EXHIBIT 10.2

 

EXECUTION COPY

 

CONSENT AND WAIVER NO.3

TO CREDIT AGREEMENT

 

This CONSENT AND WAIVER NO. 3 TO CREDIT AGREEMENT (this “Consent and Waiver”),
dated as of April 25, 2005, is made among Sabine Pass LNG, L.P., a Delaware
limited partnership (the “Borrower”), Société Générale, in its capacity as
administrative agent for the Lenders (the “Agent”), HSBC Bank USA, National
Association, in its capacity as collateral agent for the Lenders (the
“Collateral Agent”) and the Lenders party to the Credit Agreement (as defined
below).

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the Agent and the Collateral Agent are party to a Credit
Agreement dated as of February 25, 2005 (as amended, modified and supplemented
and in effect from time to time, the “Credit Agreement”), pursuant to which the
lenders from time to time party thereto (the “Lenders”) have agreed to make
loans to the Borrower in an aggregate principal amount of $822,000,000;

 

WHEREAS, the Borrower and Bechtel Corporation (the “EPC Contractor”) have
entered into an Engineering, Procurement and Construction Agreement (the “EPC
Contract”) relating to the Project;

 

WHEREAS, the Borrower desires to amend certain provision of Attachment EE to the
EPC Contract in order to reflect the Tank Subcontractor October 2004 updated
material pricing proposal to the EPC Contractor; and

 

WHEREAS, the Borrower has requested that the Lenders consent to the Borrower
entering into Change Order SP/BE-006 (the “Change Order”), attached hereto as
Exhibit B, to effect the necessary amendments to Attachment EE to the EPC
Contract, as more fully described in the waiver request letter (the “Waiver
Request Letter”) attached hereto as Exhibit A.

 

NOW THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:

 

Section 1. Definitions. Capitalized terms (including those used in the preamble
and the recitals above) not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement and the principles of
interpretation set forth therein shall apply herein.

 

Section 2. Consent and Waiver. Subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, the Agent, the Collateral Agent and the
Lenders hereby consent to the Borrower entering into the Change Order. In
addition, the Lenders hereby waive (1) compliance with Section 8.20(e) of the
Credit Agreement solely to the extent necessary to

 

Consent and Waiver No. 3

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- 2 -

 

permit the Borrower to enter into the Change Order and (ii) any Defaults or
Events of Default arising directly as a result of the Borrower’s entering into
the Change Order.

 

Section 3. Conditions Precedent. This Consent and Waiver shall become effective
on the date on which the Agent has received counterparts of this Consent and
Waiver duly executed and delivered by each of the Borrower, the Agent, the
Collateral Agent and the Majority Lenders.

 

Section 4. Miscellaneous.

 

(a) Limited Waiver.

 

(i) Except as expressly consented to or waived hereby, all of the
representations, warranties, terms, covenants, conditions and other provisions
of the Credit Agreement and the other Financing Documents shall remain unchanged
and unwaived and shall continue to be and shall remain in full force and effect
in accordance with their respective terms.

 

(ii) The consent and waivers set forth herein shall be limited precisely as
provided for herein to the provisions expressly consented to or waived and shall
not be deemed to be a waiver of any right, power or remedy of any Lender, the
Agent or the Collateral Agent under, or a waiver of, consent to or modification
of any other term or provision of the Credit Agreement, any other Financing
Document referred to therein or herein or of any transaction or further or
future action on the part of the Borrower which would require the consent of the
Lenders under the Credit Agreement or any of the other Financing Documents.

 

(iii) Except as provided in Section 2 hereof, nothing contained in this Consent
and Waiver shall abrogate, prejudice, diminish or otherwise affect any powers,
rights, remedies or obligations of any Person arising before the date of this
Consent and Waiver.

 

(b) Financing Document. This Consent and Waiver shall be deemed to be a
Financing Document referred to in the Credit Agreement and shall be construed,
administered and applied in accordance with the terms and provisions thereof.

 

(c) Counterparts; Integration; Effectiveness. This Consent and Waiver may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any parties hereto may execute this
Consent and Waiver by signing any such counterpart.

 

(d) Costs and Expenses. The Borrower agrees to pay and reimburse the Agent for
all its reasonable costs and out-of-pocket expenses (including, without
limitation, the reasonable fees and expenses of counsel to the Agent and the
Lenders) incurred in connection with the preparation and delivery of this
Consent and Waiver and such other related documents.

 

Consent and Waiver No. 3

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- 3 -

 

(e) Governing Law. THIS CONSENT AND WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

 

[Signature Pages Follow]

 

Consent and Waiver No. 3

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

 

SABINE PASS LNG, L.P.,

    as Borrower

By:  

Sabine Pass LNG – GP, Inc.,

    its General Partner

        By:   /s/ Graham McArthur    

Name: Graham McArthur

Title: Treasurer

Address for Notices:

717 Texas Avenue, Suite 3100

Houston, TX 77002

Attn: Treasurer

 

 

Consent and Waiver No. 3

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SOCIÉTÉ GÉNÉRALE,

    as Agent

By:   /s/ Robert J. Preminger    

Name: Robert J. Preminger

Title: Director

Address for Notices:

1221 Avenue of the Americas

New York, NY 10020

Attn: Robert Preminger

 

 

Consent and Waiver No. 3

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HSBC BANK USA, NATIONAL ASSOCIATION,

    as Collateral Agent

By:   /s/ Deirdra N. Ross    

Name: Deirdra N. Ross

Title: Assistant Vice President

Address for Notices:

HSBC Bank USA, National Association

452 Fifth Avenue

New York, NY 10018

Attn: Corporate Trust

With a copy to:

DLA Piper Rudnick Gray Cary US LLP

One Liberty Place

1650 Market Street, Suite 4900

Philadelphia, PA 19103

Attn: Peter Tucci, Esq.

 

 

 

Consent and Waiver No. 3

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Exhibit A to Consent and

Waiver No. 3

 

Waiver Request Letter

 

(see attached)

 

Consent and Waiver No. 3

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April 12, 2005

 

Societe Generale

1221 Avenue of the Americas

New York, NY 10020

Attn: Robert Preminger

 

Re:   

Sabine Pass LNG, L.P. (“Sabine”)

Credit Agreement Dated February 25, 2005

 

Gentlemen:

 

Pursuant to section 8.20(e) of the above referenced Agreement, Sabine is hereby
requesting the consent of the Majority Lenders to make the following
modifications to Attachment EE to the EPC Contract:

 

• Amend the price index start date in Sections 3.2 through 3.8 from October 2004
to January 2004. This change will result in a price escalation of $17,715,027.17
which is within the permitted Adjustment Amount. Stone & Webster’s review of the
calculations will be sent directly to you.

 

• Amend the indexes used in the Tank Subcontract Materials Adjustment for
Sections 3.3 through 3.8 so that the index is established on the day the tank
subcontractor receives (ex-mill) the material rather than using a best fit
linear regression straight line of values of the applicable index from October
2004 through the Exercise Date.

 

• Add Section 3.10 to establish invoicing and payment guidelines for the Tank
Subcontract Materials Adjustment.

 

Please note that the pricing proposal quoted by the tank subcontractor for the
9% nickel steel adjustment is only valid through April 26, 2005. Accordingly, we
request consent to these proposed changes to Attachment EE no later than
April 22, 2005 to allow adequate time to place the 9% nickel steel order.

 

Very truly yours,

 

Sabine Pass LNG, L.P

 

By:

   

Name:

  Graham A. McArthur

Title:

  Treasurer

 

CHENIERE ENERGY, INC.

717 Texas Avenue, Suite 3100 • Houston, Texas 77002 • (713) 659-1361 • Fax
(713) 659-5459

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Exhibit B to Consent and

Waiver No. 3

 

Change Order

 

(see attached)

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DRAFT

 

SCHEDULE D-1

 

CHANGE ORDER FORM

 

PROJECT NAME: Sabine Pass LNG Receiving,

Storage and Regasification Terminal

   CHANGE ORDER NUMBER: SP/BE-00x

OWNER: Sabine Pass LNG, L.P.

   DATE OF CHANGE ORDER: April 1, 2005

CONTRACTOR: Bechtel Corporation

    

DATE OF AGREEMENT: December 18, 2004

    

 

The Agreement between the Parties listed above is changed as follows:

Attachment EE of the Agreement is replaced by the attached Attachment EE, Rev 1.
All references in the Agreement to Attachment EE shall be understood to refer to
Attachment EE, Rev I. Adjustment to Contract Price       

The original Contract Price was

   $ 646,936,000

Net change by previously authorized Change Orders (#SP/BE-002)

   $ 1,500,000

The Contract Price prior to this Change Order was

   $ 648,436,000

The Contract Price will be unchanged by this Change Order

   $ 0

The new Contract Price including this Change Order will be

   $ 648,436,000

Adjustment to dates in Project Schedule

       The following dates are modified (list all dates modified; insert N/A if
no dates modified): The Target Bonus Date will be unchanged. The Target Bonus
Date as of the date of this Change Order therefore is 1,095 Days following NTP
The Guaranteed Substantial Completion Date will be unchanged. The Guaranteed
Substantial Completion Date as of the date of this Change Order therefore is
1,247 Days following NTP Adjustment to other Changed Criteria: None

 

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Adjustment to Minimum Acceptance Criteria: None

 

Adjustment to Performance Guarantees: None

 

Adjustment to Design Basis: None

 

Other adjustments to liability or obligation of Contractor or Owner under the
Agreement:

 

  1. In addition to the due Monthly Payments, Milestone Payments, and
Reimbursable Costs described in the Agreement, Contractor shall invoice the
applicable Tank Subcontract Materials Adjustment in the Month immediately
following the Month in which the materials are received (ex-mill or ex-works) by
the Tank Subcontractor, and Owner shall make payment to Contractor in accordance
with Section 7.2E of the Agreement.

 

  2. To provide clarification, Owner and Contractor have jointly performed the
sample calculations shown in Table 1 below using the formulas set forth in
Sections 3.2 through 3.9 of Attachment EE Rev 1. The total and component amounts
shown in Table 1 are the cost reimbursable material escalation amounts that
would be due and payable to Contractor for the period from January 2004 through
October 2004, subject to shipment of all affected materials. October 2004 was
selected since the LNG Tank Subcontractor had initially updated its proposal to
the Contractor as of that date. This escalation amount is not currently included
in the Contract Price from Contractor to Owner.

 

Table 1, Sample Calculation Through October 2004

 

          Oct 04

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   Oct 04

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          Index

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   Escalation

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3.2    9% Ni Steel    13440      4,739,797.00 3.3    Rebar & Anchors    520     
245,313.40 3.4    Tank Stainless Steel    3480      205,097.28 3.5    Aluminum
   137      310,857.79 3.6    Carbon Steel    744      8,368,940.93 3.7   
Structural Steel    574      2,582,096.83 3.8    Piping & Valves    3480     
1,262,923.94      Total Escalation to October 2004         $ 17,715,027.17

 

Owner, Contractor, and the Tank Subcontractor have also jointly developed a
package, as per Contractor letter to Owner dated March 17, 2005, which provides
supporting details and adequately documents the formulas for the Tank
Subcontract

 

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Materials Adjustments shown in Attachment EE, Rev. 1. Contractor will confirm
quantities provided by Tank Subcontractor for rebar by September 2005 and will
confirm remaining quantities provided by Tank Subcontractor for structural steel
by December 2005. All other quantities have been provided to Owner.

 

Attachment EE Rev 1 and the Change Order will prevail should any inconsistency
occur between Contractor letter of March 17, 2005, and Attachment EE Rev 1 and
the Change Order.

 

Upon execution of this Change Order by Owner and Contractor, the
above-referenced change shall become a valid and binding part of the original
Agreement without exception or qualification, unless noted in this Change Order.
Except as modified by this and any previously issued Change Orders, all other
terms and conditions of the Agreement shall remain in full force and effect.
This Change Order is executed by each of the Parties’ duly authorized
representatives.

 

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* Charif Souki

   Contractor

Chairman

  

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Name

    

--------------------------------------------------------------------------------

    

Title

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Date of Signing

  

Date of Signing

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* Keith Meyer

    

President

    

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Date of Signing

    

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* Ed Lehotsky

    

Owner Representative

    

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Date of Signing

    

 

* Required Owner signature

 

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ATTACHMENT EE Rev 1

 

STAINLESS STEEL ADJUSTMENT, TANK SUBCONTRACT MATERIALS

ADJUSTMENT, MARINE LOADING ARM ADJUSTMENT AND BOG COMPRESSOR

ADJUSTMENT

 

1. STAINLESS STEEL ADJUSTMENT

 

1.1 Stainless Steel Adjustment

 

The Stainless Steel Adjustment, which is used to account for the changes in
commodity pricing of 304L stainless steel pipe, fittings and flanges as
described in Section 7.1D of the Agreement, shall be determined in accordance
with this Section 1. All calculations shall be rounded to four (4) decimal
places.

 

1.2 Step 1, Determine Base Metal Price at NTP

 

  Nibase = nickel base metal price

 

  Crbase = chromium base metal price

 

  Febase = iron base metal price

 

The above Nibase, Crbase and Febase shall be as published by North American
Stainless at website http://www.northamericanstainless.com, using the commercial
information/flat alloy surcharge and the averages cited for two (2) Months prior
to NTP. For example, if the NTP is given in March 2005, the Monthly average for
January 2005 shall be used.

 

1.3 Step 2, Calculate Alloy Surcharge for Pipe “Pipesch” at NTP

 

Pipesch = 0.096*(Nibase – 2.0) + 0.216*(Crbase – 0.35) + 0.8388*(Febase –
0.0625)

 

1.4 Step 3, Determine Base Price for Pipe at NTP

 

The base price for stainless pipe at NTP (“Pipebase”) shall be the pricing index
“Stainless Steel Pipe & Tube – 4-1/2 in. to 16 in.” for the Month in which the
NTP is issued, as specified in the pricing index database maintained by Preston
Pipe & Tube Report, expressed in U.S. Dollars per lb.

 

1.5 Step 4, Determine Piping Component of Adjustment

 

PipeNTP = U.S.$10,860,880*[((Pipesch + Pipebase)/1.4635) – 1]

 

1.6 Step 5, Calculate Alloy Surcharge for Fittings at NTP

 

Ftgsch = 1.0836* Pipesch

 

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1.7 Step 6, Determine Fitting Component of Adjustment

 

FtgNTP = U.S.$3,100,000*[((Ftgsch + Pipebase)/1.4938) – 1]

 

1.8 Step 7, Calculate Stainless Steel Adjustment

 

In accordance with Section 7.1D of the Agreement, the Contract Price shall be
adjusted by the Stainless Steel Adjustment (“SSadj”), which shall be determined
as follows:

 

SSadj (in U.S.$) = PipeNTP + FtgNTP

 

The Stainless Steel Adjustment shall be paid as an adjustment to the applicable
Milestone(s) in Schedule C-1.

 

2. MARINE LOADING ARM ADJUSTMENT AND BOG COMPRESSOR ADJUSTMENT

 

2.1 Introduction

 

The Marine Loading Arm Adjustment (“Armadj”) and BOG Compressor Adjustment
(“BOGadj”), which are used to take into account currency fluctuations, shall be
determined in accordance with this Section 2. All calculations shall be rounded
to four (4) decimal places. All currency exchange rates shall be determined
using FxConverter on website http://www.oanda.com/convert/classic.

 

In accordance with Section 7.1F of the Agreement, the Contract Price shall be
adjusted by the Marine Loading Arm Adjustment, which shall be determined as
follows:

 

Armadj (in U.S.$) = U.S.$6,289,705 * ((0.79177/ EuroNTP – 1)

 

Where:

 

EuroNTP = The currency exchange rate for Euros compared to U.S.$ (Euro/U.S.$),
defined as the Interbank rate, median price (ask) for the Day of the Notice to
Proceed.

 

In accordance with Section 7.1 G of the Agreement, the Contract Price shall be
adjusted by the BOG Compressor Adjustment, which shall be determined as follows:

 

BOGadj (in U.S.$) = U.S.$8,314,332 * ((107.35/YenNTP) – 1)

 

Where:

 

YenNTP = The currency exchange rate for Japanese Yen compared to U.S.$
(Yen/U.S.$) defined as the Interbank rate, median price (ask) for the Day of the
Notice to Proceed.

 

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The Marine Loading Arm and BOG Compressor Adjustment shall be paid as an
adjustment to the applicable Milestone(s) in Schedule C-1.

 

3. TANK SUBCONTRACT MATERIALS ADJUSTMENT

 

3.1 Adjustment Date

 

The Tank Subcontract Materials Adjustment, which is used to account for changes
in commodity pricing of certain materials used in the Tanks, shall be determined
in accordance with this Section 3.

 

The Adjustment Date for determining the Tank Subcontract Materials Adjustment
shall be the date as advised in writing to Owner by the Tank Subcontractor
through Contractor. The Adjustment Date for Section 3.2 is the Day that Tank
Subcontractor places a purchase order for 9% Nickel Steel. The “Adjustment Date”
for Sections 3.3 through 3.8 shall be the respective Days the Tank Subcontractor
receives (ex-mill) the materials, or portions thereof, listed in Sections 3.3
through 3.8 hereunder. If the Tank Subcontractor receives the materials in
partial shipments, the formulas in Sections 3.3 through 3.8 will be adjusted by
using the corresponding percentage of material received.

 

Except for SSC1 defined in Section 3.4 hereunder, the “Purchasing Magazine
Business Information Center Price Index” (available through subscription at
www.Purchasing.com) shall be the applicable Purchasing Magazine Business
Information Center Indices defined in Sections 3.2 through 3.8 below available
on the Adjustment Date.

