EXHIBIT 10.20
OPTION PURCHASE AGREEMENT
This Option Purchase Agreement (the "Agreement") is made and entered into
as of June 4, 2002, by and between Contango Sundance, Inc., a Delaware
corporation and its affiliates ("Contango") and Cheniere Energy, Inc., a
Delaware corporation and its affiliates ("Cheniere"), each a "party" and
collectively the "parties."
R E C I T A L S
A. Cheniere intends to form a limited partnership ("Freeport") for the
purpose of developing one or more LNG receiving and regasification facilities in
Freeport, Texas (the "Project").
B. Contango desires to obtain from Cheniere, and Cheniere desires to grant
to Contango, an option, composed of two tranches (the First Option and the
Second Option, as defined herein), to acquire up to 20% of the partnership
interests of Freeport (the "Freeport Interests"), on a fully diluted basis, on
the terms and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
1. Definitions.
1.1 The following terms shall have meanings assigned to them below:
1.1.1 "Agreement" shall have the meaning assigned to it in the
introductory paragraph.
1.1.2 "Cheniere" shall have the meaning assigned to it in the
introductory paragraph.
1.1.3 "Cheniere Additional Sale Notice" shall have the meaning assigned
to it in Section 7.5
1.1.4 "Cheniere Indemnified Parties" shall have the meaning assigned to
it in Section 8.2.
1.1.5 "Contango" shall have the meaning assigned to it in the
introductory paragraph.
1.1.6 "Contango Indemnified Parties" shall have the meaning assigned to
it in Section 8.1.
1.1.7 "Development Schedule" shall have the meaning assigned to it in
Section 7.2.6.
1.1.8 "Financing Statements" shall have the meaning assigned to it in
Section 3(a).
1.1.9 "First Option" shall have meaning assigned to it in Section 2.
1.1.10 "First Option Expiration Date" shall have the meaning assigned to
it in Section 2.1.
1.1.11 "First Option Price" shall have the meaning assigned to it in
Section 2.2.1.
1.1.12 "Freeport" and "Freeport Interests" shall have the meanings
assigned to them in the Recitals.
1.1.13 "Note" shall have the meaning assigned to it in Section 2.2.2.
1.1.14 "Option Price" shall have the meaning assigned to it in Section 2.
1.1.15 "Partnership Agreement" shall have the meaning assigned to it in
Section 7.2.
1.1.16 "Prepayment Amount" shall have the meaning assigned to it in
Section 7.2.4(f).
1.1.17 "Project" shall have the meaning assigned to it in the Recitals.
1.1.18 "Second Option" shall have the meaning assigned to it in Section 2.
1.1.19 "Second Option Expiration Date" shall have the meaning assigned to
it in Section 2.3
1.1.20 "Second Option Price" shall have the meaning assigned to it in
Section 2.4.
1.1.21 "Security Agreement" shall have the meaning assigned to it in
Section 3(a).
2. Option to Purchase. Upon the terms and subject to the conditions set forth in
this Agreement, in exchange for a payment of $750,000 by Contango in immediately
available funds (the "Option Price"), Cheniere hereby grants Contango an
exclusive option (i) to purchase 10% of the Freeport Interests (the "First
Option") and (ii) to purchase an additional 10% of the Freeport Interests (the
"Second Option"), such that upon exercise of the Second Option Contango would
own 20% of the Freeport Interests on a fully diluted basis.
2.1 First Option Term. The First Option shall be exercisable at any time on
or prior to the First Option Expiration Date (as defined). The First Option
shall expire (the "First Option Expiration Date") upon the earlier to occur
of (i) December 15, 2002 and (ii) the date that is seven (7) days after
Contango's receipt of a Cheniere Additional Sale Notice.
2.2 First Option Price.
2.2.1 The exercise price for the First Option (the "First Option Price")
shall be One Million Five Hundred Thousand Dollars ($1,500,000),
payable as follows:
(a) Contango shall pay Cheniere the Option Price on the date of this
Agreement, which amount shall be credited to the First Option Price;
(b) the balance of $750,000 shall be paid by Contango on the date the
First Option is exercised in immediately available funds; and
(c) any amount payable pursuant to Section 7.2 hereof.
2.2.2 Upon the expiration without exercise of the First Option in
accordance with its terms, the Option Price shall be refunded,
together with any applicable interest, to Contango on or before
July 15, 2003 in accordance with the terms of the promissory note
(the "Note") of Cheniere, attached hereto as Exhibit B.
2.3 Second Option Term. The Second Option shall become exercisable on the date
the First Option is exercised. The Second Option shall expire on the earlier to
occur of (i) the First Option Expiration Date if Contango fails to exercise the
First Option on or prior thereto or (ii) December 15, 2002, provided that if the
payment specified in Section 2.4(b)(i) has not been delivered to Cheniere, the
Second Option shall expire at the close of business on September 15, 2002 (such
date as applicable, the "Second Option Expiration Date").
2.4 Second Option Price. The price for the Second Option (the "Second Option
Price") shall be One Million Five Hundred Thousand Dollars ($1,500,000), payable
as follows:
(a) if the Second Option is exercised prior to September 15, 2002,
$1,500,000 (plus any amount required by Section 7.2) shall be paid by
Contango on the date of exercise; and
(b) if the Second Option is not exercised prior to September 15,
2002, then (i) on September 15, 2002, Contango shall pay Cheniere
$250,000 as a nonrefundable deposit on the Second Option Price and
(ii) on the date the Second Option is exercised, Contango shall pay
Cheniere $1,250,000 (plus any amount required by Section 7.2).
2.5 Method of Exercise; Option Closings. In the event Contango elects to
exercise the First Option and/or the Second Option, the purchase and sale of the
Freeport Interests covered thereby shall occur at one or more subsequent
closings as specified in the Option
Exercise Notice (as defined below) or at such other time as Cheniere and
Contango mutually agree.
