Exhibit 10.2

EXECUTION COPY

 

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AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT

among

HSBC BANK USA, NATIONAL ASSOCIATION,

in its capacity as Collateral Agent and Securities Intermediary

SOCIÉTÉ GÉNÉRALE,

in its capacity as Agent

SABINE PASS LNG, L.P.,

as Borrower

Dated as of July 21, 2006

 

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TABLE OF CONTENTS

 

               Page

ARTICLE I DEFINITIONS AND OTHER MATTERS

   1    1.01   

Definitions

   1    1.02   

Interpretation

   4    1.03   

Uniform Commercial Code

   4

ARTICLE II THE COLLATERAL AGENT AND THE ESTABLISHMENT OF THE ACCOUNTS

   4    2.01   

Collateral Agent and the Securities Intermediary

   4    2.02   

The Collateral Accounts

   7    2.03   

Grant of Lien on Collateral Accounts

   9

ARTICLE III PROVISIONS APPLICABLE TO COLLATERAL ACCOUNTS

   9    3.01   

Permitted Investments

   9    3.02   

Withdrawal and Transfer Procedure

   11    3.03   

Transfer of Amounts

   13    3.04   

Trigger Event

   13    3.05   

Distribution of Collateral Proceeds

   14    3.06   

Closing of Collateral Accounts

   15    3.07   

Disposition of Collateral Accounts upon Termination Date

   15

ARTICLE IV THE COLLATERAL ACCOUNTS

   15    4.01   

Phase 1 Construction Account and Phase 1 Punchlist Retention Subaccount

   15    4.02   

Phase 2 Construction Account and Phase 2 Punchlist Retention Subaccount

   18    4.03   

Revenue Account

   22    4.04   

Operating Account

   25    4.05   

Debt Service Accrual Account

   25    4.06   

Debt Service Reserve Account

   27    4.07   

Income Tax Reserve Account

   27    4.08   

Distribution Account

   27    4.09   

Insurance Proceeds Account

   28

ARTICLE V AGREEMENTS WITH AGENTS

   33    5.01   

Stamp and Other Similar Taxes

   33    5.02   

Filing Fees, Excise Taxes, Etc.

   33

ARTICLE VI THE COLLATERAL AGENT

   33    6.01   

General

   33    6.02   

Reliance by the Collateral Agent

   33    6.03   

Court Orders

   34    6.04   

Resignation or Removal

   34    6.05   

Exculpatory Provisions

   35    6.06   

Fees; Expenses

   36    6.07   

Reports; Documents

   36

 

   - i -    COLLATERAL AGENCY AGREEMENT

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ARTICLE VII MISCELLANEOUS

   36    7.01   

No Waiver; Remedies Cumulative

   36    7.02   

Notices

   37    7.03   

Amendments

   37    7.04   

Benefit of Agreement; Successors and Assigns

   37    7.05   

Third-Party Beneficiaries

   37    7.06   

Counterparts

   38    7.07   

Effectiveness

   38    7.08   

Entire Agreement

   38    7.09   

Severability

   38    7.10   

Conflict with Other Agreements

   38    7.11   

Dealings With the Borrower

   38    7.12   

Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial

   38    7.13   

Termination

   39    7.14   

Reinstatement

   39    7.15   

Attorney-In-Fact

   39

 

ATTACHMENTS SCHEDULE I    -     Account Names and Numbers SCHEDULE II    -    
Schedule of Fees EXHIBIT A    -     Form of Withdrawal/Transfer Certificate
EXHIBIT B    -     Form of Distribution Certificate EXHIBIT C    -     Form of
Secured Party Addition Agreement

 

   - ii -    COLLATERAL AGENCY AGREEMENT

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AGREEMENT

AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT (the “Agreement”), dated as of
July 21, 2006 among SABINE PASS LNG, L.P., a Delaware limited partnership (the
“Borrower”), HSBC BANK USA, NATIONAL ASSOCIATION, in its capacity as Collateral
Agent (the “Collateral Agent”) and Securities Intermediary (the “Securities
Intermediary”), and SOCIÉTÉ GÉNÉRALE, in its capacity as Agent (the “Agent”).

RECITALS

A. The Borrower has entered into that certain Amended and Restated Credit
Agreement, dated as of July 21, 2006 (as amended, modified and supplemented from
time to time, the “Credit Agreement”), among the Borrower, the financial
institutions from time to time parties thereto (collectively, “Lenders”), HSBC
Bank USA, National Association, as Collateral Agent, and Société Générale, as
Agent, pursuant to which the Lenders have agreed to make certain Loans to the
Borrower in the amounts specified and on the terms and subject to the conditions
set forth therein.

B. It is a condition precedent to the effectiveness of the Credit Agreement that
the parties hereto shall have executed and delivered this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and other good and valid
consideration, the receipt and adequacy of which is hereby expressly
acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND OTHER MATTERS

 

1.01 Definitions. Unless otherwise defined herein, terms defined in Section 1.01
of the Credit Agreement are used herein (including the introductory paragraph
and recitals of this Agreement) as defined therein. In addition, for purposes of
this Agreement, the following terms shall have the following meanings:

“Agents” means, collectively, the Agent and the Collateral Agent.

“Agreement” has the meaning assigned to such term in the introductory paragraph
hereof.

“Bechtel Construction Payment Subaccount” has the meaning assigned to such term
in Section 2.02(a)(xiv).

“Bechtel Payment Instruction” means an irrevocable written instruction delivered
by Bechtel Corporation to the Collateral Agent directing that either: (a) a wire
transfer be made or (b) a check be issued, in each case from amounts available
in cash and standing to the credit of the Bechtel Construction Payment
Subaccount, such written instruction to specify the amount of funds to be
transferred and the Person or account to which such funds are to be transferred.

 

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“Capacity Reservation Fees” shall have the meaning assigned to such term in the
Omnibus Agreements.

“Collateral Accounts” means the Collateral Accounts set out in Section 2.02.

“Committed Available Amounts” means (a) cash actually deposited into the
Insurance Proceeds Account, the Phase 1 Construction Account or the Phase 2
Construction Account, respectively, by any Person or (b) irrevocable commitments
to deposit cash into the Insurance Proceeds Account, the Phase 1 Construction
Account or the Phase 2 Construction Account, respectively, in the form of cash
equity contributions to the Borrower by such a Person.

“Debt Service Accrual Account” has the meaning assigned to such term in
Section 2.02(a)(vii).

“Debt Service Reserve Account” has the meaning assigned to such term in
Section 2.02(a)(vi).

“Depository Collateral” has the meaning assigned to such term in Section 2.03.

“Distribution Account” has the meaning assigned to such term in
Section 2.02(a)(ix).

“Distribution Certificate” means a certificate substantially in the form of
Exhibit B and delivered by the Borrower pursuant to Section 3.02(c)(ii).

“Executed Withdrawal/Transfer Certificate” has the meaning assigned to such term
in Section 3.02(b).

“Financial Assets” has the meaning set forth in Section 2.01(b).

“Income Tax Reserve Account” has the meaning assigned to such term in
Section 2.02(a)(viii).

“Insurance Proceeds Account” has the meaning assigned to such term in
Section 2.02(a)(xi).

“Monthly Transfer Date” means the 26th day of each month or, if such day is not
a Business Day, the next succeeding Business Day.

“Operating Account” has the meaning assigned to such term in Section 2.02(a)(v).

“Payment Instruction” means an irrevocable written instruction delivered by the
Borrower to the Collateral Agent directing that either: (a) a wire transfer be
made or (b) a check be issued by the Collateral Agent, in each case from amounts
available in

 

   - 2 -    COLLATERAL AGENCY AGREEMENT

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cash and standing to the credit of a Collateral Account, such Payment
Instruction to specify the amount of funds to be transferred and the Person or
account to which such funds are to be transferred, which information and
instructions shall be consistent in all material respects with that set out in
the Executed Withdrawal/Transfer Certificate which transferred such amounts into
such Account.

“Permitted Distribution” has the meaning assigned to such term in
Section 4.08(b).

“Phase 1 Construction Account” has the meaning assigned to such term in
Section 2.02(a)(i).

“Phase 1 Construction Payment Subaccount” has the meaning assigned to such term
in Section 2.02(a)(xii).

“Phase 1 Punchlist Retention Subaccount” has the meaning assigned to such term
in Section 2.02(a)(iii).

“Phase 2 Construction Account” has the meaning assigned to such term in
Section 2.02(a)(ii).

“Phase 2 Construction Payment Subaccount” has the meaning assigned to such term
in Section 2.02(a)(xiii).

“Phase 2 Punchlist Retention Subaccount” has the meaning assigned to such term
in Section 2.02(a)(iv).

“Remedies Direction” means a written notice and instruction to the Collateral
Agent from the Agent (acting on the direction of the Supermajority Lenders
directing the Agent) to take the actions specified therein with respect to a
Trigger Event which has occurred and is continuing.

“Required Accrual Amount” means an amount equal to the product of (1) one-sixth
(1/6) of the Debt Service in respect of the Secured Obligations payable at the
next succeeding Semi-Annual Date or Principal Payment Date (as applicable),
multiplied by the number of months since the next preceding Semi-Annual Date or
Principal Payment Date, as applicable.

“Restoration Plan” has the meaning set forth in Section 4.09(b)(iii).

“Restoration Work” has the meaning set forth in Section 4.09(b)(iii).

“Revenue Account” has the meaning assigned to such term in Section 2.02(a)(x).

“Secured Party Addition Agreement” means an agreement substantially in the form
of Exhibit C.

 

   - 3 -    COLLATERAL AGENCY AGREEMENT

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“Termination Date” means the date on which the Secured Parties have received
final and indefeasible payment in full of all Secured Obligations and all other
amounts owing to the Secured Parties under the Financing Documents.

“Trigger Event” means any Event of Default under the Credit Agreement which is
designated as a “Trigger Event” by the Agent in writing to the Borrower and the
Collateral Agent.

“Trigger Event Date” has the meaning assigned to such term in Section 3.04(a).

“Withdrawal Date” means any Monthly Transfer Date or any other date on which a
withdrawal of transfer is to be made from a Collateral Account.

“Withdrawal/Transfer Certificate” means a certificate substantially in the form
of Exhibit A and delivered by the Borrower pursuant to Section 3.02.

 

1.02 Interpretation.

 

  (a) Principles of Construction. The principles of construction and
interpretation set forth in Sections 1.02 and 1.03 of the Credit Agreement shall
apply to this Agreement as if set forth herein, mutatis mutandis.

 

  (b) Withdrawals to Occur on a Business Day. In the event that any withdrawal,
transfer or payment to or from any Collateral Account contemplated under this
Agreement shall be required to be made on a day that is not a Business Day, such
withdrawal, transfer or payment shall be made on the next succeeding Business
Day.

 

1.03 Uniform Commercial Code. As used herein, the term “UCC” shall mean the
Uniform Commercial Code as in effect from time to time in the State of New York.
All terms defined in the UCC shall have the respective meanings given to those
terms in the UCC, except where the context otherwise requires.

ARTICLE II

THE COLLATERAL AGENT AND THE ESTABLISHMENT OF THE ACCOUNTS

 

2.01 Collateral Agent and the Securities Intermediary.

 

  (a)

Acceptance of Appointment. (i) The Collateral Agent is hereby appointed to act
as Collateral Agent and it hereby agrees to act as Collateral Agent under the
express terms of this Agreement. The Collateral Agent is hereby appointed to act
as Securities Intermediary and it hereby agrees to act as “securities
intermediary” (within the meaning of Section 8-102(14) of the UCC) with respect
to the Collateral Accounts and the Financial Assets credited to such Collateral
Accounts, and as “bank” (within the meaning of 9-102(a) of the UCC) with respect
to the Collateral Accounts and credit balances not constituting Financial Assets
credited thereto and to accept all cash, payments, other amounts and

 

   - 4 -    COLLATERAL AGENCY AGREEMENT

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Permitted Investments to be delivered to or held by the Securities Intermediary
pursuant to the terms of this Agreement. The Securities Intermediary shall hold
and safeguard the Collateral Accounts during the term of this Agreement in
accordance with the provisions of this Agreement.

 

  (ii) The Borrower shall not have any rights to withdraw or transfer funds from
the Accounts, as third party beneficiary or otherwise, except as permitted by
this Depositary Agreement, and to direct the investment of monies held in the
Accounts as permitted by Section 3.01

 

  (b)

Accounts Maintained as UCC “Securities Accounts”. The Collateral Agent and the
Securities Intermediary hereby agree that (i) the Securities Intermediary has
established, in the name of the Borrower, the Collateral Accounts as set forth
in Section 2.02(a), (ii) each such Collateral Account is and will be maintained
as a “securities account” (within the meaning of Section 8-501 of the UCC);
(iii) the Borrower is the “entitlement holder” (within the meaning of
Section 8-102(a)(7) of the UCC) in respect of the “financial assets” (within the
meaning of Section 8-102(a)(9) of the UCC, the “Financial Assets”) credited to
such Collateral Accounts that are “securities accounts”; (iv) all Financial
Assets in registered form or payable to or to the order of and credited to any
such Collateral Account shall be registered in the name of, payable to or to the
order of, or specially endorsed to, the Securities Intermediary or in blank, or
credited to another securities account maintained in the name of Securities
Intermediary; and (v) in no case will any Financial Asset credited to any such
Collateral Account be registered in the name of, payable to or to the order of,
or endorsed to, the Borrower except to the extent the foregoing have been
subsequently endorsed by the Borrower to Securities Intermediary or in blank.
Each item of Property (including a security, security entitlement, investment
property, instrument or obligation, share, participation, interest or other
property whatsoever) credited to any Collateral Account shall to the fullest
extent permitted by law be treated as a Financial Asset. Until the Termination
Date, the Collateral Agent shall have “control” (within the meaning of
Section 8-106(d)(2) or Section 9-104(a) (as applicable) of the UCC) of the
Collateral Accounts and the Borrower’s “security entitlements” (within the
meaning of Section 8-102(a)(17) of the UCC) with respect to the Financial Assets
credited to the Account. All property delivered to the Securities Intermediary
pursuant to this Agreement will be promptly credited to the applicable
Collateral Account. The Borrower hereby irrevocably directs, and the Securities
Intermediary (in its capacity as securities intermediary) hereby agrees, that
the Securities Intermediary will comply with all instructions and orders
(including entitlement orders within the meaning of Section 8-102(a)(8) of the
UCC) regarding each Collateral Account and any Financial Asset therein
originated by the Collateral Agent without the further consent of the Borrower
or any other Person. In the case of a conflict between any instruction or order
originated by the Collateral Agent and any instruction or order originated by
the Borrower or any other Person other than a court of competent jurisdiction,
the instruction or order originated by the Collateral Agent shall prevail. The
Securities Intermediary shall not change the name or account number of any

 

   - 5 -    COLLATERAL AGENCY AGREEMENT

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Collateral Account without the prior written consent of the Collateral Agent and
at least five Business Days’ prior notice to the Borrower, and shall not change
the entitlement holder.

To the extent that the Collateral Accounts are not considered “securities
accounts” (within the meaning of Section 8-501(a) of the UCC), the Collateral
Accounts shall be deemed to be “deposit accounts” (as defined in
Section 9-102(a)(29) of the UCC) to the extent a security interest can be
granted and perfected under the UCC in the Collateral Accounts as deposit
accounts, which the Borrower shall maintain with the Securities Intermediary
acting not as a securities intermediary but as a “bank” (within the meaning of
Section 9-102(a)(8) of the UCC). The Securities Intermediary shall not have
title to the funds on deposit in the Collateral Accounts, and shall credit the
Collateral Accounts with all receipts of interest, dividends and other income
received on the Property held in the Collateral Accounts. The Securities
Intermediary shall administer and manage the Collateral Accounts in strict
compliance with all the terms applicable to the Collateral Accounts pursuant to
this Agreement, and shall be subject to and comply with all the obligations that
the Securities Intermediary owes to the Collateral Agent with respect to the
Collateral Accounts, including all subordination obligations, pursuant to the
terms of this Agreement. The Securities Intermediary hereby agrees to comply
with any and all instructions originated by the Collateral Agent directing
disposition of funds and all other Property in the Collateral Accounts without
any further consent of the Borrower.

