EXTENSION AND AMENDMENT
TO
CONTRIBUTION AGREEMENT
This Extension and Amendment (this "Amendment"), dated as of September 19,
2002 (the "Effective Date"), is between (1) Freeport LNG Investments, LLC, a
Delaware limited liability company ("Investments"), (2) Freeport LNG-GP, Inc., a
Delaware corporation (the "General Partner"), (3) Cheniere Energy, Inc., a
Delaware corporation ("Cheniere"), (4) Cheniere LNG, Inc., a Delaware
corporation ("Cheniere LNG") and (5) Freeport LNG Terminal, LLC, a Delaware
limited liability company ("Terminal LLC" together with Cheniere and Cheniere
LNG, the "Cheniere Entities"). Each of Investments, General Partner, and the
Cheniere Entities is sometimes referred to herein as a "Party," and all of them
together, are sometimes referred to herein as the "Parties."
RECITALS
WHEREAS, the Parties executed a Contribution Agreement, dated August 26,
2002 (the "Contribution Agreement") (capitalized terms used herein and not
otherwise defined herein shall have the same meaning assigned to them in the
Contribution Agreement); and
WHEREAS, the assignment of the Lease Option from Terminal LLC to the
Partnership is a condition to Closing the Contribution Agreement;
WHEREAS, the Lease Option grants Terminal LLC an option to lease the
Xxxxxxxx Site;
WHEREAS, the Parties believe it is in the best interest of the Partnership
and the Parties, that instead of Terminal LLC assigning the Lease Option to the
Partnership, the Partnership shall enter into a definitive lease agreement with
the Brazos River Harbor Navigation District (the "District") for the Xxxxxxxx
Site, as well as other real property the Partnership would like to lease from
the District for the Project (collectively, the "Premises");
WHEREAS, the Parties have agreed to extend the Closing Date and otherwise
amend the Contribution Agreement, so that, among other things, Investments and
General Partner can attempt to negotiate a definitive lease agreement between
the Partnership and the District for the Premises (the "Lease Agreement");
WHEREAS, pursuant to Section 9.8 of the Contribution Agreement, the
Contribution Agreement may be amended only by the written consent of the
Parties.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Amendment and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the Parties agree as follows:
AGREEMENT
1. The following defined term shall be added to Article I of the Contribution
Agreement:
"Material Adverse Change" means, individually or in the aggregate, a
material adverse effect on or change in (i) the Contributed Assets or the
condition (financial or otherwise) or prospects of the Project taken as a
whole, (ii) the Laws
affecting LNG facilities or the natural gas industry, whether enacted,
pending or threatened, (iii) the LNG or natural gas industry, (iv) the
likelihood of Project Approval, or (v) the ability of the Cheniere Entities
or an Affiliate thereof to perform their obligations under this Agreement
or the other Related Documents to which they are a party."
2. Section 2.1(c)(i) of the Contribution Agreement is hereby deleted and
replaced in its entirety by the following:
"The Partnership shall reimburse or directly pay on behalf of the Cheniere
Entities at the Closing: (A) all non-Affiliate third party accounts payable
(including legal fees related to the FERC permitting) incurred by the
Cheniere Entities and directly related to the Project, which accrued
between June 30, 2002 through the Closing Date and (B) all payment
obligations the Cheniere Entities have incurred under the ENE Agreement and
Technip Agreement regardless of whether incurred prior to June 30, 2002;
provided, however, that the Partnership shall only be obligated to
reimburse or directly pay on behalf of the Cheniere Entities (as the case
may be) those accounts payable (collectively, the "Assumed Accounts
Payable") listed and described on Schedule 2.1(c)(i), which as of the
Effective Date, shall include actual accounts payable from June 30, 2002
through July 31, 2002, or those actual non-Affiliate third party accounts
payable that are incurred between July 1, 2002 through the Closing Date and
are in accordance with the detailed budget contained in Schedule 2.1(c)(i)
and that have not been paid for as a Pre-Closing Accounts Payable (as
defined below);"
3. Schedule 2.1(c)(i) of the Contribution Agreement is hereby deleted and
replaced in its entirety by Schedule 2.1(c)(i) attached hereto.
4. Section 2.1(c)(vi) of the Contribution Agreement is hereby deleted and
replaced in its entirety by the following:
"The Partnership shall reimburse Cheniere at Closing $89,000 for salary and
other overhead expenses (the "Cheniere Payable").
5. Section 2.2(a)(ii) of the Contribution Agreement is hereby deleted and
replaced in its entirety by the following:
"On July 15, 2003 (the "Second Payment Date"), $750,000 in cash less any
amounts previously paid to Cheniere by the Partnership prior to the Second
Payment Date pursuant to Section 3.2(a) (the "Second Payment");"
6. Section 2.3 of the Contribution Agreement is hereby deleted and replaced in
its entirety by the following:
"2.3 Additional Contributions by Investments.