2.5.1 Exercise of First Option. Contango shall exercise the First Option
by delivering written notice of exercise (the "Option Exercise
Notice") to Cheniere on or prior to the First Option Expiration
Date, which notice shall specify the exercise date of such option
which shall occur prior to the First Option Expiration Date. On the
exercise date, a closing shall occur whereby (i) Contango shall
deliver to Cheniere the payment set forth in Section 2.2.1(b) and
(c) hereof, the Note and terminations of the Security Agreement and
the Financing Statements along with a release as reasonably
requested by Cheniere and (ii) the parties shall enter into a
joinder to the Partnership Agreement (as defined below), admitting
Contango as a partner in Freeport, owning a 10% partnership interest
in Freeport, in accordance with the terms of this Agreement.
2.5.2 Exercise of Second Option. Contango shall exercise the Second Option
by delivering an Option Exercise Notice to Cheniere on or prior to
the Second Option Expiration Date, which notice shall specify the
exercise date of such option which shall occur prior to the Second
Option Expiration Date. On the exercise date, a closing shall occur
whereby (i) Contango shall deliver to Cheniere the payment set forth
in Section 2.4(a) or 2.4(b) hereof, as applicable, and (ii) Contango
shall then own a 20% partnership interest in Freeport, in accordance
with the terms of this Agreement and the Partnership Agreement.
3. Security. Cheniere's obligation to refund the Option Price to Contango shall
be secured by the following:
(a) the grant to Contango of a security interest in all revenue
and receivables of Cheniere and its affiliates, including without
limitation all oil and gas receivables, as evidenced by a
security agreement (the "Security Agreement"), attached hereto as
Exhibit A, to be entered into on the date hereof and the filing
of a UCC-1 or other applicable financing statement or statements
(the "Financing Statements") with the secretary of state of
Delaware; and
(b) the execution by Cheniere on the date hereof of the Note,
attached hereto as Exhibit B, in favor of Contango in the
principal amount of $750,000, evidencing Cheniere's obligations
under Section 2.2.2 of this Agreement.
4. Intentionally Omitted.
5. Representations and Warranties of Cheniere. Cheniere represents and warrants
to Contango as follows:
5.1 Corporate Existence; Authority. Cheniere is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware, and it has all requisite power and authority to own and operate
its property, to carry on its business as now conducted and to carry out
the transactions contemplated by this Agreement. Cheniere is duly qualified
to transact business and is in good standing in each jurisdiction in which
such qualification is required. The individual executing and delivering
this Agreement on behalf of Cheniere has been duly authorized to execute
and deliver this Agreement on behalf of Cheniere, and the signature of such
individual is binding upon Cheniere.
5.2 Enforceability. This agreement constitutes the valid and binding
agreement of Cheniere, enforceable in accordance with its terms, except as
such enforceability may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
5.3 No Conflicts. The execution and performance of this Agreement, the
Security Agreement, the Financing Statements and the Note by Cheniere will
not (a) violate or conflict with Cheniere's certificate of incorporation or
bylaws or any agreements; (b) conflict with or violate any judicial or
administrative order, award, judgment or decree applicable to Cheniere; (c)
conflict with any of the terms, conditions or provisions of any mortgage,
instrument, lease, agreement, contract or restriction to which Cheniere is
a party, or by which Cheniere is bound, or require the approval of any
creditor of Cheniere or any other party; (d) violate any provision of any
federal or state statute, rule or regulation applicable to Cheniere, except
where such failure or violation would not have a material adverse effect on
Cheniere's ability to perform its obligations hereunder and thereunder.
5.4 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with,
any federal, state or local governmental authority on the part of Cheniere
is required in connection with the consummation of the transactions
contemplated by this Agreement.
5.5 Litigation. There is no litigation or other legal, administrative or
governmental proceeding pending or, to the knowledge of Cheniere,
threatened against or relating to Cheniere or its properties or business,
that if determined adversely to Cheniere may reasonably be expected to have
a material adverse effect on Cheniere's ability to perform its obligations
under this Agreement, the Note, the Security Agreement and the Financing
Statements.
5.6 Brokers' or Finders' Fees. No agent, broker, investment banker, person
or firm acting on behalf of Cheniere other than Xxxxxx Xxxxxxx & Co. (the
fees for which will be borne solely by Cheniere), is or will be entitled to
any brokers' or finders' fee or any
other commission or similar fee directly or indirectly from any of the
parties hereto in connection with any of the transactions contemplated
hereby.
6. Representations and Warranties of Contango. Contango represents and warrants
to Cheniere as follows:
6.1 Corporate Existence; Authority. Contango is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware, and it has all requisite power and authority to carry on its
business as now conducted and to carry out the transactions contemplated by
this Agreement. Contango is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification is required.
The individual executing and delivering this Agreement on behalf of
Contango has been duly authorized to execute and deliver this Agreement on
behalf of Contango, and the signature of such individual is binding upon
Contango.
6.2 Enforceability. This agreement constitutes the valid and binding
agreement of Contango, enforceable in accordance with its terms, except as
such enforceability may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
6.3 No Conflicts. The execution and performance of this Agreement and the
Security Agreement by Contango will not (a) violate or conflict with
Contango's certificate of incorporation or bylaws or any agreements; (b)
conflict with or violate any judicial or administrative order, award,
judgment or decree applicable to Contango; (c) conflict with any of the
terms, conditions or provisions or any mortgage, instrument, lease,
agreement, contract or restriction to which Contango is a party, or by
which Contango is bound, or require the approval of any creditor of
Contango or any other party; (d) violate any provision of any federal or
state statute, rule or regulation applicable to Contango, except where such
failure or violation would not have a material adverse effect on Contango's
ability to perform its obligations hereunder and thereunder.
6.4 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with,
any federal, state or local governmental authority on the part of Contango
is required in connection with the consummation of the transactions
contemplated by this Agreement.
6.5 Litigation. There is no litigation or other legal, administrative or
governmental proceeding pending or, to the knowledge of Contango,
threatened against or relating to Contango or its properties or business,
that if determined adversely to Contango may reasonable be expected to have
a material adverse effect on Contango's ability to perform its obligations
under this Agreement or the Security Agreement.
6.6 Brokers' or Finders' Fees. No agent, broker, investment banker, person
or firm acting on behalf of Contango other than Growth Capital Partners
(the fees for which will be borne solely by Contango), is or will be
entitled to any brokers' or finders' fee or any
other commission or similar fee directly or indirectly from any of the
parties hereto in connection with any of the transactions contemplated
hereby.
