Exhibit 10.2

VARIABLE CAPACITY RIGHTS AGREEMENT

This Variable Capacity Rights Agreement (this “Agreement”) dated June 24, 2010
and effective as of July 1, 2010 (the “Effective Date”), is by and between
Cheniere Energy Investments, LLC, a Delaware limited liability company
(“Investments”), and Cheniere Marketing, LLC, a Delaware limited liability
company (“CMI”). Investments and CMI are referred to individually as a “Party”
and collectively as the “Parties.”

WHEREAS, pursuant to that certain Assignment and Assumption Agreement (the
“Assignment Agreement”) effective as of the Effective Date, among CMI,
Investments and Sabine Pass LNG, L.P. (“Sabine”), CMI assigned to Investments
all of CMI’s rights, titles and interests in (i) that certain Amended and
Restated LNG Terminal Use Agreement by and between CMI and Sabine dated as of
November 9, 2006, as amended by that certain Amendment of LNG Terminal Use
Agreement, dated June 25, 2007 (as amended, the “TUA”), subject to CMI’s prior
surrender to Sabine of the rights to utilize Services and any related reception,
storage or regasification capacity at the Sabine Pass Facility pursuant to the
Surrender of Capacity Rights Agreement dated as of March 26, 2010 and effective
as of April 1, 2010 by and between CMI and Sabine (the “Surrender Agreement”),
and (ii) the Surrender Agreement; and Investments accepted such assignment and
assumed all of CMI’s obligations accruing under the TUA and the Surrender
Agreement on and after the Effective Date; and

WHEREAS, under the Surrender Agreement, CMI has surrendered certain of its
rights to utilize Services under the TUA to Sabine sufficient to permit Sabine
to provide to JPMorgan LNG Co. (“LNGCo”) the capacity rights granted by Sabine
to LNGCo pursuant to that certain Capacity Rights Agreement, dated March 26,
2010 and effective as of April 1, 2010 by and between LNGCo and Sabine, and
amended and restated on the date hereof (as amended and restated, the “Capacity
Rights Agreement”); and

WHEREAS, under the TUA and subject to the Surrender Agreement, Investments has
the right to utilize the Services and other rights at the Sabine Pass Facility
(as such term is defined in the TUA); and

WHEREAS, Investments desires that CMI undertake on the behalf of Investments,
subject to certain limitations, to commercialize the rights of Investments under
the TUA to the extent neither CMI nor Investments is obligated to the contrary
under any of the LNGCo Agreements or any other agreements from time to time in
effect; and

WHEREAS, Investments and CMI desire to enter into an agreement that will grant
to CMI, subject to certain limitations, the right to utilize the Services and
other rights at the Sabine Pass Facility available under the TUA and not
otherwise surrendered to Sabine under the Surrender Agreement or granted to
third parties as provided herein.

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NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. Defined terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the TUA.

“Assignment Agreement” has the meaning set forth in the first Whereas clause of
this Agreement.

“Available Cash” has the meaning set forth in the Limited Partnership Agreement.

“Capacity Rights Agreement” has the meaning set forth in the second Whereas
clause of this Agreement.

“CMI” has the meaning set forth in the Preamble.

“Common Units” has the meaning set forth in the Limited Partnership Agreement.

“Conflicts Committee” means the Conflicts Committee of the Board of Directors of
Cheniere Energy Partners GP, LLC, the general partner of the Partnership, as
such committee is so designated.

“Effective Date” has the meaning set forth in the Preamble.

“GDF Agreements” means the Master Ex-Ship LNG Sales Agreement between CMI and
Gaz de France International Trading S.A.S dated April 26, 2007 and the GDF
Transatlantic Option Agreement dated April 26, 2007 by and between CMI and Gaz
de France International Trading S.A.S.

“Initial Quarterly Distribution” has the meaning set forth in the Limited
Partnership Agreement.

“Investments” has the meaning set forth in the Preamble.

“Investments Third Party TUA” has the meaning set forth in Section 2.3.

“Limited Partnership Agreement” means the First Amended and Restated Limited
Partnership Agreement of Cheniere Energy Partners, L.P. dated March 26, 2007, as
the same may be amended, modified or supplemented from time-to-time.

“LNG Purchase Agreement” has the meaning set forth in the Services Agreement.

“LNGCo” has the meaning set forth in the second Whereas clause of this
Agreement.

“LNGCo Agreements” means the Services Agreement, the Capacity Rights Agreement,
the Surrender Agreement and the Tri-Party Agreement.

