Exhibit 10.30
THREE PARTY AGREEMENT
This Three Party Agreement (this "Agreement") is made as of the 4th day of
January, 2000, by Cheniere Energy, Inc. ("Cheniere"), Schlumberger Technology
Corporation ("Schlumberger"), and EnCap Energy Capital Fund III, L.P. ("EnCap
Fund III").
RECITALS:
1. EnCap Fund III and Cheniere have entered into that certain Credit
Agreement dated as of September 1, 1999 (the "EnCap Credit Agreement"), pursuant
to which EnCap Fund III made loans to Cheniere and Cheniere mortgaged to EnCap
Fund III Cheniere's interests in Louisiana State Leases Nos. 16185, 16017, and
16186 in Cameron Parish, Louisiana (as more fully described on Schedule 1
hereto, the "Stingray Prospect") and Louisiana State Leases Nos. 16016, 16018,
16020 and 16022 in Cameron Parish, Louisiana (as more fully described on
Schedule 1 hereto, the "Redfish Prospect"), pursuant to that certain Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement recorded
in Cameron Parish, Louisiana on September 3, 1999 in Mortgage Book 245, File No.
261733, as amended by that certain First Amendment to Mortgage, Assignment,
Security Agreement, Fixture Filing and Financing Statement recorded in Cameron
Parish, Louisiana on September 9, 1999 in Mortgage Book 245, File No. 2618017 as
amended by that certain Second Supplement and Amendment to Mortgage, Assignment,
Security Agreement, Fixture Filing and Financing Statement recorded in Cameron
Parish, Louisiana on October 26, 1999 in Mortgage Book 246, File No. 262290.
Prior to giving such mortgage, Cheniere executed and delivered to EnCap Fund III
a Conveyance of Net Profits Overriding Royalty Interest dated as of September 1,
1999 (the "NPI Conveyance") which has been filed for record in Cameron Parish,
Louisiana on September 3, 1999 in Conveyance Book 900, File No. 261733.
2. Schlumberger has provided materials and services to Cheniere in
connection with the Stingray Prospect and has mechanic's and materialman's liens
on the Stingray Prospect (the "M&M Liens") that are superior to the liens under
EnCap Fund III's mortgage to secure unpaid bills owing by Cheniere to
Schlumberger. Prior to the execution hereof, Schlumberger does not have any
liens, security interests or privileges of any kind on the Redfish Prospect.
3. EnCap Fund III, Cheniere and Schlumberger desire to enter into this
Agreement to provide a procedure under which payments will be made to both EnCap
Fund III and Schlumberger.
In consideration of the mutual covenants herein, including, without
limitation Schlumberger's agreement with respect to foreclosure, as provided
below, and EnCap Fund III's agreement to allow certain proceeds from the Redfish
Prospect to be used to pay Schlumberger, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
EnCap Fund III, Cheniere and Schlumberger hereby agree as follows:
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AGREEMENTS:
Section 1. Payments; Collections.
(a) Cheniere has paid to Schlumberger the amount of $360,000 in immediately
available funds.
(b) Cheniere has arranged, and, until all amounts owed EnCap Fund III under
the EnCap Credit Agreement or other Loan Documents (as such term is defined in
the EnCap Credit Agreement) entered into pursuant thereto have been paid in
full, will continue to arrange, for all payments owing to Cheniere by the
purchasers of Cheniere's production from the Stingray Prospect and the Redfish
Prospect to be paid directly to EnCap Fund III. IP Petroleum Company, Inc.
("IP"), who is the operator of both prospects, presently distributes revenue
attributable to the sale of such production and may possibly from time to time
net out of such payments certain amounts owing to IP, as operator, by Cheniere,
as non-operator. As used herein, "Net Payments" refers to the net amounts
actually received by EnCap Fund III from IP or any other purchasers of
Cheniere's production from the Stingray Prospect and the Redfish Prospect, less
any xxxxxxxx from the operators of the Redfish Prospect or Stingray Prospect
that have not already been netted out (it being agreed that EnCap Fund III will
authorize IP to withhold, from the proceeds of the sale of such production,
Cheniere's share of lease operating expenses owed to IP as operator of the
Stingray Prospect and the Redfish Prospect.
