Exhibit 10.2

Execution Version

 

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AMENDED AND RESTATED

PARITY LIEN SECURITY AGREEMENT

Dated as of November 9, 2006

between

SABINE PASS LNG, L.P.,

as Company

and

THE BANK OF NEW YORK,

as Collateral Trustee

 

 

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TABLE OF CONTENTS

 

     Page ARTICLE I DEFINITIONS AND INTERPRETATION    2

1.01

     Certain Defined Terms    2

1.02

     Interpretation    5 ARTICLE II THE COLLATERAL    5

2.01

     Grant for the benefit of the Parity Lien Secured Parties    5

2.02

     Grant for the benefit of Crest    7

2.03

     Priority    7

2.04

     Amendment and Restatement of Prior Security Agreement; Confirmation of
Grant of Security    7

2.05

     Perfection    7

2.06

     Preservation and Protection of Security Interests.    8

2.07

     Attorney-in-Fact.    10

2.08

     Instrument    11

2.09

     Rights and Obligation.    11

2.10

     Release and Termination    12

2.11

     Intellectual Property.    12 ARTICLE III COLLATERAL ACCOUNTS    12 ARTICLE
IV REPRESENTATIONS AND WARRANTIES    13

4.01

     Title    13

4.02

     No Other Financing Statements    13

4.03

     Perfection Representations    14

4.04

     Other Perfection Matters    14

4.05

     Fair Labor Standards Act    14

4.06

     No Further Consents, etc    14 ARTICLE V COVENANTS    15

5.01

     Books and Records    15

5.02

     Legal Status    15

5.03

     Sales and Other Liens    15

5.04

     Further Assurances    15 ARTICLE VI REMEDIES    16

6.01

     Events of Default, Etc.    16

6.02

     Deficiency    18

6.03

     Private Sale    18

6.04

     Application of Proceeds    19

 

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ARTICLE VII COLLATERAL TRUSTEE MAY PERFORM    19 ARTICLE VIII REINSTATEMENT   
19 ARTICLE IX EXCULPATORY PROVISIONS    20 ARTICLE X MISCELLANEOUS    20

10.01

     No Waiver; Remedies Cumulative    20

10.02

     Notices    20

10.03

     Expenses    21

10.04

     Waivers, etc    21

10.05

     Successors and Assigns    21

10.06

     Survival    21

10.07

     Agreements Superseded    21

10.08

     Severability    22

10.09

     Captions    22

10.10

     Counterparts    22

10.11

     CONSENT TO JURISDICTION    22

10.12

     Certain Matters Relating to Collateral Located in the State of Louisiana   
22

10.13

     Waiver of Jury Trial    24

10.14

     GOVERNING LAW    24

10.15

     Supremacy Clause    24

10.16

     Subordination of Lien    24

 

Annex A:      Project Documents Schedule 2.06(a):      Amounts Payable by
Instrument or Tangible Chattel Paper Schedule 2.06(c):      Investment Property
Schedule 2.06(f):      Commercial Tort Claims Schedule 4.04:      UCC Filing
Offices

 

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This AMENDED AND RESTATED PARITY LIEN SECURITY AGREEMENT, dated as of
November 9, 2006 (this “Agreement”), is made between SABINE PASS LNG, L.P., a
Delaware limited partnership (the “Company”) and THE BANK OF NEW YORK, a New
York banking corporation, as collateral trustee (the “Collateral Trustee”) on
behalf of and for the benefit of the Secured Parties (defined below).

RECITALS

A. Capitalized terms used in this Agreement have the meanings assigned to them
above or in Article I below.

B. The Company (a) on the date hereof, will issue senior secured notes due
November 30, 2013 and senior secured notes due November 30, 2016 (together, the
“Initial Notes”) under an indenture, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the
“Indenture”), between the Company and The Bank of New York, in its capacity as
indenture trustee (the “Trustee”) and (b) in the future may issue additional
senior secured notes (together with the Initial Notes, the “Notes”) under the
Indenture and/or may otherwise incur additional secured indebtedness raking pari
passu with the Notes (such other secured indebtedness together with the Notes,
the “Parity Secured Debt”).

C. The Company may, from time to time, incur additional future Parity Secured
Debt that will, be secured Equally and Ratably with the Notes by Liens on all
present and future Collateral.

D. In order to cause the Liens encumbering the Collateral and created herein to
secure Equally and Ratably, the Notes and all other future Parity Lien
Obligations, the Company and the other Pledgors will enter into a collateral
trust arrangement pursuant to the Collateral Trust Agreement, dated as of the
date hereof (as amended, restated, supplemented or otherwise modified from time
to time, the “Collateral Trust Agreement”) among the Company, the Pledgors, the
Trustee, the other Secured Debt Representatives party thereto from time to time
and the Collateral Trustee.

E. Pursuant to the Crest Settlement Documents, the Company is prohibited from
creating or allowing to be created any lien, security interest or other
encumbrance on any of the Company’s assets for borrowed money that is senior to
or pari passu with the obligations of the Company to Crest and therefore the
Company desires to grant in favor of the Collateral Trustee for the benefit of
Crest, a secured lien that is senior to the Lien granted by the Company to the
Collateral Trustee in favor of the Parity Lien Secured Parties.

F. The Company, Société Générale, as agent, and HSBC Bank USA, National
Association, as collateral agent thereunder (in such capacity, the “Prior
Collateral Agent”), were parties to a security agreement, dated as of
February 25, 2005 (as amended, restated, supplemented and otherwise modified
from time to time, the “Prior Security

 

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Agreement”) pursuant to which the Company granted an interest in all of its
assets to the Prior Collateral Agent. Pursuant to a letter agreement dated as of
the date hereof, the Prior Collateral Agent has assigned all of its rights under
the Prior Security Agreement to the Collateral Trustee for the benefit of the
Secured Parties. The Collateral Trustee for the benefit of the Secured Parties
shall have no liability for any action or inaction of the Prior Collateral
Agent. The Prior Security Agreement is hereunder declared amended and restated
as the Agreement.

G. It is a requirement under the Indenture and a condition precedent to the
issuance of the Notes that the Company shall have executed and delivered this
Agreement.

NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

1.01 Certain Defined Terms.

(a) Unless otherwise defined herein, all capitalized terms used in this
Agreement that are defined in the Collateral Trust Agreement (including those
terms incorporated by reference) shall have the respective meanings assigned to
them in the Collateral Trust Agreement.

(b) The terms “Accounts”, “Chattel Paper”, “Commercial Tort Claims”, “Deposit
Account”, “Document”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”,
“General Intangibles”, “Goods”, “Instrument”, “Inventory”, “Investment
Property”, “Letter of Credit”, “Letter-of-Credit Rights”, “Payment Intangible”,
“Proceeds”, “Record” and “Software” shall have the respective meanings ascribed
thereto in Article 9 of the Uniform Commercial Code. In addition to the terms
defined in the preamble, recitals and the first sentence of this
Section 1.01(b), the following terms shall have the following respective
meanings:

“Assigned Agreement” shall have the meaning assigned to that term in
Section 2.01.

“Cheniere” means Cheniere Energy, Inc., a Delaware corporation.

“Collateral” shall have the meaning assigned to that term in Section 2.01.

“Collateral Accounts” means the “Accounts” under and as defined in the Security
Deposit Agreement.

“Copyrights” means, collectively, (a) all copyrights, copyright registrations
and applications for copyright registrations, (b) all renewals and extensions of
all copyrights,

 

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copyright registrations and applications for copyright registration and (c) all
rights, now existing or hereafter coming into existence: (i) to all income,
royalties, damages and other payments (including in respect of all past, present
or future infringements) now or hereafter due or payable under or with respect
to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world.

“Crest” means Crest Investment Company, a Texas corporation.

“Crest Cheniere Indemnity” means that certain Indemnification Agreement, dated
May 9, 2005, executed by Cheniere relating to the Settlement Agreement.