 

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“LNGCo Scheduled Delivery Notice” has the meaning set forth in the Capacity
Rights Agreement.

“LNGCo Scheduled Delivery Volume” has the meaning set forth in the Capacity
Rights Agreement.

“LNGCo TUA” has the meaning set forth in the Capacity Rights Agreement.

“Maximum Capability” means, at any time during the Term, the Services and other
rights to the maximum extent available to Investments under the TUA; provided,
however, that the Maximum Capability shall not include any Services to the
extent such Services are surrendered to Sabine under the Surrender Agreement.

“Partnership” means Cheniere Energy Partners, L.P., a Delaware limited
partnership.

“Permit” means, without limitation, any permit, exemption, approval, license,
consent, authorization, certification, concession, order, easement, or other
right that is required by any applicable Governmental Authority for the
activities in question.

“Sabine” has the meaning set forth in the first Whereas clause of this
Agreement.

“Services Agreement” means that certain LNG Services Agreement dated as of
March 26, 2010 and effective as of April 1, 2010 by and between CMI and LNGCo,
as amended by Amendment No. 1 to LNG Services Agreement dated as of the date
hereof.

“Surrender Agreement” has the meaning set forth in the first Whereas clause of
this Agreement.

“Term” means the period beginning on the Effective Date and ending as provided
in Section 6.1.

“Term Purchase TUA” has the meaning set forth in the Tri-Party Agreement.

“Third Party TUA” has the meaning set forth in the Tri-Party Agreement.

“Tri-Party Agreement” means that certain Tri-Party Agreement dated as of the
date hereof by and among Investments, LNGCo and Sabine.

“TUA” has the meaning set forth in the first Whereas clause of this Agreement.
The TUA is attached hereto as Exhibit A.

“TUA Utilization Notice” has the meaning set forth in Section 2.2.

1.2 Construction.

(a) Unless the context of this Agreement otherwise requires, (i) words of any
gender include each other gender, (ii) words using the singular or plural number
also include the plural or singular number, respectively, (iii) the terms
“hereof,” “herein,” “hereby” and derivative or

 

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similar words refer to this entire Agreement, (iv) the terms “modified” and
“amended” and derivative or similar words shall mean amended, supplemented,
waived or otherwise modified, (v) the terms “Article” or “Section” refer to the
specified Article or Section of this Agreement, (vi) the word “including” shall
mean “including, without limitation,” whether or not so specified, and (vii) the
word “or” shall be disjunctive but not exclusive.

(b) Except as otherwise provided herein, references to agreements and other
documents shall be deemed to include all subsequent modifications thereto or
replacements thereof.

(c) References to statutes shall include all regulations promulgated thereunder
and references to statutes or regulations shall be construed as including all
statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation.

(d) The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.

(e) Whenever this Agreement refers to a number of days, such number shall refer
to calendar days unless Business Days are specified.

ARTICLE II

GRANT OF CAPACITY RIGHTS

2.1 Investments Grant of Terminal Capacity Rights to CMI.

(a) On the terms and subject to the conditions set forth in this Agreement,
Investments hereby grants to CMI the right to utilize the Services, such rights
to be upon the same terms and conditions in the TUA, and any related reception,
storage or regasification capacity at the Sabine Pass Facility required to
regasify, store, transport and deliver LNG set forth in a TUA Utilization
Notice, such utilization to be subject to:

(i) the terms and conditions contained in the TUA, including being subject to
(A) the rights of Sabine (including, upon delivery of an LNGCo Scheduled
Delivery Notice, the automatic surrender to Sabine of the right to utilize the
Services and any related reception, storage or regasification capacity at the
Sabine Pass Facility required to regasify, store, transport and deliver the
LNGCo Scheduled Delivery Volume set forth in such LNGCo Scheduled Delivery
Notice at the Sabine Pass Facility) under the Surrender Agreement, (B) any
Investments Third Party TUA covered by a notice delivered pursuant to
Section 2.3 and (C) any prior delivered TUA Utilization Notices (except as
otherwise provided in the penultimate sentence of Section 2.1(b)); and

(ii) the approval of Investments for any transactions having an expected or
stated term of twelve (12) or more months, which approval shall not be
unreasonably withheld, conditioned or delayed.

