidation or
sale. In any such case, appropriate adjustment (as determined in good faith by
the Board) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of Holder after the reorganization,
share exchange, merger, consolidation or sale to the end that the provisions of
this Warrant (including adjustment of the Exercise Price then in effect and the
number of the Shares) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
7.2. Splits and Subdivisions. If the Company at any time or from
time to time fixes a record date for the effectuation of a split or subdivision
of the outstanding shares of Common Stock or the determination of the holders of
Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as the "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or Common Stock Equivalents, then, as of such
record date (or the date of such distribution, split or subdivision if no record
date is fixed), the Exercise Price shall (i) in the case of a split or
subdivision, be appropriately decreased and the number of the Shares shall be
appropriately increased in proportion to such increase of outstanding shares and
(ii) in the case of a dividend or other distribution, the holder of the warrant
shall have the right to acquire without additional consideration, upon exercise
of the warrant, such property or cash as would have been distributed in respect
of the shares of Common Stock for which the warrant was exercisable had such
shares of Common Stock been outstanding on the date of such distribution.
7.3. Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination or reverse stock split of the outstanding shares of Common Stock,
the Exercise Price shall be appropriately increased and the number of the Shares
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
7.4. Adjustments for Other Distributions. In the event the
Company shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Company or other persons, assets
(excluding cash dividends) or options or rights not referred to in Section 7.4,
upon exercise of this Warrant, Holder shall be entitled to a proportionate share
of any such distribution as though Holder was the holder of the number of shares
of Common Stock of the Company into which this Warrant may be exercised as of
the record date fixed for the determination of the holders of Common Stock of
the Company entitled to receive such distribution.
7.5. Certificate as to Adjustments. In the case of each
adjustment or readjustment of the Exercise Price pursuant to this Article 7, the
Company will promptly compute such adjustment or readjustment in accordance with
the terms hereof and cause a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon
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which such adjustment or readjustment is based to be delivered to Holder. The
Company will, upon the written request at any time of Holder, furnish or cause
to be furnished to Holder a certificate setting forth:
(a) Such adjustment and readjustments;
(b) The Exercise Price at the time in effect; and
(c) The number of Shares and the amount, if any, of other
property at the time receivable upon the exercise of the Warrant.
7.6. Notices of Record Date, etc. In the event of:
(a) Any taking by the Company of a record of the holders of any
class of securities of the Company for the purpose of determining the holders
thereof who are entitled to receive any dividends or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right; or
(b) Any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to any other
person or any consolidation, share exchange or merger involving the Company; or
(c) Any voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company will mail to Holder at least 20 days
prior to the earliest date specified herein, a notice specifying:
(i) The date on which any such record is to be taken for
the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right; and
(ii) The date on which any such reorganization,
reclassification, transfer, consolidation, share exchange, merger, dissolution,
liquidation or winding up is expected to become effective and the record date
for determining stockholders entitled to vote thereon.
8. Piggyback Registration.
8.1. Right to Include Registrable Securities. Except as set forth
below, if the Company at any time proposes or is required to file a Registration
Statement under the Act covering any of its securities, whether or not for its
own account, other than (i) a registration on Form X-0, Xxxx X-0, or any
successor or similar forms, or (ii) a shelf registration under Rule 415 under
the Act for the sole purpose of registering shares to be issued in connection
with the acquisition of assets, whether or not for sale for its own account, it
will each such time give prompt written notice to the Holder of its intention to
do so and of the Holder's rights under this Section 7.1. Upon the written
request of the Holder made within 30 days after the receipt of any such notice
(which request shall specify the Shares intended to be disposed of by the Holder
and the intended method of disposition thereof), the Company will use its best
efforts to effect the registration under the Act of all Shares which the Company
has been so requested to register by the Holder, to the extent required to
permit the disposition in accordance with the
5
intended methods of disposition, by inclusion of such Shares in the Registration
Statement which covers the securities that the Company proposes to register
("Piggyback Right"); provided, that if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the Registration Statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to the Holder and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Shares in connection with such registration (but not from its obligation to
pay the registration expenses in connection therewith), without prejudice and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any Shares, for the same period as the delay in registering
such other securities. There is no limitation on the number of such piggyback
registrations pursuant to this Section 7 which the Company is obligated to
effect.
(a) Priority in Piggyback Registrations. If (i) a registration
pursuant to Section 7.1 involves an underwritten offering of the securities
being registered, whether or not for sale for the account of the Company, to be
distributed by or through one or more underwriters under underwriting terms
appropriate for such a transaction, and (ii) the managing underwriter of such
underwritten offering shall inform the Company and the Holder by letter that
marketing factors require a limitation of the number of securities (including
the Shares) to be underwritten (such writing to state the basis of such belief
and the approximate number of such securities which may be distributed without
such effect), then the underwriter(s) may exclude shares (including the Shares)
from the registration and the underwriting, and the number of shares that may be
included in the registration and the underwriting shall be allocated as follows:
(1) if the Company initiates the registration, first, to the Company and second,
to the Holder or any other person or entity exercising piggyback registration
rights on a pro rata basis based on the total number of Shares or shares of
Common Stock then held by such Holder or other person or entity; or (2) if a
person or entity (including the Holder) is exercising demand registration
rights, first, to such person or entity or Holder exercising such demand
registration rights, second, to the Company, and third, to the Holder or any
other person or entity exercising piggyback registration rights on a pro rata
basis based on the total number of Common Stock or Shares then held by the
Holder or such other person or entity. In the event that the underwriters
determine that the total amount of securities requested to be included in the
offering exceeds the amount that the underwriters determine is compatible with
the success of the offering, then the Company shall provide written notice of
such determination to the Holder.
