<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to ________
COMMISSION FILE NO. 0-9092
CHENIERE ENERGY, INC.
(Exact name as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
95-4352386
(I. R. S. Identification No.)
1200 SMITH STREET, SUITE 1710
HOUSTON, TEXAS
(Address or principal place of business)
77002-4312
(Zip Code)
(713) 659-1361
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] NO [ ].
As of January 12, 1998, there were 14,457,866 shares of Cheniere Energy, Inc.
Common Stock, $.003 par value, issued and outstanding.
================================================================================
<PAGE>
CHENIERE ENERGY, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet................................... 3
Consolidated Statement of Operations......................... 4
Consolidated Statement of Stockholders' Equity............... 5
Consolidated Statement of Cash Flows......................... 6
Notes to Consolidated Financial Statements................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 9
PART II. OTHER INFORMATION
Item 2. Changes in Securities........................................ 11
Item 6. Exhibits and Reports on Form 8-K............................. 11
SIGNATURES.................................................................... 12
</TABLE>
2
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
November 30, August 31,
1997 1997
ASSETS ------------ -----------
------ (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 26,989 $ 234,764
Accounts Receivable 95,033 -
Prepaid Expenses and Other Current Assets 20,284 57,141
------------ ------------
TOTAL CURRENT ASSETS 142,306 291,905
OIL AND GAS PROPERTIES, full cost method
Unevaluated 13,521,811 13,500,000
FIXED AND OTHER ASSETS 64,055 49,807
------------ ------------
TOTAL ASSETS $ 13,728,172 $ 13,841,712
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 513,665 $ 388,291
Note Payable - Related Party - 500,000
------------ ------------
TOTAL LIABILITIES 513,665 888,291
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock - $.0001 Par Value
Authorized 5,000,000 and 1,000,000 shares,
at November 30 and August 31, 1997 respectively;
None Issued and Outstanding
Common Stock - $.003 Par Value
Authorized 45,000,000 and 20,000,000 shares,
Issued and Outstanding 14,357,866 and 14,160,866
at November 30 and August 31, 1997, respectively 43,074 42,483
Additional Paid-in-Capital 15,225,131 14,709,253
Deficit Accumulated During the Development Stage (2,053,697) (1,798,315)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 13,214,507 12,953,421
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,728,172 $ 13,841,712
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended November 30, Cumulative
-------------------------- from the Date
1997 1996 of Inception
----------- ----------- ----------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
----------- ----------- ----------------
General and Administrative Expenses 303,975 145,928 2,121,250
Interest Expense 2,551 13,689 41,552
----------- ----------- ----------------
306,526 159,617 2,162,802
----------- ----------- ----------------
Loss from Operations Before Other Income
and Income Taxes (306,526) (159,617) (2,162,802)
Interest Income 51,144 1,501 109,105
----------- ----------- ----------------
Loss From Operations Before Income Taxes (255,382) (158,116) (2,053,697)
Provision for Income Taxes - - -
Net Loss $ (255,382) $ (158,116) $ (2,053,697)
=========== =========== ================
Net Loss Per Share $ (0.02) $ (0.02) $ (0.18)
=========== =========== ================
Weighted Average Number of Shares Outstanding 14,326,130 10,310,670 11,540,244
=========== =========== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Total
-------------------------- Paid-In Retained Stockholders'
Per Share Shares Amount Capital Deficit Equity
--------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sale of Shares on April 9, 1996 $ 0.012 6,242,422 $ 18,727 $ 56,276 $ - $ 75,003
Sale of Shares on May 5, 1996 1.50 2,000,000 6,000 2,994,000 - 3,000,000
Issuance of Shares to an Employee
on July 1, 1996 1.00 30,000 90 29,910 - 30,000
Issuance of Shares in Reorganization to
Former Bexy Shareholders - 600,945 1,803 (1,803) - -
Sale of Shares on July 30, 1996 2.00 50,000 150 99,850 - 100,000
Sale of Shares on August 1, 1996 2.00 508,400 1,525 1,015,275 - 1,016,800
Sale of Shares on August 30, 1996 2.00 500,000 1,500 998,500 - 1,000,000
Expenses Related to Offering - - - (686,251) - (686,251)
Issuance of Warrants - - - 12,750 - 12,750
Net Loss - - - - (121,847) (121,847)
----------- ----------- ----------- ----------- --------------
Balance - August 31, 1996 9,931,767 29,795 4,518,507 (121,847) 4,426,455
Sale of Shares on September 12, 1996 2.00 50,000 150 99,850 - 100,000
Sale of Shares on September 16, 1996 2.00 80,250 241 160,259 - 160,500
Conversion of Debt 2.00 105,000 315 209,685 - 210,000
Sale of Shares on October 30, 1996 2.25 457,777 1,373 1,028,627 - 1,030,000
Issuance of Warrants - - - 6,450 - 6,450
Sale of Shares on December 6, 1996 2.25 475,499 1,426 1,068,448 - 1,069,874
Sale of Shares on December 9, 1996 2.50 400,000 1,200 998,800 - 1,000,000
Sale of Shares on December 11, 1996 2.25 22,222 67 49,933 - 50,000
Sale of Shares on December 19, 1996 2.50 200,000 600 499,400 - 500,000
Sale of Shares on December 20, 1996 2.50 220,000 660 549,340 - 550,000
Sale of Shares on February 28, 1997 4.25 * 352,947 1,059 1,498,967 - 1,500,026
Sale of Shares on March 4, 1997 4.25 * 352,947 1,059 1,498,966 - 1,500,025
Sale of Shares on May 22, 1997 3.00 535,000 1,605 1,603,395 - 1,605,000
Issuance of Shares to Adjust Prices of
Shares Sold on February 28 and
March 4, 1997 - * 294,124 883 (883) - -
Sale of Shares on June 26, 1997 3.00 33,333 100 99,900 - 100,000
Sale of Shares on July 24, 1997 3.00 250,000 750 749,250 - 750,000
Issuance of Shares in Connection with
Financial Advisory Services 3.125 200,000 600 624,400 - 625,000
Sale of Shares on July 30, 1997 3.00 100,000 300 299,700 - 300,000
Sale of Shares on August 19, 1997 3.00 100,000 300 299,700 - 300,000
Expenses Related to Offering - - - (1,153,441) - (1,153,441)
Net Loss - - - - (1,676,468) (1,676,468)
----------- ----------- ----------- ----------- --------------
Balance - August 31, 1997 14,160,866 42,483 14,709,253 (1,798,315) 12,953,421
Sale of Shares on September 15, 1997 3.00 67,000 201 200,799 - 201,000
Sale of Shares on September 16, 1997 3.00 130,000 390 389,610 - 390,000
Expenses Related to Offerings - - (74,531) - (74,531)
Net Loss - - - (255,382) (255,382)
----------- ----------- ----------- ----------- --------------
Balance - November 30, 1997 14,357,866 $ 43,074 $15,225,131 $(2,053,697) $ 13,214,508
=========== =========== =========== =========== ==============
* Additional shares were issued to the purchasers of shares sold on February 28, 1997 and March 4, 1997 pursuant to the terms of
those sales.