“Crest Default Remedy Instruction” means, collectively any instruction by Crest
to the Collateral Trustee in writing to exercise remedies under the this
Agreement as a result of the Company’s failure to make any payment in respect of
the Crest Obligations after written demand by Crest.

“Crest Obligations” means all obligations of the Company in favor of Crest under
the Crest Settlement Documents.

“Crest Settlement Documents” means (a) the Settlement Agreement, (b) the
Assumption Agreement, (c) the Crest Cheniere Indemnity and (d) any and all other
agreements and documents heretofore or hereafter entered into by any subsidiary
of Cheniere pursuant to Section 1.07 of the Settlement Agreement.

“Event of Default” means (a) an “Event of Default” under and as defined in the
Indenture or (b) any other Secured Debt Default.

“Gas” means any hydrocarbon or mixture of hydrocarbons consisting predominantly
of methane which is in a gaseous state.

“Intellectual Property” means all Copyrights, all Patents and all Trademarks,
together with (a) all inventions, processes, production methods, proprietary
information, know-how and trade secrets, (b) all licenses or user or other
agreements granted to the Company with respect to any of the foregoing, in each
case whether now or hereafter owned or used, (c) all information, customer
lists, identification of suppliers, data, plans, blueprints, specifications,
designs, drawings, recorded knowledge, surveys, engineering reports, test
reports, manuals, materials standards, processing standards, performance
standards, catalogs, computer and automatic machinery software and programs,
(d) all field repair data, sales data and other information relating to sales or
service of products now or hereafter manufactured, (e) all accounting
information and all media in which or on which any information or knowledge or
data or records may be recorded or stored and all computer programs used for the
compilation or printout of such information, knowledge, records or data, (f) all
licenses, consents, permits, variances, certifications and approvals of
governmental agencies now or hereafter held by the

 

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Company, in each case, to the extent assignable and (g) all causes of action,
claims and warranties now owned or hereafter acquired by the Company in respect
of any of the foregoing.

“Loss Proceeds” shall have the meaning ascribed thereto in the Security Deposit
Agreement.

“Motor Vehicles” means motor vehicles, tractors, trailers and other like
property, whether or not the title thereto is governed by a certificate of title
or ownership.

“Patents” means, collectively, (a) all patents and patent applications, (b) all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of all patents or patent applications and (c) all rights,
now existing or hereafter coming into existence: (i) to all income, royalties,
damages, and other payments (including in respect of all past, present and
future infringements) now or hereafter due or payable under or with respect to
any of the foregoing, (ii) to sue for all past, present and future infringements
with respect to any of the foregoing and (iii) otherwise accruing under or
pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.

“Prior Collateral Agent” shall have the meaning ascribed thereto in the
recitals.

“Project” means the Sabine Pass LNG receiving terminal in Cameron Parish,
Louisiana, including associated storage tanks, unloading docks, vaporizers and
related facilities.

“Project Document” means each of the agreements or other documents listed on
Annex A and each other agreement to which the Company is party including
contracts or agreements for legal, accounting, engineering, environmental,
consulting and other professional services in connection with the Project.

“Secured Obligations” means the Parity Lien Obligations and the Crest
Obligations.

“Secured Parties” mean all holders of Parity Lien Obligations, the Parity Lien
Representatives and Crest.

“Settlement Agreement” means that certain Settlement and Purchase Agreement,
dated as of June 14, 2001, by and among Cheniere, Cheniere FLNG, L.P., Crest,
Crest Energy, L.L.C., and Freeport LNG Terminal, LLC.

“Site” shall have the meaning ascribed thereto in the Multiple Indebtedness
Mortgage, Assignment of Rents and Leases and Security Agreement, dated as of
November 9, 2006 between the Company and the Collateral Trustee.

“Trademarks” means, collectively, (a) all trade names, trademarks and service
marks, logos, trademark and service mark registrations and applications for
trademark and service mark registrations, (b) all renewals and extensions of any
of the foregoing and (c) all

 

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rights, now existing or hereafter coming into existence: (i) to all income,
royalties, damages and other payments (including in respect of all past, present
and future infringements) now or hereafter due or payable under or with respect
to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, together, in
each case, with the product lines and goodwill of the business connected with
the use of, or otherwise symbolized by, each such trade name, trademark and
service mark. Notwithstanding the foregoing, “Trademark” does not and shall not
include any Trademark that would be rendered invalid, abandoned, void or
unenforceable by reason of its being included as a Trademark for the purposes of
this Agreement.

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in
effect in the State of New York from time to time; provided, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of any security interests hereunder in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than New
York, “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for the purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.

1.02 Interpretation. The rules of interpretation set forth in Section 1.2 of the
Collateral Trust Agreement shall apply to, and are hereby incorporated by
reference in, this Agreement.

ARTICLE II

THE COLLATERAL

2.01 Grant for the benefit of the Parity Lien Secured Parties. As collateral
security for the prompt payment in full when due (whether at stated maturity,
upon acceleration, on any optional or mandatory prepayment date or otherwise)
and performance of the Parity Lien Obligations, the Company hereby pledges and
grants to the Collateral Trustee for the benefit of the Parity Lien Secured
Parties, a security interest in all of its right, title and interest in and to
the following property, assets and revenues, whether now owned or in the future
acquired by it and whether now existing or in the future coming into existence
and wherever located (collectively, the “Collateral”):

(a) the Collateral Accounts and all amendments, extensions, renewals, and
replacements thereof whether under the same or different account number,
together with all funds, cash, monies, credit balances, financial assets,
investments, Instruments, certificates of deposit, promissory notes, and any
other property (including any Permitted Investments) at any time on deposit
therein or credited to any of the foregoing, all rights to payment or withdrawal
therefrom, and all proceeds, accounts receivable arising in the ordinary course,
products, accessions, profits, gains, and interest thereon of or in respect of
any of the foregoing;

 

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(b) the agreements, contracts and documents listed in Annex A (including all
exhibits and schedules thereto) and each additional Project Document to which
the Company is or may from time to time be a party or of which it is or may from
time to time be a beneficiary, whether executed by the Company or by an agent on
behalf of the Company, as each such agreement, contract and document may be
amended, supplemented or modified and in effect from time to time (such
agreements, contracts and documents, being individually, an “Assigned
Agreement”, and collectively, the “Assigned Agreements”) including all rights of
the Company (i) to receive moneys thereunder, whether or not earned by
performance or for property that has been or is to be sold, leased, licensed,
assigned or otherwise disposed of pursuant thereto, (ii) to receive proceeds of
any performance or payment bond, liability or business interruption insurance,
indemnity, warranty, guaranty or letters of credit with respect thereto,
(iii) to all claims of the Company for damages arising out of, for breach of or
default thereunder by any party other than the Company and (iv) to take any
action to terminate, amend, supplement, modify or waive performance thereof, to
perform thereunder and to compel performance and otherwise exercise all remedies
thereunder;

(c) all Accounts, Deposit Accounts, Instruments, Documents, Chattel Paper
(including Electronic Chattel Paper), Letters of Credit and Letter-of-Credit
Rights, Inventory, Equipment, Fixtures (including those located on or forming
part of the Site), Investment Property, Payment Intangibles, Software and, to
the extent not already covered by the other enumerated categories of Collateral
described in this clause (c), all Goods and General Intangibles; including all
liquefied natural gas and Gas owned by the Company and the Project to be
constructed on or near the Site pursuant to the plans and specifications set
forth in the EPC Contract, all other machinery, apparatus, installation
facilities, including all goods of the Company that are spare parts and related
supplies, and all goods obtained by the Company in exchange for any such goods,
all substances, if any, commingled with or added to such goods, all upgrades and
other improvements to such goods and all other tangible personal property owned
by the Company or in which the Company has rights, and all fixtures and all
parts thereof and accessions thereto;