7. Covenants.
7.1 Limitation on Indebtedness; No Sale of Business. Cheniere shall be
prohibited, until such time as the First Option is exercised or, in the
event the First Option expires in accordance with its terms, until the
Option Price (together with interest thereon) has been refunded to
Contango, from (i) incurring any other indebtedness for borrowed money,
other than unsecured indebtedness that is junior and subordinate in right
of payment to Cheniere's obligations under the Note, which subordination
shall be pursuant to documentation reasonably satisfactory to Contango,
(ii) grant a security interest, mortgage, pledge or otherwise xxxxx x xxxx
in any of its property or assets to secure payment of a debt or the
performance of an obligation, and (iii) directly or indirectly selling all
or any substantial portion of its assets outside the ordinary course of
business; provided that Cheniere may farm out existing oil and gas existing
leases to third party industry partners and may sell up to an additional
40% of the Freeport Interests.
7.2 Partnership Agreement. On the date of an exercise of the First Option
by Contango, the parties shall enter into an agreement of limited
partnership (the "Partnership Agreement") with Freeport LNG GP, Inc., a
wholly owned subsidiary of Cheniere, as general partner, that will be in
form and substance reasonably satisfactory to Contango. Prior to execution
of the Partnership Agreement, Cheniere, Contango and all other prospective
partners therein as identified by Cheniere shall negotiate the Partnership
Agreement and its terms in good faith. Notwithstanding anything herein to
the contrary, unless otherwise agreed to by both parties, the terms of the
Partnership Agreement shall include without limitation the following:
7.2.1 Effective Date. The effective date of Contango's ownership of the
Freeport Interests purchased upon exercise of the First Option and,
if applicable, the Second Option shall be the date of formation of
the partnership.
7.2.2 Partner Interest. The ownership interest in Freeport of Contango (or
its designated affiliate) shall be a limited and/or general
partnership interest.
7.2.3 General Partner: Freeport LNG GP, Inc., a wholly owned Cheniere
subsidiary, will own 1% of Freeport as the general partner and shall
be the managing partner of Freeport.
7.2.4 Expenditures: Expenditures after January 1, 2002 will be funded by
cash calls paid by the partners in accordance with the following:
(a) With respect to the first Five Million Dollars ($5,000,000) incurred
after January 1, 2002, such expenditures will be funded by the partners by cash
calls pro rata in accordance with their respective partnership interests,
payable according to procedures outlined in the Partnership Agreement.
(b) Beginning with the first dollar of additional capital contributions in
excess of Five Million Dollars ($5,000,000), all partners will make their
contributions pro rata in accordance with their respective partnership interests
according to procedures outlined in the Partnership Agreement.
(c) Cash expenditures incurred by Cheniere or its affiliates from January
1, 2002 will be credited against Cheniere's pro rata share of the initial cash
call. Through June 30, 2002, such expenditures are estimated at $1,500,000.
(d) Cheniere and its affiliates have accrued liabilities related to
development expenditures for the Project after January 1, 2002, which will be
payable by Freeport. Through June 30, 2002, such liabilities are estimated at
$500,000.
(e) A preliminary budget for 2002 and 2003 will be attached to the
Partnership Agreement. The attached budget shall include both the cash
expenditures and liabilities described above.
(f) An initial cash call relating to 2002 operating expenses will be made
after the formation of the partnership. Such initial cash call will require
Contango to contribute One Million Dollars ($1,000,000) to Freeport on the later
to occur of the exercise date, or the date specified in the Partnership
Agreement for funding of the capital call by all partners, regardless of whether
the Second Option has then been exercised. Such payment by Contango shall be
credited against Contango's pro rata share of the initial $5,000,000 capital
call, and then the excess remaining credited as a prepayment of Contango's pro
rata share of either the initial $5,000,000 capital call related to the
interests acquired pursuant to the Second Option, or if Contango fails to
exercise such Second Option, Contango's pro rata share on future capital calls
(the "Prepayment Amount"); provided that in the event Contango subsequently
exercises the Second Option, the Prepayment Amount shall be reallocated and
applied to Contango's pro rata share of 2002 operating expenses relating to the
interests acquired upon exercise of the Second Option.
7.2.5 Failure To Fund Cash Calls: If any partner in Freeport obligated to
make a capital contribution to Freeport fails to make such
contribution, any other partner or partners may fund such
contribution and increase its ownership interest in Freeport in
proportion to the contribution made, with the non-contributing
partner's equity position in Freeport being diluted accordingly.
7.2.6 Annual Budget: An addendum will be included setting forth an
operating and capital expenditure budget for fiscal years 2002 and
2003.
7.2.7 Noncompetition: Each of the partners in Freeport will not compete,
directly or indirectly, with Freeport in the building, owning and
operating of LNG receiving and regasification facilities within 20
miles of Freeport, Texas.
7.2.8 Transferability: Contango and Cheniere, or their affiliates, will
have a right to transfer all or a portion of their respective
ownership in Freeport to
an affiliate, subject to certain customary restrictions. Transfer
rights to third parties will be agreed and specified.
7.2.9 Dissolution: The rights of each partner with respect to the
dissolution of Freeport shall be specified.
7.2.10 Standstill: Cheniere will agree not to actively pursue development
of its other potential LNG sites in Texas with LNG suppliers until
firm Terminal Use Agreements of at least the equivalent of 600
MMcf/d of natural gas have been executed for the Project.
7.2.11 Governing Law: The Partnership Agreement will be governed by the
laws of the State of Texas, without reference to its choice of law
principles.
7.3 Formation of Entity. Cheniere agrees to form the Freeport entity as soon as
practicable after the date of this Agreement and to take all action necessary
for the sale of partnership interests in such entity to Contango upon exercise
of the First Option and the execution of the Partnership Agreement.
7.4 Conduct of Partnership. After the formation of Freeport and until such time
as the First Option is exercised, Cheniere will cause Freeport LNG GP, Inc., as
managing partner of Freeport, to conduct the business of the partnership as
contemplated by the parties to this Agreement on the date hereof, including
without limitation complying with the terms of the Partnership Agreement and the
purpose of the partnership as stated therein and developing the Project in
accordance with customary and reasonably prudent development standards for an
LNG receiving and regasification facility.
