Exhibit 10.29
CHENIERE ENERGY, INC.
Two Xxxxx Center
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
December 15, 1997
Arabella S.A.
00, xxx Xxxxxxxx
X-0000
Xxxxxxxxxx
Alba Limited
c/o Huntlaw Corporate Services, Ltd.
P.O. Box 1350GT
The Huntlaw Building
Fort Street
Grand Cayman, Cayman Islands
Scorpion Energy Partners
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: SECURITIES PURCHASE AGREEMENT
Cheniere Energy, Inc. ("CHENIERE"), Arabella S.A. ("ARABELLA"), Alba
Limited ("ALBA") and Scorpion Energy Partners ("SCORPION"; Arabella, Alba and
Scorpion are collectively referred to herein as the "LENDER GROUP") in
consideration of the mutual covenants contained herein, agree as follows:
1. ISSUANCE OF STOCK AND WARRANTS.
(a) In accordance with the terms and conditions set forth herein and
as additional consideration for the purchase of Term Notes in the principal
amount of $1,900,000 by Arabella and $100,000 by Alba from BSR Investments, Ltd.
("BSR"), Cheniere will issue (i) to Scorpion 50,000 shares (the "LENDER STOCK")
of Cheniere's common stock, par value $.003 per share (the "COMMON STOCK"); (ii)
to Arabella warrants in the form of EXHIBIT A (the "LENDER WARRANTS") to
purchase 475,000 shares of Common Stock at an exercise price of 2.375 per share
(the "EXERCISE PRICE"); and (iii) to Alba Lender Warrants to purchase 25,000
shares of Common Stock at the Exercise Price.
(b) If BSR extends the Maturity Date of the Term Notes pursuant to the
terms of the Note Purchase Agreements, Cheniere will issue to Arabella and Alba
additional warrants (the "ADDITIONAL LENDER WARRANTS" and together with the
Lender Warrants, the "WARRANTS") with an exercise price equal to the Exercise
Price which expire on the Expiration Date in the form of EXHIBIT A to
purchase 63,334 and 3,333 shares of Common Stock, respectively, for each 30 day
period after the original Maturity Date during which any amount of the Term Loan
is outstanding and unpaid until the date (the "FINAL REPAYMENT DATE") that is
the earlier of (x) the date of repayment of the Term Loan in full and (y) 180
days after the original Maturity Date. The Additional Lender Warrants shall be
issued within 10 days after the Final Repayment Date.
2. LENDER GROUP ACKNOWLEDGMENTS.
(a) TRANSFER RESTRICTIONS. Each member of the Lender Group
acknowledges that (i) the Lender Stock, Warrants and the Common Stock underlying
the Warrants (collectively, the "RESTRICTED SECURITIES") to be issued to it
hereunder have not been and are not being registered under the provisions of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or any applicable
state securities laws (except as provided in SECTION 4), and may not be offered,
sold, pledged or otherwise transferred unless (A) the Restricted Securities are
subsequently registered under the Securities Act and all applicable state
securities laws or (B) the holder of the Restricted Securities shall have
delivered to Cheniere an opinion of counsel, reasonably satisfactory in form,
scope and substance to Cheniere, to the effect that the Restricted Securities
may be sold or transferred pursuant to a valid exemption from such registration
requirements; (ii) the Restricted Securities are and will be "restricted
securities" (as defined in Rule 144 promulgated under the Securities Act); (iii)
any sale of the Restricted Securities, as the case may be, made in reliance on
Rule 144 promulgated under the Securities Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any
resale of the Restricted Securities, as the case may be, under circumstances in
which the seller, or the person through whom the sale is made, may be deemed to
be an underwriter, as that term is used in the Securities Act, may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities and Exchange Commission (the "SEC") thereunder;
and (iv) Cheniere is not under any obligation to register the Restricted
Securities (other than as set forth in SECTION 4) under the Securities Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(b) RESTRICTIVE LEGEND. Each member of the Lender Group acknowledges
and agrees that "stop transfer" instructions shall be given regarding the
Restricted Securities on the transfer books of Cheniere, and that the
certificate(s) evidencing the Restricted Securities shall bear the following
legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE DISPOSED OF FOR VALUE UNLESS A REGISTRATION STATEMENT HAS BECOME
EFFECTIVE WITH RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE CORPORATION THAT THERE IS AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS."