(d) all Investment Property and “Financial Assets” and “Securities Account”
(each as defined in the UCC);

(e) all Commercial Tort Claims, including as listed on Schedule 2.01(e) attached
hereto (as such schedule may be amended, supplemented or otherwise modified from
time to time);

(f) all Government Approvals now or hereafter held in the name, or for the
benefit, of the Company or of the Project; provided, that any Government
Approval that by its terms or by operation of law (in each case, other than to
the extent any such term would be rendered ineffective pursuant to
Section 9-406, 9-407, 9-408 or 9-409 of the UCC) would be breached or become
void, voidable, terminable or revocable if mortgaged, pledged or assigned
hereunder or if a security interest therein was granted

 

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hereunder, are, in each case, expressly excepted from the Collateral to the
extent necessary so as to avoid such voidness, avoidability, terminability or
revocability;

(g) all Records of the Company directly related to, or necessary for the use of,
the foregoing Collateral included in clauses (a) - (e);

(h) all Intellectual Property; and

(i) all other tangible and intangible personal Property whatsoever of the
Company and all cash, products, offspring, rents, revenues, issues, profits,
royalties, income, benefits, accessions, equity contributions, additions,
substitutions and replacements of and to any and all of the foregoing, including
all Proceeds of and to any of the Property the Company described in the
preceding paragraphs of this Section 2.01 (including any Loss Proceeds or other
Proceeds of insurance thereon (whether or not the Collateral Trustee is loss
payee thereof), and any indemnity, warranty or guarantee, payable by any reason
of loss or damage to or otherwise with respect to any of the foregoing, and all
causes of action, claims and warranties now or hereafter held by the Company in
respect of any of the items listed above).

2.02 Grant for the benefit of Crest. As collateral security for the prompt
payment in full when due of the Crest Obligations now existing or hereafter
arising, the Company hereby pledges and grants to the Collateral Trustee for the
benefit of Crest, and hereby grants to the Collateral Trustee for the benefit of
Crest, a security interest in all of the Company’s right, title and interest in,
to and under the Collateral, whether now owned or in the future acquired by it
and whether now existing or hereafter coming into existence and wherever
located.

2.03 Priority. The relative priority of the liens granted pursuant to
Section 2.01 and 2.02 shall be as set forth in the Collateral Trust Agreement.

2.04 Amendment and Restatement of Prior Security Agreement; Confirmation of
Grant of Security. The Company hereby acknowledges that the Prior Collateral
Agent assigned all of its rights under the Prior Security Agreement to the
Collateral Trustee. This Agreement is hereby deemed to be an amendment and
restatement of the Prior Security Agreement. The Company hereby confirms that
all Collateral (as defined in the Prior Security Agreement (prior to giving
effect to this amendment and restatement)) encumbered by the Prior Security
Agreement will continue to secure to the fullest extent possible the payment and
performance of the obligations secured by this Agreement.

2.05 Perfection. Concurrently with the execution and delivery of this Agreement,
the Company shall (a) file such financing statements and other documents in such
offices included, but not limited to, the United States Patent and Trademark
Office and the United States Copyright Office as shall be necessary to perfect
and establish the priority of the Liens granted by this Agreement, (b) file
amendments to any existing financing statements to reflect the assignment from
the Prior Collateral Agent to the Collateral Trustee

 

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for the benefit of the Secured Parties of the security interest granted by the
Company under the Prior Security Agreement and (c) take all such other actions
as shall be necessary to perfect and establish the priority of the Liens granted
by this Agreement.

2.06 Preservation and Protection of Security Interests. In order to further
ensure the attachment, perfection and priority of, and the ability of the
Collateral Trustee for the benefit of the Parity Lien Secured Parties to
enforce, the Collateral Trustee’s security interest for the benefit of the
Parity Lien Secured Parties in the Collateral, the Company represents and
warrants to the Parity Lien Secured Parties on the date hereof and as of and on
the date of each extension of credit by any Parity Lien Secured Party pursuant
to any Parity Lien Document and covenants as follows and agrees, in each case at
its own expense, to take the following actions with respect to the following
Collateral:

(a) Schedule 2.06(a) (as such schedule may be amended, supplemented or otherwise
modified from time to time) lists all amounts payable under or in connection
with any of the Collateral that are evidenced by any Instrument or Tangible
Chattel Paper. Subject to Section 2.08, each Instrument and each item of
Tangible Chattel Paper listed in Schedule 2.06(a) (i) in which Company currently
has rights and (ii) in which Company acquires rights after the date hereof, has
been and will be promptly, as the case may be, properly endorsed, assigned and
delivered to the Collateral Trustee for the benefit of the Secured Parties,
accompanied by duly executed instruments of transfer or assignment in blank and
that the Collateral Trustee for the benefit of the Secured Parties has a
perfected first priority security interest therein.

(b) Except as permitted by the Indenture and other Parity Lien Documents, the
Company has no Deposit Accounts or Securities Accounts other than the Collateral
Accounts. Subject to the Lien in favor of Crest, except as permitted by the
Indenture and other Parity Lien Documents, the Collateral Trustee for the
benefit of the Secured Parties has a first priority security interest in the
Collateral Accounts. The Company shall not hereafter establish and maintain any
other Deposit Account or Securities Accounts other than (i) Deposit Accounts and
Securities Accounts which are used to deposit and hold disbursements made to the
Company from the Construction Account in accordance with the Security Deposit
Agreement, provided that the funds in such Deposit Accounts and Securities
Accounts are used to pay Construction Expenses (as defined in the Security
Deposit Agreement) and provided that with respect to each such Deposit Account
and Securities Account, the Company shall make a good faith and commercially
reasonable effort to cause the financial institution at which any such account
is opened to execute a customary account control agreement in favor of the
Collateral Trustee promptly following the opening of any such account, and
(ii) any account (A) which is open as of the date hereof, (B) in which any
amounts deposited therein will be transferred to the Construction Account as
soon as practicable after such deposit is made and (C) which will be closed no
later than December 31, 2006.

(c) Schedule 2.06(c) (as such schedule may be amended, supplemented or otherwise
modified from time to time) sets forth all certificates or instruments

 

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representing or evidencing Investment Property comprising any part of the
Collateral and all such certificates and instruments have been delivered to the
Collateral Trustee in suitable form for transfer by delivery or accompanied by
duly executed instruments of transfer or assignment in blank and that the
Collateral Trustee has a perfected first priority security interest therein. The
Company agrees that all certificates or instruments representing or evidencing
Investment Property comprising any part of the Collateral acquired by the
Company after the date hereof shall promptly (but in any event within five days
after receipt thereof by the Company) be delivered to and held by or on behalf
of the Collateral Trustee pursuant thereto. The Collateral Trustee shall have
the right, at any time upon the occurrence and during the continuance of any
Event of Default, to endorse, assign or otherwise transfer to or to register in
the name of the Collateral Trustee or any of its nominees or endorse for
negotiation any or all of the Investment Property. In addition, upon the
occurrence and during the continuance of an Event of Default, the Collateral
Trustee shall have the right at any time to exchange certificates representing
or evidencing Investment Property for certificates of smaller or larger
denominations.

(d) If the Company shall at any time own or acquire, directly or through a
nominee, any uncertificated securities constituting Investment Property, the
Company shall promptly notify the Collateral Trustee thereof and pursuant to an
agreement in form and substance satisfactory to the Collateral Trustee, either
(1) cause the issuer to agree to comply with instructions from the Collateral
Trustee as to such securities, without further consent of the Company or such
nominee or (2) register the Collateral Trustee for the benefit of the Secured
Parties as the registered owner thereof on the books and records of the issuer.

