Amended And Restated Collateral Agency Agreement

Exhibit 10.2

EXECUTION COPY


AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT

among HSBC BANK USA, NATIONAL ASSOCIATION,

in its capacity as Collateral Agent and Securities Intermediary

SOCIc9Tc9 Gc9Nc9RALE, in its capacity as Agent

SABINE PASS LNG, L.P.,

as Borrower

Dated as of July 21, 2006


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

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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

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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 SOCIc9Tc9 Gc9Nc9RALE , 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 Socie9te9 Ge9ne9rale, 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.

COLLATERAL AGENCY AGREEMENT

" 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 26 th 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

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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 .

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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

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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

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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 (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

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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 ...