(b) Holder's Right to Withdraw. The Holder shall have the right
to withdraw its request for inclusion of its Shares in any registration
statement pursuant to Section 7.1 by giving written notice to the Company of its
request to withdraw; provided, however, that (i) such request must be made in
writing prior to the earlier of the execution of the custody agreement with
respect to such registration and (ii) such withdrawal shall be irrevocable and,
after making such withdrawal, the Holder shall no longer have any right to
include Shares in the registration as to which such withdrawal was made.
8.2. Demand Registration. Except as provided in Section 8.2(d) below,
the Holder shall be entitled to one Demand Registration Request (as defined
herein). Subject to this Section 8.2, the Holder shall have the right to require
the Company to file a registration statement under the Act covering the Shares
by delivering a written request therefor to the Company specifying the Shares to
be included in such registration by the Holder and the intended method of
distribution thereof. Any such request pursuant to this Section 8.2 is
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referred to herein as a "Demand Registration Request" and the registration so
requested is referred to herein as the "Demand Registration."
(a) Registration. The Company shall, as expeditiously as
possible following the Demand Registration Request, use commercially best
efforts to effect such registration under the Act (including, without
limitation, by means of a shelf registration pursuant to Rule 415 under the Act
if so requested and if the Company is then eligible to use such a registration)
of the Shares which the Company has been so requested to register, for
distribution in accordance with such intended method of distribution.
(b) Limitations on Requested Registration. The rights of the
Holder to request a Demand Registration pursuant to this Section 8.2 are subject
to the following limitations: (1) except as provided in Section 8.2(d), in no
event shall the Holder be entitled to more than one Demand Registration Requests
or (2) if the Holder has participated in a Demand Registration in a 90 day
period preceding the request.
(c) Company Registration. During the period starting with the
date of filing of, and ending on a date 180 days after the effective date of, a
registration subject to Section 8.1 hereof, the Company shall not be obligated
to effect, or take any action to effect, any registration pursuant to this
Section 8.2; provided that the Company is actively employing good faith and
commercially best efforts to cause such registration statement to become
effective. In the event that the Company determines not to pursue a registration
or to withdraw a registration that has been filed, notice of such action will be
provided promptly by the Company to the Holder.
(d) Underwriting Requirements. If the Holder intends to
distribute the Shares by means of an underwriting, it shall so advise the
Company as a part of its request made pursuant to this Section 8.2. The
underwriter will be selected by the Holder and shall be reasonably acceptable to
the Company. All persons, including the Holder, proposing to distribute their
Common Stock through such underwriting shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting. Notwithstanding any other provisions of this Section 8.2, if
the underwriter advises the Holder in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the number of Shares
and other securities that may be included in the underwriting shall be allocated
first, to the Holder, second, to the Company, and third, to any other person or
entity of whose Common Stock the Company has agreed may be included in the
offering or any other person exercising piggyback registration rights on a pro
rata basis. In the event that notice is received from the underwriter that the
number of shares to be underwritten should be limited, and as a result of such
limitation Holder will continue to hold 200,000 or more Shares, then the
offering shall not be deemed to be a Demand Registration Request.
8.3. Expenses. All expenses incurred in connection with a Demand
Registration pursuant to this Article 8, including without limitation all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the Holder (but excluding underwriters'
discounts and commissions), shall be borne by the Company. The Holder shall bear
such Holder's proportionate share (based on the total number of shares sold in
such registration other than for the account of the Company) of all discounts,
commissions or other amounts payable to underwriters or brokers in connection
with such offering. Notwithstanding the foregoing, the Company shall not be
required to pay for any expenses of any registration
7
proceeding begun pursuant to this Article 8 if the registration request is
subsequently withdrawn at the request of the Holder, unless the Holder agrees to
forfeit its right to one Demand Registration; provided, further, however, that
if at the time of such withdrawal, the Holder has learned of a material adverse
change in the condition, business, or prospects of the Company not known to the
Holder at the time of its request for such registration and has withdrawn its
request for registration with reasonable promptness after learning of such
material adverse change, then the Holder shall not be required to pay any such
expenses and shall retain its rights pursuant to this Article 8.