7.5 Sale of Additional Interests. Cheniere agrees that, prior to the exercise of
the First Option, it shall and it shall cause Freeport to sell additional
interests in Freeport to additional investors only on terms that are no less
favorable than those obtained by Contango hereunder. Promptly after the sale of
twenty percent (20%) or more of the interests in Freeport to additional
investors on terms no less favorable than those obtained by Contango, Cheniere
shall deliver to Contango notice thereof, including the financial and other
terms of such sales (the "Cheniere Additional Sales Notice"). Notwithstanding
anything in this Agreement to the contrary, the Cheniere Additional Sales Notice
shall be deemed to have been given to Contango if and only if (i) it is
delivered personally, (ii) it has been faxed to Contango, upon electronic
confirmation of receipt of such fax (provided such fax is immediately confirmed
by overnight mail or delivery service requiring signature by Contango on
receipt), or (iii) it is delivered by overnight mail or delivery service
requiring signature by Contango on receipt, in which case it shall be deemed
delivered on the date the delivery signature is obtained.
7.6 Certain Payments. All revenues relating to the proposed operation of the
Project received by Cheniere, its affiliates or Freeport on or after January 1,
2002 shall be considered to be the property of Freeport and received for its
benefit, to be held or distributed, as the case may be, in accordance with the
terms of the Partnership Agreement and shall be allocated amongst the partners
pro rata in accordance with their
respective percentage interests in the Partnership (which, in the case of
Contango, shall be Contango's percentage interest as of December 15, 2002).
7.7 Confidentiality. The contents of this Agreement are intended to be
confidential and are not to be discussed with or disclosed to any third
person, except (i) with the express prior written consent of the other
party hereto, (ii) as may be required or appropriate in response to any
summons, subpoena or discovery order or to comply with any applicable law,
order, regulation or ruling, provided that (a) the disclosing party seeks,
under applicable law, confidential treatment for such information by the
governmental or regulatory authority or such other recipient and (b) prior
to such disclosure, the other party is given prompt written notice of the
disclosure requirement so that it may take whatever action it deems
appropriate, including intervention in any proceeding and the seeking of an
injunction to prohibit such disclosure; or (iii) to financial advisors,
legal counsel and other consultants assisting such party, or to third
parties in order to obtain such consents or approvals from such third
parties as may be necessary or desirable, provided that such advisors,
counsel, consultants and third parties have either entered into
confidentiality arrangements with the party disclosing such confidential
information to such persons, or they agree to become bound by the terms of
this Section 7.7 as if they were a party to this letter; provided, that
nothing contained herein shall prevent any party from promptly making such
disclosures as may, in its good faith judgment, be required or advisable
under applicable securities laws (in which case the disclosing party shall
advise the other party and provide them with a copy of the proposed
disclosure prior to making such disclosure).
7.8 Further Actions. Each of the parties hereto agrees that it will, at any
time, and from time to time, upon the request of the appropriate party, do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be
required to consummate the transaction contemplated by this Agreement.
8. Indemnification.
8.1 Indemnity by Cheniere Against Claims. Cheniere hereby indemnifies and
holds harmless Contango and its shareholders, employees, agents,
affiliates, successors and assigns (the "Contango Indemnified Parties")
from and against the following:
8.1.1 any and all losses, costs, liabilities, damages, or deficiencies
resulting from any misrepresentation, breach or failure of any
warranty or non-fulfillment of any agreement, covenant or
undertaking on the part of Cheniere contained in this Agreement; and
8.1.2 any and all claims, actions, suits, proceedings, demands,
assessments, judgments, costs and expenses (including, but not
limited to, reasonable attorneys', accountants' or other
professional fees incident to this Section 8.1).
8.2 Indemnity by Contango Against Claims. Contango hereby indemnifies and
hold harmless Cheniere and its shareholders, employees, agents, affiliates,
successors and assigns (the "Cheniere Indemnified Parties") from and
against the following:
8.2.1 any and all losses, costs, liabilities, damages or deficiencies
resulting from any misrepresentation, breach or failure of any
warranty or non-fulfillment of any agreement, covenant or
undertaking on the part of Contango contained in this Agreement; and
8.2.2 any and all actions, suits, proceedings, demands, assessments,
judgments, costs and expenses (including, but not limited to,
reasonable attorneys', accountants' and other professional fees
incident to this Section 8.2).
8.3 Remedies. Upon the occurrence of any event for which any of the
Contango Indemnified Parties or the Cheniere Indemnified Parties, as the
case may be, is entitled to indemnification under this Agreement, such
indemnified party shall have all of the rights and remedies in law and in
equity available to it.
9. Miscellaneous.
9.1 Inurement; Binding Effect. This agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective
successors, and assigns.
9.2 Assignment. Neither party may assign any of its rights under this
Agreement, except that either party may assign its rights under this
Agreement to one or more of its wholly owned affiliates (or in the case of
Contango, any wholly owned subsidiary of Contango Oil & Gas Company);
provided, that no such assignment shall relieve any assigning party from
any of its obligations hereunder.
9.3 Third Parties. Nothing in this Agreement shall confer upon any person
or entity not a party to this Agreement, any rights or remedies of any
nature or kind whatsoever under or by reason of this Agreement.
9.4 Notices. All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed to have been given
or made if in writing and delivered personally or sent by registered or
certified mail (postage prepaid, return receipt requested) to the parties
at the following addresses (or at such other address as a party may specify
by notice given pursuant to this Section 9.4):
If to Contango:
Contango Sundance, Inc.
0000 Xxxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Peak
Facsimile No.: 000-000-0000
with a required copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: 000-000-0000
If to Cheniere:
Cheniere Energy, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxx
Telephone No.: (000) 000 0000
with a required copy to:
Xxxxxxx & Xxxxx, L.L.P.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Except as set forth elsewhere in this Agreement, such notice or
communication shall be deemed to have been given when delivered personally,
upon electronic confirmation of receipt if by fax (provided such fax is
immediately confirmed by registered or certified mail (postage prepaid,
return receipt requested), or the earlier of (i) the date delivered or (ii)
three days after being mailed (with the first day of this three day period
being the day following mailing).
