Pipeline Construction Agreement

Exhibit 10.2

EXECUTION COPY

CONSTRUCTION AGREEMENT for the

ALTERNATE ROUTE 42" SINGLE LINE OPTION CREOLE TRAIL PIPELINE - SEGMENT 3A PROJECT

by and between CHENIERE CREOLE TRAIL PIPELINE, L.P.

as Owner

and

SHEEHAN PIPE LINE CONSTRUCTION COMPANY

as Contractor

Dated as of the 10th Day of January, 2007

TABLE OF CONTENTS Page

ARTICLE 1 DEFINITIONS 1

ARTICLE 2 RELATIONSHIP OF OWNER, CONTRACTOR AND SUBCONTRACTORS 6

2.1 Status of Contractor 6

2.2 Key Personnel 7

2.3 Subcontractors and Sub-subcontractors 7

2.4 Subcontracts and Sub-subcontracts 7

2.5 Contractor Investigations of the Site and Differing Site Conditions 7

ARTICLE 3 CONTRACTOR' S RESPONSIBILITIES 8

3.1 Scope of Work 8

3.2 Specific Obligations 8

3.3 Contractor' s Tools and Construction Equipment 8

3.4 Employment of Personnel 8

3.5 Clean-up 9

3.6 Safety and Security 9

3.7 Emergencies 9

3.8 Books, Records and Audits 9

3.9 Temporary Utilities, Roads, Facilities and Storage 10

3.10 Hazardous Materials 10

3.11 Reports and Meetings 10

3.12 Title to Materials Found 10

3.13 Cooperation with Others 10

3.14 Responsibility for Property 11

3.15 Used or Salvaged Materials 11

3.16 Compliance with Real Property Interests 11

3.17 Layout 11

3.18 Substitutions 11

ARTICLE 4 OWNER' S RESPONSIBILITIES 11

4.1 Payment 11

4.2 Access to the Site 12

4.3 Owner-Provided Equipment 12

ARTICLE 5 COMMENCEMENT OF WORK, PROJECT SCHEDULE, AND SCHEDULING OBLIGATIONS 12

5.1 Commencement of Work 12

5.2 Project Schedule 12

5.3 CPM Schedule 12

5.4 Recovery and Recovery Schedule 13

5.5 Acceleration and Acceleration Schedule 13

ARTICLE 6 CHANGES; FORCE MAJEURE; AND OWNER-CAUSED DELAY 14

6.1 Change Orders Requested by Owner 14

6.2 Change Orders Requested by Contractor 14

6.3 Estimated Contract Price Adjustment; Contractor Documentation 15

6.4 Change Orders Act as Accord and Satisfaction 15

6.5 Timing Requirements for Notifications and Change Order Requests by Contractor 15

6.6 Adjustment Only Through Change Order 16

6.7 Force Majeure 16

6.8 Delay Caused by Owner or Changes in the Work 16

6.9 Delay 17

6.10 Contractor Obligation to Mitigate Delay 17


i ARTICLE 7 CONTRACT PRICE AND PAYMENTS TO CONTRACTOR 17 7.1 Contract Price and Estimated Contract Price 17 7.2 Interim Payments 17 7.3 Final Completion and Final Payment 18 7.4 Payments Not Acceptance of Work 18 7.5 Payments Withheld 18 7.6 Release of Retainage 19 ARTICLE 8 TITLE AND RISK OF LOSS 19 8.1 Title 19 8.2 Risk of Loss 19 ARTICLE 9 INSURANCE AND PAYMENT AND PERFORMANCE BONDS 19 9.1 Insurance 19 9.2 Payment and Performance Bonds 19 ARTICLE 10 DOCUMENTATION 19 10.1 Patents and Royalties 19 10.2 Owner Provided Documents 19 ARTICLE 11 MECHANICAL COMPLETION, SUBSTANTIAL COMPLETION, AND FINAL COMPLETION 20 11.1 Notice and Requirements for Mechanical Completion 20 11.2 Notice and Requirements for Substantial Completion 20 11.3 Punchlist 20 11.4 Notice and Requirements for Final Completion 21 11.5 Partial Occupancy and Use 21 11.6 Long-Term Obligations 21 ARTICLE 12 WARRANTY AND CORRECTION OF WORK 21 12.1 Warranty 21 12.2 Correction of Work Prior to Substantial Completion 22 12.3 Correction of Work After Substantial Completion 22 12.4 Assignability of Warranties 23 ARTICLE 13 GUARANTEE OF TIMELY COMPLETION 23 13.1 Guarantee of Timely Completion 23 ARTICLE 14 CONTRACTOR REPRESENTATIONS 23 14.1 Corporate Standing 23 14.2 No Violation of Law 23 14.3 Licenses 23 14.4 No Breach 23 14.5 Financial Solvency 23 14.6 No Conflicts of Interest 23 ARTICLE 15 DEFAULT, TERMINATION AND SUSPENSION 24 15.1 Default by Contractor 24 15.2 Termination for Convenience by Owner 25 15.3 Suspension of Work 25 15.4 Suspension by Contractor 26 15.5 Termination by Contractor 26 ARTICLE 16 INDEMNITIES 26 16.1 General Indemnification 26 16.2 Lien Indemnification 27 16.3 Attorneys' Fees 27 16.4 Enforceability 27