8.4. Obligations of the Company. Whenever required to effect the
registration of any Shares under this Agreement, the Company shall, as
expeditiously as reasonably possible:
(a) prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such Shares and use reasonable,
diligent efforts to cause such registration statement to become effective, and,
upon the request of the Holder registered thereunder, keep such registration
statement effective for up to 90 days;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(c) furnish to the Holder a copy of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Act, and such
other documents as Holder may reasonably request in order to facilitate the
disposition of the Shares owned by it that are included in such registration;
(d) use reasonable, diligent efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions;
(e) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. The Holder
shall also enter into and perform its obligations under such an agreement;
(f) notify the Holder at any time when a prospectus relating to
the Shares is required to be delivered under the Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(g) furnish, at the request of Holder, on the date that Shares
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective:
8
(i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to the Holder requesting registration,
addressed to the underwriters, if any, and to the Holder; and
(ii) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to
the Holder requesting registration, addressed to the underwriters, if any, and
to the Holder.
8.5. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Article 8 that the
Holder shall furnish to the Company such information regarding itself, the
Shares held by it, and the intended method of disposition of such securities as
shall be required to timely effect the registration of the Shares.
8.6. Indemnification. In the event any Shares are included in a
registration statement under Sections 8.1 and 8.2:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Holder, the shareholders, partners, members, officers and
directors of the Holder, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Act or the Securities and Exchange Act of 1934, as amended (the
"1934 Act") against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, "Violations" and,
individually, a "Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
(iii) any violation or alleged violation by the Company of
the Act, the 1934 Act, any federal or state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any federal or state
securities law in connection with the offering covered by such registration
statement; and
(iv) the Company will reimburse Holder, shareholder,
partner, member, Manager, officer or director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them, as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this Section 8.6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it
9
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, shareholder, partner, member, officer,
director, underwriter or controlling person of Holder.
(b) To the extent permitted by law, the Holder will indemnify
and hold harmless (i) the Company, each of its directors, each of its officers
who have signed the registration statement, each person, if any, who controls
the Company within the meaning of the Act and (ii) any underwriter, against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, controlling person or underwriter may become subject under
the Act, the 1934 Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by Holder expressly for use in connection with
such registration; and Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 8.6(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; and provided further, that the total amounts
payable in indemnity by a Holder under this Section 8.6(b) in respect of any
Violation shall not exceed the net proceeds received by Holder in the registered
offering out of which such Violation arises.
(c) Promptly after receipt by an indemnified party under this
Section 8.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 8.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 8.6, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 8.6.
(d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of the Company and Holder are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Act.
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8.7. Survival. The obligations of the Company and Holder under Section
8.6 shall survive the completion of any offering of Shares in a registration
statement, and otherwise.
8.8. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit the
sale of the Shares to the public without registration, after such time as a
public market exists for the Common Stock of the Company, the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act, at all times after the
effective date of the first registration under the Act filed by the Company for
an offering of its securities to the general public;
(b) Use reasonable, diligent efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Act and the 1934 Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as Holder owns the Warrant or any Shares, to furnish
to the Holder upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of the
Act and the 1934 Act (at any time after it has become subject to the reporting
requirements of the 1934 Act), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as
the Holder may reasonably request in availing itself of any rule or regulation
of the Commission allowing a Holder to sell any such securities without
registration (at any time after the Company has become subject to the reporting
requirements of the 1934 Act).
9. Fractional Shares. The Company shall not be required to issue a
fractional share upon the exercise of this Warrant the aggregate number of
shares issuable will be rounded up to the nearest full share.
10. Split-Up, Combination, Exchange and Transfer of Warrants. Subject to
and limited by the provisions of Section 5(a) hereof, this Warrant at the
request of the Holder may be split up, combined or exchanged for another Warrant
or Warrants containing the same terms and entitling the Holder to purchase a
like aggregate number of Shares. If the Holder desires to split up, combine or
exchange this Warrant, the Holder shall make such request in writing delivered
to the Company and shall surrender to the Company this Warrant and any other
Warrants to be so split up, combined or exchanged. Upon any such surrender for a
split-up, combination or exchange, the Company shall execute and deliver to the
person entitled thereto a Warrant or Warrants, as the case may be, as so
requested. The Company shall not be required to effect any split-up, combination
or exchange which will result in the issuance of a Wan-ant entitled the
Warrantholder to purchase upon exercise a fraction of a share of Common Stock or
a fractional Warrant. The Company may require such Holder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any split-up, combination or exchange of Warrants.
11. Successors and Assigns. All the covenants and provisions of this
Warrant shall bind and inure to the benefit of the Company's successors and
assigns, and the heirs, legatees, devisees, executors, administrators, personal
and legal representatives, and successors and permitted assigns of Holder.
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12. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws, and not the laws of conflicts, of the State of
Delaware. The Holder hereby consents and agrees to submit to the jurisdiction in
the United States of the District Court of the State of Texas located in Xxxxxx
County or of the United States District Court for the Southern District of Texas
for any action or proceeding brought by the Company arising under this Warrant
and to the venue of such action or proceeding in such courts.
CHENIERE ENERGY, INC.
By: /s/ Xxx X. Xxxxxxxxx
---------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Chief Financial Officer
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