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended November 30, Cumulative
-------------------------- from the Date
1997 1996 of Inception
----------- ----------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (255,382) $ (158,116) $ (2,053,697)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities:
Depreciation 2,203 2,023 14,074
Compensation Paid in Common Stock - - 654,400
(Increase) in Accounts Receivable (95,033) - (95,033)
(Increase) Decrease in Prepaid Expenses and Other Current Assets 36,857 (1,822) (20,284)
Increase in Accounts Payable and Accrued Liabilities 125,374 81,290 513,665
----------- ----------- ----------------
NET CASH USED BY OPERATING ACTIVITIES (185,981) (76,625) (986,875)
----------- ----------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Furniture, Fixtures and Equipment (1,451) (6,180) (63,129)
Increase in Other Assets (15,000) - (15,000)
Proceeds from Sale of Oil and Gas Seismic Data 46,000 - 46,000
Investment in 3-D Exploration Program (67,811) (2,000,000) (13,567,811)
----------- ----------- ----------------
NET CASH USED BY INVESTING ACTIVITIES (38,262) (2,006,180) (13,599,940)
----------- ----------- ----------------
CASH FLOWS FROM FINANCIAL ACTIVITIES:
Proceeds from Note Issuance - - 925,000
Repayment of Note (500,000) - (715,000)
Sale of Common Stock 591,000 1,290,500 16,298,828
Issuance of Warrants - 6,450 19,200
Offering Costs (74,531) (367,760) (1,914,223)
Advances for Issuance of Common Stock - 384,985 -
----------- ----------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,469 1,314,175 14,613,805
----------- ----------- ----------------
NET (DECREASE) INCREASE IN CASH (207,775) (768,630) 26,989
----------- ----------- ----------------
CASH - BEGINNING OF PERIOD 234,764 1,093,180 -
----------- ----------- ----------------
CASH - END OF PERIOD 26,989 324,550 26,989
----------- ----------- ----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest $ 6,718 $ 8,570 $ 22,353
=========== =========== ================
Cash Paid for Income Taxes $ - $ - $ -
=========== =========== ================
The accompanying notes are an integral part of the financial statements.
</TABLE>
6
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Cheniere Energy, Inc.
("Cheniere" or the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments necessary for a fair presentation, have been included.
For further information, refer to the financial statements and footnotes
included in the Company's Annual Report on Form 10-K, as amended, for the year
ended August 31, 1997. Interim results are not necessarily indicative of
results to be expected for the full fiscal year ended August 31, 1998.
The Company is currently a development stage enterprise and reports as such
under the provisions of SFAS No. 7. The Company's future business will be in
the field of oil and gas exploration and exploitation.
NOTE 2 - NOTE PAYABLE - RELATED PARTY
On July 31, 1997, Cheniere borrowed $500,000 from a related party,
evidenced by a promissory note bearing interest at 10% per annum and due on
August 29, 1997. On August 28, 1997, the maturity date was extended to
September 29, 1997. On September 19, 1997, the note was repaid in full with
interest. All collateral securing the note has been released.
NOTE 3 - COMMON STOCK ISSUANCE
During September 1997, pursuant to Regulation S promulgated under the
Securities Act of 1933, the Company sold an aggregate of 197,000 shares of
Common Stock to two offshore investors for gross proceeds of $591,000 and net
proceeds of $531,900.
NOTE 4 - STOCK OPTIONS
On September 29, 1997, the Company's Board of Directors elected a new
outside director. This director was granted options to purchase 25,000 shares
of the Company's Common Stock at an exercise price of $3.00 per share, the
quoted market price on the date of grant. These options vest 12,500 on
September 29, 1998, and 12,500 on September 29, 1999, and will expire on
September 29, 2002. Also on September 29, 1997, the Company granted to each of
two outside directors options to acquire 10,000 shares of the Company's Common
Stock at an exercise price of $3.00 per share, the quoted market price on the
date of grant. These options will vest one year from the date of grant and will
expire five years from the date of grant. All of the options described in this
Note 4 were issued pursuant to an exemption from the securities registration
provisions of the Securities Act of 1933 contained in Section 4(2).
7
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - SUBSEQUENT EVENTS
In December 1997, Cheniere completed the private placement of a $4 million
bridge financing. The senior term notes issued by Cheniere mature March 15,
1998 and are extendible at the option of the Company to September 15, 1998.
Proceeds from the bridge financing will be used to fund the Company's ongoing
activities related to its 3-D seismic exploration project in Cameron Parish,
Louisiana. Payment by Cheniere of $2.9 million on December 31, 1997 completed
the Company's payment obligation to earn a 50% interest in the project.
In connection with the bridge financing, Cheniere issued 100,000 shares of
common stock and 4-year warrants to purchase 1,333,333 shares of Common Stock at
$2-3/8 per share. Annual interest on the senior term notes will accrue at
LIBOR plus 4%. If all of the senior term notes are extended, additional
warrants to purchase 266,667 shares of Cheniere Common Stock will be issued for
each month the notes remain outstanding beyond March 15, 1998. The Company
expects to file a Registration Statement to register the Common Stock issued and
underlying the warrants no later than April 15, 1998. The bridge financing
included two tranches, one domestic, one European. In conjunction with the
European tranche, BSR Investments, Ltd., a major shareholder of the company,
purchased $2 million of the notes and pledged a portion of its Cheniere Common
Stock to fund its participation.