 

  (c) Jurisdiction of Depositary. The Borrower, the Collateral Agent and the
Securities Intermediary agree that, for purposes of the UCC, notwithstanding
anything to the contrary contained in any other agreement relating to the
establishment and operation of the Collateral Accounts, the jurisdiction of the
Securities Intermediary (in its capacity as the securities intermediary and
bank) is the State of New York and the laws of the State of New York govern the
establishment and operation of the Collateral Accounts.

 

  (d) Degree of Care; Liens. The Securities Intermediary shall exercise the same
degree of care in administering the funds held in the Collateral Accounts and
the investments purchased with such funds in accordance with the terms of this
Agreement as the Securities Intermediary exercises in the ordinary course of its
day-to-day business in administering other funds and investments for its own
account and as required by applicable law. The Securities Intermediary is not
party to and shall not execute and deliver, or otherwise become bound by, any
agreement under which the Securities Intermediary agrees with any Person other
than the Collateral Agent to comply with entitlement orders or instructions
originated by such Person relating to any of the Collateral Accounts or the
security entitlements that are the subject of this Agreement. The Securities
Intermediary shall not grant any Lien on any Financial Asset and shall, if any
such lien, pledge or security interest shall nevertheless be created, cause the
prompt release or discharge of the same.

 

   - 6 -    COLLATERAL AGENCY AGREEMENT

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  (e) Subordination of Lien; Waiver of Set-Off. In the event that the Securities
Intermediary has or subsequently obtains by agreement, operation of law or
otherwise a Lien in any Collateral Account or in any Depositary Collateral, the
Securities Intermediary agrees that such Lien shall (except to the extent
provided in the last sentence of this Section 2.01(e)) be subordinate to the
Lien of the Collateral Agent. The financial assets standing to the credit of the
Collateral Accounts will not be subject to deduction, set-off, banker’s lien, or
any other right in favor of any Person other than the Collateral Agent (except
to the extent of returned items and chargebacks either for uncollected checks or
other items of payment and transfers previously credited to one or more of the
Collateral Accounts, and the Borrower and the Collateral Agent hereby authorize
the Securities Intermediary to debit the Account for such amounts).

 

  (f) No Other Agreements. None of the Securities Intermediary, the Collateral
Agent and the Borrower have entered or will enter into any agreement with
respect to any Collateral Account or in any Depositary Collateral, other than
this Agreement and the other Financing Documents.

 

  (g) Notice of Adverse Claims. The Securities Intermediary hereby represents
that, except for the claims and interests of the Collateral Agent and the
Borrower in each of the Collateral Accounts, the Securities Intermediary, (i) as
of the Effective Date, has no actual knowledge of, and has received no written
notice of, and (ii) as of each date on which any Collateral Account is
established pursuant to this Agreement, has received no notice of, any claim to,
or interest in, any Collateral Account or in any other Depositary Collateral. If
any Person asserts any Lien (including any writ, garnishment, judgment, warrant
of attachment, execution or similar process) against any Collateral Account or
in any other Depositary Collateral, the Securities Intermediary, upon obtaining
written notice thereof, will promptly notify the Collateral Agent and Borrower
thereof.

 

  (h) Rights and Powers of the Collateral Agent. The rights and powers granted
to the Collateral Agent by the Secured Parties have been granted in order to,
among other things, perfect their Lien in the Collateral Accounts and the other
Depositary Collateral and to otherwise act as their agent with respect to the
matters contemplated hereby.

 

2.02 The Collateral Accounts.

 

  (a)

Establishment of Collateral Accounts. As of the Effective Date, the Collateral
Agent has established the following special, segregated and irrevocable
collateral accounts at its offices located in New York City bearing the names
and account numbers identified in Schedule I (such accounts, collectively, the
“Collateral Accounts”) (each such Collateral Account being a securities account)
each of which shall be maintained at all times by the Collateral Agent until the

 

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termination of this Agreement in accordance with Section 7.13 (unless this
Agreement otherwise expressly contemplates closure of such Collateral Account
prior to the date of the termination of this Agreement):

 

  (i) the Phase 1 Construction Account (the “Phase 1 Construction Account”);

 

  (ii) the Phase 2 Construction Account (the “Phase 2 Construction Account”);

 

  (iii) the Phase 1 Punchlist Retention Subaccount (the “Phase 1 Punchlist
Retention Subaccount”), a sub-account of the Phase 1 Construction Account;

 

  (iv) the Phase 2 Punchlist Retention Subaccount (the “Phase 2 Punchlist
Retention Subaccount”), a sub-account of the Phase 2 Construction Account;

 

  (v) the Operating Account (the “Operating Account”);

 

  (vi) the Debt Service Reserve Account (the “Debt Service Reserve Account”);

 

  (vii) the Debt Service Accrual Account (the “Debt Service Accrual Account”);

 

  (viii) the Income Tax Reserve Account (the “Income Tax Reserve Account”);

 

  (ix) the Distribution Account (the “Distribution Account”);

 

  (x) the Revenue Account (the “Revenue Account”);

 

  (xi) the Insurance Proceeds Account (the “Insurance Proceeds Account”);

 

  (xii) the Phase 1 Construction Payment Subaccount (the “Phase 1 Construction
Payment Subaccount”), a sub-account of the Phase 1 Construction Account;

 

  (xiii) the Phase 2 Construction Payment Subaccount (the “Phase 2 Construction
Payment Subaccount”), a sub-account of the Phase 2 Construction Account; and

 

  (xiv) the Bechtel Construction Payment Subaccount (the “Bechtel Construction
Payment Subaccount”), a sub-account of the Phase 2 Construction Account.

 

  (b)

Account Names and Numbers. The names and account numbers of the Collateral
Accounts established hereunder on or prior to the Effective Date are set out on

 

   - 8 -    COLLATERAL AGENCY AGREEMENT

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Schedule I. The Collateral Agent shall advise the Agent and the Borrower in
writing of the account name and number of any Collateral Account established
hereunder by the Collateral Agent and the Borrower, if any, after the Effective
Date.

 

  (c) No Other Accounts. The Borrower shall not open or maintain or cause to be
opened or maintained with any bank or other financial institution any deposit,
savings or other account other than the Collateral Accounts and any other
accounts expressly permitted by the Financing Documents or otherwise established
with the consent of the Collateral Agent.

 

  (d) Collateral Accounts Constitute Collateral.

 

  (i) Each Collateral Account and all amounts from time to time held in such
Collateral Account shall be subject to the Lien of the Collateral Agent for the
benefit of the Secured Parties.

 

  (ii) Each Collateral Account and all amounts from time to time held in such
Collateral Account shall be held in the custody of, and maintained by the
Collateral Agent for the purposes and on the express terms set out in this
Agreement. All such amounts shall constitute a part of the Depository Collateral
and shall not constitute payment of any Secured Obligations or any other
obligations of the Borrower until expressly applied thereto in accordance with
the provisions of this Agreement or the Credit Agreement.

 

  (e) Standing Instructions. The Borrower and the Agent hereby irrevocably
instruct and authorize the Collateral Agent to deposit funds (promptly upon
receipt thereof) into, and transfer and withdraw funds from, the Collateral
Accounts in accordance with the terms of this Agreement and the other Financing
Documents.

 

2.03 Grant of Lien on Collateral Accounts. As collateral security for the prompt
and complete payment and performance when due of the Secured Obligations, the
Borrower has, pursuant to the Security Agreement, assigned, granted and pledged
to the Collateral Agent on behalf of and for the benefit of the Secured Parties,
a security interest in (a) each Collateral Account and (b) all cash,
investments, investment property, securities or other property at any time on
deposit in or credited to any Collateral Account, including all income or gain
earned thereon and any proceeds thereof (the “Depository Collateral”).

ARTICLE III

PROVISIONS APPLICABLE TO COLLATERAL ACCOUNTS

 

3.01 Permitted Investments.

 

  (a)

Permitted Investments. Pending the application of funds in accordance with
Articles III and IV, funds held in any Collateral Account shall be invested and

 

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reinvested by the Collateral Agent upon written direction of the Borrower (which
may be in the form of a standing instruction) only in Permitted Investments, and
with respect to those amounts next anticipated to be transferred or withdrawn,
having a scheduled maturity no later than such next anticipated cash withdrawal
or transfer from such Collateral Account; provided, however, that: (i) upon the
receipt by the Borrower of notice of a Trigger Event delivered by the Agent
pursuant to Section 3.04 and unless otherwise directed therein, or (ii) in the
event of any failure by the Borrower to so direct the Collateral Agent in
writing on or prior to the day on which any funds are (A) received by the
Collateral Agent or (B) transferred between Collateral Accounts in accordance
with this Agreement as to the investment of such funds, such investments and
reinvestments shall be made by the Collateral Agent in Permitted Investments of
the type referred to in clause (f) of the definition of “Permitted Investments”.
All funds in a Collateral Account that are invested pursuant to this
Section 3.01(a) shall be deemed to be held in such Collateral Account for
purposes of this Agreement and the other Financing Documents and shall
constitute part of the Collateral. The Borrower shall bear all risk of loss of
capital from investments in Permitted Investments.

 

  (b) Liability of Collateral Agent.

 

  (i) Other than with respect to Permitted Investments required to be invested
by the Collateral Agent in accordance with the proviso in Section 3.01(a), the
Collateral Agent shall not have any duty to determine whether any investment or
reinvestment of monies in any Collateral Account satisfies the criteria set out
in the definition of “Permitted Investment”.

 

  (ii) The Collateral Agent shall not be liable for any loss resulting from any
investment in any Permitted Investment or the sale, disposition, redemption or
liquidation of such investment or by reason of the fact that the proceeds
realized in respect of such sale, disposition, redemption or liquidation were
less than that which might otherwise have been obtained.

 

  (c) Liquidation to Make Disbursements. If and when cash is required for the
making of any transfer, disbursement or withdrawal in accordance with Articles
III and IV, the Borrower shall cause Permitted Investments to be sold or
otherwise liquidated into cash (without regard to maturity) as and to the extent
necessary in order to make such transfers, disbursements or withdrawals required
pursuant to Articles III and IV by giving written notice of such sale or
liquidation to the Collateral Agent. In the event any such investments are
redeemed prior to the maturity thereof, the Collateral Agent shall not be liable
for any loss or penalties relating thereto.

 

  (d)

Income from Investments. The proceeds from the investment of monies in any
Collateral Account in Permitted Investments shall be deposited by the Collateral
Agent into the Revenue Account on or before the second Business Day following
the month in which such interest, gain or other amount is earned and received;
provided that for the avoidance of doubt, such proceeds shall consist of
interest,

 

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gain and other amounts received in respect of an investment of principal and not
the principal itself. Any interest, gain or other amount of income earned on
Permitted Investments shall be for the account of the Borrower for income tax
purposes.

 

3.02 Withdrawal and Transfer Procedure.

 

  (a) Maintenance of Funds in Accounts; Withdrawals. Until withdrawn or
transferred pursuant to and in accordance with this Agreement, any amounts
deposited into a Collateral Account (other than income from investments
transferred to the Revenue Account pursuant to Section 3.01(d)) shall be held in
such Collateral Account. All withdrawals and transfers from any Collateral
Account shall be made in accordance with the provisions of Articles III and IV.

 

  (b) Withdrawal/Transfer Certificate. Except as otherwise expressly provided
herein, the Borrower shall not be entitled to request withdrawals or transfers
of monies from any Collateral Account without having provided a
Withdrawal/Transfer Certificate authorizing such withdrawal and/or transfer.
Withdrawals or transfers from any Collateral Account (except as otherwise
expressly provided herein) shall be made by the Collateral Agent following
receipt of (and in accordance with) a Withdrawal/Transfer Certificate signed by
the Borrower and countersigned by the Agent (an “Executed Withdrawal/Transfer
Certificate”). Each Withdrawal/Transfer Certificate shall request withdrawals
and transfers to and from Collateral Accounts in the amounts, at the times and
in the order of priority set out in Article IV.

 

  (c) Delivery to Agent and Form of Withdrawal/Transfer Certificate. On the
Effective Date and no later than five Business Days prior to each Monthly
Transfer Date, at least five Business Days prior to the Final Funding Date, the
Borrower shall deliver for purposes of any withdrawal or transfer on the next
succeeding Withdrawal Date (unless no withdrawal or transfer is anticipated in
respect of such Withdrawal Date):

 

  (i) to each Agent a Withdrawal/Transfer Certificate signed by an Authorized
Officer of the Borrower specifying:

 

  (A) each Collateral Account from which a withdrawal or transfer is requested
and, in the case of any transfer, the relevant Collateral Account(s) to which,
and/or other Person(s) to whom, such transfer is to be made;

 

  (B) the amount requested to be withdrawn or transferred from each such
Collateral Account (and the calculation thereof, if required, in accordance with
the relevant provisions of Article IV);

 

  (C) the relevant Withdrawal Date on which such withdrawal or transfer is to be
made;

 

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  (D) the purpose for which the amount so withdrawn or transferred is to be
applied (if not evident from the nature of the payment or identity of the
intended payee); and

 

  (E) all other information required to be provided in such Withdrawal/Transfer
Certificate under, or to evidence compliance with, the relevant provisions of
Articles III and IV; and

 

  (ii) to each Agent, in the event that the applicable Withdrawal/Transfer
Certificate shall request any transfers, payments or withdrawals constituting
Restricted Payments, a Distribution Certificate.

 

  (d) Agents’ Review of Certificates; Delivery to Collateral Agent.

 

  (i) In the event that, prior to the relevant Withdrawal Date, the Agent shall
determine that either or both: (A) any amounts specified in a
Withdrawal/Transfer Certificate (or an amended Withdrawal/Transfer Certificate,
as applicable) have been incorrectly calculated; and/or (B) such
Withdrawal/Transfer Certificate (or an amended Withdrawal/Transfer Certificate,
as applicable) is inconsistent with, or otherwise fails to satisfy the
requirements of, the provisions of this Agreement and the other Financing
Documents, the Agent shall notify the Collateral Agent and the Borrower in
writing promptly but in no case later than the third Business Day following the
Agent’s receipt of such Withdrawal/Transfer Certificate and may either
(I) return such Withdrawal/Transfer Certificate (or such amended certificate, as
applicable) to the Borrower with its determinations noted thereon; or (II) in
consultation with the Borrower, make such corrections as it reasonably deems
necessary to satisfy the requirements of this Agreement. In the event that the
Agent makes any revisions to a Withdrawal/Transfer Certificate as described
above, it shall promptly provide a copy of the same, as so revised, to the
Collateral Agent and the Borrower. The Agent and the Borrower will endeavor to
agree and complete the final form Withdrawal/Transfer Certificate (or any
amended or corrected certificate), and deliver such certificate to the
Collateral Agent, no later than the Business Day prior to the Withdrawal Date to
which such certificate relates.

 

  (ii) The Agent and the Collateral Agent each shall countersign any accepted
Withdrawal/Transfer Certificate (or any amended or corrected Withdrawal/Transfer
Certificate, as applicable) (which acceptance or counter-signature shall not be
unreasonably withheld or delayed), and the Collateral Agent shall implement such
Executed Withdrawal/Transfer Certificate (or such amended or corrected
certificate, as applicable) in accordance with Section 3.02(e) and the other
provisions of this Agreement.

 

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  (iii) Nothing in this Section 3.02(d) shall preclude any Agent from consulting
with the Borrower, any Secured Party or any consultant or expert advisor in
making its determinations with respect to the accuracy of any
Withdrawal/Transfer Certificate (or any amended or corrected Withdrawal/Transfer
Certificate, as applicable).

 

  (e) Implementation of Withdrawal/Transfer Certificate. Except as otherwise
provided in this Agreement, following receipt of an Executed Withdrawal/Transfer
Certificate, the Collateral Agent shall pay or transfer the amount(s) specified
in such Withdrawal/Transfer Certificate by initiating such payment or transfer
not later than 11:30 a.m. (New York time) on the Withdrawal Date set out in such
Withdrawal/Transfer Certificate for such payment or transfer (or if such
certificate is not received by the Collateral Agent at least one Business Day
prior to such Withdrawal Date, by 11:30 a.m. (New York time) on the next
succeeding Business Day following delivery of such Withdrawal/Transfer
Certificate to the Collateral Agent).

 

  (f) Failure of the Borrower to Submit Withdrawal/Transfer Certificate.
Notwithstanding any other provision of this Agreement to the contrary, if at any
time the Borrower fails to timely submit or cause to be timely submitted an
Executed Withdrawal/Transfer Certificate to the Collateral Agent for the
withdrawal, transfer or payment of amounts to any Collateral Account or Person,
the Collateral Agent may (but shall not be obligated to) effect any withdrawal,
transfer or payment, as the case may be, of any amounts then due and payable or
required to be transferred pursuant to the terms of this Agreement or any other
Financing Document. The Collateral Agent shall, as soon as practicable, provide
written notice to the Borrower regarding any such withdrawals, transfer or
payments.

 

3.03 Transfer of Amounts. Amounts improperly or inadvertently deposited into any
Collateral Account shall be transferred by the Collateral Agent into the correct
Collateral Accounts. Any withdrawals and transfers hereunder shall only be made
to the extent that sufficient funds are then available (including as Permitted
Investments) in the Collateral Account from which such withdrawal is to be made.

 

3.04 Trigger Event.

 

  (a) The Trigger Event Date. Notwithstanding anything in this Agreement to the
contrary, on and after receipt by the Collateral Agent and the Borrower of
written notice from the Agent that a Trigger Event has occurred and is
continuing (the date of such notice, the “Trigger Event Date”): (i) no transfer
or withdrawal of funds from any Collateral Account shall be requested by the
Borrower or implemented by the Collateral Agent pursuant to any
Withdrawal/Transfer Certificate or otherwise, and (ii) such funds shall be
retained in the applicable Collateral Account for application by the Collateral
Agent in accordance with a Remedies Direction.

 

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  (b) Accounting. Promptly upon receipt of notice of the occurrence of (but no
later than two Business Days after) any Trigger Event Date, the Collateral Agent
shall render an accounting to the Agent and the Borrower of all monies in the
Collateral Accounts as of the Trigger Event Date. Such accounting may be
satisfied by delivery to the other Agents and the Borrower of the most recently
available bank statement for such Collateral Account (including any
electronically available statement) and a transaction or activity report for
each Collateral Account covering the period from the closing date of the last
statement through the delivery date thereof.

 

3.05 Distribution of Collateral Proceeds.

 

  (a) Priority of Payments. Upon the occurrence and during the continuation of a
Trigger Event and following delivery of a Remedies Direction to the Collateral
Agent in connection with the sale, disposition or other realization, collection
or recovery of any amounts in the Collateral Accounts or any other Collateral
(or any portion thereof), the Collateral Agent shall apply the proceeds of such
sale, disposition, or other realization, collection or recovery toward the
payment of the Secured Obligations in the following order of priority:

 

  (i) first, to any fees, costs, charges and expenses then due and payable to
the Agent, the Collateral Agent and the Securities Intermediary under any
Financing Document pro rata based on such respective amounts then due to such
Persons;

 

  (ii) second, to the respective outstanding fees, costs, charges and expenses
then due and payable to the Secured Parties under any Financing Document pro
rata based on such respective amounts then due to such Persons;

 

  (iii) third, to any accrued but unpaid Interest Expense owed to the Secured
Parties on the Secured Obligations pro rata based on such respective amounts
then due to the Secured Parties;

 

  (iv) fourth, to the respective overdue principal and other Debt Service with
respect to the Secured Obligations owed to the Secured Parties under the Credit
Agreement, pro rata based on such respective amounts then due to the Secured
Parties;

 

  (v) fifth, to the unpaid principal and other Debt Service with respect to the
Secured Obligations then due and payable to the Secured Parties under the Credit
Agreement, pro rata based on such respective amounts then due to the Secured
Parties; and

 

  (vi) sixth, after final payment in full of the amounts described in this
Section 3.05 and the Termination Date shall have occurred, in accordance with
Section 3.07.

 

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  (b) Borrower Remains Liable for Deficiency. It is understood that the Borrower
shall remain liable to the extent of any deficiency between the amount of the
proceeds of the Depository Collateral and any other Collateral and the aggregate
of the sums referred to in clauses first through fifth of paragraph (a) above.

 

3.06 Closing of Collateral Accounts. At any point prior to the Termination Date
and subject to the other terms and conditions of this Agreement, if the Borrower
requests in writing (and the Agent consents thereto in writing) at any time
after the date on which a Collateral Account is no longer intended to be
utilized pursuant to this Agreement that such Collateral Account be closed, the
Agent shall direct the Collateral Agent to close such Collateral Account and
transfer any amount standing to the credit of that Collateral Account (together
with any accrued interest or profit on or income from such amount) to the
Revenue Account for application pursuant to Section 4.03(b) or Section 4.03(c).

 

3.07 Disposition of Collateral Accounts upon Termination Date. Upon the
Termination Date, the Collateral Agent shall pay any sums remaining in the
Collateral Accounts to the order of the Borrower or as otherwise required by
applicable law upon receipt of a certificate of an authorized officer of the
Borrower certifying that the Termination Date has occurred, which certificate
shall be acknowledged by the Agent and the Collateral Agent (which
acknowledgement shall not be unreasonably withheld or delayed).

ARTICLE IV

THE COLLATERAL ACCOUNTS

 

4.01 Phase 1 Construction Account and Phase 1 Punchlist Retention Subaccount.

 

  (a) Deposits to Phase 1 Construction Account. The following amounts shall be
deposited into the Phase 1 Construction Account:

 

  (i) the Equity Contribution Amount;

 

  (ii) the proceeds of all Phase 1 Loans made pursuant to the Credit Agreement
(other than (w) Phase 1 Loans used to pay Debt Service on or prior to the Final
Funding Date, which amounts shall be advanced directly to the Secured Parties
entitled thereto, (x) the portion of the Phase 1 Loan made on the Final Funding
Date not required to be transferred to the Phase 1 Punchlist Retention
Subaccount or the Phase 1 Construction Payment Subaccount pursuant to
Section 4.01(c)(ii) or Section 4.01(c)(iii), respectively, which amount shall be
deposited to the Phase 2 Construction Account, (y) the repayment of Subordinated
Indebtedness as contemplated in Section 8.09(a)(viii) of the Credit Agreement
and (z) other amounts contemplated in the Credit Agreement to be paid out of the
proceeds of the initial Phase 1 Loan);

 

  (iii) Capacity Reservation Fees payable pursuant to the Omnibus Agreements
received between the Original Closing Date and the Final Funding Date;

 

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  (iv) each other contribution by any Person prior to the Term Conversion Date
for the purposes of paying Phase 1 Project Costs; and

 

  (v) deposits from the Revenue Account pursuant to Section 4.03(b)(ii) below.

If any such amounts are remitted to the Borrower, the Borrower shall hold such
amounts in trust for the Collateral Agent and shall, as promptly as possible
after the receipt thereof, remit such amounts to the Collateral Agent for
deposit in the Phase 1 Construction Account, with any necessary endorsements.

 

  (b) Transfers or Payments from the Phase 1 Construction Account Prior to the
Final Funding Date. Prior to the Final Funding Date, on each Monthly Transfer
Date, subject to Section 3.05, the Collateral Agent shall, provided that it has
received an Executed Withdrawal/Transfer Certificate in relation thereto, make
the following withdrawals and transfers of amounts to the extent then available
in the Phase 1 Construction Account as specified in and in accordance with such
Executed Withdrawal/Transfer Certificate in the following order of priority:

 

  (i) First, to the account of the Phase 1 EPC Contractor or such other Person
or account specified therein, the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 1
Project Costs due and payable within a 30-day period from the Withdrawal Date,
net of any surplus remaining in the Phase 1 Construction Account from prior
deposit of funds therein;

 

  (ii) Second, after making the withdrawal and transfer above, to the Phase 1
Construction Payment Subaccount, the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 1
Project Costs due and payable within a 30-day period from the Withdrawal Date,
net of any surplus remaining in the Phase 1 Construction Account from prior
deposit of funds therein;

 

  (iii) Third, on each Monthly Transfer Date prior to the Term Conversion Date,
after making the withdrawals and transfers above, to the Operating Account an
amount set forth on the Executed Withdrawal/Transfer Certificate (without
duplication of any amounts transferred pursuant to Section 4.03(b)(i)) and
certified therein to be equal to the Operation and Maintenance Expenses then due
and payable or to become due and payable within the next 30 days, net of any
surplus remaining in the Operating Account from prior deposit of funds therein;
and

 

  (iv) Fourth, after making the withdrawals and transfers above, to pay to each
Secured Party entitled thereto, all Debt Service and all fees, costs,
indemnities and expenses then due and payable to such Person pursuant to the
Financing Documents.

 

  (c)

Transfers or Payments from the Phase 1 Construction Account on and after the
Final Funding Date. Subject to Section 3.05, on the Final Funding Date and, in

 

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the case of transfers pursuant to clause first, on each Monthly Transfer Date
thereafter, the Collateral Agent shall, provided that it has received an
Executed Withdrawal/Transfer Certificate in relation thereto, make the following
withdrawals and transfers of amounts to the extent then available in the Phase 1
Construction Account as specified in and in accordance with such Executed
Withdrawal/Transfer Certificate in the following order of priority:

 

  (i) First, if applicable, to the account of the Phase 1 EPC Contractor or such
other Person or account specified therein the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 1
Project Costs then due and payable;

 

  (ii) Second, after making the withdrawals and transfers above, if applicable,
to the Phase 1 Punchlist Retention Subaccount an amount specified in the
Executed Withdrawal/Transfer Certificate and certified therein to be equal to
the total cost of the punchlist items as notified by the Phase 1 EPC Contractor
to the Borrower pursuant to Section 11.6B of the EPC Contract;

 

  (iii) Third, after making the withdrawal and transfer above, to the Phase 1
Construction Payment Subaccount, the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 1
Project Costs due and payable on or prior to Phase 1 Final Completion;

 

  (iv) Fourth, after making the withdrawals and transfers above, to pay to each
Secured Party entitled thereto, all fees, costs, indemnities and expenses then
due and payable to such Person pursuant to the Financing Documents; and

 

  (v) Fifth, after making each applicable withdrawal and transfer above, to the
Debt Service Reserve Account, an amount necessary such that the balance in the
Debt Service Reserve Account is equal to the Required Debt Service Reserve
Amount.

 

  (d) Phase 1 Construction Payment Subaccount. Subject to Section 3.05, all
amounts from time to time on deposit in the Phase 1 Construction Payment
Subaccount shall be available at all times to the Borrower to be applied solely
for the payment when due of Phase 1 Project Costs. Upon the receipt of a Payment
Instruction, the Collateral Agent shall transfer funds from the Phase 1
Construction Payment Subaccount on the date (provided that the date specified
for payment must be at least one (1) Business Day following receipt by the
Collateral Agent), in the amount and to the Person or account specified therein.

 

  (e)

Phase 1 Punchlist Retention Subaccount. Subject to Section 3.05, funds on
deposit in the Phase 1 Punchlist Retention Subaccount may be withdrawn by the
Borrower at any time upon delivery to the Collateral Agent of an Executed

 

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Withdrawal/Transfer Certificate to be applied in payment of all costs in
connection with completion of the punchlist items to be completed under the
Phase 1 EPC Contract after the Final Funding Date.

 

  (f) Excess Amounts. Following the Final Funding Date and the funding of the
Phase 1 Construction Payment Subaccount in accordance with Section 4.01(c)(iii)
and the Phase 1 Punchlist Retention Subaccount in accordance with
Section 4.01(c)(ii), any amounts remaining in the Phase 1 Construction Account
shall be transferred by the Collateral Agent upon receipt of an Executed
Withdrawal/Transfer Certificate to the Phase 2 Construction Account for
application as set forth in Section 4.03. Following Phase 1 Completion, any
amounts remaining in the Phase 1 Construction Payment Subaccount or the Phase 1
Punchlist Retention Subaccount shall be transferred by the Collateral Agent upon
receipt of an Executed Withdrawal/Transfer Certificate to the Phase 2
Construction Account for application as set forth in Section 4.03.

 

  (g) Capacity Reservation Fees. Notwithstanding the foregoing provisions of
this Section 4.01, all Capacity Reservation Fees received by the Collateral
Agent from the Original Closing Date to the Final Funding Date, shall be
transferred to the Distribution Account.

 

4.02 Phase 2 Construction Account and Phase 2 Punchlist Retention Subaccount.

 

  (a) Deposits to Phase 2 Construction Account. The following amounts shall be
deposited into the Phase 2 Construction Account:

 

  (i) the proceeds of all Phase 2 Loans made pursuant to the Credit Agreement
(other than Phase 2 Loans used to pay Debt Service on or prior to the Final
Funding Date, which amounts shall be advanced directly to the Secured Parties
entitled thereto);

 

  (ii) the proceeds of the Phase 1 Loan made on the Final Funding Date remaining
after the amounts required to be transferred to the Phase 1 Punchlist Retention
Subaccount or the Phase 1 Construction Payment Subaccount pursuant to
Section 4.01(c)(ii) or Section 4.01(c)(iii), respectively, have been so
transferred;

 

  (iii) each other contribution by any Person for the purposes of paying Phase 2
Project Costs;

 

  (iv) deposits from the Revenue Account pursuant to Section 4.03(b)(iii) below;
and

 

  (v) deposits from the Phase 1 Construction Account, the Phase 1 Punchlist
Retention Subaccount or the Phase 1 Construction Payment Subaccount pursuant to
Section 4.01(f) above.

 

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If any such amounts are remitted to the Borrower, the Borrower shall hold such
amounts in trust for the Collateral Agent and shall, as promptly as possible
after the receipt thereof, remit such amounts to the Collateral Agent for
deposit in the Phase 2 Construction Account, with any necessary endorsements.

 

  (b) Transfers or Payments from the Phase 2 Construction Account Prior to the
Final Funding Date. Prior to the Final Funding Date, on each Monthly Transfer
Date, subject to Section 3.05, the Collateral Agent shall, provided that it has
received an Executed Withdrawal/Transfer Certificate in relation thereto, make
the following withdrawals and transfers of amounts to the extent then available
in the Phase 2 Construction Account as specified in and in accordance with such
Executed Withdrawal/Transfer Certificate in the following order of priority:

 

  (i) First, to the account of any Phase 2 Construction Contractor or such other
Person or account specified therein, the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 2
Project Costs (A) then due and payable (or, on the Initial Phase 2 Funding Date,
reimbursable to the Borrower or Cheniere LNG, Inc. or an Affiliate thereof) or
(B) due and payable within a 30-day period from the Withdrawal Date, net of any
surplus remaining in the Phase 2 Construction Account from prior deposit of
funds therein;

 

  (ii) Second, after making the withdrawal and transfer above, to the Phase 2
Construction Payment Subaccount, the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 2
Project Costs due and payable within a 30-day period from the Withdrawal Date,
net of any surplus remaining in the Phase 2 Construction Account from prior
deposit of funds therein;

 

  (iii) Third, on each Monthly Transfer Date prior to the Term Conversion Date,
after making the withdrawals and transfers above, to the Operating Account an
amount set forth on the Executed Withdrawal/Transfer Certificate (without
duplication of any amounts transferred pursuant to Section 4.03(b)(i)) and
certified therein to be equal to the Operation and Maintenance Expenses then due
and payable or to become due and payable within the next 30 days, net of any
surplus remaining in the Operating Account from prior deposit of funds therein
and to the extent not paid pursuant to Section 4.01(b)(iii); and

 

  (iv) Fourth, after making the withdrawals and transfers above, to pay to each
Secured Party entitled thereto, all Debt Service and all fees, costs,
indemnities and expenses then due and payable to such Person pursuant to the
Financing Documents, to the extent not paid pursuant to Section 4.01(b)(iv).

 

  (c)

Transfers or Payments from the Phase 2 Construction Account on and after the
Final Funding Date. Subject to Section 3.05, on the Final Funding Date and, in

 

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the case of transfers pursuant to clause first, on each Monthly Transfer Date
thereafter, the Collateral Agent shall, provided that it has received an
Executed Withdrawal/Transfer Certificate in relation thereto, make the following
withdrawals and transfers of amounts to the extent then available in the Phase 2
Construction Account as specified in and in accordance with such Executed
Withdrawal/Transfer Certificate in the following order of priority:

 

  (i) First, if applicable, subject to the satisfaction of the conditions set
forth in Section 6.04 of the Credit Agreement, to the account of any Phase 2
Construction Contractor or such other Person or account specified therein the
amounts specified in the Executed Withdrawal/Transfer Certificate and certified
therein to be equal to the Phase 2 Project Costs then due and payable;

 

  (ii) Second, after making the withdrawal and transfer above, to the Phase 2
Construction Payment Subaccount, the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 2
Project Costs due and payable on or prior to Phase 2 Completion;

 

  (iii) Third, after making the withdrawal and transfer above, to the Bechtel
Construction Payment Subaccount, the amounts specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the Phase 2
Project Costs due and payable on or prior to Phase 2 Completion, to the extent
not intended to be paid from the Phase 2 Construction Payment Subaccount
pursuant to Section 4.02(c)(ii) above;

 

  (iv) Fourth, on each Monthly Transfer Date prior to the Phase 2 Completion
Date, after making the withdrawals and transfers above, to the Operating Account
an amount set forth on the Executed Withdrawal/Transfer Certificate (without
duplication of any amounts transferred pursuant to Section 4.02(c)(i),
Section 4.03(b)(i) or Section 4.03(c)(i)), and certified therein to be equal to
the Operation and Maintenance Expenses then due and payable or to become due and
payable within the next 30 days, net of any surplus remaining in the Operating
Account from prior deposit of funds therein and to the extent not paid pursuant
to Section 4.02(c)(i), Section 4.03(b)(i) or Section 4.03(c)(i);

 

  (v) Fifth, after making the withdrawals and transfers above, if applicable, to
the Phase 2 Punchlist Retention Subaccount an amount specified in the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the total
cost of the punchlist items as notified to the Borrower by each Phase 2
Construction Contractor pursuant to the relevant Phase 2 Construction Contract
or other contractor entering into an agreement with the Borrower in relation to
Phase 2;

 

  (vi) Sixth, after making the withdrawals and transfers above, to pay to each
Secured Party entitled thereto, all fees, costs, indemnities and expenses then
due and payable to such Person pursuant to the Financing Documents and not paid
pursuant to Section 4.01(c)(iv)1; and

 

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

1 Payment of Debt Service from Phase 2 Construction Account post-Final Funding
Date (if necessary) under consideration.

 

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  (vii) Seventh, after making each applicable withdrawal and transfer above, to
the Debt Service Reserve Account, an amount necessary such that the balance in
the Debt Service Reserve Account is equal to the Required Debt Service Reserve
Amount and not paid pursuant to Section 4.01(c)(v).

 

  (d) Phase 2 Construction Payment Subaccount. Subject to Section 3.05, all
amounts from time to time on deposit in the Phase 2 Construction Payment
Subaccount shall be available at all times to the Borrower to be applied solely
for the payment when due of Phase 2 Project Costs. The Collateral Agent shall
upon the receipt of a Payment Instruction, transfer funds from the Phase 2
Construction Payment Subaccount on the date (provided that the date specified
for payment must be at least one (1) Business Day following receipt by the
Collateral Agent), in the amount and to the Person or account specified therein.

 

  (e) Phase 2 Punchlist Retention Subaccount. Subject to Section 3.05, funds on
deposit in the Phase 2 Punchlist Retention Subaccount may be withdrawn by the
Borrower at any time upon delivery to the Collateral Agent of an Executed
Withdrawal/Transfer Certificate to be applied in payment of all costs in
connection with completion of the punchlist items to be completed under each
Phase 2 Construction Contract and any other agreement entered into by the
Borrower with a contractor in relation to Phase 2 after the Final Funding Date.

 

  (f) Bechtel Construction Payment Subaccount. Subject to Section 3.05, all
amounts from time to time on deposit in the Bechtel Construction Payment
Subaccount shall be available at all times to the signatories to the Bechtel
Construction Payment Subaccount to be applied solely for the payment when due of
Phase 2 Project Costs. The Collateral Agent shall upon receipt of a Bechtel
Payment Instruction, subject to the Bechtel/Sabine Account Agreement, transfer
funds from the Bechtel Construction Payment Subaccount on the date (provided
that the date specified for payment must be at least one (1) Business Day
following receipt by the Collateral Agent), in the amount and to the Person or
account specified therein.

 

  (g) Excess Amounts. Upon Phase 2 Completion, any amount remaining in the Phase
2 Construction Account, Phase 2 Construction Payment Subaccount, Phase 2
Punchlist Retention Subaccount or Bechtel Construction Payment Subaccount shall
be transferred by the Collateral Agent upon receipt of an Executed
Withdrawal/Transfer Certificate to the Revenue Account for application as set
forth in Section 4.03.

 

 

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4.03 Revenue Account.

 

  (a) Deposits to the Revenue Account. The Borrower shall or shall cause the
following amounts to be deposited in the Revenue Account:

 

  (i) all Project Revenues received at any time by or on behalf of the Borrower;

 

  (ii) the proceeds of all Permitted Indebtedness other than the Loans under the
Credit Agreement;

 

  (iii) all other amounts received at any time by or on behalf of the Borrower
(including, without limitation, all payments in respect of Permitted Swap
Agreements and all proceeds of Collateral received by the Collateral Agent
pursuant to an exercise of remedies in accordance with the Financing Documents);
and

 

  (iv) deposits from the Phase 2 Construction Account, the Phase 2 Punchlist
Retention Subaccount, the Phase 2 Construction Payment Subaccount or the Bechtel
Construction Payment Subacccount pursuant to Section 4.02(g) above.

Notwithstanding the foregoing, in the event that any such payments, proceeds or
other amounts constituting Project Revenues are received by the Borrower, the
Borrower shall promptly pay, endorse, transfer and deliver the same to the
Collateral Agent for deposit to the Revenue Account, and, until such delivery,
the Borrower shall hold such payments and other amounts in trust for the
Collateral Agent.

 

  (b) Transfers and Payments from the Revenue Account Prior to the Term
Conversion Date. Prior to the Term Conversion Date, on each Monthly Transfer
Date, the Collateral Agent shall, subject to Section 3.05, provided that it has
received an Executed Withdrawal/Transfer Certificate in relation thereto and in
each case without duplication of any amount transferred pursuant to
Section 4.01(b), make the following withdrawals and transfers of amounts to the
extent then available in the Revenue Account, as specified and in accordance
with such Executed Withdrawal/Transfer Certificate either (A) to the Debt
Service Accrual Account to the extent of any Project Revenue deposited to the
Revenue Account or (B) in the following order of priority:

 

  (i) First, to the Operating Account an amount set forth on the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the amount
necessary to pay Operation and Maintenance Expenses and obligations under the
Assumption Agreement (other than Restricted Payments) to the extent that funds
have been deposited by Cheniere Energy, Inc. to the Revenue Account for the
purpose of paying such obligations then due and payable;

 

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  (ii) Second, after making the withdrawal and transfer above, to the Phase 1
Construction Payment Subaccount to pay any Phase 1 Project Costs in an amount
set forth on the Executed Withdrawal/Transfer Certificate and certified therein
to be equal to Phase 1 Project Costs due or to become due and payable in the
next succeeding 30-day period and not otherwise funded from the Phase 1
Construction Account pursuant to Section 4.01(b)(i);

 

  (iii) Third, after making the withdrawal and transfer above, to the Phase 2
Construction Payment Subaccount to pay any Phase 2 Project Costs in an amount
set forth on the Executed Withdrawal/Transfer Certificate and certified therein
to be equal to Phase 2 Project Costs due or to become due and payable in the
next succeeding 30-day period and not otherwise funded from the Phase 2
Construction Account pursuant to Section 4.02(b)(i);

 

  (iv) Fourth, after making each applicable withdrawal and transfer above, to
pay each Secured Party entitled thereto, all Debt Service and all fees, costs,
indemnities and expenses then due and payable to such Person pursuant to the
Financing Documents and not otherwise funded from either the Phase 1
Construction Account or the Phase 2 Construction Account pursuant to
Section 4.01(b)(iv) or Section 4.02(b)(iv), respectively;

 

  (v) Fifth, after making each applicable withdrawal and transfer above, to the
Phase 1 Punchlist Retention Subaccount, an amount, if any, set forth on the
Executed Withdrawal/Transfer Certificate and certified therein to be equal to
the difference between the cost of punchlist items notified by the Phase 1 EPC
Contractor to the Borrower pursuant to Section 11.6B of the Phase 1 EPC Contract
and the amount of the transfer made from the Phase 1 Construction Account to the
Phase 1 Punchlist Retention Subaccount pursuant to Section 4.01(c)(ii); and

 

  (vi) Sixth, after making each applicable withdrawal and transfer above, to the
Phase 2 Punchlist Retention Subaccount, an amount, if any, set forth on the
Executed Withdrawal/Transfer Certificate and certified therein to be equal to
the difference between the cost of punchlist items notified to the Borrower by
each Phase 2 Construction Contractor pursuant to the relevant Phase 2
Construction Contract or other contractor who has entered into an agreement with
the Borrower in relation to Phase 2 and the amount of the transfer made from the
Phase 2 Construction Account to the Phase 2 Punchlist Retention Subaccount
pursuant to Section 4.02(c)(v);

provided, that in the case of paragraphs (ii) and (v) above, the Borrower shall
have (a) delivered to the Independent Engineer and the Agent all invoices in
relation thereto, and (b) received written approval of the Agent (acting in
consultation with the Independent Engineer) for such withdrawal and transfer.

 

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  (c) Withdrawals from the Revenue Account following the Term Conversion Date.
Subject to Section 3.05, on each Monthly Transfer Date on or following the Term
Conversion Date, the Collateral Agent shall, provided that it has received an
Executed Withdrawal/Transfer Certificate in relation thereto, make the following
withdrawals and transfers of amounts to the extent then available in the Revenue
Account, as specified in and in accordance with such Executed
Withdrawal/Transfer Certificate in the following order of priority:

 

  (i) First, to the Operating Account an amount set forth on the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the
Operation and Maintenance Expenses and obligations under the Assumption
Agreement (other than Restricted Payments) to the extent that funds have been
deposited by Cheniere Energy, Inc. to the Revenue Account for the purpose of
paying such obligations then due and payable or to become due and payable within
the next 30 days, net of any surplus remaining in the Operating Account from
prior deposits of funds therein;

 

  (ii) Second, after making the withdrawal and transfer above, to the Borrower
in an amount set forth on the Executed Withdrawal/Transfer Certificate and
certified therein to be equal to any Emergency Capital Expenditures, provided,
that the Borrower may request withdrawals from the Revenue Account for the
purposes of making Emergency Capital Expenditures on any date other than a
Monthly Transfer Date upon delivery of an Executed Withdrawal/Transfer
Certificate and receipt of the written approval of the Agent and the Independent
Engineer;

 

  (iii) Third, after making each applicable withdrawal and transfer above, to
each Secured Party entitled thereto, all fees, costs, indemnities and expenses
and unscheduled payments (other than prepayments of principal (and interest
thereon) of Loans) then due and payable to such Person in accordance with the
terms of the Financing Documents;

 

  (iv) Fourth, after making each applicable withdrawal and transfer above, to
the Debt Service Accrual Account, an amount set forth on the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to
(A) one-sixth (1/6th) of the Debt Service in respect of the Secured Obligations
due on the immediately succeeding Principal Payment Date and (B) all other
regularly scheduled Debt Service due or to become due and payable in the next
succeeding 30-day period;

 

  (v) Fifth, after making each applicable withdrawal and transfer above, to the
Debt Service Reserve Account, an amount set forth on the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to the amount
equal to the difference, if any, between the amount on deposit in the Debt
Service Reserve Account and the Required Debt Service Reserve Amount;

 

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  (vi) Sixth, after making each applicable withdrawal and transfer above, to the
Income Tax Reserve Account an amount set forth on the Executed
Withdrawal/Transfer Certificate and certified therein to be equal to one third
of the amount that would be due as a quarterly estimated payment in respect of
federal income tax and state income and franchise tax liability that would have
accrued if the Borrower were a corporation subject to federal income tax and
state income and franchise tax; provided that in the case of the fourth calendar
quarter, such estimated payment will be adjusted to take into account any
increase or decrease in the estimated federal and state income and franchise tax
liability of the immediately preceding annual tax reporting period;

 

  (vii) Seventh, after making each applicable withdrawal and transfer above, to
the Borrower in the amount set forth on the Executed Withdrawal/Transfer
Certificate, any Permitted Capital Expenditures described in paragraph (b) of
the definition thereof; and

 

  (viii) Eighth, after making each applicable withdrawal and transfer above, to
the Distribution Account an amount set forth on the Executed Withdrawal/Transfer
Certificate and certified therein to be equal to the full remaining amount on
deposit in the Revenue Account.

 

4.04 Operating Account.

 

  (a) Deposits. There shall be deposited to the Operating Account the amounts
distributed from the Revenue Account pursuant to Sections 4.01(b)(iii),
4.02(b)(iii), 4.03(b)(i) and 4.03(c)(i) above.

 

  (b) Withdrawals from the Operating Account. Subject to Section 3.05, all
amounts from time to time on deposit in the Operating Account shall be available
at all times to the Borrower to be applied solely for the payment when due and
payable of Operation and Maintenance Expenses. Upon the receipt of a Payment
Instruction, the Collateral Agent shall transfer funds from the Operating
Account on the date (provided that the date specified for payment must be at
least one (1) Business Day following receipt by the Collateral Agent), in the
amount and to the Person or account specified therein.

 

4.05 Debt Service Accrual Account.

 

  (a) Deposits to the Debt Service Accrual Account. There shall be deposited to
the Debt Service Accrual Account (i) the amounts distributed from the Revenue
Account pursuant to Section 4.03(b) and Section 4.03(c)(iv), (ii) the amounts
transferred from time to time from the Debt Service Reserve Account pursuant to
Section 4.06(b), (iii) any amounts contributed from time to time by the
Borrower, any Pledgor or any other Person for the purposes of paying Debt
Service and (iv) all other amounts from time to time paid to the Collateral
Agent in respect of prepayments of the Secured Obligations including, without
limitation, the net available amount of all sales of assets not otherwise
permitted pursuant to Section 8.11(a) of the Credit Agreement.

 

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  (b) Withdrawals from the Debt Service Accrual Account.