Section 2. Reduced Schlumberger Claim; Promissory Note; Mortgage;
Subordination.
(a) Schlumberger claims and believes that the amount of indebtedness owing
to it by Cheniere for services and materials provided in connection with the
Stingray Prospect (the "Original Schlumberger Claim") is in excess of
$1,117,569.84, as determined after application of the $360,000 referred to in
Section 1(a) above. Schlumberger hereby reduces the Original Schlumberger Claim
(together with any other amounts owing by Cheniere to Schlumberger that are
possibly secured by any lien, security interest, or privilege of any kind
burdening either the Stingray Prospect or the Redfish Prospect) to $1,117,569.84
(which includes its legal fees and expenses to date), and Schlumberger hereby
waives any rights Schlumberger may have on the date hereof to receive more than
such reduced claim from Cheniere (except to the limited extent provided in (i)
the Debt Restructure Agreement by and between Cheniere and Schlumberger, (ii)
the Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement dated January 4, 2000 executed by Cheniere in favor of Schlumberger
(the "Schlumberger Mortgage"), and (iii) the Promissory Note dated January 4,
2000 executed by Cheniere in favor of Schlumberger. Schlumberger's reduced
claim in the amount of $1,117,569.84 plus (i) future legal fees and expenses
and (ii) Cheniere's obligation under the Debt Restructure Agreement, the
Schlumberger Note, and the Schlumberger Mortgage is herein collectively referred
to as the "Reduced Schlumberger Claim".
(b) Cheniere has executed and delivered to Schlumberger on the date hereof
the Debt Restructure Agreement ("Debt Restructure Agreement").
(c) In order to evidence the Reduced Schlumberger Claim, Cheniere executed
and delivered to Schlumberger on the date hereof a promissory note in the form
required by the Debt Restructure Agreement (the "Schlumberger Note").
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(d) In order to secure the payment and performance of the Schlumberger
Note, Cheniere executed and delivered to Schlumberger the Schlumberger Mortgage.
(e) EnCap Fund III hereby promises simultaneously with execution hereof to
execute and deliver to Schlumberger on the date hereof the Lien Subordination
Agreement attached hereto as Exhibit A.
Section 3. Application of Net Payments. Until the Schlumberger Note is
paid in full, either pursuant to this Agreement or otherwise, EnCap Fund III
will apply all Net Payments it receives during January 2000 and each calendar
month thereafter as follows:
(a) Within two business days after receipt of Net Payments, EnCap
Fund III will first apply such Net Payments to any payments (i) which are
then due under the Schlumberger Note, or (ii) shall become due on the first
business day of the following month (e.g., for January 2000, to any
payments due under the Schlumberger Note on or before February 1, 2000) by
paying over the same to Schlumberger;
(b) EnCap Fund III will thereafter apply the entirety of any
remaining Net Payments:
(i) with respect to the Net Proceeds received from production that
occurred in November 1999, December 1999, and January 2000, (A)
first to the amount of outstanding legal fees and costs owed by
Cheniere and (B) next to the unpaid principal balance under the
EnCap Credit Agreement or the promissory note issued in
connection therewith;
(ii) with respect to any other Net Proceeds (A) first to all amounts
then due and payable under the NPI Conveyance, (B) next to all
interest then due and payable under the EnCap Credit Agreement
and the related promissory note, and (C) next to the unpaid
principal balance under the EnCap Credit Agreement or the
promissory note issued in connection therewith.
Pending payment to Schlumberger under subsection (a) above, EnCap Fund III will
hold in trust for Schlumberger any Net Payments to be paid to Schlumberger.