(b) The exercise of the utilization right set forth in Section 2.1(a) shall be
deemed to become automatically effective, without further action by Investments
or CMI, upon delivery of

 

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a TUA Utilization Notice by CMI to Sabine and Investments, as provided in
Section 2.2. When any LNG associated with a TUA Utilization Notice has been
regasified and delivered to a Delivery Point by Sabine, the portion of the
utilization rights applicable to such LNG shall revert automatically to
Investments without any action by Investments or CMI. At no time shall the
utilization rights granted to CMI under this Agreement exceed the Maximum
Capability; provided, however, that, for purposes of this sentence, the Maximum
Capability shall be reduced by (i) any Services proposed to be covered by any
Investments Third Party TUA that is the subject of a notice delivered by
Investments pursuant to Section 2.3 and (ii) any Services covered by delivered
TUA Utilization Notices (except as otherwise provided in the penultimate
sentence of this Section 2.1(b)).

2.2 Notices. From time-to-time during the Term, CMI may deliver written notice
(a “TUA Utilization Notice”) to Sabine and Investments setting forth the
Services to be utilized by CMI or a third party (which utilization may extend
beyond the Term) and the date CMI or such third party will be utilizing such
Services or other rights granted to CMI under Section 2.1. A TUA Utilization
Notice shall note the relevant information pertaining to CMI’s or such third
party’s utilization of Services at the Sabine Pass Facility, including the
anticipated volume of any LNG to be delivered to the Sabine Pass Facility.
Subject to the last sentence of Section 2.1(b), there shall be no limit on the
number of TUA Utilization Notices that may be delivered by CMI during the Term.
Each TUA Utilization Notice shall include the then current Guaranteed Minimum
Capacity.

2.3 Investments Third Party Terminal Use Agreement. During the Term, Investments
may enter into terminal use agreements with non-Affiliated third parties (each
an “Investments Third Party TUA”) upon the following terms and conditions:

(a) an Investments Third Party TUA shall comply with any applicable requirements
under the Tri-Party Agreement, including, if applicable, the execution and
delivery of an operations coordination agreement in form and substance
reasonably satisfactory acceptable to the parties thereto;

(b) an Investments Third Party TUA shall provide that the counterparty thereto
pay or reimburse Sabine or Investments for a pro-rata portion of the Sabine
Taxes and New Regulatory Costs;

(c) Investments shall provide written notice to CMI at least one hundred eighty
(180) days prior to entering into an Investments Third Party TUA that
Investments intends to enter into an Investments Third Party TUA, which notice
shall include the name of the proposed counterparty to the proposed Investments
Third Party TUA, the proposed effective date of the Investments Third Party TUA,
and the material terms of the proposed Investments Third Party TUA (including
the maximum gas redelivery rate); and

(d) if Investments enters into an Investments Third Party TUA that is permitted
under this Section 2.3, Investments shall provide written notice to CMI
instructing CMI that the amount of send-out capacity granted to CMI hereunder
shall be reduced by the amount of send-out capacity granted under the
Investments Third Party TUA.

 

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2.4 Grant of Rights to Third Parties under TUA.

(a) Investments may not assign, transfer, amend, modify or supplement the TUA or
otherwise grant a third party the right to utilize the Services (except as
expressly permitted under Section 2.3) without the prior written consent of CMI,
which consent shall not be unreasonably withheld, conditioned or delayed.

(b) CMI may not grant a third party the right to use Services or any other
rights under the TUA (except as expressly permitted under Sections 2.1 and 2.2)
without the prior written consent of Investments, which consent shall not be
unreasonably withheld, conditioned or delayed.

2.5 GDF Agreements.

(a) From and after the expiration of the Term until the expiration of the GDF
Agreements, Investments agrees that it shall automatically upon the receipt of
the notice specified in this Section 2.5 grant to CMI the rights to utilize the
Services and all other rights of Investments as “Customer” under the TUA, such
rights to be upon the same terms and conditions in the TUA, and any related
reception, storage or regasification capacity at the Sabine Pass Facility
required to regasify, store, transport and deliver any Cargo(es) of LNG CMI
purchases under the GDF Agreements. As soon as practicable after CMI receives an
option exercise notice under the GDF Agreements, CMI shall deliver a written
notice to Sabine and Investments setting out the volume of LNG procured by CMI
and the anticipated schedule of delivery of such LNG to the Sabine Pass
Facility. When the LNG associated with such notice has been regasified and
delivered to a Delivery Point by Sabine, the portion of the rights granted under
this Section 2.5 shall revert automatically to Investments without any action by
Investments or CMI.

(b) CMI shall act as Investments’ Scheduling Representative for purposes of
Article 5 of the TUA with respect to any Cargo(s) to be delivered to the Sabine
Pass Facility in connection with the GDF Agreements. CMI shall perform such
duties in a commercially reasonable manner.