Also in December 1997, Cheniere announced it is seeking to place privately
a $10 million equity offering in the form of 100,000 Units, each Unit being
comprised of one share of Series A Convertible Preferred Stock and Warrants to
purchase 20 shares of the Company's Common Stock. The Company seeks to complete
the equity offering during the first half of 1998. Proceeds from the equity
offering will be used to retire the bridge notes and to fund Cheniere's oil and
gas exploration activities.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL - Cheniere Energy, Inc. is currently a development stage company
and reports as such under the provisions of SFAS No. 7. Accordingly, the
Company's unaudited consolidated financial statements and notes thereto relate
to the three-month periods ended November 30, 1997 and 1996 and the period from
inception (February 21, 1996) to November 30, 1997. These statements, the notes
thereto and the consolidated financial statements included in the Company's
Annual Report on Form 10-K for the period ended August 31, 1997 contain detailed
information that should be referred to in conjunction with the following
discussion.
PRIVATE PLACEMENT OF COMMON SHARES - In September 1997, pursuant to
Regulation S promulgated under the Securities Act of 1933, the Company sold an
aggregate of 197,000 shares of Common Stock to two offshore investors and
received proceeds of $531,900 net of placement fees from such sales.
Information regarding each sale is set forth in the table below.
Date Shares Price Proceeds Fee/Commission Net Proceeds
- - - - - - ---- ------ ----- -------- -------------- ------------
9/15 67,000 $3.00 $201,000 $20,100 $180,900
9/16 130,000 $3.00 $390,000 $39,000 $251,000
Proceeds from the sales of Common Stock made in September 1997, were used
to fund the repayment of the Company's short-term note payable which matured
September 29, 1997.
RESULTS OF OPERATIONS
COMPARISON OF THREE-MONTH PERIODS ENDED NOVEMBER 30, 1997 AND 1996 - The
Company's operating results for the three months ended November 30, 1997 reflect
a loss of $255,382, or $0.02 per share, compared to a loss of $158,116 or $0.02
per share a year earlier. The Company is in the development stage; accordingly,
there continue to be no operating revenues. General and administrative expenses
of $309,975 in the three months ended November 30, 1997 were significantly
higher than the $145,928 reported for the comparable period a year earlier. The
increased expenses include greater professional fees, additional insurance and
increased printing costs as well as increased personnel costs. Interest expense
of $2,551 was less than the $13,689 reported a year ago due to a decrease in the
number of days the Company had interest-bearing obligations outstanding.
Cheniere reported interest income of $51,144 in the current-year's quarter
compared to $1,501 a year ago. The increase in income relates to an agreement
that interest earned from inception to date on funds advanced by the Company to
its exploration joint venture inures to the benefit of Cheniere.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its capital expenditures and working
capital requirements through private placements of equity securities and short-
term debt issuances. Since its inception in February 1996, Cheniere has raised
$16.3 million through the sale of its Common Stock.
The Company expects drilling operations to commence on more than one
prospect in the 3-D Exploration Program during 1998. The related capital needs
of the Company will depend
9
<PAGE>
upon the level of participation it chooses to retain in the drilling projects.
The Company expects to finance such activities through additional private
placements of equity securities, short-term debt issuances or the partial sale
of its interest in the projects.
At November 30, 1997, total assets were $13,728,172 compared to $13,841,712
at August 31, 1997. The decrease in assets is due primarily to the Company's
repayment of a $500,000 short-term note payable and to its operating loss for
the three months, offset by the proceeds from the issuance of Common Stock
The Company's balance sheet at November 30, 1997 reflected current assets
of $142,306 and current liabilities of $513,665. In addition, Cheniere had a
contractual commitment to make a payment of $2.9 million on December 31, 1997 in
order to earn a 50% interest in its 3-D Exploration Program. The Company has no
long term liabilities.
In December 1997, the Company completed a $4,000,000 bridge financing and
used a portion of the proceeds to meet its $2.9 million obligation to earn the
full 50% interest in its joint venture 3-D Exploration Program. It also
initiated a $10,000,000 offering of 100,000 units each comprised of one share of
the Company's Preferred Stock and warrants to purchase 20 shares of Cheniere
Common Stock. The Company seeks to complete the equity offering during the
first half of 1998. Proceeds will be used to retire the bridge notes and to
fund additional exploration expenditures.
OTHER
This document includes "forward looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended. Although the Company believes that the
expectations reflected in such forward looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved. Certain risks and uncertainties inherent in the Company's business
are set forth in the filings of the Company with the Securities and Exchange
Commission.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
The information contained in Note 4 to the Consolidated Financial Statements is
incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held an annual meeting of its shareholders on November 5, 1997. The
following individuals, were nominated to be elected to the Board of Directors:
William D. Forster, Kenneth R. Peak, Charif Souki, Walter L. Williams and Efrem
Zimbalist III. In addition to the election of Directors, the following matters
were submitted to a vote: the adoption of the 1997 Stock Option Plan; the
Amendment to the Company's Amended and Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock, par value of $.003 per
share, to 40,000,000 shares and to increase the number of authorized shares of
Preferred Stock, par value $.0001 per share, to 5,000,000 shares; and the
ratification and approval of the appointment of Merdinger, Fruchter, Rosen and
Corso, P.C. as auditors of the Company. The results of voting on these matters
is summarized in the following table:
<TABLE>
<CAPTION>
Votes Abstentions or
Description Votes For Against Broker Non-Votes
- - - - - - ----------------------------- ------------ -------------- ----------------------
<S> <C> <C> <C>
William D. Forster 10,464,736 - 0 - - 0 -
Kenneth R. Peak 10,464,736 - 0 - - 0 -
Charif Souki 10,464,736 - 0 - - 0 -
Walter L. Williams 10,464,736 - 0 - - 0 -
Efrem Zimbalist III 10,464,736 - 0 - - 0 -
1997 Stock Option Plan 7,233,003 87,049 3,144,726
Approve Auditors 10,460,727 4,051 - 0 -
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Each of the following exhibits is filed herewith:
Exhibit No. Description
- - - - - - ----------- -----------
3.3 Amendment to Amended and Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock from
20,000,000 to 40,000,000 and to increase the number of authorized
shares of Preferred Stock from 1,000,000 to 5,000,000.