 

3.2 Adjustment for 9% Nickel Steel Materials (“9Niadj”)

 

9Niadj = U.S. $4,739,797 + (4644*((0.09 * N1) – 1209.6))

 

Where “N1” is the 3-Month Bid price of nickel (in U.S.$/metric ton), as
published in the Wall Street Journal on the Day of the Adjustment Date

 

If Owner does not issue the NTP to Contractor pursuant to 5.2.B of the Agreement
on or before April 26, 2005, then the formula set forth in this Section 3.2 will
be renegotiated.

 

3.3 Adjustment for Rebar and Anchors (“Rebaradj”)

 

 

Rebaradj = U.S.5551,955*(( R1/360) – 1)

 

Where “R1” is the Purchasing Magazine Business Information Center Price Index
for “Steel, reinforcing bar (PURPRI50D208)” for the Month of the Adjustment
Date.

 

3.4 Adjustment for Tank Stainless Steel (“TankSSadj”)

 

 

TankSSadj = U.S.$524,846*[((S1+SSC1,)/2502.2) – 1]

 

Where:

 

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S1 is the Purchasing Magazine Business Information Center Price Index for
“Stainless steel, hot rolled plate (PURPRI50D210)”, for the Month of the
Adjustment Date; and

 

SSC1 is the current Allegheny Ludlum “Raw Material Surcharge for 304/304L
Stainless Steel”, as published on website http://www.alleghenyludlum.com, for
the Month of the Adjustment Date.

 

3.5 Adjustment for Aluminum Materials (“Aladj”)

 

Aladj = U.S.$1,266,458*((Al1/110) – 1)

 

Where “Al1” is the Purchasing Magazine Business Information Center Price Index
for Aluminum, grade 3003 common alloy sheet (PURPRI50D303), for the Month of the
Adjustment Date.

 

3.6 Adjustment for Carbon Steel Materials (“CSadj”)

 

CSadj = U.S.$8,279,434*((CS1/370) – 1)

 

Where “CS1” is the Purchasing Magazine Business Information Center Price Index
for Steel, hot rolled plate (PURPRI50D204) for the Month of the Adjustment Date.

 

3.7 Adjustment for Structural Steel Materials (“STadj”)

 

STadj = U.S.$5,259,827*((ST1/385) – 1)

 

Where “ST1” is the Purchasing Magazine Business Information Center Price Index
for Steel, wide-flange beams (PURPRI50D206) for the Month of the Adjustment
Date.

 

3.8 Adjustment for Piping and Valves (“PVadj”)

 

PVadj = U.S.$6,463,670*0.5*[((S1+ SSC1)/ 2502.2) – 1]

 

Where S1 and SSC1 are as specified in Section 3.4 above.

 

3.9 Tank Subcontract Materials Adjustment

 

In accordance with Section 7.1E, the Contract Price shall be adjusted by the
Tank Subcontract Materials Adjustment (“Tankadj”), which shall be determined as
follows:

 

Tankadj (in U.S.$) = Rebaradj + 9Niadj + TankSSadj + Aladj + CSadj + STadj +
PVadj

 

3.10 Invoicing and Support Documentation

 

The Parties agree that the Adjustments calculated in accordance with this
Section 3 for materials used in the Tanks shall be invoiced in the Month
immediately following the Month in which the materials are received (ex-mill or
ex-works) by the Tank Subcontractor. Contractor’s Invoice for

 

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the Tank Subcontract Material Adjustments shall include for each of the
materials in Section 3.2 through 3.8 the date of the receipt of the materials,
the percentage of materials received and the applicable Index for the Adjustment
Date. Reasonably sufficient supporting documentation sufficient for the approval
of the Tank Subcontract Materials Adjustments by Owner shall consist of: a)
Contractor’s Invoice, b) Tank Subcontractor’s Invoice, e) total quantities, d)
percentage received based on actual weight or weighting, e) bill of lading or
other document evidencing date of receipt of materials, f) calculation of
applicable escalation, and g) index in effect as of date materials received, all
of which shall be made available to Owner to verify the materials adjustment
calculation and the partial materials shipment percentage, if applicable.
Contractor will provide to Owner updated projections of material shipment dates
during the materials delivery phase.

 

The Contract Price shall be adjusted by Change Order every six (6) Months (or
such other earlier period as requested by Owner) to account for the Tank
Subcontract Material Adjustments occurring during such six (6) Month period,
with the first such Change Order occurring in the second Month following NTP and
with the last Change Order occurring in the Month following the last Tank
Subcontract Material Adjustment.

 

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