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ARTICLE 17 DISPUTE RESOLUTION 28

17.1 Negotiation 28

17.2 Arbitration 28

17.3 Continued Performance 29

ARTICLE 18 CONFIDENTIALITY 29

18.1 Contractor' s Obligations 29

18.2 Exceptions 29

18.3 Equitable Relief 29

18.4 Term 29

18.5 Disclosure and Filings 29

ARTICLE 19 WAIVER OF CONSEQUENTIAL DAMAGES 29

19.1 Waiver of Consequential Damages 29

ARTICLE 20 MISCELLANEOUS PROVISIONS 30

20.1 Entire Agreement 30

20.2 Amendments 30

20.3 Interpretation 30

20.4 Notice 30

20.5 Severability 31

20.6 Assignment 31

20.7 No Waiver 31

20.8 Governing Law 31

20.9 No Publicity 31

20.10 Counterparts 31

20.11 Survival 31


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LIST OF ATTACHMENTS AND SCHEDULES

ATTACHMENT A

Contract Documents

ATTACHMENT B

Key Personnel

ATTACHMENT C

Form of Notice to Proceed

ATTACHMENT D

Form of Change Order

SCHEDULE D-1

Change Order Form

SCHEDULE D-2

Unilateral Change Order Form

SCHEDULE D-3

Pricing for Change Orders

ATTACHMENT E

Project Schedule

ATTACHMENT F

Insurance Requirements

ATTACHMENT G

Form of Contractor' s Invoice

ATTACHMENT H

Form of Payment and Performance Bonds

SCHEDULE H-1

Form of Payment Bond

SCHEDULE H-2

Form of Performance Bond

ATTACHMENT I

Form of Lien and Claim Waivers

SCHEDULE I-1

Contractor' s Interim Lien and Claim Waiver

SCHEDULE I-2

Subcontractor' s Interim Lien and Claim Waiver

SCHEDULE I-3

Contractor' s Final Lien and Claim Waiver

SCHEDULE I-4

Subcontractor' s Final Lien and Claim Waiver

ATTACHMENT J

Pricing Schedule

ATTACHMENT K

Project Scope of Work

ATTACHMENT L

Contractor' s Clarifications


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CONSTRUCTION AGREEMENT

THIS CONSTRUCTION AGREEMENT (this " Agreement" ), dated as of the 10th Day of January, 2007 (the " Effective Date" ), is entered into by and between Cheniere Creole Trail Pipeline, L.P., a limited partnership organized under the laws of the State of Delaware (" Owner" ), and Sheehan Pipe Line Construction Company, a general partnership organized under the laws of the State of Oklahoma (" Contractor" and, together with Owner, each a " Party" and together the " Parties" ).

WHEREAS, Owner desires to enter into an agreement with Contractor to provide construction services for the Alternate Route 42" Single Line Option Creole Trail Pipeline - Segment 3A Project (as more fully described below, the " Project" ) to be located in Calcasieu Parish and Beauregard Parish, Louisiana (the " Site" ) all as further described herein; and WHEREAS, Contractor, itself or through its vendors, suppliers, and subcontractors, desires to provide the foregoing construction services;

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

ARTICLE 1 DEFINITIONS

1.1 In addition to other defined terms used throughout this Agreement, when used herein, the following capitalized terms have the meanings specified in this Section 1.1.

" AAA" has the meaning set forth in Section 17.2.

" AAA Rules" has the meaning set forth in Section 17.2

" Acceleration Schedule" has the meaning set forth in Section 5.5.

" Affiliate" means any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Party. For purposes of this definition, " control" (including, with correlative meanings, the terms " controlled by" and " under common control with" ) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or otherwise. " Agreement" means this Agreement for the performance of the Work (including all Attachments and Schedules attached hereto), as it may be amended from time to time in accordance with this Agreement.

" Allocated Percentage" has the meaning set forth in Section 2 of Attachment J .

" Applicable Law" means all laws, statutes, ordinances, codes, regulations, certifications, orders, decrees, injunctions, licenses, Permits, approvals, agreements, rules and regulations, including any conditions thereto, of any Governmental Instrumentality having jurisdiction over all or any portion of the Site or the Project or performance of all or any portion of the Work, or other legislative or administrative action of a Governmental Instrumentality, or a final decree, judgment or order of a court which relates to the performance of Work hereunder or the interpretation or application of this Agreement, including (i) any and all Permits, and (ii) any Applicable Law related to (a) conservation, improvement, protection, pollution, contamination or remediation of the environment or (b) Hazardous Materials or any handling, storage, release or other disposition of Hazardous Materials.

" Base Lay Mobilization/Demobilization" has the meaning set forth in Section 2 of Attachment J .

" Books and Records" has the meaning set forth in Section 3.8.

" Business Day" means every Day other than a Saturday, a Sunday or a Day that is an official holiday for employees of the federal government of the United States of America.


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" Change Order" means a written order issued by Owner to Contractor after the execution of this Agreement, in the form of Schedule D-2 , or a written instrument signed by both Parties after the execution of this Agreement in the form of Schedule D-1 , that authorizes an addition to, deletion from, suspension of, or any other modification or adjustment to the requirements of this Agreement. Owner and Contractor are entitled to a Change Order in accordance with Article 6.

" Changed Criteria" has the meaning set forth in Section 6.1A.

" Claims" has the meaning set forth in Section 16.1A.

" Construction Equipment" means the equipment, machinery, structures, scaffolding, materials, tools, supplies and systems, purchased, owned, rented or leased by Contractor or its Subcontractors or Sub-subcontractors for use in accomplishing the Work, but not intended for incorporation into the Project.

" Contract Documents" mean the documents that establish the rights and obligations of the parties engaged in the Work, which include this Agreement, Attachments and Schedules to this Agreement, other documents listed in this Agreement, Drawings, Specifications, and Change Orders. An enumeration of the Contract Documents appears in Attachment A in order of priority, with the Contract Document having the highest priority listed first. In the event of any variance or conflict between a provision in one Contract Document and a provision in another Contract Document, the Contract Document with the higher priority and the greater obligation shall control. In the event of a conflict within the same Contract Document, explanatory notes take precedence over graphic indications, larger scale drawings and details take precedence over smaller scale drawings, and figured dimensions take precedence over scaled dimensions.

" Contract Price" has the meaning set forth in Section 7.1.

" Contractor" has the meaning set forth in the preamble.

" Contractor Indemnified Parties" means Contractor and its directors, officers, agents, partners, Affiliates and employees. A " Contractor Indemnified Party" means any of the Contractor Indemnified Parties. " Contractor Representative" means that Person or Persons designated by Contractor in a written notice to Owner and acceptable to Owner, who shall have complete authority to act on behalf of Contractor on all matters pertaining to this Agreement or the Work, including making changes in the Work. Contractor designates Rob Riess, President of Contractor, as the Contractor Representative who is a Key Person.

" Corrective Work" has the meaning set forth in Section 12.3.

" CPM Schedule" has the meaning set forth in Section 5.3A. " Day" means a calendar day.

" Default" has the meaning set forth in Section 15.1A.

" Defect" or " Defective" has the meaning set forth in Section 12.1A.

" Defect Correction Period" means the period commencing upon Substantial Completion and ending eighteen months (18) months thereafter as may be extended pursuant to Section 12.3B.

" Dispute" has the meaning set forth in Section 17.1.

" Dispute Notice" has the meaning set forth in Section 17.1.

" Drawings" means the graphic and pictorial documents (in written or electronic format) showing the design, location and dimensions of the Work, generally including plans, elevations, sections, details, schedules and diagrams which are prepared by Engineer. " Effective Date" has the meaning set forth in the preamble.


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" Engineer" means the design professional engaged by Owner to provide certain design, engineering and administrative services required in the agreement between them. Engineer will, to the extent specified in the agreement between Owner and Engineer, act for or on behalf of Owner with respect to Owner' s rights, remedies and obligations under this Agreement. Except as specifically provided in this Agreement, references to Engineer shall mean Owner' s Engineer for the Project which is Hatch Mott MacDonald, LLC. " Equipment" means all equipment, materials, supplies and systems required for the completion of and incorporation into the Work, excluding only the Owner-Provided Equipment.

" Estimated Contract Price" is the value set forth in Section 4 of Attachment J .

" Final Completion" means that all Work and all other obligations under the Agreement for the Project (except for that Work and obligations that survive the termination or expiration of this Agreement), are fully and completely performed in accordance with the terms of this Agreement, including: (i) the successful achievement of Substantial Completion; (ii) the completion of all Punchlist items and delivery by Contractor to Owner of all Warranties relating to such Punchlist items; (iii) delivery by Contractor to Owner of a fully executed Final Lien and Claim Waiver in the form of Schedule I-3 ; (iv) delivery by Contractor to Owner of all documentation required to be delivered under this Agreement, including Owner' s Confidential Information; (v) removal from the Site of all of Contractor' s, Subcontractors' and Sub-subcontractor' s personnel, supplies, waste, materials, rubbish, Hazardous Materials, Construction Equipment, and temporary facilities; (vi) delivery by Contractor to Owner of evidence acceptable to Owner that all Subcontractors and Sub-subcontractors have been fully and finally paid, including fully executed Final Lien and Claim Waivers from all Subcontractors in the form in Schedule I-4 ; (vii) if requested by Owner, fully executed Final Lien and Claim Waivers from Sub-subcontractors in a form substantially similar to the form in Schedule I-4 ; and (viii) performance by Contractor of all other obligations required under this Agreement for Final Completion.

" Final Lien and Claim Waiver" means the waiver and release provided to Owner by Contractor, Subcontractors and, if requested by Owner, Sub-subcontractors in accordance with the requirements of Section 7.3.

" Force Majeure" means catastrophic storms or floods, tornadoes, named tropical storms, hurricanes, earthquakes and other acts of God, wars, civil disturbances, terrorist attacks, revolts, insurrections, sabotage, commercial embargoes, epidemics, fires, explosions and actions of a Governmental Instrumentality that were not requested, promoted, or caused by the affected Party; provided that such act or event (i) delays or renders impossible the affected Party' s performance of its obligations under this Agreement, (ii) is beyond the reasonable control of the affected Party, not due to its fault or negligence and was not reasonably foreseeable, and (iii) could not have been prevented or avoided by the affected Party through the exercise of due diligence, including the expenditure of any reasonable sum taking into account the Contract Price. For avoidance of doubt, Force Majeure shall not include any of the following (except to the extent otherwise caused by Force Majeure): (a) economic hardship, (b) changes in market conditions, (c) late delivery or failure of Equipment or Construction Equipment, (d) labor availability, strikes, or other similar labor actions, or (e) climatic conditions (including rain, snow, wind, temperature and other weather conditions), tides, or seasons.

" Fixed Unit Price" has the meaning set forth in Section 1 of Attachment J .

" Governmental Instrumentality" means any federal, state or local department, office, instrumentality, agency, board or commission having jurisdiction over a Party or any portion of the Work, the Project or the Site. " Guaranteed Final Completion Date" has the meaning set forth in Section 5.2C. " Guaranteed Mechanical Completion Date" has the meaning set forth in Section 5.2A. " Guaranteed Substantial Completion Date" has the meaning set forth in Section 5.2B. " Hazardous Materials" means any substance that under Applicable Law is considered to be hazardous or toxic or is or may be required to be remediated, including (a) " hazardous substances" as defined in 42 U.S.C. a7 9601(14), (b) " chemicals" subject to regulation under Title III of the Superfunds Amendments and Reauthorization Act (" SARA" ) of 1986, (c) natural gas liquids, liquefied natural gas or synthetic gas, (d) any petroleum, petroleum-based products or crude oil or any fraction, or (e) any other chemical, waste, material, pollutant, contaminant or


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any other substance, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Instrumentality or which may be the subject of liability for damages, costs or remediation.

" Indemnified Party" means any Owner Indemnified Party or Contractor Indemnified Party, as the context requires.

" Indemnifying Party" means Owner or Contractor, as the context requires.

" Interim Lien and Claim Waiver" means the waiver and release provided to Owner by Contractor, Subcontractors and, if requested by Owner, Sub-subcontractors in accordance with the requirements of Section 7.2C.

" Invoice" means Contractor' s request for a payment pursuant to Section 7.1 for progress payments and pursuant to Section 7.3 for final payment, which invoices shall be in the form of Attachment G .

" Item" has the meaning set forth in Section 1 of Attachment J. " Key Personnel" or " Key Persons" has the meaning set forth in Section 2.2. " Lump Sum Amount" has the meaning set forth in Section 1 of Attachment J . " Lump Sum Work" has the meaning set forth in Section 1 of Attachment J . " Measured Quantity" is the actual quantity of each individual Item of Unit Price Work completed in accordance with the Contract Documents, as measured by Contractor and approved by Owner, in units of measure specified in the Schedule of Fixed Prices. Measured Quantities shall not include unused quantities or quantities for unauthorized or unapproved Work or for Work that is Defective.

" Mechanical Completion" means that all of the following has occurred in accordance with this Agreement: (i) Contractor has completed all construction, procurement, fabrication, assembly, erection, installation, inspection and non-destructive testing; (ii) Contractor has completed a gauging/caliper pig run, and made any required repairs; (iii) Contractor has completed hydrostatic testing to ensure that the Work was correctly constructed, procured, fabricated, assembled, erected, installed and tested, and is capable of being operated safely and reliably; (iv) Contractor has dewatered and dried the Work to a dewpoint of negative forty degrees Fahrenheit (-40baF); (v) Contractor has delivered notice to Owner that all of the requirements under this Agreement for Mechanical Completion have occurred and the Work is ready for Natural Gas Operations; (vi) Owner has accepted such Contractor notice as set forth in Section 11.1; and (vii) Contractor has performed all other obligations required under the Contract Documents for Mechanical Completion.

" Natural Gas Operations" means that all of the following has occurred: (i) Owner has purged the Work of air, nitrogen or other inert gasses following construction by Contractor; (ii) Owner has filled the Work with natural gas and achieved operating pressure; and (iii) the Owner is capable of utilizing the Work in performance of its intended commercial operations.

" Notice to Proceed" or " NTP" has the meaning set forth in Section 5.1.

" Owner" has the meaning set forth in the preamble. " Owner Indemnified Parties" means (i) Owner, its parent, Affiliates, (ii) landowners granting Owner rights-of-way or similar real property interests, and (iii) the respective co-owners, partners, joint venturers, members, directors, officers, agents, and employees of each Person specified in clauses (i) and (ii) above. An " Owner Indemnified Party" means any one of the Owner Indemnified Parties.

" Owner Representative" means that Person or Persons designated by Owner in a written notice to Contractor who shall have complete authority to act on behalf of Owner on all matters pertaining to the Work, including giving instructions and making changes in the Work. Owner designates Tarry Hutton as the Owner Representative. Notification of a change in Owner Representative shall be provided in advance, in writing, to Contractor.

" Owner' s Confidential Information" has the meaning set forth in Section 18.1.


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" Owner-Provided Equipment" means the equipment and materials listed in Attachment K to be provided by Owner to Contractor. Such Owner-Provided Equipment will be assembled, erected and installed by Contractor.

" Party" or " Parties" means Owner and/or Contractor and their successors and permitted assigns.

" Permit" means any valid waiver, certificate, approval, consent, license, exemption, variance, franchise, permit, authorization or similar order or authorization from any Governmental Instrumentality required to be obtained or maintained in connection with the Project, the Site or the Work.

" Person" means any individual or any company, joint venture, corporation, partnership, association, limited liability company, unincorporated organization or other entity having legal capacity, including the Parties, any Subcontractors and Sub-subcontractors, and their respective directors, officers, agents and employees.

" Progress Reports" has the meaning set forth in Section 3.11A.

" Project" has the meaning set forth in the Project Scope of Work described in Attachment K.

" Project Schedule" means the schedule of dates in which Contractor is required to achieve certain stages of completion of the Work, including the Guaranteed Mechanical Completion Date, Guaranteed Substantial Completion Date, and Guaranteed Final Completion Date, as more particularly described in Section 5.2 and in Attachment E .

" Punchlist" means a list of those finishing items required to complete the Work, the completion of which shall not interrupt, disrupt or interfere with the safe and reliable operation or use of all or any part of the Project as more fully described in Section 11.3 of this Agreement. " Recovery Schedule" has the meaning set forth in Section 5.4. " Retainage" means an amount equal to five percent (5%) of each payment up to Final Completion, which shall be released in accordance with Section 7.6.

" Schedule of Fixed Prices" means the detailed schedule of Unit Price Work and Lump Sum Work set forth in Section 4 of Attachment J (as may be modified by Change Order) allocating the Estimated Contract Price among the various portions of the Work. The Schedule of Fixed Prices shall be used as a basis to determine the percent completion of the Lump Sum Work and the Fixed Unit Price for the purposes of calculating payments owed to Contractor.

" Site" has the meaning set forth in the preamble, as further defined in the Scope of Work, Attachment K .

" Specifications" means those documents consisting of the written requirements for Equipment standards and workmanship for the Work, assembly, erection and installation of the Owner-Provided Equipment, and performance of related services, which are prepared by Engineer.

" Subcontract" means an agreement by Contractor with a Subcontractor for the performance of any portion of the Work.

" Subcontractor" means any Person who has a direct contract with Contractor to manufacture or supply Equipment which is a portion of the Work, to lease Construction Equipment to Contractor in connection with the Work, to install Owner-Provided Equipment, to perform a portion of the Work or to otherwise furnish labor or Equipment.

" Substantial Completion" means the stage in the progress of the Work following Mechanical Completion, as certified by the Engineer and agreed to by Owner, when the Work is complete in accordance with the Contract Documents except for Work on the Punchlist in accordance with the requirements of this Agreement. Without limiting the generality of the foregoing, the Work shall not be considered Substantially Complete until all of the following have occurred: (i) Contractor and Owner have agreed upon a Punchlist of items as set forth in Section 11.3; (ii) any damages due and owing to Owner have been paid (directly or by offset at Owner' s sole discretion); (iii) the entire Work has been completed (including training, manuals and the delivery of all documentation required hereunder), except for Work on the Punchlist, in accordance with the requirements of this Agreement;


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(iv) Contractor has obtained all Permits for the Work as required by the Contract Documents; (v) Contractor has delivered to Owner a fully executed Interim Lien and Claim Waiver in the form of Schedule I-1 , fully executed Interim Lien and Claim Waivers from all Subcontractors in the form of Schedule I-2 and, if requested by Owner, fully executed Interim Lien and Claim Waivers from all Sub-subcontractors substantially in the form of Schedule I-2 , covering all Work up to the date of Substantial Completion; (vi) Contractor has assigned to or provided Owner with all Warranties (other than those Warranties related to Punchlist items) to the extent Contractor is obligated to do so pursuant to the Contract Documents; (vii) Contractor has delivered notice to Owner that all of the requirements under this Agreement for Substantial Completion have occurred, and Owner has accepted such notice as set forth in Section 11.2; and (viii) Contractor has performed all other obligations required under the Contract Documents for Substantial Completion. " Sub-subcontract" means any agreement by a Subcontractor with a Sub-subcontractor or by a Sub-subcontractor with another Sub-subcontractor for the performance of any portion of the Work.

" Sub-subcontractor" m ...