(c) CMI shall pay Investments a fee for each Cargo delivered to the Sabine Pass
Facility pursuant to this Section 2.5 equal to eighty percent (80%) of the
expected positive gross margin to be received with respect to such Cargo. The
expected positive gross margin shall be calculated by CMI in a manner consistent
with the manner in which CMI values such transaction on a mark-to-market basis
in its own risk management systems, and considering CMI’s cost of capital. Such
fee shall be paid to Investments within twenty-five (25) Business Days after
delivery of the applicable Cargo to the Sabine Pass Facility.

(d) This Section 2.5 shall be binding on the successors and assigns of
Investments. Investments shall cause any assignment of its rights under the TUA
(including a party to an Investments Third Party TUA) to be subject to CMI’s
rights under this Section 2.5. This Section 2.5 shall survive termination or
expiration of this Agreement until expiration of the GDF Agreements; provided,
that, CMI shall continue to have the rights provided in this Section 2.5 for any
volumes of LNG specified in a notice received by Sabine pursuant to this
Section 2.5 which has not been delivered to the Sabine Pass Facility prior to
expiration of the GDF Agreements or which has been delivered, but not yet
regasified and delivered to a Delivery Point prior to expiration of the GDF
Agreements.

 

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(e) Subject to Investments compliance with the terms of this Section 2.5, CMI
shall be solely responsible for its compliance with, and performance of, the GDF
Agreements and for the compliance of such performance with the terms and
conditions of the TUA, and shall be responsible for all liabilities and
obligations arising under the GDF Agreements.

(f) The GDF Agreements shall not be amended or modified in a manner that would
adversely affect Investments without the prior written consent of Investments,
which consent shall not be unreasonably withheld, conditioned or delayed.

2.6 Scheduling Representative. During the Term, CMI shall act as Investments’
Scheduling Representative for purposes of Article 5 of the TUA. After the Term,
CMI shall act as Investments’ Scheduling Representative for purposes of Article
5 of the TUA with respect to any Cargo(s) to be delivered to the Sabine Pass
Facility in connection with transactions entered into by CMI that extend beyond
the Term. CMI shall perform such duties in a commercially reasonable manner.

2.7 Services Provided by CMI. During the Term and subject to the terms of this
Agreement, CMI shall use reasonable commercial efforts, at its sole expense, to
commercialize the rights of Investments under the TUA to the extent neither CMI
nor Investments is obligated to the contrary under the LNGCo Agreements, any
Investments Third Party TUAs or any TUA Utilization Notices. The term of the
Services Agreement shall not be extended without the prior written consent of
Investments, which consent shall not be unreasonably withheld, conditioned or
delayed.

2.8 Services Agreement. During the Term, the Services Agreement shall not be
amended or modified in a manner that would adversely affect Investments without
the prior written consent of Investments, which consent shall not be
unreasonably withheld, conditioned or delayed.

ARTICLE III

FEES AND PAYMENT TERMS

3.1 Capacity Fee.

(a) In consideration of the rights granted by Investments to CMI in Section 2.1,
CMI shall pay Investments during the Term:

(i) a fee for each Cargo delivered on behalf of LNGCo or CMI to the Sabine Pass
Facility equal to eighty percent (80%) of the expected positive gross margin to
be received with respect to such Cargo; plus

 

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(ii) an amount, if any, equal to the shortfall between Available Cash and the
distribution of the Initial Quarterly Distribution to the Common Units in
respect of any quarter in any year referenced below; provided, however, that the
fee payable pursuant to this Section 3.1(a)(ii) for any such year shall not
exceed the amount opposite such year in the table below:

 

Year

   Amount

7/1/10 - 6/30/11

   $ 200,000

7/1/11 - 6/30/12

   $ 1.0 million

7/1/12 - 6/30/13

   $ 1.3 million

7/1/13 - 6/30/14

   $ 1.4 million

7/1/14 - 6/30/15

   $ 1.6 million

On and after 7/1/15

     0

(b) The expected positive gross margin referenced in Section 3.1(a)(i) shall be
calculated by CMI in a manner consistent with the manner in which CMI values
such transaction on a mark-to-market basis in its own risk management systems,
and considering CMI’s cost of capital. The fee payable pursuant to
Section 3.1(a)(i) shall be paid to Investments within twenty-five (25) Business
Days after delivery of the applicable Cargo to the Sabine Pass Facility.