(e) If the Company is at any time a beneficiary under a Letter of Credit now or
hereafter issued, the Company shall promptly notify the Collateral Trustee
thereof and the Company shall, at the request of the Collateral Trustee,
pursuant to an agreement in form and substance reasonably satisfactory to the
Collateral Trustee, either (i) arrange for the issuer and any confirmer of such
Letter of Credit to consent to an assignment to the Collateral Trustee of the
proceeds of any drawing under the Letter of Credit or (ii) arrange for the
Collateral Trustee to become the transferee beneficiary of such Letter of
Credit, with the Collateral Trustee agreeing, in each case, that the proceeds of
any drawing under the Letter of Credit are to be applied as provided in the
Collateral Trust Agreement.

(f) Schedule 2.06(f) (as such schedule may be amended or supplemented from time
to time) sets forth all Commercial Tort Claims of the Company. If the Company
shall at any time hold or acquire a Commercial Tort Claim, the Company shall
immediately notify the Collateral Trustee in writing together with the brief
details thereof and grant to the Collateral Trustee in such writing a security
interest therein and in the Proceeds thereof, all upon the terms of this
Agreement.

(g) If the Company moves any item of Equipment with a book value greater than
$25,000,000 to any location other than the Site, it shall, within ten Business
Days of

 

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such move, notify the Collateral Agent in writing of such move, such notice to
clearly describe such new location and provide such other information in
connection therewith as the Collateral Trustee may reasonably request.

(h) The Company shall grant the Collateral Trustee or its designee from time to
time, including but not limited to during the pendency of a Default or an Event
of Default, reasonable access to all of its books and records, quality control
and performance test data, all other data relating to the Project and
construction progress and the physical facilities of the Project and an
opportunity to discuss accounting matters with the Company’s independent
auditors, provided that all such inspections are conducted during normal
business hours in a manner that does not unreasonably disrupt the construction
or operation of the Project. The Collateral Trustee shall also have the right to
monitor, witness and appraise the construction, testing and operation of the
Project. So long as a Default or any Event of Default has occurred and is
continuing, the reasonable fees and documented expenses of such persons shall be
for the account of the Company.

(i) The Company shall give, execute, deliver, file or record any and all
financing statements, notices, contracts, agreements or other instruments,
obtain any and all Government Approvals and take any and all steps that may be
necessary to create, perfect, establish the priority of, or to preserve the
validity, perfection or priority of, the Liens granted by this Agreement or to
enable the Collateral Trustee to exercise and enforce its rights, remedies,
powers and privileges under this Agreement with respect to such Liens.

(j) The Company shall maintain, hold and preserve full and accurate Records
concerning the Collateral, and stamp or otherwise mark such Records in such
manner as may reasonably be required in order to reflect the Liens granted by
this Agreement.

(k) The Company shall at any time upon request of the Collateral Trustee, cause
the Collateral Trustee for the benefit of the Secured Parties to be listed as
the lienholder on any certificate of title or ownership covering any Motor
Vehicle (other than Motor Vehicles constituting Inventory) and within 120 days
of such request deliver evidence of the same to the Collateral Trustee.

2.07 Attorney-in-Fact. Subject to the rights of the Company under Sections 2.08
and 2.09, the Company hereby appoints the Collateral Trustee as its
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and, following the occurrence and during the continuation of an Event
of Default, taking any action and executing any instruments which the Collateral
Trustee may deem necessary or reasonably advisable to accomplish the purposes of
this Agreement, to preserve the validity, perfection and priority of the Liens
granted by this Agreement and to exercise its rights, remedies, powers and
privileges under Article VI of this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, the Collateral Trustee shall be entitled under
this Agreement, following the occurrence and during the continuation of an Event
of Default (a) to ask, demand, collect, sue for, recover, receive and give
receipt and discharge for amounts due and to become due

 

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under and in respect of all or any part of the Collateral, (b) to receive,
endorse and collect any Instruments or other drafts, documents and Chattel Paper
in connection with clause (a) above (including any draft or check representing
the proceeds of insurance or the return of unearned premiums), (c) to file any
claims or take any action or proceeding that the Collateral Trustee may deem
necessary or reasonably advisable for the collection of all or any part of the
Collateral, including the collection of any compensation due and to become due
under any contract or agreement with respect to all or any part of the
Collateral, (d) to execute, in connection with any sale or disposition of the
Collateral under Article VI, any endorsements, assignments, bills of sale or
other instruments of conveyance or transfer with respect to all or any part of
the Collateral, (e) to obtain and adjust insurance required to be maintained by
the Company pursuant to the Indenture or any other Parity Lien Document and
(f) to pay and discharge any taxes or Liens (other than Permitted Prior Liens)
levied or placed upon or threatened against the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Trustee in its sole discretion, any such payments
made by the Collateral Trustee to become Obligations of the Company to the
Collateral Trustee, due and payable immediately without demand.

2.08 Instrument. So long as no Event of Default shall have occurred and be
continuing, the Company may retain for collection in the ordinary course of
business any Instruments comprising any part of the Collateral obtained by it in
the ordinary course of business, and the Collateral Trustee shall, promptly upon
the written request of an officer of the Company, and at the expense, of the
Company make appropriate arrangements for making any Instruments pledged by the
Company available to the Company for purposes of presentation, collection or
renewal. Any such arrangement shall be effected, to the extent deemed
appropriate by the Collateral Trustee, against trust receipt or like document.

2.09 Rights and Obligation.

(a) The Company shall remain liable to perform its duties and obligations under
the contracts and agreements included in the Collateral in accordance with their
respective terms to the same extent as if this Agreement had not been executed
and delivered. The exercise by the Collateral Trustee or any Secured Party of
any right, remedy, power or privilege in respect of this Agreement shall not
release the Company from any of its duties and obligations under such contracts
and agreements. Neither the Collateral Trustee nor any Parity Lien Secured Party
shall have a duty, obligation or liability under such contracts and agreements
or in respect to any Government Approval included in the Collateral by reason of
this Agreement or any other Security Document, nor shall the Collateral Trustee
or any Parity Lien Secured Party be obligated to perform any of the duties or
obligations of the Company under any such contract or agreement or any such
Government Approval or to take any action to collect or enforce any claim (for
payment) under any such contract or agreement or Government Approval.

(b) No Lien granted by this Agreement in the Company’s right, title and interest
in any contract, agreement or Government Approval shall be deemed to be a
consent by the Collateral Trustee or any Secured Party to any such contract,
agreement or Government Approval.

 

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(c) No reference in this Agreement to proceeds or to the sale or other
disposition of Collateral shall authorize the Company to sell or otherwise
dispose of any Collateral except to the extent otherwise expressly permitted by
the terms of the Secured Debt Documents.

(d) Neither the Collateral Trustee nor any Secured Party shall be required to
take steps necessary to preserve any rights against prior parties to any part of
the Collateral.

2.10 Release and Termination

(a) Continuing Security Interest; Termination. This Agreement shall create a
continuing assignment of and security interest in the Collateral and shall
(a) remain in full force and effect until the Discharge of Parity Lien
Obligations, (b) be binding upon the Company, its successors and assigns and
(c) inure, together with the rights and remedies of the Collateral Trustee
hereunder, to the benefit of the Collateral Trustee and the other Secured
Parties and their respective successors, transferees and assigns.

(b) Releases. All or any portion of the Collateral shall be released from the
security interest created hereby in accordance with Article 4 of the Collateral
Trust Agreement.

2.11 Intellectual Property. For the purpose of enabling the Collateral Trustee
for the benefit of the Parity Lien Secured Parties to exercise its rights,
remedies, powers and privileges under Article VI at that time or times as the
Collateral Trustee is lawfully entitled to exercise those rights, remedies,
powers and privileges, and for no other purpose, the Company hereby grants to
the Collateral Trustee for the benefit of the Parity Lien Secured Parties, to
the extent assignable, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Company) to use, assign, license
or sublicense any Intellectual Property of the Company which is directly related
to, or necessary and incidental to the use of, any of the Collateral, together
with reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout of those items.

COLLATERAL ACCOUNTS

The Company agrees and confirms for the benefit of the Parity Lien Secured
Parties that (a) pursuant to the Security Deposit Agreement, it has caused to be
established with the Depositary Agent each of the Construction Account, the
Operating Account, the DSR Account, the Debt Payment Account, the Revenue
Account, the Distribution Account, Asset Sale Proceeds Account and Loss Proceeds
Account, in each case in the name of the Collateral Trustee for the benefit of
the Secured Parties and (b) it has instructed (or, on or before the
effectiveness of each Project Document that is entered into after the date
hereof, will instruct) each of the other parties to the Project Documents that
all payments constituting revenues resulting from the ownership or operation of
the Project due or to become due to the Company under or in connection with each
such Project Document shall be made directly to the Collateral Trustee for
deposit to the Revenue Account in accordance with the terms of the Collateral
Trust Agreement.

 

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If, notwithstanding the foregoing, any such payment or proceeds are remitted
directly to the Company, the Company shall hold such funds in trust for the
Collateral Trustee and shall promptly remit such payments for deposit to the
Revenue Account in accordance with the Collateral Trust Agreement. In addition
to the foregoing, the Company agrees for the benefit of the Parity Lien Secured
Parties that if the proceeds of any Collateral hereunder (including the payments
made in respect of the Collateral Accounts) shall be received by it, the Company
shall as promptly as possible transfer such Proceeds to the Collateral Trustee
for deposit to the Revenue Account. Until so deposited, all such proceeds shall
be held in trust by the Company for and as the property of the Collateral
Trustee and shall not be commingled with any other funds or property of the
Company.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

As of and on the date hereof, and as of and on the date of each extension of
credit by any Parity Lien Secured Party pursuant to any Parity Lien Document,
the Company represents and warrants to the Collateral Trustee for the benefit of
the Parity Lien Secured Parties as follows:

4.01 Title. The Company is the sole beneficial owner of the Collateral in which
it purports to grant a security interest pursuant to Section 2, and such
Collateral is free and clear of all Liens, except for Permitted Prior Liens.

4.02 No Other Financing Statements. The Company has not executed and is not
aware of any currently effective financing statement or other instrument similar
in effect that is on file in any recording office covering all or any part of
the Company’s interest in the Collateral, except such as may have been filed
pursuant to this Agreement (including the Crest Obligations) and the other
Security Documents evidencing Permitted Prior Liens and the Junior Lien
Obligations, and so long as the Discharge of Parity Lien Obligations has not
occurred, the Company will not execute or authorize to be filed in any public
office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except for (i) financing statements filed or to be filed in respect
of and covering the security interests granted hereby by the Company,
(ii) financing statements filed or to be filed in respect of Permitted Prior
Liens or (iii) precautionary financing statements filed or to be filed in
respect of operating leases of equipment entered into by the Company. The
Company has not assigned any of its rights under the Instruments referred to in
Section 2.01(c) except as expressly permitted under the Parity Lien Documents.
The Company has not consented to, and is not otherwise aware of, any Person,
other than the Collateral Trustee and the Depositary Agent, having either
control (within the meaning of common law applicable to this Agreement), sole
dominion, or “control” (within the meaning of the Uniform Commercial Code) over
any interest in any Collateral Accounts or any funds or other property deposited
therein.

 

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4.03 Perfection Representations.

(a) The name of the Company shown on the signature pages to this Agreement is
the exact legal name of the Company. The Company is a limited partnership and
its “location” (within the meaning of the Uniform Commercial Code) is Delaware.
The offices where the Company keeps Records concerning the Collateral and a set
of the original counterparts of the Assigned Agreements are located at the
addresses specified for the Company in Section 10.02, or such other location as
specified in the most recent notice delivered pursuant to Section 5.01.

(b) The Company has not (i) within the period of one year prior to the date
hereof, changed its “location” (within the meaning of the UCC), (ii) changed its
name, or (iii) heretofore become a “new debtor” (within the meaning of the UCC)
with respect to a currently effective security agreement previously entered into
by any other Person.

4.04 Other Perfection Matters. Upon the filing of financing statements or other
appropriate instruments pursuant to the Uniform Commercial Code in the offices
set forth on Schedule 4.04 attached hereto, the Collateral Trustee’s Liens in
the Collateral granted hereunder shall be valid, continuing (subject to any
requirement of the Uniform Commercial Code with respect to the filing of
continuation statements), and perfected to the extent any such Lien may be
perfected by the filing of a financing statement or other appropriate
instrument. Upon the execution and delivery of the Security Deposit Agreement
and the establishment of the Collateral Accounts, the Collateral Trustee’s Liens
in the Collateral Accounts and in any funds or other property from time to time
deposited therein shall be valid, continuing, and perfected to the extent any
such Lien may be perfected by “control” (within the meaning of the Uniform
Commercial Code). All other action necessary or reasonably requested by the
Collateral Trustee for the benefit of the Secured Parties to protect and perfect
the Liens in the Collateral has been duly taken with respect to any Collateral
that the Company now owns or in which the Company now has a right. The Liens
granted by this Agreement in favor of the Collateral Trustee are subject to no
other Liens, except Permitted Prior Liens.

4.05 Fair Labor Standards Act. Any goods now or hereafter produced by the
Company or any of its Subsidiaries included in the Collateral have been and will
be produced in compliance with the requirements of the Fair Labor Standards Act,
as amended.

4.06 No Further Consents, etc. No authorization, approval or other action by,
and no notice to or filing with, any Government Authority or regulatory body is
required for either (i) the grant by the Company of the Liens purported to be
created in favor of the Collateral Trustee hereunder or (ii) the exercise by the
Collateral Trustee of any rights or remedies in respect of any Collateral
(whether specifically granted or created hereunder or created or provided for by
applicable law), except for the filings contemplated by 2.05(a) above and as may
be required, in connection with the disposition of any Investment Property, by
laws generally affecting the offering and sale of securities and authorizations
or notices required to be obtained or provided by the Collateral Trustee in the
event the Collateral Trustee becomes the owner of the Collateral pursuant to
Article VI hereof. All actions and consents, including all filings, notices,
registrations and recordings necessary or desirable for the exercise by the

 

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Collateral Trustee of the voting or other rights provided for in this Agreement
or the exercise of remedies in respect of the Collateral have been made or
obtained.

ARTICLE V

COVENANTS

The Company covenants and agrees for the benefit of the Parity Lien Secured
Parties that, until the Parity Lien Obligations have been indefeasibly paid in
full:

5.01 Books and Records. The Company shall (a) stamp or otherwise mark the
Records in its possession that relate to the Collateral in order to reflect the
Liens granted by this Agreement and (b) give the Collateral Trustee at least 30
calendar days’ notice before it changes the office where the Company keeps the
Records.

5.02 Legal Status. The Company shall not (i) change its type of organization or
jurisdiction of organization or (ii) change its legal name or the name under
which it does business from the name shown on the signature pages to this
Agreement unless, in either case, it shall have given the Collateral Trustee at
least 30 days’ prior written notice and taken all necessary steps to maintain
the continuous validity, perfection and the same or better priority of
Collateral Trustee’s security interest in the Collateral granted hereby.

5.03 Sales and Other Liens. The Company shall not (a) create, incur, assume or
suffer to exist any Lien (other than Permitted Prior Liens) upon any Collateral
or (b) file or suffer to be on file or authorize to be filed, in any
jurisdiction, any financing statement or like instrument with respect to all or
any part of the Collateral in which the Collateral Trustee is not named as the
sole secured party for the benefit of the Secured Parties (except for financing
statements related to Permitted Prior Liens and precautionary financing
statements filed or to be filed in respect of operating leases of equipment
entered into by the Company).

5.04 Further Assurances.

(a) The Company agrees that, from time to time upon the written request of the
Collateral Trustee, the Company will execute and deliver such further documents
and do such other acts and things as the Collateral Trustee may reasonably
request in order fully to effect the purposes of this Agreement.

(b) The Company hereby authorizes the Collateral Trustee and/or any Secured
Party (it being understood and agreed that the Collateral Trustee has no
obligation in any circumstance) to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of the Company where permitted by law. Such
financing statements may describe the Collateral in the same manner as described
herein or may describe such property as “all assets” or “all personal property
of the debtor, whether now existing or hereafter acquired.” Copies of any such
statement or amendment thereto shall be delivered to the Company.

 

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(c) The Company shall pay all filing, registration and recording fees or
re-filing, re-registration and re-recording fees, and all other expenses
incident to the execution and acknowledgment of this Agreement, any agreement
supplemental hereto and any instruments of further assurance, and all federal,
state, county and municipal stamp taxes and other taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of this Agreement, any agreement supplemental hereto and any
instruments of further assurance.

ARTICLE VI

REMEDIES

6.01 Events of Default, Etc. Subject to the provisions hereof, if any Event of
Default shall have occurred and be continuing, the Company agrees for the
benefit of the Parity Lien Secured Parties that:

(a) the Collateral Trustee in its sole discretion may require the Company to,
and the Company shall, assemble the Collateral owned by it at such place or
places, reasonably convenient to both the Collateral Trustee and the Company,
designated in the Collateral Trustee’s request;

(b) the Collateral Trustee in its sole discretion may make any reasonable
compromise or settlement it deems desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of all or any part of the
Collateral;

(c) the Collateral Trustee in its sole discretion may, in its name or in the
name of the Company or otherwise, demand, sue for, collect or receive any money
or property at any time payable or receivable on account of or in exchange for
all or any part of the Collateral, but shall be under no obligation to do so;

(d) the Collateral Trustee in its sole discretion may, upon 10 Business Days’
prior written notice to the Company of the time and place, with respect to all
or any part of the Collateral which shall then be or shall thereafter come into
the possession, custody or control of the Collateral Trustee or any other
Secured Party or any of their respective agents, sell, lease or otherwise
dispose of all or any part of such Collateral, at such place or places and at
such time or times as the Collateral Trustee deems best, for cash, on credit or
for future delivery (without thereby assuming any credit risk) and at public or
private sale, without demand of performance or notice of intention to effect any
such disposition of or time or place of any such sale (except such notice as is
required above or by applicable statute and cannot be waived), and the
Collateral Trustee or any other Secured Party or any other Person may be the
purchaser, lessee or recipient of any or all of the Collateral so disposed of at
any public sale (or, to the extent permitted by law, at any private sale) and
thereafter hold the same absolutely, free from any claim or right of whatsoever
kind, including any right or equity of redemption (statutory or otherwise), of
the Company, any such demand, notice and right or equity being hereby expressly

 

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waived and released to the extent permitted by applicable Government Rule. The
Collateral Trustee shall not be obligated to make any sale pursuant to any such
notice. The Collateral Trustee may, in its sole discretion, at any such sale
restrict the prospective bidders or purchasers as to their number, nature of
business and investment intention to the extent necessary to comply with
applicable Government Rule. The Collateral Trustee may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Collateral
Trustee until the full selling price is paid by the purchaser thereof, but
neither the Collateral Trustee nor any other Secured Party shall incur any
liability in case of the failure of such purchaser to take up and pay for the
Collateral so sold, and, in case of any such failure, such Collateral may again
be sold pursuant to the provisions hereof;

(e) the Collateral Trustee shall have, and in its sole discretion may exercise,
all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights,
remedies, powers and privileges are asserted) and such additional rights,
remedies, powers and privileges to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights, remedies, powers and
privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by applicable Government
Rule, to exercise all voting, consensual and other powers of ownership
pertaining to the Collateral as if the Collateral Trustee were the sole and
absolute owner of the Collateral (and the Company agrees to take all such action
as may be appropriate to give effect to such right);

(f) the Collateral Trustee for the benefit of the Parity Lien Secured Parties
may exercise the voting and other consensual rights the Company would otherwise
be entitled to exercise in the Investment Property and the rights of the Company
therein shall immediately cease and, upon such exercise by the Collateral
Trustee, all such rights shall thereupon become vested in the Collateral Trustee
for the benefit of the Parity Lien Secured Parties, which shall thereupon have
the sole right to exercise such voting and other consensual rights and the
Company shall, at its sole cost and expense, deliver to the Collateral Trustee
for the benefit of the Parity Lien Secured Parties all proxies and other
instruments as the Collateral Trustee may reasonably request to exercise such
voting and consensual rights; and

(g) all rights of the Company to receive distributions from Investment Property
which it would otherwise be authorized to receive and retain hereof shall
immediately cease, and all such rights shall thereupon become vested in the
Collateral Trustee for the benefit of the Secured Parties, which shall thereupon
have the sole right to receive and hold as Collateral and the Company shall, at
its sole cost and expense, deliver to the Collateral Trustee for the benefit of
the Parity Lien Secured Parties all dividend

 

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payment orders and other instruments as the Collateral Trustee for the benefit
of the Secured Parties may reasonably request to receive all dividends and other
distributions which it may be entitled to receive hereunder.

The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 6.01 shall be applied in accordance with
Section 6.04.

It shall be a condition precedent to any sale or transfer of the Collateral that
such purchaser or transferee thereof enter into an assumption agreement
substantially in the form of the Assumption Agreement unless, at the time of
each such transfer, Cheniere or any of its direct or indirect affiliates, joint
ventures, and subsidiaries that are involved in the LNG business have under
contract at one or more LNG facilities it retains, the right and obligation to
process and receive a tariff for processing at least one billion cubic feet of
gas per day, for a period of at least five years following such transfer of
assets. To the extent any purchaser or transferee is required to enter into any
such assumption agreement, it shall be assigned the benefits of the Crest
Cheniere Indemnity.

The Company recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state securities laws, the
Collateral Trustee may be compelled, with respect to any sale of all or any part
of the Collateral constituting Investment Property, to limit purchasers to those
who will agree, among other things, to acquire such Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. The Company for the benefit of the Parity Lien Secured Parties
acknowledges that any such private sale may be at prices and on terms less
favorable to the Collateral Trustee than those obtainable through a public sale
without such restrictions, and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Trustee shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral
constituting Investment Property for the period of time necessary to permit the
respective issuer thereof to register it for public sale.

The Company acknowledges that the Collateral Trustee shall have no obligation to
marshall any of the Collateral.

6.02 Deficiency. If the proceeds of, or other realization upon, the Collateral
by virtue of the exercise of remedies under Section 6.01 are insufficient to
cover the costs and expenses of such exercise and the payment in full of the
other Parity Lien Obligations, the Company shall remain liable to the Parity
Lien Secured Parties for any deficiency.

6.03 Private Sale. The Collateral Trustee and the Parity Lien Secured Parties
shall incur no liability as a result of the sale, lease or other disposition of
all or any part of the Collateral at any private sale pursuant to Section 6.01
conducted in a commercially reasonable manner. To the extent permitted by
applicable Government Rule, the Company hereby waives any claims against the
Collateral Trustee or any Parity Lien Secured Party arising by reason of the
fact that the price at which the Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale or
was less than the

 

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aggregate amount of the Secured Obligations, even if the Collateral Trustee
accepts the first offer received and does not offer the Collateral to more than
one offeree.

6.04 Application of Proceeds. Except as otherwise expressly provided in this
Agreement, the proceeds of, or other realization upon, all or any part of the
Collateral by virtue of the exercise of remedies under Section 6.01, and any
other cash at the time held by the Collateral Trustee under Article III or this
Article VI at the time of the exercise of such remedies, shall be applied by the
Collateral Trustee in accordance with the terms of the Collateral Trust
Agreement.

As used in this Article VI, “Proceeds” of Collateral shall mean cash, securities
and other property realized in respect of, and distributions in kind of,
Collateral, including any property received under any bankruptcy, reorganization
or other similar proceeding as to the Company or any issuer of, or account
debtor or other Company on, any of the Collateral.

6.05 Crest Remedies. If Crest shall have delivered a Crest Default Remedy
Instruction to the Collateral Trustee, the Collateral Trustee for the benefit of
Crest shall have all of the rights and remedies with respect to the Collateral
of a secured party under the Uniform Commercial Code.

ARTICLE VII

COLLATERAL TRUSTEE MAY PERFORM

If the Company shall fail to observe or perform any of the terms, conditions,
covenants and agreements to be observed or performed by it under this Agreement,
the Collateral Trustee may (but shall not be obligated to), to the extent
legally practicable (and so long as the rights of the Collateral Trustee shall
not be adversely affected thereby (as determined by the Collateral Trustee)),
upon reasonable notice to the Company, do the same or cause it to be done or
performed or observed at the expense of the Company, in its name, and the
Company hereby authorizes the Collateral Trustee to do.

ARTICLE VIII

REINSTATEMENT

This Agreement and the Lien created hereunder shall automatically be reinstated
if and to the extent that for any reason any payment by or on behalf of the
Company in respect of the Parity Lien Obligations is rescinded or must otherwise
be restored by any holder of the Parity Lien Obligations, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise.

 

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ARTICLE IX

EXCULPATORY PROVISIONS

Notwithstanding anything herein to the contrary, the liability of the Collateral
Trustee shall be limited, and the Collateral Trustee shall be entitled to
indemnification and all rights, benefits, privileges, immunities and other
protections as provided in Article 5 and 6 of the Collateral Trust Agreement,
which provisions are incorporated by reference as if set forth in full herein.

ARTICLE X

MISCELLANEOUS

10.01 No Waiver; Remedies Cumulative. No failure or delay by any Parity Lien
Secured Party in exercising any remedy, right, power or privilege under this
Agreement or any other Parity Lien Document shall operate as a waiver of that
remedy, right, power or privilege, nor shall any single or partial exercise of
that remedy, right, power or privilege preclude any other or further exercise of
that remedy, right, power or privilege or the exercise of any other remedy,
right, power or privilege. The remedies, rights, powers and privileges provided
by this Agreement are cumulative and not exclusive of any remedies, rights,
powers or privileges provided by the other Parity Lien Documents or by
applicable Government Rule.

10.02 Notices. All notices, requests and other communications provided for in
this Agreement shall be given or made in writing (including by fax) and
delivered to the intended recipient at the address specified below or, as to any
party, at such other address as is designated by that party in a notice to each
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted and
received by fax or personally delivered or, in the case of a mailed notice or
notice sent by courier, upon receipt, in each case given or addressed as
provided in this Section 10.02.

If to the Company:

Sabine Pass LNG, L.P.

717 Texas Ave.

Ste 3100

Houston, TX 77002

Attn: Graham McArthur

Fax: (713) 659-5459

Email: gmcarthur@cheniere.com

 

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If to the Collateral Trustee:

The Bank of New York

101 Barclay Street, 8W

New York, NY 10286

Attn: Corporate Trust Administration

Fax: 212 815 5707

10.03 Expenses. The Company hereby agrees to reimburse the Collateral Trustee
and each of the Secured Parties for all reasonable costs and expenses incurred
by them hereunder as provided in Section 7.10 of the Collateral Trust Agreement.

10.04 Waivers, etc. This Agreement may be amended, supplemented or modified only
by an instrument in writing signed by the Company and the Collateral Trustee
acting in accordance with the Collateral Trust Agreement, and any provision of
this Agreement may be waived by the Collateral Trustee acting in accordance with
the Collateral Trust Agreement; provided that no amendment, supplement,
modification or waiver shall, unless by an instrument in writing signed by the
Collateral Trustee acting with the consent of all of the Secured Debt
Representatives, alter the terms of this Section 10.04. Any waiver shall be
effective only in the specific instance and for the specified purpose for which
it was given.

10.05 Successors and Assigns. This Agreement, together with the other Security
Documents, shall be binding upon and inure to the benefit of the respective
successors and assigns of the Company, the Collateral Trustee for the benefit of
the Parity Lien Secured Parties, the other Secured Parties and each holder of
any of the Secured Obligations (provided, however, that the Company shall not
assign or transfer its rights hereunder without the prior consent of the
Collateral Trustee for the benefit of the Parity Lien Secured Parties acting in
accordance with Indenture and the other Parity Lien Documents).

The Company shall not assign or transfer its rights or obligations under this
Agreement without the prior written consent of the Collateral Trustee.

10.06 Survival. Each representation and warranty made, or deemed to be made, in
or pursuant to this Agreement shall survive the making or deemed making of that
representation and warranty, and no Secured Party shall be deemed to have
waived, by reason of making any extension of credit, any default under any of
the Parity Lien Documents that may arise by reason of that representation or
warranty proving to have been false or misleading, notwithstanding that such or
any other Secured Party may have had notice or knowledge or reason to believe
that such representation or warranty was false or misleading at the time that
extension of credit was made.

10.07 Agreements Superseded. This Agreement, together with the other Parity Lien
Documents, constitutes the entire agreement and understanding among the parties
to this Agreement with respect to the matters covered by this Agreement and
supersedes any and all prior agreements and understandings, written or oral,
with respect to such matters.

 

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10.08 Severability. Any provision of this Agreement that is held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions of this Agreement, and the invalidity, illegality or unenforceability
of a particular provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

10.09 Captions. The table of contents, captions and section headings appearing
in this Agreement are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.

10.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party to this Agreement may execute this Agreement by
signing any such counterpart; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signatures are physically attached to the same counterpart. Delivery of an
executed counterpart of a signature page to this Agreement by hand or by fax
shall be effective as the delivery of a fully executed counterpart of this
Agreement.

10.11 CONSENT TO JURISDICTION. ALL LEGAL ACTIONS OR PROCEEDINGS BROUGHT AGAINST
THE COMPANY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE BOROUGH OF MANHATTAN IN THE STATE OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, THE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY
CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR
BASIS. THE COMPANY HEREBY APPOINTS AND DESIGNATES CT CORPORATION SYSTEM, WHOSE
ADDRESS IS 111 EIGHTH AVENUE, 13TH FLOOR, NEW YORK, NY 10011, OR ANY OTHER
PERSON HAVING AND MAINTAINING A PLACE OF BUSINESS IN THE STATE OF NEW YORK WHOM
THE COMPANY MAY FROM TIME TO TIME HEREAFTER DESIGNATE (HAVING GIVEN 30 DAYS’
NOTICE THEREOF TO THE COLLATERAL TRUSTEE), AS THE DULY AUTHORIZED AGENT FOR
RECEIPT OF SERVICE OF LEGAL PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE PARTIES TO BRING PROCEEDINGS IN THE COURTS OF ANY OTHER JURISDICTION OR TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

10.12 Certain Matters Relating to Collateral Located in the State of Louisiana.
With respect to Collateral which is located in the state of Louisiana,
notwithstanding anything contained herein to the contrary:

 

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(a) Acceleration, Executory Process; Confession of Judgment. The Parity Lien
Obligations may be accelerated in accordance with the terms and conditions of
the applicable Secured Debt Documents. Upon such acceleration, that portion of
the Parity Lien Obligations so accelerated shall become immediately do and
payable, and upon such acceleration, the Collateral Trustee may, at its option
(and, if so instructed by an Act of Required Debtholder, shall), declare the
Parity Lien Obligations at once due and payable without further demand, notice
or putting the Company in default, and cause all and singular the Collateral to
be seized and sold under executory or other legal process, issued by any court
of competent jurisdiction, with or without appraisement, at the option of the
Collateral Trustee, to the highest bidder, for cash.

(b) Confession of Judgment. For purposes of foreclosure by executory process,
the Company hereby confesses judgment in favor of the Collateral Trustee for the
full amount of the Secured Obligations, including principal and interest,
together with all attorney’s fees and costs, and any and all monies that may
become due to the Collateral Trustee for the benefit of the Secured Parties
under the terms hereof or secured hereby.

(c) Company’s Waiver of Rights. To the fullest extent permitted by law, the
Company hereby waives:

(i) the benefit of appraisement provided for in Articles 2332, 2336, 2723 and
2724 of the Louisiana Code of Civil Procedure, to the extent applicable, and all
other laws conferring the same;

(ii) the demand and three days notice of demand as provided in Articles 2639 and
2721 of the Louisiana Code of Civil Procedure;

(iii) the notice of seizure provided by Articles 2293 of the Louisiana Code of
Civil Procedure; and

(iv) the three days delay provided for in Articles 2331 and 2722 of the
Louisiana Code of Civil Procedure.

(d) Special Appointment of Collateral Trustee as Agent. In addition to all of
the rights and remedies of the Collateral Trustee hereunder, so long as this
Agreement remains in effect, the Collateral Trustee is, pursuant to Louisiana
R.S. 9:5388, hereby appointed by the Company as agent and attorney-in-fact of
the Company, coupled with an interest, to carry out and enforce all or any
specified portion of the incorporeal rights comprising part of the Collateral.

(e) Civil Law Terminology. All references in this Agreement to “real property”,
“personal property”, “easements” and “receiver” shall mean and include
“immovable property”, “movable property”, “servitudes” and “keeper”
respectively.

 

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10.13 Waiver of Jury Trial. THE COMPANY AND THE COLLATERAL TRUSTEE (ON BEHALF OF
ITSELF AND EACH OTHER SECURED PARTY) HEREBY IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE GOVERNMENT RULE, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

10.14 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, ARE
GOVERNED BY THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

10.15 Supremacy Clause. In the event of any conflict between any terms and
provisions set forth in this Agreement and those set forth in the Collateral
Trust Agreement, the terms and provisions of the Collateral Trust Agreement
shall supersede and control the terms and provisions of this Agreement.

10.16 Subordination of Lien. The parties hereto intend that the security
interests created under this Agreement in favor of the Collateral Trustee for
the benefit of the Parity Lien Secured Parties shall be effectively subordinated
to the security interests created under this Agreement in favor of the
Collateral Trustee for the benefit of Crest.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the day and year first above written.

 

SABINE PASS LNG, L.P. By:   Sabine Pass LNG – G.P., Inc.   its general partner
By:  

/s/ Graham McArthur

Name:   Graham McArthur Title:   Treasurer

 

Signature Page - Security Agreement

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THE BANK OF NEW YORK, not individually but solely in its capacity as Collateral
Trustee

By:  

/s/ Beata Hryniewicka

Name:   Beata Hryniewicka Title:   Vice President

 

Security Agreement

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ANNEX A

Project Documents

 

1. Lump Sum Turnkey for the Engineering, Procurement and Construction of the
Sabine Pass LNG Receiving, Storage and Regasification Terminal, dated as of
December 18, 2004, between Sabine Pass LNG, L.P. and Bechtel Corporation (Phase
1).

 

2. Agreement for Engineering, Procurement, Construction and Management of the
Sabine Pass Phase 2 LNG Receiving, Storage and Regasification Terminal
Expansion, dated as of July 21, 2006, between Sabine Pass LNG, L.P. and Bechtel
Corporation (Phase 2).

 

3. EPC LNG Unit Rate Soil Improvement Contract, dated as of July 21, 2006,
between Sabine Pass LNG, L.P. and Remedial Construction Services, L.P.

 

4. EPC LNG Tank Contract, dated as of July 21, 2006, among Sabine Pass LNG,
Zachary Construction Corporation and Diamond LNG LLC

 

5. Operation & Maintenance Agreement, dated as of February 25, 2005, between
Cheniere LNG O&M Services and Sabine Pass LNG, L.P.

 

6. Management Services Agreement, dated as of February 25, 2005, between Sabine
Pass LNG, L.P. and Sabine Pass LNG—GP, Inc.

 

7. Lease Agreement, dated January 15, 2005, between Crain Brothers Ranch, Inc.
and Sabine Pass LNG, L.P., as amended by an Amendment to Lease, dated
February 24, 2005

 

8. Lease Agreement, dated January 15, 2005, between Crain Lands Ranch, Inc. and
Sabine Pass LNG, L.P., as amended by an Amendment to Lease, dated February 24,
2005

 

9. Lease Agreement, dated January 15, 2005, between George A. Davis, Linda
Dianne Dlouhy, Mary P. Lakhardi, Carmen V. Gebhardt, Sharon D. Faulk, Sandra D.
Davis, Martha Davis Johnson, Lonnie A. Davis, Jr., Daniel D. Davis, Wilma Davis
Bride, William Earl Guthrie, Jr., James Austin Guthrie, Edwin Scott Henry,
Candace Henry Olivier, Charles Gregory Henry, Daniel Ellender, Amy Ellender and
Sally Ellender Gay and Sabine Pass LNG, L.P.

 

10. LNG Terminal Use Agreement, dated November 8, 2004, between Chevron U.S.A,
Inc. and Sabine Pass LNG, L.P., as amended , restated, supplemented or otherwise
modified from time to time.

 

11. Guaranty Agreement dated December 15, 2004, executed by Chevron Corporation,
guaranteeing the obligations of Chevron U.S.A. under that certain LNG Terminal
Use Agreement, dated as of November 8, 2004.

 

Annex A

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12. LNG Terminal Use Agreement, dated September 2, 2004, between Total LNG USA
Inc. and Sabine Pass LNG, L.P. as amended, restated, supplemented or otherwise
modified from time to time.

 

13. Parent Guarantee dated as of November 5, 2004, executed by Total S.A.,
guaranteeing certain payment obligations of Total LNG USA, Inc. under that
certain LNG Terminal Use Agreement, dated as of September 2, 2004.

 

14. Amended and Restated LNG Terminal Use Agreement, dated November 9, 2006,
between Cheniere Marketing, Inc. and Sabine Pass LNG, L.P.

 

15. J&S Cheniere Letter Agreement, dated November 9, 2006, among J&S Cheniere,
S.A., Cheniere Marketing, Inc. and Sabine Pass LNG, L.P.

 

16. Indemnification Agreement, dated May 9, 2005, between Cheniere Energy, Inc.
and Sabine Pass LNG, L.P.

 

17. Guaranty Agreement dated November 9, 2006 executed by Cheniere Energy, Inc.,
guaranteeing the obligations of Cheniere Marketing, Inc., under that certain
Amended and Restated LNG Terminal Use Agreement, dated as of November 9, 2006
between Cheniere Marketing, Inc. and Sabine Pass LNG, L.P.

 

18. Tank Contractor’s Parent Guarantee dated as of July 21, 2006 executed by
Mitsubishi Heavy Industries, Ltd. in favor of Sabine Pass LNG, L.P.,
guaranteeing the obligations of Zachry Construction Corporation and Diamond LNG
LLC, under that certain Engineering, Procurement and Construction (EPC) LNG Tank
Contract, executed by and among Sabine Pass LNG, L.P., Diamond LNG LLC and
Zachry Construction Corporation dated as of July 21, 2006.

 

A-2

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Schedule 2.06(a)

Amounts Payable by Instrument or Tangible Chattel Paper

None

Schedule 2.06(c)

Investment Property

None

Schedule 2.06(f)

Commercial Tort Claims of Company

None

Schedule 4.04

UCC Filing Offices

 

1. Secretary of State of the State of Delaware

 

2. Clerk of Court of Cameron Parish, Louisiana, for inclusion in the Louisiana
Secretary of State Master UCC Index

 

Schedules