10.25 Cheniere Energy, Inc. 1997 Stock Option Plan.
27.1 Financial Data Schedule
11
<PAGE>
(b) The following reports on Form 8-K were filed for the three months ended
November 30, 1997:
Current Report on Form 8-K, filed on September 24, 1997 under Item 5
reporting the repayment by Cheniere of a $500,000 short-term note and the
extension of payments due under the Company's 3-D Exploration Agreement until
December 31, 1997, and under Item 9 reporting the sale of 197,000 shares of
Common Stock pursuant to Regulation S under the Securities Act of 1933,
Current Report on Form 8-K, filed on October 10, 1997 under Item 5 reporting
a new outside director appointment and management changes.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHENIERE ENERGY, INC.
/s/ Don A. Turkleson
-------------------------------------------
Don A. Turkleson
Chief Financial Officer
Date: January 14, 1998
12
<PAGE>
EXHIBIT 3.3
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATION
FILED 09:00 AM 11/13/1997
971387924 - 2005509
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CHENIERE ENERGY, INC.
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, Cheniere Energy, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Company"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Company (the "Board"), by the
unanimous written consent of its members, filed with the minutes of the Board,
adopted a resolution proposing and declaring advisable an amendment to the
Amended and Restated Certificate of Incorporation of the Company. The
resolution setting forth the proposed amendment is as follows:
NOW, THEREFORE, BE IT RESOLVED, that, the first sentence and items (1) and
(2) of Article Fourth of the Company's Amended and Restated Certificate of
Incorporation be amended to be and read in their entirety as follows:
FOURTH: The total number of shares of stock that the Company
shall have authority to issue is 45,000,000 shares, consisting of:
(1) 40,000,000 shares of Common Stock, having a par value
of $.003 per share; and
(2) 5,000,000 shares of Preferred Stock with a par value of
$.0001 per share.
SECOND: That thereafter, the 1997 annual meeting of the stockholders of
the Corporation was duly called and held, upon notice in accordance with Section
222 of the General Corporation law of the State of Delaware, at which meeting
the necessary number of shares as required by statute were voted in favor of the
amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Walter L. Williams, its President and Chief Executive Officer, this
5th day of November 1997.
/S/ WALTER L. WILLIAMS
------------------------------
Walter L. Williams
President and Chief Executive Officer
<PAGE>
EXHIBIT 10.25
CHENIERE ENERGY, INC.
---------------------
1997 STOCK OPTION PLAN
----------------------
ARTICLE I
---------
PURPOSE
-------
1.1 This Cheniere Energy, Inc. 1997 Stock Option Plan is intended to
advance the interests of the Company and its stockholders and subsidiaries by
attracting, retaining and motivating the performance of selected directors,
officers and employees of the Company of high caliber and potential upon whose
judgment, initiative and effort the Company is largely dependent for the
successful conduct of its business, and to encourage and enable such directors,
officers and employees to acquire and retain a propriety interest in the Company
by ownership of its stock.
ARTICLE II
DEFINITIONS
-----------
2.1 "Board" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as amended.
2.3 "Common Stock" means the Company's Common Stock, par value $.003
per share.
2.4 "Committee" means a committee appointed by the Board consisting of
not less than two directors who fulfill the "non-employee director" requirements
of Rule 16b-3 under the Exchange Act and the "outside director" requirements of
Section 162(m) of the code. Without limitation, the Committee may be the
Compensation Committee, if any, of the Board, or any subcommittee of the
Compensation Committee or the Board, provided that the members of the Committee
satisfy the requirements of the previous sentence. The Board shall have the
power to fill vacancies on the Committee arising by resignation, death, removal
or otherwise. The Board, in its sole discretion, may bifurcate the powers and
duties of the Committee among one or more separate committees, or retain all
powers and duties of the Committee in a single Committee. The members of the
Committee shall serve at the discretion of the Board.
Notwithstanding the preceding paragraph, the term "Committee" as used in
the Plan with respect to any Nonqualified Stock Option for a Committee member
shall refer to the Board. In the case of a Nonqualifed Stock Option for a
Committee member, the Board shall have all the powers and responsibilities of
the Committee hereunder as to such Option, and any actions as to such Options
may be acted upon only by the Board (unless it otherwise designates in its
discretion). When the Board exercises its authority to act in the capacity as
the Committee hereunder with respect to a Nonqualified Stock Option for a
Committee member, it shall so designate with respect to any action that it
undertakes in its capacity as the Committee.
2.5 "Company" means Cheniere Energy, Inc., a Delaware corporation.
2.6 "Covered Employee" means a named executive officer who is one of
the group of covered employees as defined in Section 162(m) of the Code and
Treasury Regulation (S) 1.162-27(c) (or its successor).
2.7 "Date of Grant" means the date on which an Option becomes effective
in accordance with Section 6.1 hereof.
2.8 "Eligible Person" means any person who is a director, officer or
employee of the Company or any Subsidiary.
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2.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.10 "Fair Market Value" means the last reported sales price of the
Common Stock on the principal trading market on which the Common Stock is listed
or traded on the date as of which fair market value is to be determined or, in
the absence of any reported sales of Common Stock on such date, on the first
preceding date on which any such sale shall have been reported. If Common Stock
is not listed or traded on the date as of which fair market value is to be
determined, the Committee shall determine in good faith the fair market value in
whatever manner it considers appropriate.
2.11 "Incentive Stock Option" means a stock option granted under the
Plan that is intended to meet the requirements of Section 422 of the Code and
regulations promulgated thereunder.
2.12 "Insider" means an individual who is, on the relevent date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.13 "Nonqualified Stock Option" means a stock option granted under the
Plan that is not an Incentive Stock Option.
2.14 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under the Plan.
2.15 "Optionee" means an Eligible Person to whom an Option has been
granted, which Option has not expired, under the Plan.
2.16 "Option Price" means the price at which each share of Common Stock
subject to an Option may by purchased, determined in accordance with Section 6.2
hereof.
2.17 "Performance-Based Exception" means the performance-based exception
from the tax deductibility limitations of Section 162(m) of the Code, as
prescribed in Section 162(m) of the Code and Treasury Regulation (S) 1.162-27(e)
(or its successor).
2.18 "Plan" means this Cheniere Energy, Inc. 1997 Stock Option Plan, as
it may be amended from time to time.
2.19 "Stock Option Agreement" means an agreement between the Company and
an Optionee under which the Optionee may purchase Common Stock under the Plan.
2.20 "Subsidiary" means a subsidiary corporation of the Company, within
the meaning of Section 424(f) of the Code.
ARTICLE III
ELIGIBILITY
-----------
All Eligible Persons are eligible to receive a grant of an Option under the
Plan. The Committee shall, in its sole discretion, determine and designate from
time to time those Eligible Persons who are to be granted an Option.
ARTICLE IV
ADMINISTRATION
--------------
4.1 Committee Members. The Plan shall be administered by the Committee
appointed by the Board.
4.2 Committee Authority. Subject to the express provisions of the
Plan, the Committee shall have the authority, in its discretion, to determine
the Eligible Persons to whom an Option shall be granted, the time or times at
which an Option shall be granted, the number of shares of Common Stock subject
to each Option, the Option Price of
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the shares subject to each Option, and the time or times when each Option shall
become exercisable and the duration of the exercise period.
Subject to the express provisions of the Plan, the committee shall also
have discretionary authority to interpret to Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the details and
provisions of each Stock Option Agreement, and to make all the determinations
necessary or advisable in the administration of the Plan. All such actions and
determinations by the Committee shall be conclusively binding for all purposes
and upon all persons. No Committee member shall be liable for any action or
determination made in good faith with respect to the Plan, any option or any
Stock Option Agreement entered into hereunder.
4.3 Majority Rule. A majority of the members of the Committee (or, if
less than three, all of the members) shall constitute a quorum, and any action
taken by a majority present at a meeting at which a quorum is present or any
action taken without a meeting evidenced by a writing executed by a majority of
the whole Commitee shall constitute the action of the Committee.
4.4 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to Eligible Persons, their
employment or other service to the Company, their death, disability or other
termination of service, and such other pertinent facts as the Commitee may
require. The Company shall furnish the Committee with such clerical and other
assistance as is necessary in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
-------------------------------
5.1 Number of Shares. Subject to adjustment pursuant to the provisions
of Section 5.2 hereof, the maximum number of shares of Common Stock which may be
issued and sold hereunder shall be 950,000 shares. Shares of Common Stock
issued and sold under the Plan may be either authorized but unissued shares or
shares held in the Company's treasury. Shares of Common Stock covered by an
Option that shall have been exercised shall not again be available for an Option
grant. If an Option shall terminate for any reason (including, without
limitation, the cancellation of an Option pursuant to Section 6.6 hereof)
without being wholly exercised, the number of shares to which such Option
termination relates shall again be available for grant hereunder. Unless and
until the Committee determines that a particular Option granted to a Covered
Employee is not intended to comply with the Performance-Based Exception, the
following rules shall apply to grants of Options to Covered Employees:
(a) Subject to adjustment as provided in Section 5.2, the maximum
aggregate number of Options for shares of Common Stock that may be granted
in any calendar year to any Covered Employee shall be five hundred thousand
(500,000) shares.
(b) With respect to any Option granted to a Covered Employee that
is canceled or repriced, the number of shares of Common Stock subject to
such Option shall continue to count against the maximum number of shares
that may be the subject of Options granted to such Covered Employees under
subsection (a) above and, in this regard, such maximum shall be determined
in accordance with Section 162(m) of the Code.
(c) The limitations of subsections (a) and (b) above shall be
construed and administered so as to comply with he Performance-Based
Exception.
5.2 Antidilution. Subject to Article IX hereof, in the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger or consolidation, or the sale, conveyance, or other transfer by
the Company of all or substantially all of its property, or any other change in
the corporate structure or shares of the Company, pursuant to any of which
events the then outstanding shares of Common Stock are split up or combined, or
are changed into, become exchangeable at the holder's election for or entitle
the holder thereof to, other shares of stock, or in the case of any other
transaction described in Section 424(a) of the Code, the Committee may change
the number and kind of shares (including by substitution of shares of another
corporation) subject to the Options and/or the Option Price of such shares in
the manner that it shall deem to be equitable and appropriate. In no event may
any such change
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be made to an Incentive Stock Option which would constitute a "modification"
within the meaning of Section 424(h)(3) of the Code.
ARTICLE VI
OPTIONS
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6.1 Grant of Option. An Option may be granted to any Eligible Person
selected by the Committee. The grant of an Option shall first be effective upon
the date it is approved by the Committee, except to the extent the Committee
shall specify a later date upon which the grant of an Option shall first be
effective. Each Option shall be designated, at the discretion of the Committee,
as an Incentive Stock Option or a Nonqualified Stock Option, provided that
Incentive Stock Options may only be granted to Eligible Persons who are
considered employees of the Company or any Subsidiary for purposes of Section
422 of the Code. The Company and the Optionee shall execute a Stock Option
Agreement which shall set forth such terms and conditions of the Option as may
be determined by the Committee to be consistent with the Plan, and which may
include additional provisions and restrictions that are not inconsistent with
the Plan.
6.2 Option Price. The Option Price shall be determined by the
Committee; provided, however, the Option Price of an Incentive Stock Option
shall not be less that 100 percent of the Fair Market Value of a share of Common
Stock on the Date of Grant. To the extent that a Nonqualified Stock Option is
intended to qualify for the Performance-Based Exception, the Option Price shall
not be less than 100% of the Fair Market Value per share of Commons Stock on the
Date of Grant.
No employee shall be eligible for the grant of any Incentive Stock Option
who owns, or would own immediately before the grant of such Incentive Stock
Option, directly or indirectly, stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company, or any
parent or Subsidiary of the Company. This restriction does not apply if, at the
time such Incentive Stock Option is granted, the Option exercise price is at
lease one hundred and ten percent (110%) of the Fair Market Value on the date of
grant and the Incentive Stock Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant. For the purpose of the
immediately preceding sentence, the attribution rules of Section 424(d) of the
Code shall apply for the purpose of determining an employee's percentage
ownership in the Company or any parent or Subsidiary. This paragraph shall be
construed consistent with the requirements of Section 422 of the Code.
6.3 Vesting; Term of Option. Unless otherwise specified by the
Committee in the Stock Option Agreement for an Optionee, an Option shall vest
and become exercisable in cumulative annual installments, each of which shall
relate to one quarter of the number of shares of Common Stock originally covered
thereby (adjusted in accordance with Section 5.2 hereof), on the second, third,
fourth and fifth anniversaries of the Date of Grant, respectively, provided that
the Optionee is an Eligible Person on such anniversary. Notwithstanding the
foregoing, the Committee, in its sole discretion, may accelerate the
exercisability to the extent provided in Article VIII hereof. The period during
which a vested Option may be exercised shall be ten years from the Date of
Grant, unless a shorter exercise period is specified by the Committee in the
Stock Option Agreement for any Optionee.
6.4 Option Exercise; Withholding. An Option may be exercised in whole
or in part at any time, with respect to whole shares only , within the period
permitted for the exercise thereof, and shall be exercised by written notice of
intent to exercise the Option with respect to a specified number of shares
delivered to the company at its principal office, and payment in full to the
Company at said office of the amount of the Option Price for the number of
shares of the Common Stock with respect to which the Option is then being
exercised. Payment of the Option Price shall be made (i) in cash or by cash
equivalent, (ii) at the discretion of the Committee, in Common Stock (not
subject to limitations on transfer) valued at the Fair Market Value of such
shares on the trading date immediately preceding the date of exercise or (iii)
at the discretion of the Committee, by a combination of such cash and such
Common Stock. In addition to and at the time or payment of the Option Price,
the Optionee shall pay to the Company in cash or, at the discretion of the
Committee, in Common Stock the full amount of all federal and state withholding
and other employment taxes applicable to the taxable income of such Optionee
resulting from such exercise.
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6.5 Nontransferability of Option. No Option shall be transferred by an
Optionee other than by will or the laws of descent and distribution. No
transfer of an Option by the Optionee by will or by laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and an authenticated copy of the
will and/or such other evidence as the Committee may deem necessary to establish
the validity of the transfer. During the lifetime of an Optionee, the Option
shall be exercisable only by him, except that, in the case of an Optionee who is
legally incapacitated, the Option shall be exercisable by his guardian or legal
representative.
6.6 Cancellation, Substitution and Amendment of Options. The
Committee shall have the authority to effect, at any time and from time to time,
with the consent of the affected Optionees, (i) the cancellation of any or all
outstanding Options and the grant in substitution therefor of new Options
covering the same or different numbers of shares of Common Stock and having an
Option Price which may be the same as or different than the Option Price of the
canceled Options or (ii) the amendment of the terms of any and all outstanding
Options.
ARTICLE VII
INCENTIVE STOCK OPTIONS
-----------------------
7.1 Annual Limits. No Incentive Stock Option shall be granted to an
Optionee as a result of which the aggregate Fair Market Value (determined as at
the date of grant) of the stock with respect to which Incentive Stock Options
are exercisable for the first time in any calendar year under the Plan (and any
other stock option plans of the Company, any Subsidiary or any parent
corporation) would exceed $100,000, as determined in accordance with Section
422(d) of the Code. This limitation shall be applied by taking Options into
account in the order in which granted.
Notwithstanding any contrary provision in the Plan, to the extent that the
aggregate Fair Market Value (determined as of the time the Incentive Stock
Option is granted) of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any Grantee during any
single calendar year (under the Plan and any other stock option plans of the
Company and its Subsidiaries or parent) exceeds the sum of $100,000, such
Incentive Stock Option shall be treated as a Nonqualified Stock Option and not
an Incentive Stock Option, but all other terms and provisions of such Stock
Option shall remain unchanged. This paragraph shall be applied by taking
Incentive Stock Options into account in the order in which they are granted.
7.2 Disqualifying Dispositions. If shares of Common Stock acquired by
exercise of an Incentive Stock Option are disposed of within two years following
the Date of Grant or one year following the transfer of such shares to the
Optionee upon exercise, the Optionee shall, within 10 days after such
disposition, notify the Company in writing of the date and terms of such
disposition and provide such other information regarding the disposition as the
Committee may reasonably require. With respect to any disqualifying disposition
of shares of Common Stock received by an Optionee pursuant to the exercise of an
Incentive Stock Option, the Company shall have the right to withhold from any
salary, wages or other compensation payable by the Company to the Optionee an
amount sufficient to satisfy federal, state and local tax withholding
requirements attributable to such disqualifying disposition.
7.3 Other Terms and Conditions. Any Incentive Stock Option granted
hereunder shall contain such additional terms and conditions, not inconsistent
with the terms of this Plan, as are deemed necessary, or desirable by the
Committee, which terms, together with the terms of this Plan, shall be intended
and interpreted to cause such Incentive Stock Option to qualify as an "incentive
stock option" under Section 422 of the Code.
ARTICLE VIII
TERMINATION OF SERVICE
----------------------
8.1 Death. Except if otherwise provided in the Stock Option Agreement,
if an Optionee shall die at any time after the Date of Grant and while he is an
Eligible Person, the executor or administrator of the estate of the decedent, or
the person or persons to whom an Option shall have been validly transferred in
accordance with Section 6.5 hereof pursuant to will or the laws of descent and
distribution, shall have the right, during the period ending one year after the
date of the Optionee's death (subject to Section 6.3 hereof concerning the
maximum term of an Option), to exercise the Optionee's Option to the extent that
it was exercisable at the date of the Optionee's death and shall not have
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been previously exercised. The Committee may determine at or after grant to
make any portion of his Option that is not exercisable at the date of death
immediately vested and exercisable. No Incentive Stock Option may be exercised
more than one year after the Optionee's termination of employment due to death.
8.2 Disability. Except if otherwise provided in the Stock Option
Agreement, if an Optionee's employment or other service with the Company or any
Subsidiary shall be terminated as a result of his permanent and total disability
(within the meaning of Section 22(e)(3) of the Code) at any time after the Date
of Grant and while he is an Eligible Person, the Optionee (or in case of an
Optionee who is legally incapacitated, his guardian or legal representative)
shall have the right, during a period ending one year after the date of his
termination due to disability (subject to Section 6.3 hereof concerning the
maximum term of an Option), to exercise such Option to the extent that it was
exercisable at the date of such termination of employment or other service and
shall not have been exercised. The Committee may determine at or after grant to
make any portion of this Option that is not exercisable at e date of termination
of employment or other service due to disability immediately vested and
exercisable. No Incentive Stock Option may be exercised more than one year
after the Optionee's termination of employment due to disability.
8.3 Termination of Cause. If an Optionee's employment or other service
with the Company or any Subsidiary shall be terminated for cause, the Optionee's
right to exercise any unexercised portion of this Option shall immediately
terminate and all rights thereunder shall cease. For purposes of this Section
8.3, termination for "cause" shall include, but not be limited to, embezzlement
or misappropriation of funds, any acts of dishonesty resulting in conviction for
a felony, misconduct resulting in material injury to the Company or any
Subsidiary, significant activities harmful to the reputation of the Company or
any Subsidiary, a significant violation of Company or Subsidiary policy, willful
refusal to perform, or substantial disregard of, the duties property assigned to
the Optionee, or a significant violation of any contractual statutory or common
law duty of loyalty to the Company or any Subsidiary. The Committee shall have
the power to determine whether the Optionee has been terminated for cause and
the date upon which such termination for cause occurs. Any such determination
shall be final, conclusive and binding upon the Optionee.
8.4 Other Termination of Service. Except if otherwise provided in the
Stock Option Agreement, if an Optionee's employment or other service with the
Company or any Subsidiary shall be terminated for any reason other than death,
permanent and total disability or termination for cause, the Optionee shall have
the right, during the period ending 90 days after such termination (subject to
Section 6.3 hereof concerning the maximum term of an Option), to exercise such
Option to the extent that it was exercisable at the date of such termination and
shall not have been exercised. For purposes of this Section 8.4, an Optionee
shall not be considered to have terminated employment or other service with the
Company or any Subsidiary until the expiration of the period of any military,
sick leave or other bona fide leave of absence, up to a maximum period of 90
days (or such greater period during which the Optionee is guaranteed
reemployment either by statute or contact).
ARTICLE IX
CHANGE IN CONTROL
-----------------
9.1 Change in Control. Upon a "change in control" of the Company (as
defined in Section 9.2), each outstanding Option, to the extent that it shall
not otherwise have become vested, shall become fully and immediately vested
(without regard to any otherwise applicable vesting requirement under Section
6.3 or in the Stock Option Agreement) and an Optionee shall surrender his
Option and receive with respect to each share of Common Stock issuable under
such Option outstanding at such time, a payment is cash equal to the excess of
the Fair Mark Value of the Common Stock at the time of the change in control
over the Option Price of the Common Stock; provided, however, that no such
vesting and cash payment shall occur if (i) the change in control has been
approved by at least two-thirds of the members of the Board who were serving as
such immediately prior to such transaction and (ii) provision has been made in
connection with such transaction for (a) the continuation of the Plan and/or
the assumption of such Options by a successor corporation (or a parent or
subsidiary thereof) or (b) the substitution for such Options of new options
covering the stock of a successor corporation (or a parent or subsidiary
thereof), with appropriate adjustments as to the number and kinds of shares and
exercise prices. In the event of any such continuation, assumption or
substitution, the Plan and/or such Options shall continue in the manner and
under the terms so provided.
9.2 Definition. For purposes of Section 9.1 hereof, a "change in
control" of the Company shall mean:
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(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of fifty percent (50%) or more of the total voting power
of all the Company's then outstanding securities entitled to vote generally
in the election of directors to the Board; provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a change in control; (i) any acquisition by the Company or its
parent or Subsidiaries, (ii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or its parent or
Subsidiaries, or (iii) any acquisition consummated with the prior approval
of the Board; or
(b) During the period of two consecutive calendar years, individuals
who at the beginning of such period constitute the Board, and any new
director(s) whose (i) election by the Board or (ii) nomination for election
by the Company's shareholders, was approved by a vote of at least two-
thirds of the directors then still in office who either were directors at
the beginning of the two-year period or whose election or nomination for
election was previously so approved, should cease for any reason to
constitute a majority of the Board; or
(c) The Company becomes a party to a merger, plan of reorganization,
consolidation or share exchange in which either (i) the Company will not be
the surviving corporation or (ii) the Company will be the surviving
corporation and any outstanding shares of the Company's common stock will
be converted into shares of any other company (other than a reincorporation
or the establishment of a holding company involving no change of ownership
of the Company) or other securities, cash or other property (excluding
payments made solely for fractional shares); or
(d) The shareholders of the Company approve a merger, plan of
reorganization, consolidation or share exchange with any other corporation,
and immediately following such merger, plan of reorganization,
consolidation or share exchange the holders of the voting securities of the
Company outstanding immediately prior thereto hold securities representing
fifty percent (50%) or less of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger, plan of reorganization, consolidation or share exchange;
provided, however, that notwithstanding the foregoing, no change in control
shall be deemed to have occurred if one-half (1/2) or more of the members
of the Board of the Company or such surviving entity immediately after such
merger, plan of reorganization, consolidation or share exchange is
comprised of persons who served as directors of the Company immediately
prior to such merger, plan of reorganization, consolidation or share
exchange or who are otherwise designees of the Company; or
(e) Upon approval by the Company's stockholders of a complete
liquidation and dissolution of the Company or the sale or other disposition
of all or substantially all of the assets of the Company other than to a
parent or Subsidiary; or
(f) Any other event that a majority of the Board, in its sole
discretion, shall determine constitutes a change in control for purposes of
Section 9.1.
Notwithstanding the occurrence of any of the foregoing events of this
Section 9.2 which would otherwise result in a change in control, the Board
may determine in its sole discretion, if it deems it to be in the best
interest of the Company, that an event or events otherwise constituting a
change in control shall not be considered a change in control. Such
determination shall be effective only if it is made by the Board as it is
constituted prior to the occurrence of an event that otherwise would be or
probably would lead to a change in control; or after such event if made by
the Board a majority of which is composed of directors who were members of
the Board immediately prior to the event that otherwise would be or
probably would lead to a change in control.
9.3 Exchange of Options. The Committee may, in its discretion, permit any
Optionee to surrender outstanding Options in order to exercise or realize his
rights under other Options or in exchange for the grant of new Options, or
require holders of Options to surrender outstanding Options as a condition
precedent to the grant of new Options.
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ARTICLE X
STOCK CERTIFICATES
10.1 Issuance of Certificates. Subject to Section 10.2 hereof, the Company
shall issue a stock certificate in the name of the Optionee (or other person
exercising the Option in accordance with the provisions of the Plan) for the
shares of Common Stock purchased by exercise of an Option as soon as practicable
after due exercise and payment of the aggregate Option Price for such shares. A
separate stock certificate or separate stock certificates shall be issued for
any shares of Common Stock purchased pursuant to the exercise of an Option that
is an Incentive Stock Option, which certificate or certificates shall not
include any shares of Common Stock that were purchased pursuant to the exercise
of an Option that is a Nonqualified Stock Option.
10.2 Conditions. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock purchased upon the exercise of any Option
granted hereunder or any portion thereof prior to fulfillment of all of the
following conditions:
(a) The completion of any registration or other qualification of such
shares, under any federal or state law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, that the Committee shall in its sole discretion deem
necessary or advisable;
(b) The obtaining of any approval or other clearance from any federal
or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable;
(c) The lapse of such reasonable period of time following the exercise
of the Option as the Committee from time to time may establish for reasons
of administrative convenience;
(d) Satisfaction by the Optionee of all applicable withholding taxes
or other withholding liabilities; and
(e) If required by the Committee, in its sole discretion, the receipt
by the Company from an Optionee of (i) a representation in writing that the
shares of Common Stock received upon exercise of an Option are being
acquired for investment and not with a view to distribution and (ii) such
other representations and warranties as are deemed necessary by counsel to
the Company.
10.3 Legends. The Company reserves the right to legend any certificate for
shares of Common Stock, conditioning sales of such shares upon compliance with
applicable federal and state securities laws and regulations.
ARTICLE XI
EFFECTIVE DATE, TERMINATION AND AMENDMENT
11.1 Effecive Date. The Plan shall become effective on the date of its
adoption by the Board; provided, however that no Option shall be exercisable by
an Optionee unless and until the Plan shall have been approved by the
stockholders of the Company, which approval shall be obtained within 12 months
before or after the adoption of the Plan by the Board. If the stockholders fail
to approve the Plan within one year from the Effective Date, any Options granted
hereunder shall be null and void and of no effect.
11.2 Termination and Amendment. The Plan shall terminate on the date
immediately preceding the tenth anniversary of the earlier of the date the Plan
is adopted by the Board or the date the Plan is approved by the Company's
stockholders. Notwithstanding the foregoing, the Board shall have complete power
and authority to terminate the Plan at an earlier date or to amend the Plan;
provided, however, the Board shall not, without the approval of the stockholders
of the Company within the time period required by applicable law, (a) increase
the maximum number of shares which may be issued under the Plan pursuant to
Section 5.1, (b) amend the requirements as to the class of employees eligible to
receive Options for Common Stock under the Plan, (c) extend the term of the
Plan, or (d) decrease the authority granted to the Committee under the Plan in
contravention of (i) Rule 16b-3 under the Exchange Act or (ii) Section
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162(m) of the Code to the extent that the Committee seeks compliance with
Section 162(m). No termination or amendment of the Plan shall adversely affect
the rights of an Optionee (or his permitted transferee) under a previously
granted or transferred Option without his written consent.
In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Common Stock is then listed or quoted, or (b) the
Code (or regulations promulgated thereunder), require stockholder approval in
order to maintain compliance with such listing requirements or to maintain any
favorable tax advantages or qualifications, then the Plan shall not be amended
in such respect without obtaining the approval of the Company's stockholders
within the prescribed time period.
With respect to insiders, transactions under the Plan are intended to comply
with all applicable conditions of Rule 16b-3 under the Exchange Act. Any
ambiguities or inconsistencies in the construction of any Stock Option Agreement
or the Plan shall be interpreted to give effect to such intention.
Unless otherwise determined by the Committee with respect to any particular
Option grant, it is intended that the Plan comply fully with and meet all the
requirements of Section 162(m) of the Code so that any Stock Options that are
granted to Covered Employees shall qualify for the Performance-Based Exception.
If any provision of the Plan or a Stock Option Agreement would not permit the
Plan or Stock Option to comply with the Performance-Based Exception as so
intended, such provision shall be construed or deemed amended to conform to the
requirements of the Performance-Based Exception to the extent permitted by
applicable law and deemed advisable by the Committee; provided, however, no such
construction or amendment shall have an adverse effect on the prior grant of any
Stock Option or on the economic value to an Optionee (or his permitted
transferee) of any outstanding Stock Option.
ARTICLE XII
MISCELLANEOUS
12.1 Employment or other Service. Nothing in the Plan, in the grant of any
Option or in any Stock Option Agreement shall confer upon any Eligible Person
the right to continue in the capacity in which he is employed by or otherwise
provides services to the Company or any Subsidiary. Notwithstanding anything
contained in the Plan to the contrary, unless otherwise provided in a Stock
Option Agreement, no Option shall be affected by any change of duties or
position of the Optionee (including a transfer to or from the Company or any
Subsidiary), so long as such Optionee continues to be an Eligible Person.
12.2 Rights as Shareholder. An Optionee or the permitted transferee of an
Option shall have no rights as a shareholder with respect to any shares subject
to such Option prior to the purchase of such shares by exercise of such Option
as provided herein. Nothing contained herein or in the Stock Agreement relating
to any Option shall create an obligation on the part of the Company to
repurchase any shares of Common Stock purchased hereunder.
12.3 Compensation and Benefit Plans. The adoption of the Plan shall not
affect any other stock option or incentive or other compensation plans in effect
for the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees of
the Company or any Subsidiary. The amount of any compensation deemed to be
received by an Optionee as a result of the exercise of an Option or the sale of
shares received upon such exercise shall not constitute compensation with
respect to which any other employee benefits of such Optionee are determined,
including, without limitation, benefits under any bonus, pension, profit
sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Board or the Committee or provided by the terms
of such plan.
12.4 Plan Binding n Successors. The Plan shall be binding upon the Company,
its successors and assigns, and the Optionee, his executor, administrator and
permitted transferees.
12.5 Construction and Interpretation. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the plan.
9
<PAGE>
12.6 Severability. If any provision of the Plan or any Stock Option
Agreement shall be determined to be illegal or unenforceable by any court of law
in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
12.7 Governing Law. The validity and Construction of this Plan and of the
Stock Option Agreements shall be governed by the laws of the State of Texas,
without regard to its conflicts of law provisions.
This Cheniere Energy, Inc. 1997 Stock Plan was originally adopted and
approved by the Board of Directors of Cheniere Energy, Inc., on April 22, 1997.
By unanimous written consent of the Board of Directors dated October 2, 1997,
the Plan was amended and restated effective as of April 22, 1997.
/s/ CHARIF SOUKI
----------------------------------
Secretary of Cheniere Energy, Inc.
This Cheniere Energy, Inc. 1997 Stock Option Plan was duly approved by the
stockholders of Cheniere Energy, Inc. on the 5th day of November, 1997.
/s/ Charif Souki
----------------------------------
Secretary of Cheniere Energy, Inc.
10
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