3. LENDER GROUP REPRESENTATIONS, WARRANTIES AND COVENANTS.
Each member of the Lender Group jointly and severally represents and
warrants to, and covenants and agrees with, Cheniere as follows:
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(a) Each member of the Lender Group is purchasing the Restricted
Securities for its own account, for investment only and not with a view towards
the public sale or distribution thereof in violation of the Securities Act, and
with no present intention of dividing or allowing others to participate in this
investment.
(b) Each member of the Lender Group is an "accredited investor" as
that term is defined in Rule 501(a)(1), (2), (3), (7) or (8) of Regulation D
promulgated under the Securities Act and no member of the Lender Group was
organized for the specific purpose of acquiring the Restricted Securities.
(c) Each member of the Lender Group has such knowledge, sophistication
and experience in business, tax and financial matters that it is capable of
evaluating, and is familiar with, the merits and risks of an investment in the
Restricted Securities, can bear the substantial economic risk of an investment
in the Restricted Securities for an indefinite period of time and can afford a
complete loss of such investment.
(d) Each member of the Lender Group represents that its overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth, and its investment in the Restricted
Securities will not cause such overall commitment to become excessive.
(e) All subsequent offers and sales of the Restricted Securities by
each member of the Lender Group shall be made pursuant to registration of such
securities under the Securities Act and applicable state securities laws or
pursuant to a valid exemption from such registration requirements.
(f) Each member of the Lender Group understands that the Restricted
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that Cheniere is relying upon the truth and accuracy of, and compliance
by each member of the Lender Group with the representations, warranties,
agreements, acknowledgments and understandings of each member of the Lender
Group set forth herein in order to determine the availability of such exemptions
and the eligibility of each member of the Lender Group to acquire the Restricted
Securities. Each member of the Lender Group agrees that, if any of the
representations, warranties, agreements, acknowledgments or understandings
deemed to have been made by it in connection with its investment in the
Restricted Securities is no longer accurate, it shall promptly notify Cheniere
and consult with Cheniere in order to determine an appropriate course of action.
(g) Each member of the Lender Group has carefully read the terms and
provisions hereof and, to the extent that it believed necessary, has discussed
the representations, warranties and agreements which each member of the Lender
Group makes herein and the applicable limitations upon the resale of the
Restricted Securities by each member of the Lender Group with its counsel.
(h) Each member of the Lender Group and its advisors have been
afforded the opportunity to ask questions of Cheniere, and have received
complete and satisfactory answers to any and all such inquiries and has had
access to such financial and other information concerning Cheniere and the
Restricted Securities as it has deemed necessary in connection with its decision
as to whether to make its investment.
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(i) Each member of the Lender Group understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Restricted
Securities.
4. REGISTRATION PROCEDURES.
(a) Within 120 days after the issuance of the Lender Stock and the
Lender Warrants, Cheniere shall prepare and file or cause to be filed with the
SEC a registration statement (the "REGISTRATION STATEMENT") with respect to the
Lender Stock and the shares of Common Stock underlying the Warrants
(collectively, the "REGISTRABLE SHARES"). Cheniere shall thereafter use
diligence in attempting to cause the Registration Statement to be declared
effective by the SEC and shall thereafter use reasonable efforts to maintain the
effectiveness of the Registration Statement until the earlier to occur of (i)
the date which is one year from the effective date of the Registration
Statement, (ii) the date on which all of the Warrants and Registrable Shares are
no longer held by Any member of the Lender Group or (iii) the date on which no
warrants are held by any member of the Lender Group and the Registrable Shares
held by any member of the Lender Group can be resold pursuant to Rule 144.
(b) Following effectiveness of the Registration Statement, Cheniere
shall furnish to each member of the Lender Group a prospectus as well as such
other documents as each member of the Lender Group may reasonably request.
