EXHIBIT 1
SECOND EXTENSION AND AMENDMENT
TO
CONTRIBUTION AGREEMENT
This Second Extension and Amendment to Contribution Agreement (this
"Amendment"), effective as of October 4, 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, as amended by the Extension and Amendment to the Contribution Agreement,
dated September 19, 2002 (collectively, 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 Parties believe it is in the best interest of the Parties to
amend the Contribution Agreement as set forth herein;
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 terms shall be added to Article I of the Contribution
Agreement:
"Management Team Payables" has the meaning set forth in Section 2.3(a)(i).
"Post October 11 Payables" has the meaning set forth in Section 2.3(a)(i).
"Pre-Closing Accounts Payable" shall mean, collectively, any and all
payments made by Investments for the Management Team Payables, Post October 11
Payables and Pre-October 11 Payables.
"Pre-October 11 Payables" has the meaning set forth in Schedule 2.3(a)(ii)
attached hereto.
2. Section 2.1(c)(ii) shall be modified by the addition of the following at
the end of such Section:
"provided, however, that the Assumed Contract Payables (1) shall
include payables incurred by the Cheniere Entities for work conducted
after October 11, 2002 if, and only if, Investments or a member of the
Management Team has approved such payables, and (2) have not been paid
for as a Pre-Closing Account Payable."
3. Section 2.3(a) is hereby deleted and replaced in its entirety by the
following:
"2.3 Additional Contributions by Investments.
(a) (i) Investments shall become responsible for and pay (1) the salaries
and overhead expenses for the employees and independent contractors listed
on Schedule 5.1(e) attached hereto from October 5, 2002 through the earlier
to occur of the Transition Date (as defined in Section 5.1(e)(ii)) or
termination of the Contribution Agreement, which salaries and overhead
shall be payable pursuant to the terms set forth in Schedule 5.1(e)
attached hereto (the "Management Team Payables"), and (2) all third-party
costs for work conducted after October 11, 2002 and payable to vendors and
contractors providing services or materials to the Project on the
instruction or request of Investments or a member of the Management Team
(the "Post October 11 Payables," and together with the Management Team
Payables, the "Section 2.3(a)(i) Payables"). All payments to Cheniere for
(1) the Management Team Payables shall be paid (A) for the month of October
2002, upon the execution of this Amendment, and (b) for each subsequent pay
period, 5 days before each payable is due, and (B) the Post October 11
Payables shall be made promptly (but in any event, within 15 Business Days)
after receipt by Investments of an invoice for such costs.
(ii) In addition to the Section 2.3(a)(i) Payables, Investments shall make
the payments set forth on and in accordance with Schedule 2.3(a)(ii)
attached hereto."
4. Schedule 2.3(a) of the Contribution Agreement is hereby deleted and
replaced in its entirety by Schedule 2.3(a) attached hereto.
5. Section 5.1(e) is hereby deleted and replaced in its entirety by the
following:
"(e) Management Team.
(i) The Cheniere Entities shall pay all Management Team employees
all compensation, including salaries, commissions, bonuses, deferred
compensation, severance, insurance, pensions, profit sharing,
vacation, sick pay and other compensation or benefits to which they
are entitled for time periods ending on or before the Transition Date
(as defined below).
(ii) The Cheniere Entities will be responsible for maintenance
and distribution of benefits accrued under any Employee Plan
maintained by the Cheniere Entities pursuant to and if required by the
provisions of such plans to the Management Team for the time period
ending on or before the Transition Date. Investments, General Partner
or the Partnership will not assume any Liability for any such benefits
or any fiduciary or administrative responsibility to account for or
dispose of any such accrued benefits under any Employee Plans
maintained by the Cheniere Entities. From October 5, 2002 through the
Transition Date, the Management Team shall remain employed by the
Cheniere Entities. The Partnership shall
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reimburse the Cheniere Entities for its expenses incurred for such
transition services in accordance with Schedule 5.1(e). At such time
following the Closing as the Partnership has established employee
compensation and benefit plans satisfactory to the Partnership, and
such compensation and benefit plans have become effective as to the
Management Team, the Partnership, by written notice to the Cheniere
Entities, shall become the employer of the Management Team. The date
on which employment commences with the Partnership and ceases with the
Cheniere Entities shall be the "Transition Date;" provided, however,
that the Transition Date shall be no later than 90 days after the
Closing Date.
(iii) All claims and obligations under, pursuant to or in
connection with any welfare, medical, insurance, disability or other
Employee Plans of the Cheniere Entities, or arising under any Law
affecting the Management Team incurred on or before the Transition
Date or resulting or arising from events or occurrences occurring on
or before the Transition Date (including, without limitation, any
liability for (1) a Management Team member who have incurred a
disability on or before the Transition Date, (2) a Management Team
member on or eligible for COBRA continuation, (3) a Management Team
member or his/her dependents hospitalized on or before the Transition
Date, and (4) any retroactive assessment resulting from underfunding
of any Employee Plan by any employer sponsors thereof prior to the
Transition Date) will remain the responsibility of the Cheniere
Entities, whether or not such employees are hired by the Partnership
after the Transition Date. None of Investments, General Partner or the
Partnership will have, nor will assume, any obligation or liability
under or in connection with any such Employee Benefit Plan or, for any
period prior the Closing, arising under any such Law. Notwithstanding
anything contained in this Agreement to the contrary, none of
Investments, General Partner or the Partnership will have, nor will
assume, any obligations or liability arising from or related to the
failure of any of the Employee Plans of the Cheniere Entities to
comply with the applicable provisions of ERISA or any other Law
governing or applicable to such Employee Plans.
(iv) All claims and obligations under, pursuant to or in
connection with any compensation or bonus plan of the Cheniere
Entities (including, without limitation, any phantom stock plan, stock
plan, option plan, or other similar plan or arrangement) pursuant to
which any employee, director or officer of the Cheniere Entities
receives or is entitled to receive compensation, in any form, solely
as a result of the consummation of the transactions contemplated by
this Agreement or the Related Documents will remain the responsibility
of the Cheniere Entities, whether or not the employees participating
in such plans are hired by the Partnership after the Transition Date.
Investments, General Partner and the Partnership will not have, and
will not assume, any obligation or liability under or in connection
with any such plan.
(v) Notwithstanding the termination of the employment of the
Management Team members, the Cheniere Entities shall either (1)
provide for the continued vesting of any stock options in Cheniere
common stock granted to a Management Team member prior to the
Transition Date and for so long as such Management Team member remains
employed by the Partnership or (2) issue replacement warrants to such
Management Team member in lieu of such stock options."
6. Schedule 5.1(e) is hereby deleted and replaced in its entirety by Schedule
5.1(e) attached hereto.
7. Section 6.2(d) is hereby amended by changing "(vii)" and "(viii)" to
"(viii)" and "(ix)," respectively and adding the following:
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"(vii) the Lease Agreement;"
8. Section 8.1(b)(iii) is hereby amended by changing the date therein from
"October 4, 2002" to "December 13, 2002".
9. 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.
10. 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]
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly
executed as of the Effective Date.
CHENIERE ENERGY, INC.
By:
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Name:
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Title:
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CHENIERE LNG, INC.
By:
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Name:
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Title:
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FREEPORT LNG TERMINAL, LLC
By:
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Name:
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Title:
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FREEPORT LNG INVESTMENTS, LLC
By:
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Name: Xxxxxxx X. Xxxxx
Title: Managing Member
FREEPORT LNG-GP, INC.
By:
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Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
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