9.5 Entire Agreement. This agreement, together with the Security Agreement,
the Note and the Partnership Agreement (collectively, the "Transaction
Documents"), shall constitute the entire subject matter concerning the
granting of an option by Cheniere to Contango for the purchase of the
Freeport Interests, and there are no agreements, undertakings,
restrictions, representations, or warranties among the parties for the
option to purchase the Freeport Interests other than those set forth in the
Transaction Documents. This agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings, and agreements
between the parties relating to the granting of an option by Cheniere to
Contango for the purchase of the Freeport Interests.
9.6 Amendment. This Agreement may be amended, modified, or supplemented
only by a writing signed by Contango and Cheniere.
9.7 Waiver. The waiver by either party of the performance by the other
party of any provision of this Agreement shall not invalidate this
Agreement, nor shall it be considered a waiver of any other provision of
this Agreement, nor shall it be considered a waiver of the performance of
such provision required to be made at a later date. The
waiver by either party of any breach by the other party of any provision of
this Agreement shall not constitute a waiver of the breach of any other
provision of this Agreement, or of any preceding or succeeding breach of
the same provision. Any waiver under this Agreement must be in writing and
signed by the waiving party to be effective, and shall be effective only to
the extent of such writing.
9.8 Severability, Construction. This agreement shall be deemed severable,
and the invalidity and unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of this Agreement or of any
other provision of this Agreement. If any provision of this Agreement or
and agreement delivered pursuant hereto, is invalid due to its scope or
breadth, such provision shall be deemed valid to the extent of the scope or
breadth permitted by law.
9.9 Section Headings. The section headings contained in this Agreement are
solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall be considered one and the same agreement.
9.11 Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES. THE PARTIES
HERETO AGREE THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR IN ANY
MANNER RELATING TO THIS AGREEMENT SHALL BE BROUGHT IN ANY COURT OF THE
STATE OF DELAWARE OR IN THE UNITED STATES DISTRICT COURT LOCATED IN
DELAWARE. THE PARTIES HERETO CONSENT AND SUBMIT TO PERSONAL JURISDICTION OF
ANY SUCH COURT IN ANY ACTION OR PROCEEDING.
9.12 Costs. All costs and expenses (including legal and accounting fees)
incurred by either party in negotiating this Agreement and carrying out the
transactions contemplated by this Agreement shall be paid by the party
incurring such fees and costs.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date and year first above written.
CONTANGO:
CONTANGO SUNDANCE, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Peak
Name: Xxxxxxx X. Peak
Title: Chairman and Chief Executive Officer
CHENIERE:
CHENIERE ENERGY, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EXHIBIT A
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of June 4, 2002 (the "Security Agreement")
is by and between CHENIERE ENERGY, INC., a Delaware corporation (the "Debtor")
and CONTANGO OIL & GAS COMPANY, a Delaware corporation (the "Secured Party").
WHEREAS, pursuant to the terms of an Option Purchase Agreement dated of
even date herewith (the "Purchase Agreement") between the Debtor and Secured
Party, Debtor agreed to purchase, and Secured Party agreed to sell, an option,
composed of two tranches (the First Option and the Second Option, each as
defined in the Purchase Agreement), to acquire up to 20% of the partnership
interests of a limited partnership ("Freeport") formed for the purpose of
developing one or more LNG receiving and regasification facilities in Freeport,
Texas (the "Freeport Interests"), on a fully diluted basis, upon the terms and
conditions set forth therein.
WHEREAS, in connection with the Purchase Agreement, the Secured Party has
agreed to make an initial payment of $750,000.00 (the "Initial Payment"), which
amount shall be refunded to the Secured Party (with interest thereon) in the
event the First Option expires without having been exercised (the "Refund"). The
Debtor's obligation to repay the Refund is evidenced by, and subject to, the
terms of that certain Secured Promissory Note in the original principal amount
of $750,000.00, dated of even date herewith (as the same may be further amended,
supplemented, or otherwise modified, renewed or replaced from time to time, the
"Note") by the Debtor in favor of the Secured Party.
WHEREAS, the Debtor has agreed to grant to the Secured Party a security
interest in the Collateral (as hereinafter defined) to secure its obligations
under the Note and Purchase Agreement to repay the Refund (if applicable), to
the extent and in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the above premises, the parties hereto
agree as follows:
SECTION 1. Definitions. When used in this Security Agreement:
"Collateral" shall mean all of the Debtor's right, title and interest in
the Debtor's accounts, revenue and accounts receivables (including without
limitation, all oil and gas receivables), all rights to payment thereof
evidenced by chattel paper (including tangible chattel paper and electronic
chattel paper) or instruments, all letters of credit and letter of credit
rights, all payment intangibles, all supporting obligations, and any and all
proceeds thereon, products thereof or income therefrom.
"Event of Default" shall mean the occurrence of any of the following
events: (1) an Event of Default (as defined in the Note), or (2) the failure of
the Debtor to comply with or perform any of the covenants contained herein.
"Obligations" shall mean all obligations of the Debtor to make due and
punctual payment of principal of and interest and any fees under the Note, costs
and attorneys' fees, and all other monetary obligations of the Debtor to the
Secured Party hereunder and under the Note, now or hereafter existing, or due or
to become due.
All terms not otherwise defined herein shall have the respective meanings
set forth in the Note. Terms not otherwise defined herein or in the Note shall
have, where appropriate, their respective definitions as set forth in the
Uniform Commercial Code as in effect in the State of Delaware.
SECTION 2. Grant of Security Interest. As security for the prompt and
complete payment when due of the Obligations, the Debtor hereby grants to the
Secured Party a security interest in all of his right, title and interest in and
to all Collateral.