(a) If, as of October 4, 2002, neither Investments nor General
Partner have terminated this Agreement, then Investments shall pay to
Cheniere (i) a maximum of $500,000 of the Assumed Accounts Payable incurred
by the Cheniere Entities prior to September 30, 2002, which are listed and
described on Schedule 2.3(a) attached hereto (which amounts shall be paid
as follows: (A) on
October 4, 2002, Cheniere shall present to Investments copies of all
outstanding Assumed Accounts Payable invoices and, provided that such
invoices are consistent with the detailed budget contained in Schedule
2.1(c)(i), Investments shall pay an amount equal to such invoices, but in
no event more than $375,000, and Cheniere shall immediately apply the funds
to the applicable outstanding Assumed Accounts Payable invoices, (B) on
October 4, 2002, an amount equal to $125,000, payable first to ENE in the
amount negotiated between ENE, Investments and Cheniere and then the
remainder to Cheniere to partially reimburse Cheniere for its September 23,
2002 Lease Option payment to the District and (C) the remainder promptly
upon presentation of invoices, and Cheniere shall promptly pay such related
invoices upon receipt of the funds from Investments), and (ii) the salaries
and overhead expenses for the employees and independent contracts listed on
Schedule 5.1(e) attached hereto from October 4, 2002 through the earlier to
occur of the Closing Date or termination of the Contribution Agreement,
which salaries and overhead shall be payable pursuant to Schedule 5.1(e)
attached hereto (collectively, the "Pre-Closing Accounts Payable"). If the
Closing does not occur for any reason, except pursuant to Section 8.1(c)(i)
hereof, then the Cheniere Entities shall reimburse Investments, by the
earlier of the date of the sale of Cheniere's Gryphon Exploration Company
stock described below, the date of any sale of all or substantially all of
the assets of Gryphon Exploration Company or eighteen (18) months after
termination of the Contribution Agreement, for all (i) Pre-Closing Accounts
Payable and (ii) up to $200,000 of actual expenses, including, but not
limited to, all attorneys' and professionals' fees, travel expenses and
other overhead expenses, incurred by Investments, General Partner or any of
their Affiliates related to or associated with the Project, including, but
not limited to, expenses related to or associated with the negotiation,
preparation and consummation of the Contribution Agreement, Transaction
Documents, Amendment and Lease Agreement (collectively clauses (i) and
(ii), the "Reimbursement Amount"). Cheniere agrees that the repayment of
the Reimbursement Amount to Investments shall be secured by a first
priority security interest in, at Investment's option, either (A) the
Gryphon Exploration Company stock owned by Cheinere or an Affiliate
thereof, or (B) certain overriding royalty interests convertible into
working interests in approximately five (5) xxxxx operated by LLOG and
Xxxx-XxXxx. Such security interest shall be evidenced by a pledge agreement
or other security agreement to Investments from Cheniere in a form
reasonably satisfactory to Investments (the "Pledge Agreement). Execution
and delivery of a mutually acceptable Pledge Agreement and other documents
perfecting the security interest shall be a condition to Investments being
obligated to make any payment for any Pre-Closing Accounts Payable.
(b) At Closing, such amounts necessary to pay the Assumed Accounts
Payable, the Assumed Contract Payables and the Cheniere Payable under
Section 2.1(c) and such additional amounts of working capital as the
General Partner determines.
(c) After Closing, in the event that the Partnership shall require
funds in excess of those available to the Partnership from operations, as
provided in the Partnership Agreement, the Partners shall make such
additional capital contributions as are needed based on the Partners'
percentage interest in the Partnership; provided, however, that the first
$9 million of additional capital
contributions under Sections 2.3(a), (b) and (c) shall be contributed
solely by Investments (or its transferees or assigns, as applicable) which
contributions will not affect or in any way alter the percentage interest
of the Partners and provided further, that (i) no amount contributed in
accordance with Section 2.2(a) shall be counted towards such $9 million,
(ii) no amount used to pay an Affiliate Payment (as defined in the
Partnership Agreement) shall be counted towards such $9 million and (iii)
such $9 million shall be increased by the amount of any distributions made
to Investments pursuant to Sections 3.2(b)(iii) and (iv).
(d) If Investments and its transferees and assigns withdraw from the
Partnership pursuant to and in accordance with the terms of the Partnership
Agreement, prior to such withdrawal, Investments and its transferees and
assigns will contribute to the Partnership an aggregate amount equal to
$4.0 million, which such $4.0 million shall be increased by the amount of
any distributions made to Investments pursuant to Sections 3.2(b)(iii) and
(iv) and shall be decreased by any amount previously contributed to the
Partnership pursuant to Sections 2.3(a), (b) and (c) above.
7. Schedule 5.1(e) of the Contribution Agreement is hereby deleted and replaced
in its entirety by Schedule 5.1(e) attached hereto.