(c) The fee, if any, payable pursuant to Section 3.1(a)(ii) shall be paid to
Investments quarterly within forty (40) days after the applicable quarter.

3.2 Sabine Taxes and New Regulatory Costs. CMI shall reimburse Investments for
Sabine Taxes and New Regulatory Costs paid by Investments during the Term
pursuant to Section 4.2 of the TUA or paid by Investments after the Term in
respect of transactions covered by TUA Utilization Notices having a term ending
after the Term; provided, however, that CMI shall not be responsible for any
Sabine Taxes and New Regulatory Costs (i) reimbursable to Investments or Sabine
under any Third Party TUA or any Investments Third Party TUA or (ii) paid by the
counterparty to any Third Party TUA or any Investments Third Party TUA.

3.3 Disputes. Should there be a dispute as to the accuracy of a billed amount,
the Parties shall pay all undisputed amounts with respect thereto, but shall be
entitled to withhold payment of any amount in dispute and shall promptly notify
the other Party of such disputed amount. The disputing Party shall provide the
other Party with records relating to the disputed amount so as to enable the
Parties to resolve the dispute. A disputed payment shall be paid promptly
following the resolution of the dispute to the extent of any amount determined
to be due and owing.

3.4 Payment Netting. The Parties shall net all undisputed amounts due and owing,
and/or past due, arising under this Agreement such that the Party owing the
greater amount shall make a single payment of the net amount to the other Party.

3.5 Guarantee. CMI shall provide a guarantee from Cheniere Energy, Inc. of CMI’s
obligations hereunder in the form attached hereto as Exhibit B.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 Representations of the Parties. On the Effective Date, each Party represents
and warrants to the other Party that:

(a) the representing Party is duly organized, validly existing and in good
standing as a limited liability company or other entity under the laws of the
state of its formation or organization;

(b) neither the execution and delivery by the representing Party of this
Agreement, nor the consummation by such Party of any of the transactions under
this Agreement requires the consent or approval or the giving of notice to, the
registration with, the recording or filing of any document with or the taking of
any other action in respect of, any Governmental Authority, except those which
have been obtained and are in full force and effect and those which are not
material;

(c) the representing Party has the requisite organizational power and authority
to, and has taken all organizational action necessary to, execute and deliver
this Agreement, to consummate the transactions contemplated hereby and to
perform its obligations contained herein, and no other organizational
proceedings on the part of such Party are necessary to authorize this Agreement
and the consummation of the transactions contemplated hereby;

(d) this Agreement has been duly executed and delivered by the representing
Party and is a valid and binding obligation of such Party, enforceable against
such Party in accordance with its terms, except as the enforceability thereof
may be limited by (i) applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors’ rights generally or (ii) general principles of equity, whether
considered in a proceeding at law or in equity; and

(e) none of the execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby or compliance with any of
the provisions hereof will result in (i) a violation of or a conflict with any
provision of the organizational documents of the representing Party, (ii) a
violation of, a conflict with, a breach of, or a default under (with or without
notice or passage of time), the termination or acceleration of the performance
required by, or the creation of any right of any party to accelerate, modify,
terminate or cancel, any material term or provision of any material contract to
which such Party is a party or by which any of its assets are bound, (iii) a
violation or breach in any material respect of any Applicable Law applicable to
the representing Party, or (iv) the representing Party being required to obtain
any material consent, waiver, agreement, Permit or approval or material
authorization of, or material declaration, filing, notice or registration to or
with, or material assignment by, any third party other than a Governmental
Authority.

4.2 Representation of CMI. On the Effective Date, CMI represents and warrants to
Investments that:

(a) there are no events that constitute, or with the giving of notice or the
passage of time or both would constitute, a breach or default by CMI of its
obligations under the TUA; and

 

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(b) except as provided in the TUA, there are no costs or expenditures that
Investments will incur or be responsible for under the TUA after the Effective
Date that CMI is not incurring or responsible for prior to the Effective Date.

ARTICLE V

LIMITATION OF LIABILITY; TAXES

5.1 Limitation of Liability. NEITHER OF THE PARTIES NOR ANY OF THEIR AFFILIATES
SHALL BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, LOSS OF USE OR OF
DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND WHETHER UNDER THIS AGREEMENT OR
OTHERWISE IN CONNECTION WITH SUCH PARTY’S OR ANY OF ITS AFFILIATES’ PERFORMANCE
OR NONPERFORMANCE HEREUNDER.

5.2 Taxes. Except as provided in Section 3.2, neither Party shall have any
liability for, and neither Party shall be obligated to pay for, (i) any property
taxes or any sales or use taxes or other excise taxes of any kind or type
applicable to the property of the other Party or any of its Affiliates, (ii) any
income, capital gains or similar taxes applicable to the other Party, or
(iii) any franchise taxes, business occupation taxes, gross receipts taxes,
goods and services taxes or any other business privilege taxes of any kind or
type applicable to the other Party or any of its Affiliates for the privilege of
doing business in the jurisdiction of the Governmental Authority imposing the
tax.

ARTICLE VI

TERM AND TERMINATION

6.1 Term. The term of this Agreement shall be that period of time extending from
the Effective Date and continuing until the earliest of (a) the termination of
the TUA, (b) expiration of the Initial Term of the TUA, (c) the termination of
this Agreement by either party pursuant to Section 6.2, and (d) the termination
of this Agreement by either party pursuant to Section 6.4. Notwithstanding the
prior expiration or termination of this Agreement, (a) Section 2.5 and the
rights granted to CMI thereunder, and the obligations imposed upon CMI
thereunder, shall survive such expiration or termination as provided in
Section 2.5, (b) Sections 2.1, 2.2, 2.6, and 3.1 shall survive such expiration
or termination with respect to any transactions entered into by CMI that extend
beyond the expiration or termination of the Term, and (c) the provisions of
Articles III, V, VII, VIII and IX, as applicable, shall survive such expiration
or termination.

6.2 Termination Option. Each of CMI and Investments shall have the option to
terminate this Agreement in its sole discretion on the second anniversary of the
Effective Date and on each anniversary of the Effective Date thereafter by
providing the other party written notice of its exercise of such option at least
twelve (12) months prior to such termination date; provided, however, that CMI
may not terminate this agreement unless the Partnership has cash reserved for
distribution to its partners as of the applicable termination date equal to or
greater than the applicable amount set forth on Exhibit C. In the event the
Partnership does not have such cash reserved on the applicable termination date,
the notice of termination delivered by CMI shall be ineffective and this
Agreement shall continue on the same terms and conditions.

 

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6.3 Events of Default. The occurrence of any one or more of the following events
shall constitute an Event of Default (“Event of Default”) by a Party under this
Agreement:

(a) the failure by such Party to make, when due, any payment required under this
Agreement if such failure is not remedied within three (3) Business Days after
written notice of such failure is received by such Party; or

(b) the failure by such Party to perform any material covenant or agreement set
forth in this Agreement and such failure is not cured within three (3) Business
Days after written notice is received by such Party; or

(c) any representation or warranty of such Party proves to have been incorrect
in any material respect as of the Effective Date; or

(d) if such Party passes a resolution, commences proceedings or has proceedings
commenced against it (which are not stayed within sixty (60) days of service
thereof) in the nature of bankruptcy or reorganization resulting from insolvency
or for its liquidation of, or the appointment of a receiver, trustee in
bankruptcy or liquidator of, its undertaking or assets.

6.4 Rights of the Non-Defaulting Party. When an Event of Default exists, the
non-defaulting Party shall have the right to: (a) cause termination of this
Agreement, effective upon delivery of a written termination notice to the
defaulting Party, but subject to Section 6.5 hereof; (b) suspend performance
under this Agreement; (c) withhold any payments due to the defaulting Party
under this Agreement; (d) net, setoff, or recoup termination values, payment
amounts or other transfer obligations arising under or in connection with this
Agreement; and/or (e) pursue any other remedy at law, in equity, or as provided
under this Agreement.

6.5 Effect of Termination. Notwithstanding termination of this Agreement,
(a) CMI and Investments shall continue to perform any of their respective duties
and obligations that arise or accrue during the Term of this Agreement,
(b) without limitation of the foregoing, CMI shall continue to have the rights
provided in Section 2.1, but subject to the limitations and obligations set
forth in this Agreement, for any (i) volumes of LNG specified in a TUA
Utilization Notice received by Sabine during the Term which has not been
delivered to the Sabine Pass Facility during the Term or which has been
delivered, but not yet regasified and delivered to a Delivery Point, and
(ii) any transactions entered into by CMI pursuant to the terms hereof that
extend beyond the expiration of the Term, and (c) Section 2.5 and the rights
granted to CMI thereunder, and the obligations imposed upon the Parties
thereunder, shall survive as provided in Section 2.5; together in all such cases
with, as may be applicable, the provisions of Articles III, V, VII, VIII, and
IX.

ARTICLE VII

AUDIT RIGHTS

Each Party or any of their respective Representatives, has the right, in its
sole discretion and at its sole expense and upon at least five (5) Business Days
advance notice and during normal working hours, to examine the books and records
of the other Party to the extent necessary to verify compliance with the
provisions of this Agreement or any related documents and agreements and the
transactions contemplated hereby and thereby. If any audit conducted

 

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under this Article VII reveals any inaccuracy in any of the fees or other
payments hereunder or thereunder, the necessary adjustments in such settlement
and the payments thereof will be promptly made and this provision shall survive
any termination of this of this Agreement or such longer period as may be
required by applicable law.

ARTICLE VIII

INDEMNIFICATION

8.1 Indemnification.

(a) Subject to the provisions of this Article VIII, CMI shall defend, indemnify
and hold Investments and its affiliated companies and their directors, officers,
employees and agents harmless from any and all claims, costs, expenses
(including reasonable attorneys’ fees), losses, causes of action, damages or
liabilities (collectively, “Loss”) arising from, relating to, or in connection
with CMI’s performance under this Agreement.

(b) Subject to the provisions of this Article VIII, Investments shall defend,
indemnify and hold CMI and its affiliated companies and their directors,
officers, employees and agents harmless from any and all Losses arising from,
relating to, or in connection with Investment’s performance under this
Agreement.

8.2 Notice of Claim. In order to make a claim for indemnification pursuant to
Section 8.1, the Party seeking indemnification (the “Indemnified Party”) shall
give the other Party (the “Indemnifying Party”) written notice of such claim,
which notice shall contain a brief description of the claim and the nature and
amount of such Loss, to the extent that the nature and amount thereof are
determinable at such time (a “Claim Notice”); provided that a delay in notifying
the Indemnifying Party will not relieve it of its obligations pursuant to
Section 8.1 so long as the Indemnifying Party is not materially prejudiced by
the delay in such notice.

8.3 Control of Defense

(a) Conditions. With respect to the defense of any third party proceeding
against or involving an indemnified party in which the claimant seeks only the
recovery of a sum of money for which indemnification is provided, at its option
the Indemnifying Party may appoint as lead counsel of such defense a legal
counsel selected by the Indemnifying Party; provided that before the
Indemnifying Party assumes control of such defense it must first (A) enter into
an agreement with such Indemnified Party (in form and substance satisfactory to
the Indemnified Party) pursuant to which the Indemnifying Party agrees to be
fully responsible (with no reservation of any rights other than the right to be
subrogated to the rights of the indemnified party) for all Losses relating to
such proceeding and (B) provide written assurances to the Indemnified Party of
the Indemnifying Party’s ability to defend such proceeding and satisfy any
judgment with respect thereto.

(b) Exceptions, etc. The Indemnified Party will be entitled to participate in
the defense of such claim and to employ separate counsel of its choice for such
purpose at its own expense; provided, however, that notwithstanding the
foregoing, the Indemnifying Party will bear the reasonable fees and expenses of
such separate counsel incurred prior to the date upon which the Indemnifying
Party effectively assumes control of such defense; provided, further, that

 

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the Indemnified Parties shall be entitled to reimbursement of only a single
legal counsel for all such Indemnified Parties. The Indemnifying Party will not
be entitled to assume control of the defense of such claim, and will pay the
reasonable fees and expenses of such single legal counsel retained by the
Indemnified Parties, if:

(i) the Indemnified Party reasonably believes that an adverse determination of
such proceeding could be materially detrimental to or materially injure the
Indemnified Party’s reputation or future business prospects;

(ii) the Indemnified Party reasonably believes that a conflict of interest
exists or could arise which, under applicable principles of legal ethics, could
prohibit a single legal counsel from representing both the Indemnified Party and
the Indemnifying Party in such proceeding, other than a conflict which may exist
due to the underlying nature of the duty to indemnify; or

(iii) a court of competent jurisdiction rules that the Indemnifying Party has
failed or is failing to prosecute or defend such claim.

8.4 Settlement of Claims. The Indemnifying Party must obtain the prior written
consent of the Indemnified Party (which will not be unreasonably withheld,
conditioned or delayed) prior to entering into any settlement of any claim or
proceeding or ceasing to defend any claim or proceeding for which
indemnification is sought under this Article VIII.

8.5 Payments. Any indemnification payments made pursuant to this Article VIII
shall be effected by wire transfer of immediately available funds from the
Indemnifying Party’s to an account designated by the applicable Indemnified
Party or by delivery of a cashier’s check by the Indemnifying Party to the
applicable Indemnified Party.

ARTICLE IX

GENERAL PROVISIONS

9.1 Entire Agreement; Amendment; Waivers; Counterparts.

(a) This Agreement, the Exhibits hereto and all documents contemplated hereunder
constitute the entire agreement between the Parties with respect to the matters
set forth herein and therein and supersede any and all negotiations, agreements,
and expressions of intent, written or oral, prior hereto.

(b) This Agreement may be amended only by written agreement executed by the
Parties; provided, however, during the period an affiliate of CMI controls
Cheniere Energy Partners GP, LLC, any amendments, modifications or waivers of
Articles II, III, and VI, and this Section 9.1(b) that adversely affect
Investments shall require the approval of the Conflicts Committee. No waiver by
either Party of any one or more defaults by the other Party in the performance
of any of the provisions of this Agreement shall operate or be construed as a
waiver of any other default or defaults whether of a like kind or different
nature.

(c) This Agreement and any amendment or modification hereof, or waiver
hereunder, may be executed and delivered in counterparts, each of which shall be
deemed an original, but all of which together shall constitute a single
Agreement. This Agreement and signature pages hereto may be delivered by
telecopy or other electronic or digital transmission method.

 

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9.2 Binding Effect. This Agreement shall be binding on and inure to the benefit
of the Parties and their respective successors and permitted assigns.

9.3 Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by a Party without the prior consent of the other
Party to this Agreement; provided that such consent shall not be unreasonably
withheld, delayed or conditioned.

9.4 Severability. If any term or provision hereof, or the application thereof to
any Person or circumstance, shall to any extent be contrary to any applicable
law or otherwise invalid or unenforceable, the remainder of this Agreement or
the application of such term or provision to Persons or circumstances other than
those as to which it is contrary, invalid or unenforceable shall not be affected
thereby and, to the extent consistent with the overall intent hereof as
evidenced by this Agreement taken as a whole, shall be enforced to the fullest
extent permitted by applicable law.

9.5 Notices and Other Communications. All notices and other communications
between the Parties shall be in writing and shall be deemed to have been duly
given when (i) delivered in person, (ii) five (5) days after posting in the
United States mail having been sent registered or certified mail return receipt
requested or (iii) delivered by telecopy and promptly confirmed by delivery in
person or post as aforesaid in each case, with postage prepaid, addressed as
follows:

 

If to Sabine or Investments:

  

Cheniere Energy Investments, LLC

700 Milam Street, Suite 800

Houston, Texas 77002

Phone: (713) 375-5000

Fax: (713) 375-6160

Attention: Contract Administration

 

With a copy to:

 

Cheniere Energy Investments, LLC

700 Milam Street, Suite 800

Houston, Texas 77002

Phone: (713) 375-5000

Fax: (713) 375-6160

Attention: Contract Administration

 

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If to CMI:

  

Cheniere Marketing, LLC

700 Milam Street, Suite 800

Houston, Texas 77002

Phone: (713) 375-5000

Fax: (713) 375-6160

Attention: Contract Administration

or to such other address or addresses as the Parties may from time to time
designate in writing.

9.6 Governing Law; Venue. The Parties agree that this Agreement (including any
claim or controversy arising out of or relating to this Agreement) shall be
governed by, construed and enforced in accordance with the laws of the State of
New York without regard to principles of conflict of laws (whether of the State
of New York or any other jurisdiction).

9.7 JURY TRIAL WAIVER. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

9.8 Third Parties. This Agreement confers no rights, benefits, duties,
obligations or liabilities whatsoever upon any Person other than Investments and
CMI and does not create, and shall not be interpreted as creating, any standard
of care, duty or liability to or for the benefit of any Person other than the
contractual duties provided expressly in this Agreement of each Party to the
other Party hereto.

9.9 Time of Essence. With regards to all obligations set forth herein, time is
of the essence.

9.10 Headings. The headings used for the Articles and Sections herein are for
convenience only and shall not affect the meaning or interpretation of the
provisions of this Agreement.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement and agreed to be
bound hereby.

 

CHENIERE ENERGY INVESTMENTS, LLC

By:

 

/s/ Meg A. Gentle

Name:

 

Meg A. Gentle

Its:

 

Chief Financial Officer

CHENIERE MARKETING, LLC

By:

 

/s/ Graham McArthur

Name:

 

Graham McArthur

Its:

 

Treasurer

Signature Page to Variable Capacity Rights Agreement