SECTION 3. Representations and Warranties of the Debtor. The Debtor hereby
represents and warrants to the Secured Party that: (i) it is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) it has the corporate power and authority to
own its properties, carry on its business as it is currently being conducted and
to execute, deliver and perform its obligations under this Security Agreement
and the Note, (iii) the execution, delivery and performance by the Debtor of
this Security Agreement and the Note have been duly authorized by all necessary
corporate action, will not constitute a violation of any indenture, agreement,
or undertaking to which the Debtor is a party or by which the Debtor is bound,
will not violate any provision of the Certificate of Incorporation or By-laws of
the Debtor, and will not violate any provision of applicable law, and order of
any court or other agency of the United States or any state thereof applicable
to the Debtor or its assets in properties; (iv) the execution, delivery and
performance of this Security Agreement will not result in the creation or
imposition of any lien or charge on, security interest in or other encumbrance
on any of the assets of the Debtor except as contemplated by this Security
Agreement; (v) no consent of any other party (including, without limitation,
creditors of the Debtor) and to the Debtor's knowledge, no permit, approval or
authorization of, exemption by, notice or report to or registration or filing
with, any governmental authority is required to be obtained by the Debtor in
connection with the execution, delivery and performance of this Security
Agreement; (vi) no financing statement, mortgage, notice of lien, deed of trust,
security agreement, or any other agreement or instrument creating or giving
notice of an encumbrance or charge against any of the Collateral is in existence
or on file in any public office other than those created or filed pursuant to
the terms of this Security Agreement in favor of the Secured Party and (vii)
this Security Agreement, when executed and delivered, will create and grant to
the Secured Party (upon the filing of the appropriate UCC financing statements)
a valid lien on and a perfected security interest in favor of the Secured Party
in, all right, title or interest of the Debtor in or to the Collateral, subject
to no prior pledge, lien, security interest, charge or encumbrance or to any
agreement purporting to grant any third party a security interest in the
Collateral.
SECTION 4. Covenants of the Debtor. The Debtor hereby covenants and agrees
that:
(a) It will keep the Collateral free and clear of all security interests,
liens and claims other than the security interest and lien herein granted and
will not sell, assign, transfer, exchange or otherwise dispose of, or grant any
option with respect to, the Collateral except by assignment to the Secured
Party.
(b) It will defend the Secured Party's right, title and security interest
in and to the Collateral against claims and demands of all persons whomsoever.
(c) It will not change its name, organization structure, jurisdiction of
incorporation or its location except upon 30 days' prior written notice to the
Secured Party.
SECTION 5. The Secured Party's Rights Exclusive of the Debtor's Default.
The Debtor hereby agrees to permit representatives of the Secured Party, upon
reasonable notice to the Debtor, to discuss its records in connection with the
Collateral at such reasonable times and as often as may be reasonably requested
by the Secured Party. The Secured Party, from time to time, at its option may
take any other action which the Secured Party deems necessary for the
maintenance or preservation of any of the Collateral or its interest therein.
The Secured Party shall have the right to designate any officer, employee or
attorney to execute, sign, endorse, assign, transfer or deliver in the name of
the Debtor or in its name any documents or certificates necessary to evidence,
perfect and realize upon the security interest granted herein and the
Obligations.
SECTION 6. The Secured Party's Rights and Remedies Upon the Debtor's
Default.
(a) Collections, etc. Upon the occurrence and during the continuance of an
Event of Default, the Secured Party may, in its sole discretion, in its name or
in the name of the Debtor or otherwise, demand, xxx for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for, or make any compromise or settlement deemed desirable with respect to, the
Collateral, but shall be under no obligation so to do, or the Secured Party may
extend the time of payment, arrange for payment in installments, or otherwise
modify the terms of, or release, any of the Collateral, without thereby
incurring responsibility to, or discharging or otherwise affecting any liability
of the Debtor. The Secured Party will not be required to take any steps to
preserve any rights against prior parties to the Collateral. If the Debtor fails
to make any payment or to take any action required hereunder, the Secured Party
may make such payments and take all such actions as the Secured Party reasonably
deems necessary to protect the Secured Party's security interests in the
Collateral and/or the value thereof, and the Secured Party is hereby authorized
(without limiting the general nature of the authority hereinabove conferred) to
pay, purchase, contest or compromise any liens which in the judgment of the
Secured Party appear to be equal to, prior to or superior to the security
interests of the Secured Party in the Collateral and any liens not expressly
permitted by this Security Agreement.
(b) Possession, Sale of Collateral, etc. Upon the occurrence and during the
continuance of an Event of Default, the Secured Party may take such measures as
it may deem necessary or proper for the care or protection of the Secured
Party's rights and remedies hereunder, including the right to sell or cause to
be sold, whenever the Secured Party shall decide, in one or more sales or
parcels, at such prices as the Secured Party may deem best, and for cash or on
credit or for future delivery, without assumption of any credit risk, all or any
portion of the Collateral, at any broker's board or at a public or private sale,
without any demand of performance or notice of intention to sell or of the time
or place of sale (except 10 days' written notice to the Debtor of the time and
place of any such sale or sales and such other notices as may be required by
applicable law and cannot be waived), and any person may be the purchaser of all
or any portion of the Collateral so sold and thereafter hold the same
absolutely, free (to the fullest extent permitted by applicable law) from any
claim or right of whatever kind, including any equity of redemption, of the
Debtor, any such demand, notice, claim, right or
equity being hereby expressly waived and released to the fullest extent
permitted by applicable law. At any sale or sales made pursuant to this Section
6, the Secured Party may bid for or purchase, free (to the fullest extent
permitted by applicable law) from any claim or right of whatever kind, including
any equity of redemption, of the Debtor any such demand, notice, claim, right or
equity being hereby expressly waived and released, any part of or all of the
Collateral offered for sale, and may make any payment on account thereof by
using any claim for moneys then due and payable to the Secured Party by the
Debtor hereunder as a credit against the purchase price. The Secured Party shall
in any such sale make no representations or warranties with respect to the
Collateral or any part thereof, and the Secured Party shall not be chargeable
with any of the obligations or liabilities of the Debtor. The Debtor hereby
agrees (i) that it will indemnify and hold the Secured Party harmless from and
against any and all claims with respect to the Collateral asserted before the
taking control of the relevant Collateral by the Secured Party pursuant to this
Section 6, or arising out of any act of, or omission to act on the part of, any
person (other than the Secured Party) prior to such taking of actual possession
or control by the Secured Party, or arising out of any act on the part of the
Debtor or its agents before or after the commencement of such actual possession
or control by the Secured Party; and (ii) the Secured Party shall have no
liability or obligation to the Debtor arising out of any such claim except for
acts of willful misconduct or gross negligence or not taken in good faith. In
any action hereunder, the Secured Party shall be entitled to the appointment of
a receiver, without notice, to take possession of all or any portion of the
Collateral and to exercise such powers as the court shall confer upon the
receiver. Notwithstanding the foregoing, upon the occurrence of an Event of
Default, and during the continuation of such Event of Default, the Secured Party
shall be entitled to apply, without prior notice to the Debtor except as may be
required by applicable law, any cash or cash items constituting Collateral in
the possession of the Secured Party to payment of the Obligations then due and
payable.