EnCap Fund III will promptly send a written report to Cheniere and to
Schlumberger of the amounts paid and applied under subsections (a) and (b)
above, and within two business days after receipt of such report Cheniere will
(1) make additional payments to Schlumberger as required under the Schlumberger
Note if the amount applied by EnCap Fund III under subsection (a) above is less
than the amount then due and payable under the Schlumberger Note, and (2) prior
to EnCap Fund III's receipt of Net Proceeds from production that occurred in
January 2000, make additional payments to EnCap Fund III of all interest then
due and payable under the EnCap Credit Agreement and the related promissory note
and of all amounts then due and payable under the NPI Conveyance. If Net
Payments are not timely received from IP and, as a result, Cheniere directly
pays to Schlumberger amounts due under the Schlumberger Note, then when such Net
Payments are received from IP, EnCap Fund III shall (upon authorization by
Schlumberger, which Schlumberger hereby agrees to give promptly after receipt of
such payment by Cheniere)
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disburse to Cheniere from such Net Payments the amount of the direct payments
made by Cheniere to Schlumberger.
Section 4. Limitations on Foreclosure by Schlumberger; Option to Purchase
Schlumberger Note and Schlumberger Mortgage by EnCap Fund III.
(a) Schlumberger hereby agrees to give written notice to EnCap Fund III and
Cheniere of the occurrence of any Schlumberger Note Default. (As used herein,
"Schlumberger Note Default" means the occurrence of any event defined as a
"default" or "event of default" in the Schlumberger Note, the Debt Restructure
Agreement, or the Schlumberger Mortgage which default or event of default is not
remedied within any applicable period of grace provided therefor therein.).
Each of Schlumberger and Cheniere promises to copy EnCap Fund III on any other
written notice or communication that it sends pursuant to the Debt Restructure
Agreement.
(b) Schlumberger will not take any action to enforce the Schlumberger
Mortgage or any other liens, security interests, privileges, or similar rights
that it may have with respect to any properties, assets, revenues, or proceeds
of Cheniere until the end of the fifteenth (15th) day following the delivery by
Schlumberger of written notice to EnCap Fund III and Cheniere of the occurrence
of a Schlumberger Note Default. (The period from the date hereof to the end of
such fifteenth day is herein referred to as the "Standstill Period".)
(c) Schlumberger hereby grants to EnCap the option to purchase the
Schlumberger Note (together with the Schlumberger Mortgage and any other related
agreements or documents) at any time during the Standstill Period, for a
purchase price equal to the amounts then owing and unpaid to Schlumberger
thereunder (including legal fees and expenses incurred by Schlumberger). This
option terminates upon expiration of the Standstill Period.
Section 5. No Enforcement Against Co-Owners. Schlumberger hereby
releases, and agrees not to perfect or enforce, any liens, security interests,
privileges, or similar rights that it may have with respect to the interests of
any person or entity other than Cheniere in the Stingray Prospect or the Redfish
Prospect, including without limitation the interests of EnCap Fund III under the
NPI Conveyance and the interests of Cheniere's joint interest owners in the
Stingray Prospect. Schlumberger expressly reserves any liens, security
interests, privileges, or similar rights that it has with respect to the
interests of Cheniere, subject to the terms hereof.
Section 6. Cheniere to Remain Liable. Notwithstanding anything to the
contrary contained herein, Cheniere shall remain liable to EnCap Fund III under
the EnCap Credit Agreement and the Loan Documents (as such term is defined in
the EnCap Credit Agreement) and shall remain liable to Schlumberger on the
Reduced Schlumberger Claim and under the Schlumberger Note.
Section 7. Notices. All notices, requests, demands and other
communications required or permitted under this Three Party Agreement or by law
shall be in writing and shall be deemed to have been duly given, made and
received only when sent by facsimile transmission (receipt confirmed) or
reputable overnight delivery service (receipt confirmed), when delivered against
receipt, or when deposited in the United States mails, certified mail, return
receipt requested, postage prepaid, addressed as set forth below, and actually
presented at the address of the noticed party:
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(a) if to Schlumberger:
Schlumberger Technology Corporation
0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Pre Xxxx
Fax: (000) 000-0000
(b) if to EnCap Fund III:
EnCap Energy Capital Fund III, L.P.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Fax: (000) 000 0000
(c) if to Cheniere:
Cheniere Energy, Inc.