 

  (i) On each Semi-Annual Date or Principal Payment Date as applicable, amounts
on deposit in the Debt Service Accrual Account shall be applied (to the extent
then available) by the Collateral Agent in payment of all Debt Service in
respect of the Secured Obligations due and payable as of such date;

 

  (ii) On any date on which a prepayment in respect of the Secured Obligations
pursuant to the terms of this Agreement or the Credit Agreement is scheduled to
be made, amounts on deposit in the Debt Service Accrual Account in respect of
such prepayment shall be applied by the Collateral Agent in payment or
prepayment of all such Secured Obligations;

 

  (iii) On each Monthly Transfer Date, the Collateral Agent shall, provided
(A) it has received an Executed Withdrawal/Transfer Certificate in relation
thereto and (B) after giving effect to such withdrawal, amounts on deposit in
the Debt Service Accrual Account shall be equal to the Required Accrual Amount,
make the following withdrawals and transfers of amounts to the extent then
available in the Debt Service Accrual Account, as specified in and in accordance
with such Executed Withdrawal/Transfer Certificate in the following order of
priority:

 

  (I) First, regularly scheduled payment to each counterparty to a Permitted
Swap Agreement an amount set forth in the Executed Withdrawal/Transfer
Certificate and certified therein to be equal to all amounts due and payable in
respect of the Permitted Swap Agreements;

 

  (II) Second, after making the withdrawals and transfers above, for payment to
each provider thereof an amount set forth in the Executed Withdrawal/Transfer
Certificate and certified therein to be equal to all amounts due and payable in
respect of all Permitted Indebtedness described in Section 8.16(a)(ii) of the
Credit Agreement;

 

  (III) Third, after making the withdrawals and transfers above, for payment to
each provider thereof an amount set forth in the Executed Withdrawal/Transfer
Certificate and certified therein to be equal to all amounts due and payable in
respect of all other Permitted Indebtedness.

 

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4.06 Debt Service Reserve Account.

 

  (a) Deposits. There shall be deposited to the Debt Service Reserve Account the
amounts distributed pursuant to Sections 4.01(c)(v), 4.02(c)(vii) and 4.03(c)(v)
above.

 

  (b) Withdrawals from the Debt Service Reserve Account. If, on any date on
which the Debt Service in respect to Secured Obligations is due and payable, the
amounts on deposit in the Debt Service Accrual Account are not sufficient to pay
the full amount of such Debt Service then due and payable, the Collateral Agent
shall withdraw from the Debt Service Reserve Account an amount equal to such
deficiency and transfer such amounts to the Debt Service Accrual Account to be
applied in payment thereof.

 

4.07 Income Tax Reserve Account.

 

  (a) Deposits to the Income Tax Reserve Account. There shall be deposited to
the Income Tax Reserve Account the amounts distributed from the Revenue Account
pursuant to Section 4.03(c)(vi) above.

 

  (b) Withdrawals from the Income Tax Reserve Account. Subject to Section 3.05,
all amounts from time to time on deposit in the Income Tax Reserve Account shall
be available on a quarterly basis to the Borrower for distribution to the
Pledgors by delivery of an Executed Withdrawal/Transfer Certificate to the
Collateral Agent instructing that amounts be paid to the Pledgors entitled to
payment therefor.

 

4.08 Distribution Account.

 

  (a) Deposits to the Distribution Account. There shall be deposited in the
Distribution Account the amounts distributed pursuant to Sections 4.01(g) and
4.03(c)(viii) above.

 

  (b) Withdrawals from the Distribution Account. Subject to Section 3.05, all
amounts from time to time on deposit in the Distribution Account shall be
available to the Borrower on each Quarterly Date for distribution to the
Pledgors or for funding of Permitted Capital Expenditures, provided that
(i) such distribution is a permitted distribution pursuant to Section 8.12 of
the Credit Agreement (a “Permitted Distribution”) and (ii) the Borrower shall
have delivered to the Collateral Agent an Executed Withdrawal/Transfer
Certificate with respect to such amounts to the Collateral Agent together with a
Distribution Certificate in form and substance acceptable to the Agent.

 

  (c)

Capacity Reservation Fees. Notwithstanding the foregoing provisions of this
Section 4.08, all amounts transferred to the Distribution Account pursuant to
Section 4.01(g) shall be available to the Borrower for distribution to the
Pledgors on any Monthly Transfer Date following the Effective Date, provided
that (i) no Event of Default has occurred and is continuing and (ii) the
Borrower shall have

 

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delivered to the Collateral Agent an Executed Withdrawal/Transfer Certificate
with respect to such amounts to the Collateral Agent together with a
Distribution Certificate in form and substance acceptable to the Agent.

 

4.09 Insurance Proceeds Account.

 

  (a) Deposits to the Insurance Proceeds Account. The Borrower shall deposit or
shall cause to be deposited in the Insurance Proceeds Account the Net Available
Amount of all Loss Proceeds in respect of any Event of Loss (including any
amounts, instruments or proceeds received in respect of any Event of Taking) to
which the Borrower or the Collateral Agent is entitled. If any such amounts are
remitted to the Borrower, the Borrower shall hold such amounts in trust for the
Collateral Agent and shall, as promptly as possible after the receipt thereof,
remit such amounts to the Collateral Agent for deposit in the Insurance Proceeds
Account, with any necessary endorsements.

 

  (b) Withdrawals from the Insurance Proceeds Account. Subject to Section 3.05,
funds on deposit in the Insurance Proceeds Account shall be applied from time to
time by the Collateral Agent for payments in respect of mandatory prepayment of
the Loans, for Restoration or to the Borrower in the manner set forth in clauses
(i) through (vi) (inclusive) below.

 

  (i) Compromise, Adjustment or Settlement.

 

  (A) To the extent not inconsistent with the Phase 1 EPC Contract or any Phase
2 Construction Contract, the Agent (in consultation with the Independent
Engineer) shall be entitled at its option to participate in any compromise,
adjustment or settlement in connection with any Event of Loss under any policy
or policies of insurance or any proceeding with respect to any Condemnation of
the Property of the Borrower in excess of $5,000,000. The Borrower shall, within
30 days after the request therefore, reimburse the Agent for all reasonable
out-of-pocket expenses (including reasonable attorneys’ and experts’ fees)
incurred by the Agent in connection with such participation.

 

  (B) Unless the Agent notifies the Borrower of its intention not to participate
in any compromise, adjustment or settlement in accordance with clause (A) above,
the Borrower shall not make any compromise, adjustment or settlement in
connection with any Event of Loss under any policy or policies of insurance or
any proceeding with respect to any Condemnation of the Property of the Borrower
in excess of $5,000,000 without the approval of the Agent (which shall not be
unreasonably withheld or delayed). The Borrower shall diligently pursue all
claims and rights to compensation against all relevant insurers and/or
Government Authorities, as applicable, in respect of any Event of Loss.

 

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  (ii) Occurrence of Event of Loss; Loss Proceeds.

 

  (A) If an Event of Loss shall occur with respect to any Collateral, the
Borrower (I) shall diligently pursue all of its rights to compensation against
any person with respect to such Event of Loss and (II) shall not compromise,
settle or consent to the settlement of any claim against any Person with respect
to such Event of Loss except in accordance with the provisions of this
Section 4.09(b).

 

  (B) Subject to the other provisions of this Agreement, in the event that the
Net Available Amount of such Loss Proceeds in respect of any Event of Loss that
occurs following Phase 2 Completion is $25,000,000 or less, the Collateral Agent
shall, upon receipt of an Executed Withdrawal/Transfer Certificate with respect
thereto either (x) make such funds available to the Borrower for payment
directly from the Insurance Proceeds Account for the purpose of Restoring the
Affected Property or (y) (1) transfer such funds to the Debt Service Accrual
Account for prepayment of the Loans or (2) provided that the Borrower and the
Agent shall have received a certificate of the Independent Engineer certifying
that the failure to Restore the Affected Property could not reasonably be
expected to result in a Material Adverse Effect, to or as directed by the
Borrower for any purpose in its sole discretion; provided, further, however,
that, if the Borrower has not delivered an Executed Withdrawal/Transfer
Certificate with respect to such Loan Proceeds within 90 days of the receipt
thereof by the Collateral Agent, the Collateral Agent shall transfer such funds
to the Collateral Agent for prepayment of Secured Obligations in accordance with
Section 4.09(b)(vi).

 

  (C) Subject to Section 4.09(b)(iii) and the other provisions of this
Agreement, in the event that the Net Available Amount of such Loss Proceeds with
respect to any Event of Loss that (I) occurs prior to Phase 2 Completion is
greater than $5,000,000 or (II) occurs following Phase 2 Completion is greater
than $25,000,000, the Collateral Agent shall make such funds available to the
Borrower for payment directly from the Insurance Proceeds Account for the
purpose of Restoring the Affected Property in accordance with
Section 4.09(b)(iii) below.

 

  (iii) Restoration. Amounts to be made available to the Borrower from the
Insurance Proceeds Account to be applied to the Restoration of the Affected
Property following an Event of Loss (“Restoration Work”) shall, be remitted to
or as directed by the Borrower by the Collateral Agent, subject to the
satisfaction of the following conditions:

 

  (A) the Borrower has delivered to the Independent Engineer, the Agent and the
Collateral Agent plans and specifications for the Restoration Work, including
reasonable estimates of the costs and time required to complete such Restoration
Work and copies of all proposed construction or other contracts in connection
therewith in form and substance reasonably acceptable to the Agent (in
consultation with the Independent Engineer) (the “Restoration Plan”);

 

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  (B) the Restoration Plan shall provide for Restoration Work that is
technically feasible and that will reasonably be expected to, upon completion
thereof, result in the Project being financially viable and able to pay
Operation and Maintenance Expenses and Debt Service;

 

  (C) the Restoration Plan shall provide for the Restoration Work to be
completed within the period covered by business interruption insurance, plus any
additional period agreed between the Borrower and the Agent (after consultation
with the Independent Engineer and the Insurance Advisor) for a cost not to
exceed the amount on deposit in the Insurance Proceeds Account in respect of
such Event of Loss together with any amounts previously paid directly to the
Phase 1 EPC Contractor pursuant to the Phase 1 EPC Contract and any other
Committed Available Amounts;

 

  (D) the Independent Engineer shall have delivered to the Agent and the
Collateral Agent a certificate to the effect that the amount of Loss Proceeds
with respect to such Event of Loss, which has been deposited in the Insurance
Proceeds Account together with any business interruption proceeds relating
thereto, any amounts previously paid directly to the Phase 1 EPC Contractor
pursuant to the Phase 1 EPC Contract and any Committed Available Amounts in
respect of the Insurance Proceeds Account are sufficient during the period of
time that is required, in the opinion of the Independent Engineer, to
(I) Restore the Affected Property, (II) pay all Operation and Maintenance
Expenses, (III) pay all Debt Service and (IV) in the case of any Event of Loss
prior to Phase 1 Substantial Completion, achieve Phase 1 Substantial Completion
in accordance with the Phase 1 Construction Budget and Schedule and to perform
the Borrower’s obligations under the TUAs then in effect; provided, that if the
Independent Engineer is unable to provide such a certificate, consent of the
Majority Lenders shall have been received;

 

  (E) no Default or Event of Default could reasonably be expected to occur
during Restoration as a consequence of Restoration Work, assuming that
Restoration Work on the Project proceeds in accordance with the Restoration
Plan;

 

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  (F) the Property constituting the Restoration Work shall be subject to the
Lien of the Security Documents (whether by amendment to the Security Documents
or otherwise) free and clear of all Liens other than Permitted Liens;

 

  (G) the Borrower has delivered a certificate of an Authorized Officer of the
Borrower certifying that the conditions set out in paragraphs (iii)(B), (E) and
(F) above have been satisfied;

 

  (H) each request by the Borrower for a disbursement of funds from the
Insurance Proceeds Account shall be made on at least 10 days’ prior written
notice to the Collateral Agent and shall be accompanied by: (I) a certificate of
each of an Authorized Officer of the Borrower and of the Independent Engineer
that: (w) all of the Restoration Work theretofore completed has been done
substantially in compliance with the Restoration Plan therefor; (x) the sum
requested is required to pay for costs incurred in connection with such
Restoration Work (giving a brief description of the services and materials
provided in connection with such Restoration Work and attaching all invoices
relating thereto); (y) the sum requested, when added to the amount of funds
previously paid out of the Insurance Proceeds Account in respect of such
Restoration Work and all funds paid directly to the Phase 1 EPC Contractor
pursuant to the Phase 1 EPC Contract, does not exceed the cost of the
Restoration Work done as of the date of such certificate; and (z) the amount of
funds remaining in the Insurance Proceeds Account in respect of such Restoration
Work together with all amounts previously paid directly to the Phase 1 EPC
Contractor pursuant to the Phase 1 EPC Contract and any Committed Available
Amounts in respect of the Insurance Proceeds Account will be sufficient to
complete the Restoration Work (giving an estimate of the remaining cost of such
completion in such reasonable detail as the Collateral Agent may require);
(II) a certificate of an Authorized Officer of the Borrower certifying that no
Default or Event of Default shall have occurred and is continuing at such date;
(III) an Executed Withdrawal/Transfer Certificate; and (IV) such other
certificates, documents or other information as the Collateral Agent shall
reasonably require.

 

  (iv) Completion of Restoration Work. Once such Restoration Work is complete
(such completion to be evidenced by a certificate of an Authorized Officer of
the Borrower and a certificate of the Independent Engineer delivered to the
Collateral Agent), any remaining relevant Loss Proceeds shall be deposited in
the Revenue Account for application in accordance with this Agreement.

 

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  (v) Abandonment of or Failure to Pursue Restoration Work. If any Secured Party
shall in good faith reasonably determine and notify the Collateral Agent in
writing that (A) the Borrower has ceased to carry on or has suspended all or
substantially all of its activities in connection with the Restoration Work or
has otherwise abandoned the Restoration Work for a period of 90 days or more,
other than where cessation or suspension is due to an event of force majeure and
the Borrower is using commercially reasonable efforts to commence or recommence
such Restoration Work, (B) the Borrower has otherwise failed to pursue the
Restoration Work substantially in accordance with the Restoration Plan for 90 or
more days or (C) the Borrower has failed to deliver to the Collateral Agent and
the Agent a Restoration Plan within 90 days of the deposit of the Loss Proceeds
in respect of an Event Loss, then the Collateral Agent shall promptly prepay the
Secured Obligations in accordance with clause (vi) below.

 

  (vi) Application to Secured Obligations. In the event that funds on deposit in
the Insurance Proceeds Account are to be applied to the prepayment of Secured
Obligations pursuant to this Section 4.09(b), the Borrower shall prepay the
Loans on the date falling two Business Days after the date that such amounts are
to be so applied pursuant to this Section 4.09(b) (such date, the “Loss Proceeds
Prepayment Date”) in an amount equal to the Net Available Amount of the Loss
Proceeds received in respect of the applicable Event of Loss minus any amounts
withdrawn from the Insurance Proceeds Account in respect of such Event of Loss
prior to such date in accordance with clauses (i) through (v) of this
Section 4.09(b). In accordance with the preceding sentence, the Borrower shall
instruct the Collateral Agent to withdraw, one Business Day prior to the Loss
Proceeds Prepayment Date, all funds on deposit in the Insurance Proceeds Account
and transfer such funds to the Secured Parties for payment of the Secured
Obligations in accordance with the relevant Financing Documents, ratably (based
on the outstanding principal amount of such Secured Obligations).

 

  (vii) Cooperation. Each of the Agent and the Borrower hereto hereby agrees to
use commercially reasonable efforts to fulfill the conditions set forth in
Section 4.09(b)(iii) within the time periods set forth in Attachment O of the
Phase 1 EPC Contract.

 

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ARTICLE V

AGREEMENTS WITH AGENTS

 

5.01 Stamp and Other Similar Taxes. The Borrower shall pay at any time all stamp
duty, registration taxes, fees or charges and other duties, levies, charges and
fees which may be assessed, levied or collected by any jurisdiction in
connection with this Agreement, any other Financing Document or the attachment
or perfection of the Lien granted to the Collateral Agent in any Depository
Collateral and shall from time to time upon demand by the Agent indemnify each
of the Agent, the Collateral Agent, the Securities Intermediary, each receiver
appointed under this Agreement and each of the other Secured Parties against any
liabilities, costs, claims, expenses, penalties and interest resulting from any
failure to pay or any delay in paying any such duty or tax (except to the extent
that such liabilities, costs, claims, expenses, penalties and interest result
from the gross negligence or willful misconduct of any such Person as finally
determined by a court of competent jurisdiction).

 

5.02 Filing Fees, Excise Taxes, Etc. The Borrower agrees to pay or to reimburse
the Agent and the Collateral Agent on demand for any and all amounts in respect
of all search, filing and recording fees, taxes, excise taxes, sales taxes and
other similar imposts which may be payable or determined to be payable in
respect of the execution, delivery, performance and enforcement of this
Agreement and each other Financing Document to which either such Person is a
party and agrees to hold each such Person harmless from and against any and all
liabilities, costs, claims, expenses, penalties and interest with respect to or
resulting from any delay in paying or omission to pay such taxes and fees
(except to the extent that such liabilities, costs, claims, expenses, penalties
and interest result from the gross negligence or willful misconduct of any such
Person as finally determined by a court of competent jurisdiction).

ARTICLE VI

THE COLLATERAL AGENT

 

6.01 General. The provisions of this Article VI are solely for the benefit of
the Secured Parties, the Agent and the Collateral Agent and, except to the
extent expressly provided in this Article VI, the Borrower shall have no rights
or obligations under this Article VI against the Collateral Agent, the Agent or
any other Secured Party; provided that the Collateral Agent shall be liable to
the Borrower for the Collateral Agent’s gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction. Whether or not
therein expressly so provided, every provision of this Agreement relating to the
conduct or affecting the eligibility of or affording protection to the
Collateral Agent shall be subject to the provision of this Article VI.

 

6.02

Reliance by the Collateral Agent. The Collateral Agent (to the extent indicated
in Section 2.01(c)) shall be entitled to rely upon any officer’s certificate of
an authorized officer of the Borrower, the Agent or any other relevant
certificate, notice or other document (including any cable, telegram or
telecopy) believed by it to be genuine and to

 

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have been signed or sent by or on behalf of the proper Person or Persons, and
shall have no liability for its actions taken thereupon, unless due to the
Collateral Agent’s willful misconduct or gross negligence as finally determined
by a court of competent jurisdiction. Without limiting the foregoing, the
Collateral Agent shall be required to make payments to the Agents, the Secured
Parties or other Persons only as set forth herein. The Collateral Agent shall be
fully justified in failing or refusing to take any action under this Agreement
(a) if such action would, in the opinion of the Collateral Agent, be contrary to
applicable law or the terms of this Agreement, (b) if such action is not
specifically provided for in this Agreement and it shall not have received any
such advice or concurrence of the Agent or the Borrower as it deems appropriate
or (c) if, in connection with the taking of any such action that would
constitute an exercise of remedies under this Agreement or the Credit Agreement,
it shall not first be indemnified to its satisfaction or as required by this
Agreement or the Credit Agreement against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Collateral Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement in accordance with any Executed
Withdrawal/Transfer Certificate, any Remedies Direction or other instruction of
the Borrower or the Agent (in each case to the extent such Person is expressly
authorized hereunder to direct the Collateral Agent to take or refrain from
taking such action), and such action taken or failure to act pursuant thereto
shall be binding upon the Borrower, the Agents and the Secured Parties. In the
event that the Collateral Agent is required to perform any action on a
particular date only following the delivery of an officer’s certificate or other
document, the Collateral Agent shall be fully justified in failing to perform
such action if it has not first received such officer’s certificate or other
document and shall be fully justified in continuing to fail to perform such
action until such time as it has received such officer’s certificate or other
document.

 

6.03 Court Orders. The Collateral Agent is hereby authorized to obey and comply
with all writs, orders, judgments or decrees issued by any court or
administrative agency affecting any money, documents or things held by the
Collateral Agent. The Collateral Agent shall not be liable to any of the parties
hereto or any other Secured Party, their successors, heirs or personal
representatives by reason of the Collateral Agent’s compliance with such writs,
orders, judgments or decrees, notwithstanding such writ, order, judgment or
decree is later reversed, modified, set aside or vacated.

 

6.04

Resignation or Removal. Subject to the appointment and acceptance of a successor
the Collateral Agent as provided below, the Collateral Agent may resign at any
time by giving notice thereof to the parties hereto, and the Collateral Agent
may be removed at any time with or without cause by the Majority Lenders. Upon
any such resignation or removal, the Majority Lenders shall have the right to
appoint, with the consent of the Borrower (unless a Default or an Event of
Default has occurred and is continuing), such consent not to be unreasonably
withheld or delayed, a successor Collateral Agent. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor Collateral Agent, such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent, and
the retiring Collateral Agent shall be discharged from its duties and
obligations hereunder. If no successor Collateral Agent shall have been so
appointed by the Majority

 

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Lenders and shall have accepted such appointment within 30 days following the
delivery by the Collateral Agent of a notice of resignation, then the retiring
Collateral Agent, in its discretion, may tender into the custody of a court of
competent jurisdiction all assets then held by it hereunder, and thereupon shall
be discharged from its duties hereunder. After the retiring Collateral Agent’s
resignation or removal hereunder as the Collateral Agent, the provisions of this
Article VI shall continue in effect for its benefit in respect of any actions
taken, suffered or omitted while it was acting as Collateral Agent. A retiring
Collateral Agent shall also be deemed to retire as the Securities Intermediary,
and any successor Collateral Agent shall be deemed to be the successor
Securities Intermediary.

 

6.05 Exculpatory Provisions.

 

  (a) Recitals; Value of Collateral; Etc. Neither the Collateral Agent nor any
of its affiliates shall be responsible to the Borrower, any other Agent or any
Secured Party for: (i) any recitals, statements, representations or warranties
made by the Borrower contained in this Agreement or any other Financing Document
or in any certificates or other document referred to or provided for in, or
received by any Secured Party under, this Agreement or any other Financing
Document; (ii) the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Financing Document or any other
document referred to or provided for herein or therein or the perfection,
priority or validity of any of the Liens created by the Financing Documents; or
(iii) any failure by the Borrower to perform its obligations hereunder or
thereunder.

 

  (b) Performance by the Borrower. The Collateral Agent shall not be required to
ascertain or inquire as to the performance by the Borrower of any of its
obligations under any Financing Document or any other document or agreement
contemplated hereby or thereby.

 

  (c) Initiation of Litigation, Etc. The Collateral Agent shall not be:
(i) required to initiate or conduct any litigation or collection proceeding
hereunder or under any other Financing Document; or (ii) responsible for any
action taken, suffered or omitted to be taken by it hereunder (except for its
own gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction).

 

  (d) Insurance and Taxes on Depository Collateral. The Collateral Agent shall
not be liable or responsible for insuring the Depository Collateral or for the
payment of taxes, charges, assessments or liens upon the Depository Collateral
or otherwise as to the maintenance of the Depository Collateral.

 

  (e) Personal Liability of the Collateral Agent. The Collateral Agent shall not
be liable for any action taken, suffered or omitted to be taken by it in
accordance with this Agreement or any other Financing Document or any
instruction or direction given to it in accordance with the terms or in
furtherance of this Agreement or any other Financing Document unless arising out
of its own gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.

 

   - 35 -    COLLATERAL AGENCY AGREEMENT

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  (f) Limitation of Liability. No provision of this Agreement shall be construed
to relieve the Collateral Agent from liability for its own grossly negligent
action, its own grossly negligent failure to act, or its own willful misconduct
as finally determined by a court of competent jurisdiction. The Collateral Agent
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Agent and except to the extent of income or
other gain on investments that are deposits in or certificates of deposits or
other obligations of the Collateral Agent in its commercial capacity and income
or other gain actually received by the Collateral Agent on Permitted
Investments.

 

  (g) Indemnification. The Borrower shall indemnify the Collateral Agent and the
Securities Intermediary against any liabilities, costs, claims, expenses,
penalties and interest by reason of any claims of third parties (other than the
Lenders) resulting from the execution, delivery, enforcement, performance or
administration of any transactions contemplated hereby (except to the extent
that such liabilities, costs, claims, expenses, penalties and interest result
from the gross negligence or willful misconduct of the Collateral Agent or the
Securities Intermediary as finally determined by a court of competent
jurisdiction).

 

6.06 Fees; Expenses. The Collateral Agent shall be compensated for its services
hereunder in accordance with the agreed fee schedule attached hereto as Schedule
II. The Borrower agrees to pay or reimburse all reasonable out-of-pocket
expenses of the Collateral Agent (including reasonable fees and expenses for
legal services) in respect of, or incident to, the preparation, delivery,
execution, administration or enforcement of any of the provisions of this
Agreement or in connection with any amendment, waiver or consent relating to
this Agreement.

 

6.07 Reports; Documents. The Collateral Agent shall provide to the Borrower and
the Agent, who in turn shall promptly provide to the Secured Parties, a monthly
statement of all deposits to, disbursements from and interest and earnings
credited to each Collateral Account. The Agent has delivered to the Collateral
Agent a true and correct copy of the Credit Agreement (including Appendix A
thereto) as in effect on the date hereof, and from time to time shall deliver to
the Collateral Agent any true and complete copies of all amendments thereto.

ARTICLE VII

MISCELLANEOUS

 

7.01

No Waiver; Remedies Cumulative. No failure or delay on the part of any party
hereto or any Secured Party in exercising any right, power or privilege
hereunder and no course of dealing between parties hereto shall impair any such
right, power or privilege or operate as a waiver thereof. No single or partial
exercise by any party hereto or any Secured Party of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. The rights, powers
and remedies provided herein are cumulative and not exclusive of any fights,
powers or remedies which any party thereto would otherwise have. No notice to

 

   - 36 -    COLLATERAL AGENCY AGREEMENT

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or demand by any party hereto or any Secured Party on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of any party hereto
or any Secured Party to any other or further action in any circumstances without
notice or demand.

 

7.02 Notices. All notices, payment instructions, Remedies Directions and other
communications required or permitted to be given hereunder shall be (a) in
writing and be considered as properly given and be deemed effective in
accordance with Section 11.02 of the Credit Agreement; and (b) sent to a party
hereto at its address and contact number specified in Section 11.02 of the
Credit Agreement, or at such other address and contact number as is designated
by any party in a written notice to the other parties hereto; provided, that
with respect to determining whether any notice, payment instruction, Remedies
Direction or other communication to the Agent or the Collateral Agent has been
given hereunder, unless otherwise expressly provided herein, such notice shall
be deemed effectively given and received on the actual day of receipt by the
Agent or the Collateral Agent, as the case may be, of such notice, payment
instruction, Remedies Direction or other communication at its designated office
for delivery of notices.

 

7.03 Amendments. This Agreement may be amended or modified only by an instrument
in writing signed by each of the parties hereto.

 

7.04 Benefit of Agreement; Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, that the
Borrower may not assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Agent and all Lenders.

(b) In the event that any Person becomes a counterparty to a Permitted Swap
Agreement and such Person has not previously executed a Secured Party Addition
Agreement in its capacity as a counterparty to a Permitted Swap Agreement, such
Person shall execute and deliver to the Collateral Agent: (i) a Secured Party
Addition Agreement and (ii) such other documentation as the Collateral Agent may
reasonably request. Upon execution and delivery of a Secured Party Addition
Agreement, a counterparty to a Permitted Swap Agreement shall be deemed to be a
Secured Party for all purposes under the Financing Documents. In furtherance of
the foregoing, the counterparty to a Permitted Swap Agreement shall be deemed to
have agreed to be bound by the provisions of the Credit Agreement for the
limited purposes of indemnifying the Collateral Agent pursuant to Section 10.05
thereof (assuming for purposes of calculating such Person’s liability to make
payments on any indemnity claimed thereunder, that any net settlement amount
payable to such counterparty to a Permitted Swap Agreement is treated as such
Person’s outstanding principal amount of Loans).

 

7.05 Third-Party Beneficiaries. The covenants contained herein are made solely
for the benefit of the parties hereto, and successors and assigns of such
parties as specified herein, and shall not be construed as having been intended
to benefit any third-party not a party to this Agreement.

 

   - 37 -    COLLATERAL AGENCY AGREEMENT

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7.06 Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which,
when executed and delivered, shall be effective for purposes of binding the
parties hereto, but all of which shall together constitute one and the same
instrument.

 

7.07 Effectiveness. This Agreement shall be effective on the date first above
written.

 

7.08 Entire Agreement. This Agreement and the other Financing Documents,
including the documents referred to herein, constitute the entire agreement and
understanding of the parties hereto, and supersede any and all prior agreements
and understandings, written or oral, of the parties hereto relating to the
subject matter hereof.

 

7.09 Severability. If any provision of this Agreement is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law:
(a) the other provisions of this Agreement shall remain in full force and effect
in such jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible; and (b) the
invalidity or unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.

 

7.10 Conflict with Other Agreements. Except as otherwise expressly provided
herein, the parties agree that in the event of any conflict between the
provisions of this Agreement (or any portion thereof) and the provisions of any
other Financing Document or any other agreement (other than the Credit
Agreement) now existing or hereafter entered into, the provisions of this
Agreement shall control. Except as otherwise expressly provided herein, the
event of any conflict between the provisions of this Agreement and the
provisions of the Credit Agreement, the provisions of the Credit Agreement shall
control. In the event that in connection with the establishment of any of the
Collateral Accounts with the Collateral Agent, the Borrower shall enter into any
agreement, instrument or other document with the Collateral Agent which has
terms that are in conflict with or inconsistent with the terms of this
Agreement, the terms of this Agreement shall control.

 

7.11 Dealings With the Borrower. Upon any application or demand (other than a
Payment Instruction) by the Borrower to the Collateral Agent to take or permit
any action under any of the provisions of this Agreement or any other Security
Document (including pursuant to a Withdrawal/Transfer Certificate), the Borrower
shall, furnish to the Collateral Agent a certificate (which may be part of the
Withdrawal/Transfer Certificate) signed by an authorized officer of the Borrower
stating that all conditions precedent, if any, provided for in this Agreement or
any other Security Document relating to the proposed action have been complied
with. In the case of any such application or demand as to which the furnishing
of specified documents is required by any provision of this Agreement or any
other Security Document relating to such particular application or demand, no
additional certificate or opinion need be furnished.

 

7.12

Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the law of the
State of New York and the provisions of Section 11.18 and Section 11.19 of the
Credit

 

   - 38 -    COLLATERAL AGENCY AGREEMENT

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

 

Agreement are hereby incorporated herein by reference, mutatis mutandis, as if
fully set out in this Agreement and each reference in any such Section of the
Credit Agreement to the “Agreement”, “herein”, “hereunder” and like terms shall
be deemed to refer to this Agreement, provided, however, that notwithstanding
anything in any Financing Document to the contrary, for purposes of the UCC, the
“security intermediary’s jurisdiction” (within the meaning of Section 8-110(e)
of the UCC) with respect to the Collateral Accounts is the State of New York.

 

7.13 Termination. Upon the Termination Date, this Agreement shall (except as
otherwise expressly set out herein) terminate and be of no further force and
effect; provided, that the obligations of the Borrower pursuant to
Sections 6.05(e), (f) and (g), Section 6.06 and Section 7.12 shall survive the
Termination Date.

 

7.14 Reinstatement. This Agreement and the obligations of the Borrower hereunder
shall continue to be effective or be automatically reinstated, as the case may
be, if (and to the extent that) at any time payment and performance of the
Borrower’s obligations hereunder, or any part thereof, is rescinded or reduced
in amount, or must otherwise be restored or returned by any Agent or any other
Secured Party. In the event that any payment or any part thereof is so
rescinded, reduced, restored or returned, such obligations shall be reinstated
on the same terms and conditions applicable thereto prior to the payment of the
rescinded, reduced, restored or returned amount, and shall be deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.

 

7.15 Attorney-In-Fact. For the purposes of allowing the Agents to exercise their
rights and remedies upon the occurrence and continuance of an Event of Default,
the Borrower irrevocably constitutes and appoints each Agent and any officer or
agent thereof, with full power of substitution as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any appropriate
action and to execute any document or instrument that may be necessary or
desirable to accomplish the purposes of this Agreement. Upon the occurrence and
continuance of an Event of Default, the Agent shall promptly inform the
Collateral Agent in writing that an Event of Default has occurred and is
continuing and that the Agent is exercising remedies under this Section 7.15.

[SIGNATURES TO FOLLOW]

 

   - 39 -    COLLATERAL AGENCY AGREEMENT

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

BORROWER: SABINE PASS LNG, L.P. By:   Sabine Pass LNG – GP, Inc.,   its General
Partner By:  

/s/ Graham A. McArthur

Name:   Graham A. McArthur Title:   Treasurer Address for Notices: 717 Texas
Avenue, Suite 3100 Houston, TX 77002 Attn: Don Turkleson

 

   S-1    COLLATERAL AGENCY AGREEMENT

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

COLLATERAL AGENT and SECURITIES INTERMEDIARY HSBC BANK USA, NATIONAL ASSOCIATION
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.

AGENT: SOCIÉTÉ GÉNÉRALE By:  

/s/ Edward J. Grimm

Name:   Edward J. Grimm Title:   Director By:  

 

Name:   Title:   Address for Notices: 1221 Avenue of the Americas New York, NY
10020 Attn: Robert Preminger Telephone: Fax:

 

   S-2    COLLATERAL AGENCY AGREEMENT

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

EXHIBIT A

to Agreement

[Letterhead of the Company]

FORM OF WITHDRAWAL/TRANSFER CERTIFICATE

Date of this Withdrawal/Transfer Certificate: [                    ]

Transfer Date: [                    ]

HSBC Bank USA, National Association

  as Collateral Agent

452 Fifth Avenue

New York, NY 10018

Attn: Corporate Trust

Re: Sabine Pass LNG Project

Ladies and Gentlemen:

 

1. This Withdrawal/Transfer Certificate is delivered to you pursuant to the
Amended and Restated Collateral Agency Agreement dated as of
[                    ], 2006 (as amended, supplemented or modified and in effect
from time to time, the “Collateral Agency Agreement”) among HSBC Bank USA,
National Association, in its capacity as collateral agent (together with its
successors and permitted assigns in such capacity, the “Collateral Agent”) and
securities intermediary, Société Générale, in its capacity as agent (the
“Agent”) and Sabine Pass LNG, L.P. (the “Company”). Reference is also made to
the Amended and Restated Credit Agreement dated as of [                    ],
2006 (as amended, modified and supplemented and in effect from time to time, the
“Credit Agreement”) among the Company, each of the lenders from time to time
party to the Credit Agreement (the “Lenders”), the Agent and the Collateral
Agent. Capitalized terms used but not defined herein shall have the respective
meanings assigned thereto in the Collateral Agency Agreement or, if not defined
therein, in the Credit Agreement.

 

2. The undersigned has read and is familiar with the provisions of the
Collateral Agency Agreement and the other Financing Documents which are relevant
to the furnishing of this Withdrawal/Transfer Certificate. With respect to the
information in this Withdrawal/Transfer Certificate, the undersigned has made
such examination or investigation as was, in [his] [her] reasonable opinion,
necessary to enable [him] [her] to express an opinion as to the accuracy of such
information.

 

3. This Withdrawal/Transfer Certificate is being provided to you at least five
Business Days prior to the Transfer Date set out above (the “Proposed Transfer
Date”).

 

4. Phase 1 Construction Account; Cash Flow Waterfall

 

  (a)

The Company hereby requests that the amount set forth in column 1 of Annex A-1
be transferred from the Phase 1 Construction Account to the applicable

 

    

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

 

Collateral Account or Person set forth on column 2 of Annex A-1 on the Proposed
Transfer Date (each such transfer, a “Phase 1 Construction Account Monthly
Transfer”).

 

  (b) On each date set forth in column 1 of Annex A-2 hereto (each such date, a
“Phase 1 Construction Secondary Withdrawal/Transfer Date”), the Company hereby
requests that the sum set forth in column 2 of Annex A-2 opposite such Phase 1
Construction Account Withdrawal/Transfer Date be withdrawn and transferred from
the Collateral Account identified in column 3 to the Collateral Account or
Person set forth on column 4 of Annex A-2 hereto on the applicable Phase 1
Construction Secondary Withdrawal/Transfer Date (each such requested withdrawal
and/or transfer as described in any row appearing in Annex A-2 hereto, a “Phase
1 Construction Secondary Withdrawal/Transfer”). Each Phase 1 Construction
Secondary Withdrawal/Transfer marked with an “*” constitutes a Payment
Instruction as contemplated under the Collateral Agency Agreement.

 

  (c) Each Phase 1 Construction Account Monthly Transfer specified in Annex A-1
is to be applied for the purpose described in column 3 of the row relating to
such Phase 1 Construction Account Monthly Transfer and each Phase 1 Construction
Secondary Withdrawal/Transfer specified in Annex A-2 is to be applied for the
purpose described in column 5 of the row relating to such Phase 1 Construction
Secondary Withdrawal/Transfer.

 

5. Phase 2 Construction Account; Cash Flow Waterfall

 

  (a) The Company hereby requests that the amount set forth in column 1 of Annex
A-3 be transferred from the Phase 2 Construction Account to the applicable
Collateral Account or Person set forth on column 2 of Annex A-3 on the Proposed
Transfer Date (each such transfer, a “Phase 2 Construction Account Monthly
Transfer”).

 

  (b) On each date set forth in column 1 of Annex A-4 hereto (each such date, a
“Phase 2 Construction Secondary Withdrawal/Transfer Date”), the Company hereby
requests that the sum set forth in column 2 of Annex A-4 opposite such Phase 2
Construction Account Withdrawal/Transfer Date be withdrawn and transferred from
the Collateral Account identified in column 3 to the Collateral Account or
Person set forth on column 4 of Annex A-4 hereto on the applicable Phase 2
Construction Secondary Withdrawal/Transfer Date (each such requested withdrawal
and/or transfer as described in any row appearing in Annex A-4 hereto, a “Phase
2 Construction Secondary Withdrawal/Transfer”). Each Phase 2 Construction
Secondary Withdrawal/Transfer marked with an “*” constitutes a Payment
Instruction as contemplated under the Collateral Agency Agreement.

 

  (c) Each Phase 2 Construction Account Monthly Transfer specified in Annex A-3
is to be applied for the purpose described in column 3 of the row relating to
such Phase 2 Construction Account Monthly Transfer and each Phase 2 Construction
Secondary Withdrawal/Transfer specified in Annex A-4 is to be applied for the
purpose described in column 5 of the row relating to such Phase 2 Construction
Secondary Withdrawal/Transfer.

 

  - 2 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

6. Revenue Account; Cash Flow Waterfall

 

  (a) The Company hereby requests that the amount set forth in column 1 of Annex
A-5 be transferred from the Revenue Account to the applicable Collateral Account
or Person set forth on column 2 of Annex A-5 on the Proposed Transfer Date (each
such transfer, a “Revenue Account Monthly Transfer”).

 

  (b) On each date set forth in column 1 of Annex A-6 hereto (each such date, a
“Revenue Account Secondary Withdrawal/Transfer Date”), the Company hereby
requests that the sum set forth in column 2 of Annex A-6 opposite such Revenue
Account Secondary Withdrawal/Transfer Date be withdrawn and transferred from the
Collateral Account identified in column 3 to the Collateral Account or Person
set forth on column 4 of Annex A-6 hereto on the applicable Revenue Account
Withdrawal/Transfer Date (each such requested withdrawal and/or transfer as
described in any row appearing in Annex A-6 hereto, a “Revenue Account Secondary
Withdrawal/Transfer”). Each Revenue Account Secondary Withdrawal/Transfer marked
with an “*” constitutes a Payment Instruction as contemplated under the
Collateral Agency Agreement.

 

  (c) Each Revenue Account Monthly Transfer specified in Annex A-5 is to be
applied for the purpose described in column 3 of the row relating to such
Revenue Account Monthly Transfer and each Revenue Secondary Withdrawal/Transfer
specified in Annex A-6 is to be applied for the purpose described in column 5 of
the row relating to such Revenue Secondary Withdrawal/Transfer.

 

7. Payment of Phase 1 Project Costs

 

  (a) The amount to be transferred from the Phase 1 Construction Account to the
account of [the Phase 1 EPC Contractor] [or specify other Person or account] on
the Proposed Transfer Date is $[            ], which amount [together with
amounts to be transferred to the Phase 1 Construction Payment Subaccount from
the Revenue Account for the payment of Phase 1 Project Costs on the proposed
Withdrawal/Transfer Date]2 is equal to the Phase 1 Project Costs then due and
payable.

 

  [(b) The amount to be transferred from the Revenue Account to the Phase 1
Construction Payment Subaccount on the Proposed Transfer Date is
$[            ], which amount is equal to the Phase 1 Project Costs that will
become due and payable within a 30-day period from the Transfer Date stated
above not otherwise funded from the Phase 1 Construction Account pursuant to
paragraph 7(a) above.]3

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

2 Insert as applicable.

3 Insert only to the extent that amounts on deposit in Phase 1 Construction
Account are insufficient to cover all Phase 1 Project Costs due and payable on
the proposed Withdrawal/Transfer Date.

 

  - 3 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

  [(c) The amount to be transferred from the Phase 1 Construction Account to the
Phase 1 Construction Payment Subaccount on the Proposed Transfer Date is
$[                ], which amount is equal to the Phase 1 Project Costs that
will become due [within a 30-day period from the Transfer Date stated above]4
[on or prior to Phase 1 Final Completion]5.

 

  [(d) The amount to be transferred from the Phase 1 Construction Account to the
Phase 1 Punchlist Retention Subaccount on the Proposed Transfer Date is
$[                ], which amount [together with amounts to be transferred from
the Revenue Account to the Phase 1 Punchlist Retention Subaccount pursuant to
paragraph 7(e) below] is equal to the total cost of the punchlist items owing
to, and as notified by, the Phase 1 EPC Contractor to the Company pursuant to
Section 11.6B of the Phase 1 EPC Contract.]6

 

  [(e) The amount to be transferred from the Revenue Account to the Phase 1
Punchlist Retention Subaccount on the Proposed Transfer Date is
$[                ], which amount is equal to the difference between the cost of
punchlist items notified by the Phase 1 EPC Contractor to the Borrower pursuant
to Section 11.6B of the Phase 1 EPC Contract and the amount of the transfer made
from the Phase 1 Construction Account to the Phase 1 Punchlist Retention
Subaccount pursuant to Section 4.01(c)(ii) of the Credit Agreement.]7

 

  (f) The amount to be transferred from the Phase 1 Punchlist Retention
Subaccount on the Phase 1 Construction Secondary Withdrawal/Transfer Date is
$[                ], which amount is equal to the cost of punchlist items then
due and payable.8

 

8. Payment of Phase 2 Project Costs

 

  (a) The amount to be transferred from the Phase 2 Construction Account to the
account of [any Phase 2 Construction Contractor] [or specify other Person or
account] on the Proposed Transfer Date is $[                ], which amount
[together with amounts to be transferred to the Phase 2 Construction Payment
Subaccount from the Revenue Account for the payment of Phase 2 Project Costs on
the proposed Withdrawal/Transfer Date]9 is equal to the Phase 2 Project Costs
then due and payable.

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

4 Insert only with respect to transfers occurring prior to Final Funding Date.

5 Insert only with respect to transfers occurring on or after Final Funding
Date.

6 Insert if applicable.

7 Insert if applicable.

8 Insert if applicable.

9 Insert as applicable.

 

  - 4 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

  [(b) The amount to be transferred from the Revenue Account to the Phase 2
Construction Payment Subaccount on the Proposed Transfer Date is
$[                ], which amount is equal to the Phase 2 Project Costs that
will become due and payable within a 30-day period from the Transfer Date stated
above not otherwise funded from the Phase 2 Construction Account pursuant to
paragraph 8(a) above.]10

 

  [(c) The amount to be transferred from the Phase 2 Construction Account to the
Phase 2 Construction Payment Subaccount on the Proposed Transfer Date is
$[                ], which amount is equal to the Phase 2 Project Costs that
will become due [within a 30-day period from the Transfer Date stated above]11
[on or prior to Phase 2 Completion]12.

 

  [(d) The amount to be transferred from the Phase 2 Construction Account to the
Phase 2 Punchlist Retention Subaccount on the Proposed Transfer Date is
$[                ], which amount [together with amounts to be transferred from
the Revenue Account to the Phase 2 Punchlist Retention Subaccount pursuant to
paragraph 8(e) below] is equal to the total cost of the Phase 2 punchlist items
owing to, and as notified by, each Phase 2 Construction Contractor to the
Company pursuant to the relevant Phase 2 Construction Contract.]13

 

  [(e) The amount to be transferred from the Revenue Account to the Phase 2
Punchlist Retention Subaccount on the Proposed Transfer Date is
$[                ], which amount is equal to the difference between the cost of
punchlist items notified by each Phase 2 Construction Contractor to the Borrower
pursuant to the relevant Phase 2 Construction Contract and the amount of the
transfer made from the Phase 2 Construction Account to the Phase 2 Punchlist
Retention Subaccount pursuant to Section 4.02(c)(vii) of the Credit
Agreement.]14

 

  (f) The amount to be transferred from the Phase 2 Punchlist Retention
Subaccount on the Phase 2 Construction Secondary Withdrawal/Transfer Date is
$[                ], which amount is equal to the cost of punchlist items then
due and payable.15

 

  [(g) The amount to be transferred from the Phase 2 Construction Account to the
Bechtel Construction Payment Subaccount on the Proposed Transfer Date is
$[                ], which amount is equal to the Phase 2 Project Costs that
will become due [within a 30-day period from the Transfer Date stated above]16
[on or prior to Phase 2 Completion]17 and will not be paid from the Phase 2
Construction Payment Subaccount directly.]

 

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

10 Insert only to the extent that amounts on deposit in Phase 2 Construction
Account are insufficient to cover all Phase 2 Project Costs due and payable on
the proposed Withdrawal/Transfer Date.

11 Insert only with respect to transfers occurring prior to Final Funding Date.

12 Insert only with respect to transfers occurring on or after Final Funding
Date.

13 Insert if applicable.

14 Insert if applicable.

15 Insert if applicable.

16 Insert only with respect to transfers occurring prior to Final Funding Date.

17 Insert only with respect to transfers occurring on or after Final Funding
Date.

 

  - 5 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

9. Payment of Operation and Maintenance Expenses

 

  (a) The amount to be transferred from the Revenue Account to the Operating
Account on the Proposed Transfer Date is $[                ], which amount
[together with amounts to be transferred to the Operating Account from the Phase
1 Construction Account and Phase 2 Construction Account for the payment of
Operation and Maintenance Expenses on the Proposed Transfer Date]18 is equal to
the Operation and Maintenance Expenses then due and payable or to become due and
payable within the next 30 days, net of any surplus remaining in the Operating
Account from prior deposits therein and [without duplication of any amounts
transferred pursuant to paragraph 9(b) or 9(c) below]19.

 

  [(b) The amount to be transferred from the Phase 1 Construction Account to the
Operating Account on the Proposed Transfer Date is $[                ], which
amount is equal to the Operation and Maintenance Expenses then due and payable
or to become due and payable within the next 30 days not otherwise funded from
the Revenue Account pursuant to paragraph 9(a) above and net of any surplus
remaining in the Operating Account from prior deposits therein.]20

 

  [(c) The amount to be transferred from the Phase 2 Construction Account to the
Operating Account on the Proposed Transfer Date is $[                ], which
amount is equal to the Operation and Maintenance Expenses then due and payable
or to become due and payable within the next 30 days not otherwise funded from
the Revenue Account pursuant to paragraph 9(a) or funded from the Phase 1
Construction Account pursuant to paragraph 9(b) above and net of any surplus
remaining in the Operating Account from prior deposits therein.]21

 

  (d) The current balance on deposit in the Operating Account is
$[                ].

 

10. Payments of Debt Service

 

  [(a) The amount to be transferred from the Revenue Account to the Debt Service
Accrual Account on the on the Proposed Transfer Date is $[                ],
which amount is equal to (I) one-sixth (1/6th) of the Debt Service in respect of
the Secured Obligations due on the immediately succeeding Principal Payment Date
and (II) all other regularly scheduled Debt Service due or to become due and
payable in the next succeeding 30-day period.]22

 

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

18 Insert as applicable prior to the Term Conversion Date.

19 Insert as applicable.

20 Insert as applicable.

21 Insert as applicable.

22 Insert if applicable.

 

  - 6 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

  [(b) The amount to be transferred from the Debt Service Accrual Account on the
Proposed Transfer Date is $[                ], which amount is equal to amount
due and payable in respect of the Permitted Swap Agreements.]23

 

  [(c) The amount to be transferred from the Debt Service Accrual Account on the
Proposed Transfer Date is $[                ], which amount is equal to amount
due and payable in respect of all Permitted Indebtedness described in
Section 8.16(b) of the Credit Agreement.]24

 

  [(d) The amount to be transferred from the Debt Service Accrual Account on the
Proposed Transfer Date is $[                ], which amount is equal to amount
due and payable in respect of all Permitted Indebtedness other than the
Permitted Indebtedness described in Sections 8.16(a) and 8.16(b) of the Credit
Agreement.]25

 

11. Debt Service Reserve Account. The amount to be transferred from the Revenue
Account to the Debt Service Reserve Account on the Proposed Transfer Date is
$[                ], which amount is equal to the excess of (i) the Required
Debt Service Reserve Amount minus amounts then on deposit in the Debt Service
Reserve Account on the Proposed Transfer Date.]26

 

[12. Payment of Income Tax. The amount to be transferred from the Revenue
Account to the Income Tax Reserve Account on the Proposed Withdrawal/Transfer
Date is $[                ], which amount is equal to one third (1/3rd) of the
amount that would be due as a quarterly estimated payment in respect of federal
income tax and state income and franchise tax liability that would have accrued
if the Company were a corporation subject to federal income tax and state income
and franchise tax [plus the amount, if necessary, to take into account an
increase in the estimated federal and state income tax and franchise liability
of the immediately preceding annual tax reporting period] net of any surplus
then on deposit in the Income Tax Reserve Account.]27

 

13. Emergency Capital Expenditures. The amount to be transferred from the
Revenue Account for the payment of Emergency Capital Expenditures on the
[Proposed Transfer Date] [Revenue Account Secondary Withdrawal/Transfer Date] is
$[                ].

 

[14. Permitted Capital Expenditures. The amount to be transferred from the
Revenue Account for the payment of Permitted Capital Expenditures on the
Proposed Withdrawal/Transfer Date is $[                ]. Such Permitted Capital
Expenditures have been incurred prior to the Final Maturity Date and are less
than $7,500,000 for the current fiscal year and less than $25,000,000 in the
aggregate.]28

 

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

23 Insert if applicable.

24 Insert if applicable.

25 Insert if applicable.

26 Insert if applicable.

27 Insert if applicable.

28 Insert if applicable.

 

  - 7 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

[15. Insurance Proceeds. The amount to be transferred from the Insurance
Proceeds Account to [the Company for the purpose of Restoring the Affected
Property] [the Debt Service Accrual Account for prepayment of the Loans] [the
Company to use in its sole discretion] is $[                ]. [The Company and
the Agent and the Agent have received a certificate of the Independent Engineer
certifying that the failure to Restore the Affected Property could not
reasonably be expected to result in a Material Adverse Effect.]29]30

 

[16. Distributions.

 

  (a) The amount to be transferred from the Revenue Account to the Distribution
Account on the Proposed Transfer Date is $[                ], which amount is
equal to the full remaining amount on deposit in the Revenue Account.]31

 

  (b) The amount to be transferred from the Distribution Account to the Company
on the Revenue Secondary Withdrawal/Transfer Date (which date is also a
Quarterly Date) is $[                ]. Such distribution is a [Permitted
Distribution pursuant to Section 8.12 of the Credit Agreement] [distribution for
the purposes of funding Permitted Capital Expenditures of the type referred to
in paragraph (c) in the definition thereof].

 

  [(c) The amount to be transferred from the Distribution Account to the Company
with respect to Capacity Reservation Fees is $[                ].]32

 

17. Certifications. THE UNDERSIGNED, ON BEHALF OF THE COMPANY, HEREBY CERTIFIES
FOR THE BENEFIT OF EACH SECURED PARTY THAT, as of the date hereof:

 

  (a) the Company is entitled, pursuant to the terms of Articles III and IV of
the Collateral Agency Agreement and [insert relevant sections of other
applicable Financing Documents], to request each Phase 1 Construction Account
Monthly Transfer, Phase 2 Construction Account Monthly Transfer, Revenue Account
Monthly Transfer, Phase 1 Construction Secondary Withdrawal/Transfer, Phase 2
Construction Secondary Withdrawal/Transfer and Revenue Secondary
Withdrawal/Transfer in the manner, in the amount and at the times set out in
this Withdrawal/Transfer Certificate;

 

  (b) the Company certifies that each withdrawal and transfer requested herein
is for an amount required for, and shall solely be used for, the purpose set
forth herein and in the Annexes attached hereto in accordance with the
Collateral Agency Agreement and the other Financing Documents;

 

  (c) the Company is in compliance with the procedures, conditions and
requirements set out in the Collateral Agency Agreement and all other applicable
Financing

 

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

29 Insert if applicable.

30 Insert if applicable.

31 Insert if applicable.

32

Insert if applicable.

 

  - 8 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

Documents in connection with each Phase 1 Construction Account Waterfall
Transfer, Phase 2 Construction Account Waterfall Transfer, Revenue Account
Waterfall Transfer, Phase 1 Construction Account Withdrawal/Transfer, Phase 2
Construction Account Withdrawal/Transfer and Revenue Account Withdrawal/Transfer
requested herein;

 

  (d) except to the extent previously disclosed by the Company to the Collateral
Agent in writing, no Trigger Event has occurred and is continuing; and

 

  (e) attached hereto are all other documents and instruments which are required
to be annexed hereto pursuant to the Collateral Agency Agreement and any other
Financing Document, if any, in connection with the Phase 1 Construction Account
Withdrawal/Transfers, Phase 2 Construction Account Withdrawal/Transfers and
Revenue Account Withdrawal/Transfers requested herein.33

Each of the foregoing certifications shall be deemed to be repeated on each
Phase 1 Construction Account Monthly Transfer Date, Phase 2 Construction Account
Monthly Transfer Date, Phase 1 Construction Secondary Withdrawal/Transfer Date,
Phase 2 Construction Secondary Withdrawal/Transfer Date, Revenue Account Monthly
Transfer Date and Revenue Secondary Withdrawal/Transfer Date to which this
Withdrawal/Transfer Certificate relates.

 

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

33 This may include a Distribution Certificate.

 

  - 9 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

IN WITNESS WHEREOF, the undersigned has executed this Withdrawal/Transfer
Certificate on this [    ] day of [                ], [            ].

 

By:   Sabine Pass LNG – GP, Inc.,   its General Partner By:  

 

Name:   Title:  

 

  - 10 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

Annex A-1 to Withdrawal/Transfer Certificate

Withdrawals from the Phase 1 Construction Account

 

Amount to be

withdrawn/transferred

  

Collateral Account or Person to be Transferred to

  

Purpose

   [Phase 1 EPC Contractor] [or specify other Person or account]       Phase 1
Construction Payment Subaccount       [Phase 1 Punchlist Retention SubAccount]
      Revenue Account       [Operating Account]       [Debt Service Reserve
Account]   

 

  - 11 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

Annex A-2 to Withdrawal/Transfer Certificate

Withdrawals from Collateral Accounts

 

Withdrawal/Transfer Date

  

Amount to be withdrawn/transferred

  

Collateral Accounts

   Recipient    Purpose                                    

Entries marked with a “*” constitute irrevocable Payment Instructions.

 

  - 12 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

Annex A-3 to Withdrawal/Transfer Certificate

Withdrawals from the Phase 2 Construction Account

 

Amount to be
withdrawn/transferred

  

Collateral Account or Person
to be Transferred to

  

Purpose

   [Phase 2 Construction Contractor] [or specify other Person or account]      
Phase 2 Construction Payment Subaccount       Bechtel Construction Payment
Subaccount       [Phase 2 Punchlist Retention SubAccount]       Revenue Account
      [Operating Account]       [Debt Service Reserve Account]   

 

  - 13 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

Annex A-4 to Withdrawal/Transfer Certificate

Withdrawals from Collateral Accounts

 

Withdrawal/Transfer Date

  

Amount to be withdrawn/transferred

  

Collateral Accounts

  

Recipient

  

Purpose

                                   

Entries marked with a “*” constitute irrevocable Payment Instructions.

 

  - 14 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

Annex A-5 to Withdrawal/Transfer Certificate

Withdrawals from the Revenue Account

 

Collateral Amount to be

withdrawn/transferred

  

Collateral Account or Person
to be Transferred to

  

Purpose

   [Phase 1 Construction Payment Subaccount]       [Phase 1 Punchlist Retention
Subaccount]       [Phase 2 Construction Payment Subaccount]       [Phase 2
Punchlist Retention Subaccount]       Revenue Account       Operating Account   
   Debt Service Accrual Account       [Debt Service Reserve Account]      
Income Tax Reserve Account       [Distribution Account]   

 

  - 15 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

Annex A-6 to Withdrawal/Transfer Certificate

Withdrawals from Collateral Accounts

 

Withdrawal/Transfer Date

  

Amount to be withdrawn/transferred

  

Collateral Accounts

   Recipient    Purpose                                    

Entries marked with a “*” constitute irrevocable Payment Instructions.

 

  - 16 -   

EXHIBIT A TO

COLLATERAL AGENCY AGREEMENT

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

EXHIBIT B

to Agreement

FORM OF DISTRIBUTION CERTIFICATE

[Pursuant to Section 4.08 of the Collateral Agency Agreement]

 

    

Date of this Distribution

Certificate:             

    

[Transfer Date/Disbursement

Date             ]

HSBC Bank USA, National Association

  as Collateral Agent

452 Fifth Avenue

New York, NY 10018

Attn: Corporate Trust

Ladies and Gentlemen:

This Distribution Certificate is delivered to you pursuant to Section 4.08 of
the Amended and Restated Collateral Agency Agreement (as amended, supplemented
or modified and in effect from time to time, the “Collateral Agency Agreement”)
dated as of [            ], 2006 among HSBC Bank USA, National Association, in
its capacity as collateral agent (together with its successors and permitted
assigns in such capacity, the “Collateral Agent”) and securities intermediary,
Société Générale, in its capacity as agent (the “Agent”) and Sabine Pass LNG,
L.P. (the “Company”). Reference is also made to the Amended and Restated Credit
Agreement dated as of [            ], 2006 (as amended, modified and
supplemented and in effect from time to time, the “Credit Agreement”) among the
Company, each of the lenders from time to time party to the Credit Agreement
(the “Lenders”), the Agent and the Collateral Agent. Capitalized terms used but
not defined herein shall have the respective meanings assigned thereto in the
Collateral Agency Agreement (or if not defined therein, in the Credit
Agreement).

The undersigned is an Authorized Officer of the Company and has read and is
familiar with the provisions of the Collateral Agency Agreement and the other
Financing Documents that are relevant to the furnishing of this Distribution
Certificate. With respect to the information herein, the undersigned has made
such examination or investigation as was, in the reasonable opinion of the
undersigned, necessary to enable the undersigned to express an opinion as to the
accuracy of such information.

The undersigned, on behalf of the Company, hereby certifies for the benefit of
each Secured Party as of the date hereof as to the matters set out in paragraphs
1 through 4 below.

 

1. This Distribution Certificate is being provided to you at least five Business
Days prior to the Disbursement Date set out above (the “Proposed Transfer
Date”).

 

    

EXHIBIT B TO

COLLATERAL AGENCY AGREEMENT

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

2. Each of the following conditions have been satisfied and the Company has no
reason to believe that any such condition will not be satisfied both immediately
before and immediately after the making of the proposed Restricted Payment(s):

 

  (a) the first Principal Payment Date has occurred or shall be concurrent with
the Proposed Transfer Date;

 

  (b) [no Default or Event of Default has occurred and is continuing or will
occur as a consequence of such Restricted Payment]34;

 

  (c) the Debt Service Reserve Account is fully funded in an amount at least
equal to the Required Debt Service Reserve Amount;

 

  (d) the Debt Service Coverage Ratio for the most recent calendar quarter is
not less than 1.25 to 1.0;

 

  (e) the Company hereby certifies that:

 

  (I) each of the foregoing conditions has been or shall be satisfied as of the
Proposed Transfer Date; and

 

  (II) attached as Annex I are the detailed calculations for computing the Debt
Service Coverage Ratio referred to in clause 2(d) above and such calculations
were prepared in good faith and were based on reasonable assumptions.

 

3. The Company hereby agrees that if any event shall occur on or prior to the
Proposed Transfer Date that shall render the statement certified in paragraph 2
or 4 false or misleading, the Company shall give the Collateral Agent notice of
any such event on the same date as the date on which the Company knows or should
reasonably have known of such event.

 

4. The Company is in compliance with the procedures, conditions and requirements
set out in all the applicable Financing Documents in connection with the
proposed distribution requested herein.

 

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

34 Note that this certification is the only certification required to be given
by the Company in connection with distributions under Section 4.08(c) of the
Collateral Agency Agreement.

 

  - 2 -   

EXHIBIT B TO

COLLATERAL AGENCY AGREEMENT

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

IN WITNESS WHEREOF, the undersigned has executed this Withdrawal/Transfer
Certificate on this [    ] day of [            ], [            ].

 

By:   Sabine Pass LNG – GP, Inc.,   its General Partner By:  

 

Name:   Title:  

 

  - 3 -   

EXHIBIT B TO

COLLATERAL AGENCY AGREEMENT

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

Annex I

to Distribution Certificate

CALCULATION OF DEBT SERVICE COVERAGE RATIOS

 

  - 4 -   

EXHIBIT B TO

COLLATERAL AGENCY AGREEMENT

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

EXHIBIT C

[FORM OF SECURED PARTY ADDITION AGREEMENT]

Reference is made to (i) that certain Amended and Restated Collateral Agency
Agreement, dated as of [            ], 2006 (the “Collateral Agency Agreement”),
among HSBC Bank USA, National Association, in its capacity as Collateral Agent,
Société Générale, in its capacity as Agent and Sabine Pass LNG, LP, as Borrower
and (ii) that certain Security Agreement, dated as of February 25, 2005, among
the Collateral Agent, the Agent and the Borrower.

The undersigned hereby agrees to be bound by, and to benefit from, the Security
Agreement and the Collateral Agency Agreement as if a party thereof.

 

Date:  

 

    [Insert Name of Party to be Added]       By:  

 

      Name:         Title:  

Address for Notes:

Attention:

Tel. No.:

Fax No.:

 

    

EXHIBIT C TO

COLLATERAL AGENCY AGREEMENT