(c) Application of Proceeds. The Debtor further agrees that the Secured
Party may apply any proceeds from the disposition of any of the Collateral in
the following manner: (x) first, to the payment of all costs and expenses
incurred in connection with the sale of or other realization on any of the
Collateral, including attorneys' fees and expenses if the Secured Party
endeavored to collect the obligations of the Debtor owing the Secured Party by
or through an attorney at law and (y) second, to the payment, in whole or in
part of the obligations of the Debtor to the Secured Party in such order as the
Secured Party may elect subject to any duty imposed by law and subject to the
direction of a court of competent jurisdiction.
(d) Power of Attorney. Upon the occurrence and during the continuance of an
Event of Default which is not waived in writing by the Secured Party (i) the
Debtor does hereby irrevocably make, constitute and appoint the Secured Party or
any of its officers or designees their true and lawful attorney-in-fact with
full power in the name of the Secured Party or such other person to endorse any
notes, checks, drafts, money orders or other evidences of payment relating to
the Collateral that may come into the possession of the Secured Party, and to do
any and all other acts necessary or proper to carry out the intent of this
Security Agreement and the grant of the security interests hereunder, and the
Debtor hereby ratifies and confirms all that the Secured Party or its
substitutes shall properly do by virtue hereof; (ii) the Debtor hereby further
irrevocably makes, constitutes and appoints the Secured Party or any of its
officers or designees its true and lawful attorney-in-fact in the name of the
Secured Party or its name (A) to enforce all of its rights under and pursuant to
all agreements with respect to the Collateral, all for the sole
benefit of the Secured Party, (B) to enter into and perform such agreements as
may be necessary in order to carry out the terms, covenants and conditions of
this Security Agreement that are required to be observed or performed by it, (C)
to execute such other and further mortgages, pledges and assignments of the
Collateral, and related instruments or agreements, as the Secured Party may
reasonably require for the purpose of perfecting, protecting, maintaining or
enforcing the security interests granted to the Secured Party hereunder, and (D)
to do any and all other things necessary or proper to carry out the intention of
this Security Agreement and the grant of the security interests hereunder and
the Debtor hereby ratifies and confirms in advance all that the Secured Party as
such attorney-in-fact or its substitutes shall properly do by virtue of this
power of attorney. In the event the Secured Party exercises the power of
attorney granted herein, the Secured Party shall concurrently with such
exercise, provide written notice to the Debtor in accordance with Section 8
hereof.
SECTION 7. Further Assurances. The Debtor agrees that it will from time to
time, on request of the Secured Party, execute such financing statements,
notices, and other documents, and pay the cost of filing or recording the same
in all public offices deemed necessary by the Secured Party and to do all such
other acts as the Secured Party may request to establish and maintain a valid
security interest in the Collateral. The Debtor hereby irrevocably appoints the
Secured Party as its attorney-in-fact (such power being coupled with an
interest) to take such action in the Debtor's name, in the case that a default
or an Event of Default shall have occurred and be continuing.
SECTION 8. Notice. If any notification of intended disposition of any of
the Collateral or of any other act by the Secured Party is required by law and a
specific time period is not stated therein such notification given at least ten
(10) days before such disposition or act, shall be deemed reasonably and
properly given. Notices and other communications provided for herein shall be in
writing and shall be delivered or mailed (or if by telecopier, delivered by such
equipment) addressed (i) if to the Secured Party, to it at 0000 Xxxxxxx
Xxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Peak, Facsimile
No. (000) 000-0000, (ii) if to Debtor, to it at 000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000, Attn: Xxxxxx Xxxxx, Telephone No. (000) 000-0000, or such
other address as such party may from time to time designate by giving written
notice to the other party hereunder. All notices and other communications given
to any party hereto in accordance with the provisions of this Security Agreement
shall be deemed to have been given on the fifth business day after the date when
sent by registered or certified mail, postage prepaid return receipt requested,
if by mail, or when receipt is acknowledged, if by telecopier, in each case
addressed to such party as provided in this Section 8 or in accordance with the
latest unrevoked written direction from such party.
SECTION 9. Non-Waiver of Rights and Remedies. No delay or failure on the
part of the Secured Party in the exercise of any right or remedy shall operate
as a waiver thereof, no single or partial exercise by the Secured Party of any
right or remedy shall preclude other or further exercise thereof or the exercise
of any other right or remedy and no course of dealing between the parties shall
operate as a waiver of any right or remedy of the Secured Party.
SECTION 10. Governing Law. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PROVISIONS. THE PARTIES HERETO AGREE THAT ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR IN ANY MANNER RELATING TO THIS SECURITY AGREEMENT
SHALL BE BROUGHT IN ANY COURT OF THE STATE OF DELAWARE OR IN THE UNITED STATES
DISTRICT COURT LOCATED IN DELAWARE. THE PARTIES HERETO HEREBY CONSENT AND SUBMIT
TO PERSONAL JURISDICTION OF ANY SUCH COURT IN ANY ACTION OR PROCEEDING..
SECTION 11. Severability. This Security Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Security Agreement shall be prohibited by or invalidated under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Security Agreement and the parties hereto
agree to negotiate in good faith a provision to replace the ineffective
provision, such provision to be as similar in effect and intent as the
ineffective provision as permissible.
SECTION 12. Amendments. This Security Agreement may not be amended except
by a writing signed by the parties hereto.
SECTION 13. Benefits. The rights and privileges of the Secured Party
hereunder shall inure to the benefits of its successors and assigns and the
obligations of the Debtor shall be binding on the Debtor's successors and
assigns.
SECTION 14. Counterparts. This Security Agreement may be executed
simultaneously in any number of counterparts, all of which taken together will
constitute one agreement, and any party hereto may execute this Security
Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this
Security Agreement to be duly executed on the date and year first written above.