(c) Cheniere shall use reasonable efforts to (i) register or otherwise
qualify the Registrable Shares for sale under the securities laws of such
jurisdictions as each member of the Lender Group may reasonably request, (ii)
prepare and file in those jurisdictions such amendments (including post-
effective amendments) and supplements as may be required, (iii) take such other
actions as may be necessary to maintain such registrations and/or qualifications
in effect at all times while the Registration Statement is likewise maintained
effective and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Shares for sale in such jurisdictions; provided,
however, that Cheniere shall not be required in connection therewith or as a
condition thereto to (I) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this SECTION 9(C), (II)
subject itself to general taxation in any such jurisdiction, (III) file a
general consent to service of process in any such jurisdiction, (IV) provide any
undertakings that cause more than nominal expense or burden to Cheniere or (V)
make any change in its certificate of incorporation or bylaws, which in each
case the Board of Directors of Cheniere determines to be contrary to the best
interests of Cheniere and its stockholders.
(d) Cheniere shall, following effectiveness of the Registration
Statement, as promptly as practicable after becoming aware of any such event,
notify each member of the Lender Group of the happening of any event of which
Cheniere has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use reasonable efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver a number of copies of such supplement
or amendment to each member of the Lender Group or as each member of the Lender
Group may reasonably request. Cheniere may voluntarily suspend the
effectiveness of such Registration Statement for a limited time, which in no
event shall be longer than 90 days, if Cheniere has been advised by legal
counsel that the offering of Common Stock pursuant to the Registration Statement
would adversely affect, or would be improper in view of (or improper without
disclosure in a prospectus), a proposed
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financing, a reorganization, recapitalization, merger, consolidation, or similar
transaction involving Cheniere or its subsidiaries, and, during such suspension,
each member of the Lender Group and its affiliates shall not sell or otherwise
dispose for value any Registered Shares, in which event the one year period
referred to in clause (i) of SECTION 9(A) shall be extended for an additional
period of time beyond such one year period for an additional period of time
equal to the number of days the effectiveness thereof has been suspended
pursuant to this sentence.
(e) Following effectiveness of the Registration Statement, Cheniere,
as promptly as practicable after becoming aware of any such event, will notify
each member of the Lender Group of the issuance by the SEC of any stop order or
other suspension of effectiveness of the Registration Statement at the earliest
possible time.
(f) Following effectiveness of the Registration Statement, Cheniere
will use reasonable efforts either to (i) cause all the Registrable Shares to be
listed on each national securities exchange on which similar securities issued
by Cheniere are then listed, if any, if the listing of the Registrable Shares is
then permitted under the rules of such exchange, or (ii) secure the quotation of
the Registrable Shares on the Nasdaq Stock Market, Inc. ("NASDAQ"), if the
listing of the Registrable Shares is then permitted under the rules of Nasdaq,
or (iii) if, despite Cheniere's reasonable efforts to satisfy the preceding
clause (i) or (ii), Cheniere is unsuccessful in satisfying the preceding clause
(i) or (ii) and without limiting the generality of the foregoing, to use
reasonable efforts to arrange for at least two market makers to register with
the National Association of Securities Dealers, Inc. as such with respect to
such Common Stock.
(g) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Shares not later than the effective date of the
Registration Statement.
(h) It shall be a condition precedent to the obligations of Cheniere
to take any action pursuant to this SECTION 9 that each member of the Lender
Group shall furnish to Cheniere such information regarding itself as Cheniere
may reasonably request to effect the registration of the Registrable Shares and
shall execute such documents in connection with such registration as Cheniere
may reasonably request.
(i) Each member of the Lender Group agrees to cooperate with Cheniere
in any manner reasonably requested by Cheniere in connection with the
preparation and filing of the Registration Statement hereunder.
(j) Each member of the Lender Group agrees that, upon receipt of any
notice from Cheniere of the happening of any event of the kind described in
SECTION 9(D) or 9(E), each member of the Lender Group will immediately
discontinue disposition of Registrable Shares pursuant to the Registration
Statement until each member of the Lender Group receives notice from Cheniere
that sales may resume and copies of the supplemented or amended prospectus and,
if so directed by Cheniere, shall deliver to Cheniere (at the expense of
Cheniere) or destroy (and deliver to Cheniere a certificate of destruction) all
copies of the prospectus covering the Registrable Shares current at the time of
receipt of such notice in the possession of each member of the Lender Group.
(k) All expenses, other than (i) underwriting discounts and
commissions, (ii) other fees and expenses of investment bankers and (iii)
brokerage commissions, incurred in connection with registrations, filings or
qualifications pursuant to this SECTION 9, including, without limitation, all
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registration, listing and qualification fees, printers and accounting fees and
the fees and disbursements of counsel to Cheniere, shall be borne by Cheniere.
(l) To the extent permitted by law, Cheniere will indemnify and hold
harmless each member of the Lender Group, the directors, if any, of each member
of the Lender Group, the officers, if any, of each member of the Lender Group,
each person, if any, who controls each member of the Lender Group within the
meaning of the Securities Act or the Exchange Act, any underwriter (as defined
in the Securities Act) for any member of the Lender Group, the directors, if
any, of such underwriter and the officers, if any, of such underwriter, and each
person, if any, who controls any such underwriter within the meaning of the
Securities Act or the Exchange Act (each, an "INDEMNIFIED PERSON"), against any
losses, claims, damages, expenses or liabilities (joint or several)
(collectively, "CLAIMS") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post effective amendment
thereof, or any prospectus included therein: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any post effective amendment thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement, or contained in
the final prospectus (as amended or supplemented, if Cheniere files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by
Cheniere of the Securities Act, any state securities law or any rule or
regulation under the Securities Act, the Exchange Act or any state securities
law (the matters in the foregoing clauses (i) through (iii) are hereinafter
collectively referred to as the "VIOLATIONS"). Subject to the restrictions set
forth in SECTION 9(N) with respect to the number of legal counsel, Cheniere
shall reimburse each member of the Lender Group and each such underwriter or
controlling person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnity
contained in this SECTION 9(L) (I) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to Cheniere by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (II) with respect to any preliminary prospectus shall not
inure to the benefit of any person from whom the person asserting any Claim
purchased the Restricted Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such final prospectus was
timely made available by Cheniere; (III) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of Cheniere, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Restricted Securities by the members of the Lender Group; and (IV) shall not
apply to a Claim arising out of or based upon the failure of an Indemnified
Person to deliver a final prospectus to purchasers of Registrable Securities if
Cheniere provided such final prospectus to the Indemnified Person.
(m) Each member of the Lender Group agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in SECTION 9(L),
Cheniere, each of its directors, each of its
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officers who signs the Registration Statement, each person, if any, who controls
Cheniere within the meaning of the Securities Act or the Exchange Act, any
underwriter and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the Securities
Act or the Exchange Act (each such person and each Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim to which any of them may become subject,
under the Securities Act, the Exchange Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation by any member of the Lender Group,
in each case to the extent (and only to the extent) that (I) such Violation
occurs in reliance upon and in conformity with written information furnished to
Cheniere by any member of the Lender Group expressly for use in connection with
such Registration Statement or such prospectus or (II) is a result of the breach
of federal or state securities laws pertaining to the transfer by any member of
the Lender Group of the Restricted Securities or the securities underlying the
Restricted Securities; and each member of the Lender Group will reimburse any
reasonable legal or other expenses reasonably incurred by any Indemnified Party
in connection with investigating or defending any such Claim; provided, however,
that the indemnity contained in this SECTION 9(M) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such member of the Lender Group, which consent shall not be
unreasonably withheld; provided, further, that each member of the Lender Group
shall be liable under this SECTION 9(M) for only that amount of a Claim as does
not exceed the net proceeds to such member of the Lender Group as a result of
the sale of Registrable Shares pursuant to such Registration Statement or such
prospectus. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Restricted Securities (or underlying securities) by
the members of the Lender Group. Notwithstanding anything to the contrary
contained herein the indemnity contained in this SECTION 9(M) with respect to
any preliminary prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(n) Promptly after receipt by an Indemnified Person or Indemnified
Party under SECTION 9(L) or 9(M) of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is made against any indemnifying
party under this SECTION 9, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. Except as provided in the preceding sentence, Cheniere shall pay
for only one separate legal counsel for the Indemnified Persons. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this SECTION 9,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnity required by this SECTION 9 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
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(o) If Arabella exercises its right under the Pledge Agreement between
BSR and Arabella to take possession of the shares of Common Stock held by BSR
and pledged as security for the BSR Term Notes issued to Arabella and Alba (the
"PLEDGED COMMON STOCK"), Arabella shall have the right, on one and only one
occasion, to require Cheniere to prepare and file a registration statement
regarding the Pledged Common Stock (the "PLEDGED COMMON STOCK REGISTRATION
STATEMENT") pursuant to the terms and agreements regarding the registration of
Registrable Shares set forth in SECTIONS 4(B) 4(G). Cheniere shall file the
Pledged Common Stock Registration Statement within 120 days of receipt of the
written request of Arabella for registration pursuant to this SECTION 4(H). For
purposes of SECTIONS 4(B) 4(G) in connection with the Pledged Common Stock
Registration Statement, the Pledged Common Stock shall be considered to be
Restricted Securities.
5. MISCELLANEOUS.
(a) THE LAWS XX XXX XXXXX XX XXXXX XXX XXX XXXXXX XXXXXX SHALL GOVERN
THE RIGHTS AND DUTIES OF THE PARTIES HERETO AND THE VALIDITY, CONSTRUCTION,
ENFORCEMENT AND INTERPRETATION HEREOF. Where appropriate, words of any number
shall include the plural and singular or of any gender shall include each other
gender. Headings and captions may not be used in interpreting provisions
hereof. Any action that is due on a non-Texas banking business day may be
delayed until the next succeeding Texas banking business day. Unless
specifically otherwise provided, any communication hereunder to any party must
be in writing (which may be by facsimile transmission if a facsimile number is
provided herein for such party and if, without affecting the date such facsimile
transmission was actually made, subsequently confirmed by delivery or mailing in
accordance with this paragraph) to be effective and shall be deemed to have been
given on the day actually delivered or, if mailed, on the third Texas banking
business day after it is enclosed in an envelope, addressed to the party to be
notified, properly stamped, sealed and deposited in the appropriate postal
service. Until changed by notice pursuant hereto, the address for each party is
set forth after its name on the first page of this agreement. If any provision
herein is unenforceable, the remaining provisions thereof shall remain in full
force and effect. The terms herein may be amended only by an instrument in
writing executed jointly by Cheniere, Arabella, Alba and Scorpion, and
supplemented only by documents delivered or to be delivered in accordance with
the express terms thereof. This Agreement may be executed in any number of
counterparts, with the same effect as if all signatories had signed the same
document, and all of those counterparts constitute, collectively, one agreement.
6. ACCEPTANCE; PARTIES BOUND. This agreement binds and inures to the
benefit of Cheniere, Arabella, Alba and Scorpion, and their respective
successors and assigns; provided that Cheniere may not, without the prior
written consent of Arabella, Alba and Scorpion, assign any rights, duties, or
obligations hereunder, and any purported assignment without such consent is
void.
Very truly yours,
CHENIERE ENERGY, INC.
By: ___________________________________________
Name: ___________________________________________
Title: ___________________________________________
The foregoing is accepted and agreed to in all respects.
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ARABELLA S.A.
By: ___________________________________________
Name: ___________________________________________
Title: ___________________________________________
ALBA LIMITED
By: ___________________________________________
Name: ___________________________________________
Title: ___________________________________________
SCORPION ENERGY PARTNERS
By: ___________________________________________
Name: ___________________________________________
Title: ___________________________________________
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EXHIBIT A
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR
UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE LAWS OR UPON DELIVERY TO
THE COMPANY OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE COMPANY THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
Form of
WARRANT TO PURCHASE COMMON STOCK
OF
CHENIERE ENERGY, INC.
This Warrant to Purchase Common Stock (this "Warrant") is issued
__________________, 1997, by Cheniere Energy, Inc., a Delaware corporation (the
"Company"), to __________________ (the "Holder").
1. Issuance of Warrant; Term. The Company hereby grants to Holder,
subject to the provisions hereinafter set forth, the right to purchase
_________________ shares of common stock $.003 par value per share, of the
Company (the "Common Stock"). The shares of Common Stock issuable upon exercise
of this Warrant are hereinafter referred to as the "Shares." This Warrant shall
be exercisable at any time before 5:00 p.m. (Houston, Texas time) on December
31, 2001.
2. Exercise Price. This exercise price per share for which all or any of
the Shares may be purchased pursuant to the terms of this Warrant shall be
$_____________ (the "Exercise Price").
3. Exercise
a This Warrant may be exercised by Holder in whole or in part, upon
delivery of written notice of intent to the Company at the address of the
Company set forth below its signature below or such other address as the Company
shall designate in written notice to Holder, together with this Warrant and
payment (in the manner described in Section 3(b) below) for the aggregate
Exercise Price of the Shares so purchased. Upon exercise of this Warrant as
aforesaid, the Company shall as promptly as practicable execute and deliver to
Holder a certificate or certificates for the total number of whole Shares for
which this Warrant is being exercised in such names and denominations as are
requested by Holder. If this Warrant shall be exercised with respect to less
than all of the Shares, Holder shall be entitled to receive a new Warrant
covering the number of Shares in respect of which this Warrant shall not have
been exercised, which new Warrant shall in all other respects be identical to
this Warrant.
b Payment for the Shares to be purchased upon exercise of this
Warrant may be made by the delivery of a certified or cashier's check payable to
the Company for the aggregate Exercise Price of the Shares to be purchased.
4. Covenants and Conditions. The above provisions are subject to the
following:
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a Neither this Warrant not the Shares have been registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws
("Blue Sky Laws"). This Warrant and the Shares have been acquired for
investment purposes and not with a view to distribution or resale, and the
Shares may not be made subject to a security interest, pledged, hypothecated,
sold or otherwise transferred without an effective registration statement
therefor under the Act and such applicable Blue Sky Laws or an opinion of
counsel (which opinion and counsel rendering same shall be reasonably acceptable
to the Company) that registration is not required under the Act and under any
applicable Blue Sky Laws. The certificates representing the Shares shall bear
substantially the following legend:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN
ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE
OFFERED, SOLD OR TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE
ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (II) IN THE OPINION OF COUNSEL (WHICH OPINION AND
COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE COMPANY) REGISTRATION UNDER
THE LAW OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.
Other legends as required by applicable federal and state laws may be
placed on such certificates. Holder and the Company agree to execute such
documents and instruments as counsel for the Company reasonably deems necessary
to effect compliance of the issuance of this Warrant and any Shares issued upon
exercise hereof with applicable federal and state securities laws.
b The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment therefor,
be legally and validly issued and outstanding, fully paid and nonassessable.
5. Warrantholder not Stockholder. This Warrant does not confer upon
Holder any voting rights or other rights as a stockholder of the Company.
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6. Certain Adjustments.
6.1 Capital Reorganizations, Mergers, Consolidations or Sales of
Assets. If at any time there shall be a capital reorganization (other than a
combination or subdivision of Common Stock otherwise provided for herein), a
share exchange (subject to and duly approved by the stockholders of the Company)
or a merger or consolidation of the Company with or into another corporation, or
the sale of the Company's properties and assets as, or substantially as, an
entirety to any other person, then, as a part of such reorganization, share
exchange, merger, consolidation or sale, lawful provision shall be made so that
Holder shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified in this Warrant and upon payment of the Exercise
Price, the number of shares of stock or other securities or property of the
Company or the successor corporation resulting from such reorganization, share,
exchange, merger, consolidation or sale, to which Holder would have been
entitled under the provisions of the agreement in such reorganization, share
exchange, merger, consolidation or sale if this Warrant had been exercised
immediately before that reorganization, share exchange, merger, consolidation or
sale. In any such case, appropriate adjustment (as determined in good faith by
the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of Holder
after the reorganization, share exchange, merger, consolidation or sale to the
end that the provisions of this Warrant (including adjustment of the Exercise
Price then in effect and the number of the Shares) shall be applicable after
that event, as near as reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of this Warrant.
6.2 Splits and Subdivisions. If the Company at any time or from time
to time fixes a record date for the effectuation of a split or subdivision of
the outstanding shares of Common Stock or the determination of the holders of
Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as the "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or Common Stock Equivalents, then, as of such
record date (or the date of such distribution, split or subdivision if no record
date is fixed), the Exercise Price shall (i) in the case of a split or
subdivision, be appropriately decreased and the number of the Shares shall be
appropriately increased in proportion to such increase of outstanding shares and
(ii) in the case of a dividend or other distribution, the holder of the warrant
shall have the right to acquire without additional consideration, upon exercise
of the warrant, such property or cash as would have been distributed in respect
of the shares of Common Stock for which the warrant was exercisable had such
shares of Common Stock been outstanding on the date of such distribution.
6.3 Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination or
reverse stock split of the outstanding shares of Common Stock, the Exercise
Price shall be appropriately increased and the number of the Shares shall be
appropriately decreased in proportion to such decrease in outstanding shares.
6.4 Adjustments for Other Distributions. In the event the Company
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options or rights not referred to in Section 6.2, upon exercise of
this Warrant, Holder shall be entitled to a proportionate share of any such
distribution as though Holder was the holder of the number of shares of Common
Stock of the Company into which this Warrant may be exercised as of the record
date fixed for the determination of the holders of Common Stock of the Company
entitled to receive such distribution.
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6.5 Certificate as to Adjustments. In the case of each adjustment or
readjustment of the Exercise Price pursuant to this Section 6, the Company will
promptly compute such adjustment or readjustment in accordance with the terms
hereof and cause a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based
to be delivered to Holder. The Company will, upon the written request at any
time of Holder, furnish or cause to be furnished to Holder a certificate setting
forth:
a Such adjustment and readjustments;
b The Exercise Price at the time in effect; and
c The number of Shares and the amount, if any, of other property
at the time receivable upon the exercise of the Warrant.
6.6 Notices of Record Date, etc. In the event of:
a Any taking by the Company of a record of the holders of any class
of securities of the Company for the purpose of determining the holders thereof
who are entitled to receive any dividends or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right; or
b Any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to any other person or any
consolidation, share exchange or merger involving the Company; or
c Any voluntary or involuntary dissolution, liquidation or winding up
of the Company, the Company will mail to Holder at least 20 days prior to the
earliest date specified herein, a notice specifying:
i The date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right; and
ii The date on which any such reorganization, reclassification,
transfer, consolidation, share exchange, merger, dissolution, liquidation
or winding up is expected to become effective and the record date for
determining stockholders entitled to vote thereon.
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7 Call of Warrant. This Warrant may be called and canceled by the Company
at its election at any time following the date upon which the closing price of
the Common Stock on its principal trading market has been 200% or more of the
Exercise Price for a period of 20 consecutive trading days (all as determined in
good faith by the Company's Board of Directors) at a price equal to $.01 per
share of Common Stock for which this Warrant shall be exercisable on the Call
Date (as defined below). The Company shall give the holder of this Warrant at
least 30 days prior written notice of any such call of this Warrant, which
notice shall certify the foregoing condition for such call and set forth the
date upon which the call shall occur (the "Call Date"). The holder of this
Warrant shall, however, be entitled to exercise this Warrant, in whole or in
part, prior to the Call Date and, in that event, the Company's right to call
this Warrant shall be limited to the extent to which the Warrant remains
unexercised on the Call Date.
8 Reservation of Common Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the exercise of this Warrant, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
exercise of this Warrant, and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the exercise
of the entire Warrant, in addition to such other remedies as shall be available
to the holder of this Warrant, the Company will use commercially reasonable
efforts to take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
9 Split-Up, Combination, Exchange and Transfer of Warrants. Subject to
and limited by the provisions of Section 4(a) hereof, this Warrant may be split
up, combined or exchanged for another Warrant or Warrants containing the same
terms and entitling the Holder to purchase a like aggregate number of Shares.
If the Holder desires to split up, combine or exchange this Warrant, the Holder
shall make such request in writing delivered to the Company and shall surrender
to the Company this Warrant and any other Warrants to be so split up, combined
or exchanged. Upon any such surrender for a split-up, combination or exchange,
the Company shall execute and deliver to the person entitled thereto a Warrant
or Warrants, as the case may be, as so requested. The Company shall not be
required to effect any split-up, combination or exchange which will result in
the issuance of a Warrant entitled the Warrantholder to purchase upon exercise a
fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Holder to pay a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any split-up, combination or
exchange of Warrants.
10 Successors and Assigns. All the covenants and provisions of this
Warrant shall bind and inure to the benefit of the Company's successors and
assigns, and the heirs, legatees, devisees, executors, administrators, personal
and legal representatives, and successors and permitted assigns of Holder.
11 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws, and not the laws of conflicts, of the State of
Delaware. The Holder hereby consents and agrees to submit to the jurisdiction
in the United States of the District Court of the State of Texas located in
Xxxxxx County or of the United States District Court for the Southern District
of Texas for any action or proceeding brought by the Company arising under this
Warrant and to the venue of such action or proceeding in such courts.
CHENIERE ENERGY, INC.
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By: ___________________________________________
Name: ___________________________________________
Title: ___________________________________________
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