Two Xxxxx Center, Suite 1740
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxx
Fax: (000) 000-0000
Any addressee may alter the address to which communications are to be
sent by giving notice of such change of address in conformity with the
provisions of this section for the giving of notice.
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IN WITNESS WHEREOF, this Agreement is executed and delivered by EnCap Fund
III, Cheniere and Schlumberger as of date first written above.
WITNESSES CHENIERE ENERGY, INC.
By:
----------------------------------
Name: Xxxxxx X. Xxxxxxxx, Vice Chairman
of the Board of Directors
Name:
Notary Public
ENCAP ENERGY CAPITAL FUND III, L.P.
By: EnCap Investments L.C., General Partner
Name:
By:
---------------------------------------
D. Xxxxxx Xxxxxxxx, Managing Director
Name:
Notary Public
SCHLUMBERGER TECHNOLOGY CORPORATION
Name: By:
---------------------------------
Name:
Title:
Name:
Notary Public
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ACKNOWLEDGMENT
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
On this date before me, the undersigned authority, personally came and
appeared Xxxxxx X. Xxxxxxxx, to me personally known and known by me to be the
person whose genuine signature is affixed to the foregoing document as the Vice
Chairman of the Board of Directors of Cheniere Energy, Inc., a Delaware
corporation, who signed said document before me in the presence of the two
witnesses, whose names are thereto subscribed as such, being competent
witnesses, and who acknowledged, in my presence and in the presence of said
witnesses, that he signed the above and foregoing document as his own free act
and deed on behalf of such corporation by authority of its board of directors
and as the free act and deed of such corporation and for the uses and purposes
therein set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Houston, Xxxxxx County, Texas, on the day and year first above written.
______________________________________
NOTARY PUBLIC, State of Texas
______________________________________
(printed name)
My commission expires:
[SEAL]
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STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
On this date before me, the undersigned authority, personally came and
appeared D. Xxxxxx Xxxxxxxx, to me personally known and known by me to be the
person whose genuine signature is affixed to the foregoing document as the
Managing Director of EnCap Investments L.C., General Partner of EnCap Energy
Capital Fund III, L.P., a Texas limited partnership, who signed said document
before me in the presence of the two witnesses, whose names are thereto
subscribed as such, being competent witnesses, and who acknowledged, in my
presence and in the presence of said witnesses, that he signed the above and
foregoing document as his own free act and deed on behalf of such general
partner acting on behalf of said limited partnership by proper authority and as
the free act and deed of such general partner acting of behalf of said limited
partnership and for the uses and purposes therein set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Houston, Xxxxxx County, Texas, on the day and year first above written.
______________________________________
NOTARY PUBLIC, State of Texas
______________________________________
(printed name)
My commission expires:
[SEAL]
8
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
On this date before me, the undersigned authority, personally came and
appeared ____________, to me personally known and known by me to be the person
whose genuine signature is affixed to the foregoing document as the
________________________of Schlumberger Technology Corporation, a Texas
corporation, who signed said document before me in the presence of the two
witnesses, whose names are thereto subscribed as such, being competent
witnesses, and who acknowledged, in my presence and in the presence of said
witnesses, that he signed the above and foregoing document as his own free act
and deed on behalf of such corporation by authority of its board of directors
and as the free act and deed of such corporation and for the uses and purposes
therein set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Houston, Xxxxxx County, Texas, on the day and year first above written.
______________________________________
NOTARY PUBLIC, State of Texas
______________________________________
(printed name)
My commission expires:
[SEAL]
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SCHEDULE 1
*[Property Descriptions from EnCap Mortgage to be attached]
Redfish Prospect
Stingray Prospect
Exhibit A
Lien Subordination Agreement
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