8. Section 5.1(j) of the Contribution Agreement is hereby deleted and replaced
in its entirety by the following:
"(j) Lease Agreement. At the request of Investments, the Cheniere
Entities shall use all commercially reasonable efforts to assist
Investments and the General Partner in obtaining the Lease Agreement
between the District and the Partnership. The Cheniere Entities acknowledge
that Investments and General Partner are authorized to represent the
Partnership in all discussions and negotiations with the District regarding
the Lease Agreement and that neither the Cheniere Entities nor any of their
Affiliates or representatives shall engage in any such discussions or
negotiations with the District without the participation and presence of
Investments' representatives."
9. The following provision shall be added as Section 5.1(m) to the Contribution
Agreement:
"(m) Conduct of Business. From the date hereof through the Closing Date,
the Cheniere Entities will continue to operate all current LNG business
operations consistent with the Cheniere Entities' past practices and
otherwise in the ordinary course. Without limiting the generality of the
foregoing, the Cheniere Entities will not, with respect to its LNG business
operations, without the prior written consent of Investments, (a) engage in
any practice, take any action or enter into any transaction outside the
ordinary course, or (b) enter into any contracts, agreements, commitments,
warranties, guaranties or other instruments, oral or written, including any
Capacity Reservations or capacity option agreements or memorandums of
understanding."
10. Section 6.1 of the Contribution Agreement is hereby deleted and replaced in
its entirety by the following:
"6.1 The Closing. The execution of the Partnership Agreement, the
contribution by the Parties of the Cheniere Contribution and Initial
Payment to the Partnership, as applicable, and the execution of the Related
Documents (the "Closing") shall take place at the offices of Xxxxxxxxxx,
Xxxxx and Xxxxxx, P.C., at 10:00 a.m. Mountain Time, ten business days
after later to occur of (a) the date the District executes a binding and
enforceable Lease Agreement (which can occur only after formal approval by
the District) and (b) the date on which all conditions to the effectiveness
of the Lease Agreement have been satisfied (the "Lease Effective Date"), or
such other time and place as the Parties may mutually agree in writing (the
applicable date on which the Closing will occur is referred to herein as
the "Closing Date")."
11. Section 6.3(d)(ii) of the Contribution Agreement is hereby deleted and
replaced in its entirety by the following:
"(ii) the Lease Agreement;"
12. Section 6.3(j) of the Contribution Agreement is hereby deleted.
13. Section 8.1(b) of the Contribution Agreement is hereby deleted and replaced
in its entirety by the following:
"(b) Investments may terminate this Agreement by giving written notice
to Cheniere:
(i) at any time prior to the Closing, in the event any Cheniere
Entity has breached any representation, warranty or covenant contained in
this Agreement in any material respect, and Investments or General Partner
has notified Cheniere of the breach and the breach has continued without
cure for a period of 30 days after the notice of breach;
(ii) at any time prior to the Closing, if a Material Adverse
Change occurs;
(iii) on or before October 4, 2002, if Investments or General
Partner are not satisfied in their sole discretion with the terms that are
acceptable to the District for a Lease Agreement; and/or
(iv) if the Lease Effective Date has not occurred on or before
December 13, 2002 or such earlier date if Investments reasonably determines
that the Lease Agreement shall not become effective; or"
14. Section 8.1(c) of the Contribution Agreement is hereby deleted and replaced
in its entirety by the following:
"(c) The Cheniere Entities may terminate this Agreement by giving
written notice to Investments or General Partner at any time prior to the
Closing
(i) in the event Investments or General Partner has breached any
representation, warranty or covenant contained in this Agreement in any
material respect, Cheniere has notified Investments or General Partner of
the breach and
the breach has continued without cure for a period of 30 days after the
notice of breach;
(ii) if the Lease Effective Date has not occurred on or before
December 13, 2002; and/or
(iii) if Investments has not funded the amounts due under 2.3(a).
15. Section 2.3(a) of this Amendment shall be added to the list of provisions
that shall survive the termination of the Contribution Agreement in Section 8.2
of the Contribution Agreement.
16. This Amendment shall be effective only for the specific purposes set forth
herein, and, except as modified by this Amendment, the terms, covenants and
provisions of the Contribution Agreement are hereby ratified and confirmed and
shall continue in full force and effect.
17. This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together will constitute one and
the same instrument. Each Party hereto agrees to accept the facsimile signature
of the other Parties hereto and to be bound by its own facsimile signature;
provided, however, that the Parties shall exchange original signatures by
overnight mail.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly
executed as of the Effective Date.
CHENIERE ENERGY, INC.
By: _____________________________
Name: _____________________________
Title: _____________________________
CHENIERE LNG, INC.
By: _____________________________
Name: _____________________________
Title: _____________________________
FREEPORT LNG TERMINAL, LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
FREEPORT LNG INVESTMENTS, LLC
By: _____________________________
Name: Xxxxxxx X. Xxxxx
Title: Managing Member
FREEPORT LNG-GP, INC.
By: _____________________________
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer