Consent and Waiver No. 3 to Credit Agreement



 EXHIBIT 10.2 
  
 EXECUTION COPY 
  
 CONSENT AND WAIVER NO.3 
 TO CREDIT
AGREEMENT 
  
 This CONSENT AND WAIVER NO. 3 TO CREDIT
AGREEMENT (this “Consent and Waiver”), dated as of April 25, 2005, is made among Sabine Pass LNG, L.P., a Delaware limited partnership (the “Borrower”), Société Générale, in its
capacity as administrative agent for the Lenders (the “Agent”), HSBC Bank USA, National Association, in its capacity as collateral agent for the Lenders (the “Collateral Agent”) and the Lenders party to the Credit
Agreement (as defined below). 
  
 W I T N E S S E T H

  
 WHEREAS, the Borrower, the Agent and the Collateral Agent
are party to a Credit Agreement dated as of February 25, 2005 (as amended, modified and supplemented and in effect from time to time, the “Credit Agreement”), pursuant to which the lenders from time to time party thereto (the
“Lenders”) have agreed to make loans to the Borrower in an aggregate principal amount of $822,000,000; 
  
 WHEREAS, the Borrower and Bechtel Corporation (the “EPC Contractor”) have entered into an Engineering, Procurement and Construction
Agreement (the “EPC Contract”) relating to the Project; 
  
 WHEREAS, the Borrower desires to amend certain provision of Attachment EE to the EPC Contract in order to reflect the Tank Subcontractor October 2004 updated material pricing proposal to the EPC Contractor; and

  
 WHEREAS, the Borrower has requested that the Lenders consent
to the Borrower entering into Change Order SP/BE-006 (the “Change Order”), attached hereto as Exhibit B, to effect the necessary amendments to Attachment EE to the EPC Contract, as more fully described in the waiver request letter
(the “Waiver Request Letter”) attached hereto as Exhibit A. 
  
 NOW THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows: 
  
 Section 1.
Definitions. Capitalized terms (including those used in the preamble and the recitals above) not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement and the principles of interpretation set forth
therein shall apply herein. 
  
 Section 2. Consent and
Waiver. Subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the Agent, the Collateral Agent and the Lenders hereby consent to the Borrower entering into the Change Order. In addition, the Lenders hereby
waive (1) compliance with Section 8.20(e) of the Credit Agreement solely to the extent necessary to 
  

 Consent and Waiver No. 3 








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 permit the Borrower to enter into the Change Order and (ii) any Defaults or Events of Default arising directly as a result of the Borrower’s entering into the
Change Order. 
  
 Section 3. Conditions Precedent.
This Consent and Waiver shall become effective on the date on which the Agent has received counterparts of this Consent and Waiver duly executed and delivered by each of the Borrower, the Agent, the Collateral Agent and the Majority Lenders.

  
 Section 4. Miscellaneous. 
  
 (a) Limited Waiver. 
  
 (i) Except as expressly consented to or waived hereby, all of
the representations, warranties, terms, covenants, conditions and other provisions of the Credit Agreement and the other Financing Documents shall remain unchanged and unwaived and shall continue to be and shall remain in full force and effect in
accordance with their respective terms. 
  
 (ii)
The consent and waivers set forth herein shall be limited precisely as provided for herein to the provisions expressly consented to or waived and shall not be deemed to be a waiver of any right, power or remedy of any Lender, the Agent or the
Collateral Agent under, or a waiver of, consent to or modification of any other term or provision of the Credit Agreement, any other Financing Document referred to therein or herein or of any transaction or further or future action on the part of
the Borrower which would require the consent of the Lenders under the Credit Agreement or any of the other Financing Documents. 
  
 (iii) Except as provided in Section 2 hereof, nothing contained in this Consent and Waiver shall abrogate, prejudice, diminish or
otherwise affect any powers, rights, remedies or obligations of any Person arising before the date of this Consent and Waiver. 
  
 (b) Financing Document. This Consent and Waiver shall be deemed to be a Financing Document referred to in the Credit Agreement and shall be
construed, administered and applied in accordance with the terms and provisions thereof. 
  
 (c) Counterparts; Integration; Effectiveness. This Consent and Waiver may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any parties
hereto may execute this Consent and Waiver by signing any such counterpart. 
  
 (d) Costs and Expenses. The Borrower agrees to pay and reimburse the Agent for all its reasonable costs and out-of-pocket expenses (including, without limitation, the reasonable fees and expenses of counsel to
the Agent and the Lenders) incurred in connection with the preparation and delivery of this Consent and Waiver and such other related documents. 
  

 Consent and Waiver No. 3 








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

 Consent and Waiver No. 3 








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

			
	 SABINE PASS LNG, L.P.,
     as Borrower

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

	 	 	 
	 
		
	By:	 	/s/ Graham McArthur
	 	 	 Name: Graham McArthur
 Title: Treasurer

	
	 Address for Notices:

	
	 717 Texas Avenue, Suite 3100
 Houston, TX 77002
 Attn: Treasurer



  
  

 Consent and Waiver No. 3 









			
	 SOCIÉTÉ GÉNÉRALE,
     as Agent

		
	By:	 	/s/ Robert J. Preminger
	 	 	 Name: Robert J. Preminger
 Title: Director

	
	 Address for Notices:

	
	 1221 Avenue of the Americas
 New York, NY 10020
 Attn: Robert Preminger



  
  

 Consent and Waiver No. 3 









			
	 HSBC BANK USA, NATIONAL ASSOCIATION,
     as Collateral Agent

		
	By:	 	/s/ Deirdra N. Ross
	 	 	 Name: Deirdra N. Ross
 Title: Assistant Vice President

	
	 Address for Notices:

	
	 HSBC Bank USA, National Association
 452 Fifth Avenue
 New York, NY 10018
 Attn: Corporate Trust

	
	 With a copy to:

	
	 DLA Piper Rudnick Gray Cary US LLP
 One Liberty Place
 1650 Market Street, Suite 4900
 Philadelphia, PA 19103
 Attn: Peter Tucci, Esq.



  
  
  

 Consent and Waiver No. 3 








 Exhibit A to Consent and 
 Waiver No. 3 
  
 Waiver
Request Letter 
  
 (see attached) 
  

 Consent and Waiver No. 3 








 April 12, 2005 
  
 Societe Generale 
 1221 Avenue of the Americas

 New York, NY 10020 
 Attn: Robert Preminger 
  

			
	Re:	  	 Sabine Pass LNG, L.P. (“Sabine”)
 Credit
Agreement Dated February 25, 2005


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

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

  

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

  

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

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

			
	 By:
	 	 
	 Name:
	 	Graham A. McArthur
	 Title:
	 	Treasurer

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







 Exhibit B to Consent and 
 Waiver No. 3 
  
 Change
Order 
  
 (see attached) 







 DRAFT 
  
 SCHEDULE D-1 
  
 CHANGE ORDER FORM 
  

			
	 PROJECT NAME: Sabine Pass LNG Receiving,
 Storage
and Regasification Terminal
	  	CHANGE ORDER NUMBER: SP/BE-00x
		
	 OWNER: Sabine Pass LNG, L.P.
	  	DATE OF CHANGE ORDER: April 1, 2005
		
	 CONTRACTOR: Bechtel Corporation
	  	 
		
	 DATE OF AGREEMENT: December 18, 2004
	  	 

  

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

	
	Attachment EE of the Agreement is replaced by the attached Attachment EE, Rev 1. All references in the Agreement to Attachment EE shall be understood to refer to Attachment EE, Rev
I.
		
	Adjustment to Contract Price	  	 	 
		
	 The original Contract Price was
	  	$	646,936,000
		
	 Net change by previously authorized Change Orders (#SP/BE-002)
	  	$	1,500,000
		
	 The Contract Price prior to this Change Order was
	  	$	648,436,000
		
	 The Contract Price will be unchanged by this Change Order
	  	$	0
		
	 The new Contract Price including this Change Order will be
	  	$	648,436,000
		
	 Adjustment to dates in Project Schedule
	  	 	 
	
	The following dates are modified (list all dates modified; insert N/A if no dates modified):
	
	The Target Bonus Date will be unchanged.
	