DEBTOR:
CHENIERE ENERGY, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
SECURED PARTY:
CONTANGO OIL & GAS COMPANY,
a Delaware corporation
By: /s/ Xxxxxxx X. Peak
Name: Xxxxxxx X. Peak
Title: Chairman and Chief Executive Officer
EXHIBIT B
SECURED PROMISSORY NOTE
$750,000.00 Houston, Texas
June 4, 2002
FOR VALUE RECEIVED, the undersigned, CHENIERE ENERGY, INC., a Delaware
corporation ("Maker") hereby promises to pay to CONTANGO OIL & GAS COMPANY, a
Delaware corporation ("Lender"), or order, at 0000 Xxxxxxx Xxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, or at such other address as the holder of this Secured
Promissory Note ("Note") may specify in writing, the principal sum of SEVEN
HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($750,000.00) (the "Loan"), plus
interest thereon, in the manner and upon the terms and conditions set forth
below.
1. Rate of Interest
The principal balance of this Note shall bear interest at a per annum rate
equal to eight percent (8%) commencing on earlier to occur of: (i) the First
Option Expiration Date (as defined in that certain Option Purchase Agreement,
dated as of even date herewith between Lender and Maker (the "Option Purchase
Agreement")) and (ii) such date on which Lender has provided written notice to
Maker that Lender has irrevocably elected not to exercise the First Option.
Interest charged on this Note shall be computed on the basis of a three hundred
sixty five or three hundred sixty six (365/366) day year for actual days
elapsed.
If Maker shall default in the payment of principal of, or interest on, the
Loan, whether at stated maturity, by acceleration or otherwise, Maker shall on
demand from time to time pay interest, to the extent permitted by law, on the
defaulted amount of the Loan up to the date of actual payment of such defaulted
amount at a per annum rate equal to the lesser of twelve percent (12%) and the
maximum amount permitted by applicable law.
In no event shall the interest rate or rates payable under this Note, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Maker and Lender intend legally to agree
upon the rate or rates of interest (and the other amounts paid in connection
herewith) and manner of payment stated within this Note; provided, however, that
anything contained herein to the contrary notwithstanding, if said interest rate
or rates of interest (or other amounts paid in connection herewith) or the
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto as of the date of this Note, the undersigned is and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Maker in excess of such legal maximum, whenever received, shall be applied to
reduce the principal balance of this Note to the extent of such excess.
2. Schedule of Payment
Principal under this Note, together with all accrued and unpaid interest
thereon and any other sums owing in connection herewith shall be due and payable
on July 15, 2003 (the "Maturity Date").
3. Prepayment
Voluntary prepayments of the principal balance of this Note shall be
permitted at any time; provided that each such prepayment shall be accompanied
by all accrued and unpaid interest on the amount being prepaid.
4. Holder's Right of Acceleration
If any one or more of the following events shall occur (each an "Event of
Default"):
(a) Default shall be made in the payment of the principal or interest of
this Note when and as the same shall become due and payable, either at the
Maturity Date, by acceleration or otherwise;
(b) Maker shall (i) apply for or consent to the appointment of a receiver,
trustee or liquidator of his property, (ii) admit in writing its inability to
pay its debts as they mature, (iii) make a general assignment for the benefit of
creditors, or (iv) commence a voluntary case under the federal bankruptcy laws
or file a petition or answer seeking reorganization or an arrangement with
creditors to take advantage of any other bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or file an
answer admitting the material allegations of a petition filed against it in any
proceeding under any such law;
(c) An order, judgment or decree shall be entered by any court of competent
jurisdiction, approving a petition seeking reorganization of all or a
substantial part of the assets of Maker and such order, judgment or decree shall
continue unstayed and in effect for a period of 30 days;
(d) Maker fails or neglects to perform, keep, or observe any material term,
provision, condition, covenant, or agreements set forth in the Option Purchase
Agreement, the failure or neglect of which has a material adverse effect on
Maker's ability to perform its material obligations thereunder, in each case
giving effect to any applicable grace periods, cure periods, or required
notices, if any;
then Lender may in its discretion and upon notice to Maker at the address set
forth on the signature page hereof, declare the entire balance hereof
immediately due and payable.
5. General Provisions
(a) All payments of principal and interest shall be made in lawful money of
the United States of America.
(b) If this Note is not paid when due, the undersigned further promises to
pay all costs of collection, foreclosure fees, and reasonable attorneys' fees
incurred by the holder, whether or not suit is filed hereon.
(c) The undersigned hereby consents to any and all renewals, replacements,
and/or extensions of time for payment of this Note before, at, or after
maturity.
(d) The undersigned hereby consents to the acceptance, release, or
substitution of security for this Note.
(e) Any waiver of any rights under this Note or under any other agreement,
instrument, or paper signed by the undersigned is neither valid nor effective
unless made in writing and signed by the holder of this Note.
(f) No delay or omission on the part of the holder of this Note in
exercising any right shall operate as a waiver thereof or of any other right.
(g) A waiver by the holder of this Note upon any one occasion shall not be
construed as a bar or waiver of any right or remedy on any future occasion.
(h) Should any one or more of the provisions of this Note be determined
illegal or unenforceable, all other provisions shall nevertheless remain
effective.
(i) This Note cannot be changed, modified, amended, or terminated orally.
(j) THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PROVISIONS. MAKER AGREES THAT ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR IN ANY MANNER RELATING TO THIS NOTE SHALL BE BROUGHT IN ANY
COURT OF THE STATE OF DELAWARE OR IN THE UNITED STATES DISTRICT COURT LOCATED IN
DELAWARE. MAKER HEREBY CONSENTS AND SUBMITS TO PERSONAL JURISDICTION OF ANY SUCH
COURT IN ANY ACTION OR PROCEEDING.
6. Security for this Note
This Note is secured by the collateral described in that certain Security
Agreement of even date herewith, between Lender and Maker, and is subject to all
of the terms and conditions thereof including, but not limited to, the remedies
specified therein or granted in connection therewith.
IN WITNESS WHEREOF, this Note has been executed and delivered on the date
first set forth above.
"MAKER"
CHENIERE ENERGY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
Address for Notices:
Cheniere Energy, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxx
