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Exhibit
10.6
CHENIERE ENERGY,
INC.
CHANGE OF CONTROL
AGREEMENT
This CHANGE OF CONTROL
AGREEMENT (this “ Agreement ”), dated as of May
, 2008, is made and entered by and
between Cheniere Energy, Inc., a Delaware corporation (the “
Company ”), and
(the “ the Employee ”).
WITNESSETH:
WHEREAS, the Employee is a
key employee of the Company or one or more of its subsidiaries and
has made and is expected to continue to make major contributions to
the short- and long-term prospects of the Company;
WHEREAS, the Company
recognizes that the possibility of a Change of Control (as defined
below) exists and that such possibility, and the uncertainty it may
create among its employees, may result in the distraction or
departure of its employees, to the detriment of the Company and its
stockholders;
WHEREAS, the Company desires
to establish a payout for certain of its employees, including the
Employee, applicable in the event of a Change of
Control;
WHEREAS, the Company wishes
to ensure that its employees are not unduly distracted by the
circumstances attendant to the possibility of a Change of Control
and to encourage the continued attention and dedication of such
employees, including the Employee, to their assigned duties with
the Company; and
WHEREAS, the Company desires
to provide additional inducement for the Employee to remain in the
employ of the Company.
NOW, THEREFORE, the Company
and the Employee agree as follows:
1. Certain Defined
Terms . In addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this
Agreement with initial capital letters:
(a) “ Affiliate
” means (i) any entity in which the Company, directly or
indirectly, owns 10% or more of the combined voting power;
(ii) any “parent corporation” of the Company (as
defined in Section 424(e) of the Internal Revenue Code of
1986, as amended (the “ Code ”)); (iii) any
“subsidiary corporation” of any such parent corporation
(as defined in Section 424(f) of the Code) of the Company; and
(iv) any trades or businesses, whether or not incorporated
which are members of a controlled group or are under common control
(as defined in Sections 414(b) or (c) of the Code) with the
Company.
(b) “ Base
Salary ” means the Employee’s annual base salary
rate as in effect immediately prior to the occurrence of a Change
of Control (or, in the case of a termination contemplated by
Section 3, as in effect immediately prior to such
termination).
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(c) “ Board
” means the Board of Directors of the Company.
(d) “ Cause
” for termination of the Employee who is a party to an
agreement of employment with the Company shall mean termination for
“Cause” as such term is defined in such agreement, the
relevant portions of which are incorporated herein by reference. If
such agreement does not define “Cause” or if the
Employee is not a party to such an agreement, “Cause”
means (i) the willful commission by the Employee of a criminal
or other act that causes or is likely to cause substantial economic
damage to the Company or an Affiliate or substantial injury to the
business reputation of the Company or Affiliate; (ii) the
commission by the Employee of an act of fraud in the performance of
the Employee’s duties on behalf of the Company or an
Affiliate; or (iii) the continuing willful failure of the
Employee to perform the duties of the Employee to the Company or an
Affiliate (other than such failure resulting from the
Employee’s incapacity due to physical or mental illness)
after written notice thereof (specifying the particulars thereof in
reasonable detail) and a reasonable opportunity to be heard and
cure such failure are given to the Employee by the Board (or in the
case of an employee who is not an executive officer, the Chief
Executive Officer of the Company). For purposes of this Agreement,
no act, or failure to act, on the Employee’s part shall be
considered “willful” unless done or omitted to be done
by the Employee not in good faith and without reasonable belief
that the Employee’s action or omission was in the best
interest of the Company or an Affiliate, as the case may
be.
(e) “ Change of
Control ” means the occurrence during the Term of any one
of the following events:
(i) (i) any
“person” (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the “
Exchange Act ”), and as modified in Section 13(d)
and 14(d) of the Exchange Act) other than (A) the Company or
any of its Subsidiaries, (B) any employee benefit plan of the
Company or any of its Subsidiaries, (C) any Affiliate,
(D) a company owned, directly or indirectly, by stockholders
of the Company in substantially the same proportions as their
ownership of the Company, or (E) an underwriter temporarily
holding securities pursuant to an offering of such securities (a
“ Person ”), becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing
30% or more of the shares of voting stock of the Company then
outstanding; or
(ii) the consummation of any
merger, organization, business combination or consolidation of the
Company or one of its Subsidiaries with or into any other company,
other than a merger, reorganization, business combination or
consolidation which would result in the holders of the voting
securities of the Company outstanding immediately prior thereto
holding securities which represent immediately after such merger,
reorganization, business combination or consolidation more than 50%
of the combined voting power of the voting securities of the
Company or the surviving company or the parent of such surviving
company; or
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(iii) the consummation of a
sale or disposition by the Company of all or substantially all of
the Company’s assets, other than a sale or disposition if the
holders of the voting securities of the Company outstanding
immediately prior thereto hold securities immediately thereafter
which represent more than 50% of the combined voting power of the
voting securities of the acquiror, or parent of the acquiror, of
such assets, or the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company; or
(iv) individuals who, as of
the Effective Date, constitute the Board (the “ Incumbent
Board ”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date of this Agreement whose
election by the Board, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an election contest with respect to the election or removal of
directors or other solicitation of proxies or consents by or on
behalf of a person other than the Board.
(f) “ Good
Reason ” means termination of employment by the Employee
under any of the following circumstances:
(i) if the Employee is a
party to an agreement for employment with the Company, which
agreement includes a definition of “Good Reason” for
termination of employment with the Company, “Good
Reason” shall have the same definition for purposes of this
Agreement as is set forth in such agreement, the relevant portions
of which are incorporated herein by reference; or
(ii) if the Employee is not a
party to an agreement with the Company that defines the term
“Good Reason,” such term shall mean termination of
employment under any of the following circumstances, if the Company
fails to cure such circumstances within thirty (30) days after
receipt of written notice from the Employee to the Board (or in the
case of an employee who is not an executive officer, to the Chief
Executive Officer of the Company) setting forth a description of
such Good Reason:
(1) the removal from or
failure to re-elect the Employee to the office or position in which
the Employee last served;
(2) the assignment to the
Employee of any duties, responsibilities, or reporting requirements
inconsistent with the Employee’s position with the Company,
or any material diminishment, on a cumulative basis, of the
Employee’s overall duties, responsibilities or
status;
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(3) a material reduction by
the Company in the Employee’s compensation or benefits;
or
(4) the requirement by the
Company that the principal place of business at which the Employee
performs the Employee’s duties be changed to a location that
increases the Employee’s commute by more than fifty
(50) miles per day.
(g) “ Term
” means the period commencing as of the date hereof and
expiring on the close of business on December 31, 2009;
provided, however, that (i) commencing on January 1, 2010
and each January 1 thereafter, the term of this Agreement will
automatically be extended for an additional year unless, not later
than September 30 of the immediately preceding year, the
Company or the Employee shall have given notice that it or the
Employee, as the case may be, does not wish to have the Term
extended; (ii) if a Change of Control occurs during the Term,
the Term shall expire and this Agreement will terminate on the date
that the payments are made pursuant to the terms of this Agreement;
and (iii) subject to Section 3, if, prior to a Change of
Control, the Employee ceases for any reason to be an employee of
the Company or any subsidiary of the Company (including termination
arising in connection with the Company ceasing to beneficially own
50% or more of the voting stock of such subsidiary), thereupon
without further action the Term shall be deemed to have expired and
this Agreement will immediately terminate and be of no further
effect. For purposes of this Section 1(g), the Employee shall
not be deemed to have ceased to be an employee of the Company and
any subsidiary of the Company by reason of the transfer of the
Employee’s employment between the Company and any subsidiary
of the Company, or among any subsidiaries of the
Company.
2. Operation of
Agreement . This Agreement will be effective and binding
immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, except as provided in Section 3,
this Agreement will not be operative unless and until a Change of
Control occurs. Upon the occurrence of a Change of Control at any
time during the Term, without further action, this Agreement will
become immediately operative.
3. Termination Prior to a
Change of Control . Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and not more than
three months prior to the date on which the Change of Control
occurs, the Employee’s employment with the Company ceases at
the previously designated level (including as a result of death or
disability) for any reason or is terminate
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