	The Target Bonus Date as of the date of this Change Order therefore is 1,095 Days following NTP
	
	The Guaranteed Substantial Completion Date will be unchanged.
	
	The Guaranteed Substantial Completion Date as of the date of this Change Order therefore is 1,247 Days following NTP
	
	Adjustment to other Changed Criteria: None

  

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 Adjustment to Minimum Acceptance Criteria: None 
  
 Adjustment to Performance Guarantees: None 
  
 Adjustment to Design Basis: None 
  
 Other adjustments to liability or obligation of Contractor or Owner under the
Agreement: 
  

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


  

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

  
 Table 1, Sample Calculation Through
October 2004 
  

								
	 	  	 	  	Oct 04

	  	Oct 04


	 	  	 	  	Index

	  	Escalation


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

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

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 Materials Adjustments shown in Attachment EE, Rev. 1. Contractor will confirm quantities provided by
Tank Subcontractor for rebar by September 2005 and will confirm remaining quantities provided by Tank Subcontractor for structural steel by December 2005. All other quantities have been provided to Owner. 
  
 Attachment EE Rev 1 and the Change Order will prevail should any
inconsistency occur between Contractor letter of March 17, 2005, and Attachment EE Rev 1 and the Change Order. 
  
 Upon execution of this Change Order by Owner and Contractor, the above-referenced change shall become a valid and binding part of the original Agreement without exception
or qualification, unless noted in this Change Order. Except as modified by this and any previously issued Change Orders, all other terms and conditions of the Agreement shall remain in full force and effect. This Change Order is executed by each of
the Parties’ duly authorized representatives. 
  

			
	
	  	

	 * Charif Souki
	  	Contractor
		
	 Chairman
	  	

		
	 	  	 Name

		
	 	  	

		
	 	  	 Title

		
	
	  	

	 Date of Signing
	  	 Date of Signing

		
	
	  	 
	 * Keith Meyer
	  	 
		
	 President
	  	 
		
	
	  	 
	 Date of Signing
	  	 
		
	
	  	 
		
	 * Ed Lehotsky
	  	 
		
	 Owner Representative
	  	 
		
	
	  	 
	 Date of Signing
	  	 

  

	*	Required Owner signature 

  

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 ATTACHMENT EE Rev 1 
  
 STAINLESS STEEL ADJUSTMENT, TANK SUBCONTRACT MATERIALS 
 ADJUSTMENT, MARINE LOADING ARM ADJUSTMENT AND BOG COMPRESSOR 
 ADJUSTMENT

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

  
 1.2 Step 1, Determine Base Metal Price at NTP 
  

	 	Nibase	= nickel base metal price 

  

	 	Crbase	= chromium base metal price 

  

	 	Febase	= iron base metal price 

  
 The above Nibase, Crbase and Febase shall be as
published by North American Stainless at website http://www.northamericanstainless.com, using the commercial information/flat alloy surcharge and the averages cited for two (2) Months prior to NTP. For example, if the NTP is given in
March 2005, the Monthly average for January 2005 shall be used. 
  
 1.3 Step 2,
Calculate Alloy Surcharge for Pipe “Pipesch” at NTP 
  
 Pipesch =
0.096*(Nibase – 2.0) + 0.216*(Crbase – 0.35) + 0.8388*(Febase – 0.0625) 
  
 1.4 Step 3, Determine Base Price
for Pipe at NTP 
  
 The base price for stainless pipe at NTP
(“Pipebase”) shall be the pricing
index “Stainless Steel Pipe & Tube – 4-1/2 in. to 16 in.” for the Month in which the NTP is issued, as specified in the pricing index database maintained by Preston Pipe & Tube Report, expressed in U.S.
Dollars per lb. 
  
 1.5 Step 4, Determine Piping Component of Adjustment

  
 PipeNTP = U.S.$10,860,880*[((Pipesch + Pipebase)/1.4635)
– 1] 
  
 1.6 Step 5, Calculate Alloy Surcharge for Fittings at
NTP 
  
 Ftgsch = 1.0836* Pipesch 
  

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 1.7 Step 6, Determine Fitting Component of Adjustment 
  
 FtgNTP = U.S.$3,100,000*[((Ftgsch + Pipebase)/1.4938) – 1] 
  
 1.8 Step 7, Calculate Stainless Steel Adjustment 
  
 In accordance with Section 7.1D of the Agreement, the Contract Price
shall be adjusted by the Stainless Steel Adjustment (“SSadj”), which shall be determined as follows: 
  
 SSadj (in U.S.$) = PipeNTP + FtgNTP 
  
 The Stainless Steel Adjustment shall be paid as an adjustment to the applicable Milestone(s) in Schedule C-1.

  
 2. MARINE LOADING ARM ADJUSTMENT AND BOG COMPRESSOR ADJUSTMENT

  
 2.1 Introduction 
  
 The Marine Loading Arm Adjustment (“Armadj”) and BOG Compressor Adjustment
(“BOGadj”), which are used to take
into account currency fluctuations, shall be determined in accordance with this Section 2. All calculations shall be rounded to four (4) decimal places. All currency exchange rates shall be determined using FxConverter on website
http://www.oanda.com/convert/classic. 
  
 In
accordance with Section 7.1F of the Agreement, the Contract Price shall be adjusted by the Marine Loading Arm Adjustment, which shall be determined as follows: 
  
 Armadj (in U.S.$) = U.S.$6,289,705 * ((0.79177/ EuroNTP – 1) 
  
 Where:

  
 EuroNTP = The currency exchange rate for Euros compared to U.S.$ (Euro/U.S.$), defined as the
Interbank rate, median price (ask) for the Day of the Notice to Proceed. 
  
 In accordance with Section 7.1 G of the Agreement, the Contract Price shall be adjusted by the BOG Compressor Adjustment, which shall be determined as follows: 
  
 BOGadj (in U.S.$) = U.S.$8,314,332 * ((107.35/YenNTP) – 1) 
  
 Where: 
  
 YenNTP = The currency exchange rate for Japanese Yen compared to U.S.$ (Yen/U.S.$) defined as the Interbank rate, median price (ask) for the Day of the Notice to Proceed.

  

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 The Marine Loading Arm and BOG Compressor Adjustment shall be paid as an adjustment to the applicable
Milestone(s) in Schedule C-1. 
  
 3. TANK SUBCONTRACT MATERIALS
ADJUSTMENT 
  
 3.1 Adjustment Date 
  
 The Tank Subcontract Materials Adjustment, which is used to account for
changes in commodity pricing of certain materials used in the Tanks, shall be determined in accordance with this Section 3. 
  
 The Adjustment Date for determining the Tank Subcontract Materials Adjustment shall be the date as advised in writing to Owner by the Tank Subcontractor
through Contractor. The Adjustment Date for Section 3.2 is the Day that Tank Subcontractor places a purchase order for 9% Nickel Steel. The “Adjustment Date” for Sections 3.3 through 3.8 shall be the respective Days the Tank
Subcontractor receives (ex-mill) the materials, or portions thereof, listed in Sections 3.3 through 3.8 hereunder. If the Tank Subcontractor receives the materials in partial shipments, the formulas in Sections 3.3 through 3.8 will be adjusted by
using the corresponding percentage of material received. 
  
 Except for SSC1 defined in Section 3.4 hereunder, the “Purchasing Magazine Business
Information Center Price Index” (available through subscription at www.Purchasing.com) shall be the applicable Purchasing Magazine Business Information Center Indices defined in Sections 3.2 through 3.8 below available on the
Adjustment Date. 
  
 3.2 Adjustment for 9% Nickel Steel Materials
(“9Niadj”)

  
 9Niadj = U.S. $4,739,797 + (4644*((0.09 * N1) – 1209.6)) 
  
 Where
“N1” is the 3-Month Bid price of
nickel (in U.S.$/metric ton), as published in the Wall Street Journal on the Day of the Adjustment Date 
  
 If Owner does not issue the NTP to Contractor pursuant to 5.2.B of the Agreement on or before April 26, 2005, then the formula set forth in this Section 3.2 will be renegotiated. 
  
 3.3 Adjustment for Rebar and Anchors (“Rebaradj”) 
  
  
 Rebaradj = U.S.5551,955*(( R1/360) – 1) 
  
 Where “R1” is the
Purchasing Magazine Business Information Center Price Index for “Steel, reinforcing bar (PURPRI50D208)” for the Month of the Adjustment Date. 
  
 3.4 Adjustment for Tank Stainless Steel (“TankSSadj”) 
  
  
 TankSSadj = U.S.$524,846*[((S1+SSC1,)/2502.2) – 1] 
  
 Where: 
  

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

 
 SSC1 is the current Allegheny Ludlum “Raw Material Surcharge for 304/304L Stainless Steel”, as published on website
http://www.alleghenyludlum.com, for the Month of the Adjustment Date. 
  
 3.5 Adjustment for Aluminum Materials (“Aladj”) 
  
 Aladj = U.S.$1,266,458*((Al1/110) – 1) 
  
 Where “Al1”
is the Purchasing Magazine Business Information Center Price Index for Aluminum, grade 3003 common alloy sheet (PURPRI50D303), for the Month of the Adjustment Date. 
  
 3.6 Adjustment for Carbon Steel Materials (“CSadj”) 
  
 CSadj = U.S.$8,279,434*((CS1/370) – 1) 
  
 Where “CS1” is the Purchasing Magazine Business Information Center Price Index for
Steel, hot rolled plate (PURPRI50D204) for the Month of the Adjustment Date. 
  
 3.7 Adjustment for Structural Steel Materials (“STadj”) 
  
 STadj = U.S.$5,259,827*((ST1/385) – 1) 
  
 Where “ST1” is the Purchasing Magazine Business Information Center Price Index for Steel, wide-flange beams (PURPRI50D206) for the Month of the Adjustment
Date. 
  
 3.8 Adjustment for Piping and Valves (“PVadj”) 
  
 PVadj = U.S.$6,463,670*0.5*[((S1+ SSC1)/ 2502.2) – 1] 
  
 Where S1 and SSC1 are as specified in Section 3.4 above. 
  
 3.9 Tank Subcontract Materials Adjustment 
  
 In accordance with Section 7.1E, the Contract Price shall be adjusted
by the Tank Subcontract Materials Adjustment (“Tankadj”), which shall be determined as follows: 
  
 Tankadj (in U.S.$) = Rebaradj + 9Niadj + TankSSadj + Aladj + CSadj + STadj + PVadj

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

  

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 the Tank Subcontract Material Adjustments shall include for each of the materials in Section 3.2 through 3.8 the
date of the receipt of the materials, the percentage of materials received and the applicable Index for the Adjustment Date. Reasonably sufficient supporting documentation sufficient for the approval of the Tank Subcontract Materials Adjustments by
Owner shall consist of: a) Contractor’s Invoice, b) Tank Subcontractor’s Invoice, e) total quantities, d) percentage received based on actual weight or weighting, e) bill of lading or other document evidencing date of receipt of materials,
f) calculation of applicable escalation, and g) index in effect as of date materials received, all of which shall be made available to Owner to verify the materials adjustment calculation and the partial materials shipment percentage, if applicable.
Contractor will provide to Owner updated projections of material shipment dates during the materials delivery phase. 
  
 The Contract Price shall be adjusted by Change Order every six (6) Months (or such other earlier period as requested by Owner) to account for the Tank Subcontract
Material Adjustments occurring during such six (6) Month period, with the first such Change Order occurring in the second Month following NTP and with the last Change Order occurring in the Month following the last Tank Subcontract Material
Adjustment. 
  

 9