AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
XXXXXX XXXXXX ENERGY PARTNERS, L.P.
This Amendment No. 1 to Second Amended and Restated Agreement of
Limited Partnership of Xxxxxx Xxxxxx Energy Partners, L.P. (this
"Amendment") is made as of the 20th day of January, 2000, by
Kinder Xxxxxx X.X., Inc., a Delaware corporation (the "General
Partner"), in its individual capacity and as attorney-in-fact for
the Limited Partners of Xxxxxx Xxxxxx Energy Partners, L.P., in
accordance with Article XV of the Partnership Agreement (as such
capitalized terms are defined below).
R E C I T A L S
A. The General Partner is the sole general partner of
Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware limited
partnership (the "Partnership") organized under a Second Amended
and Restated Agreement of Limited Partnership effective as of
February 14, 1997 (the "Partnership Agreement").
B. The General Partner and the Partnership entered into a
Contribution Agreement dated December 30, 1999 (the "Contribution
Agreement") among Xxxxxx Xxxxxx, Inc., a Kansas corporation
("KMI"), Natural Gas Pipeline Company of America, a Delaware
corporation ("NGPL"), KN Gas Gathering, Inc., a Colorado
corporation ("KN Gas"), the General Partner and the Partnership.
C. The Contribution Agreement contemplates, among other
things, the contribution (i) of all of KMI's equity interest in
KN Interstate Gas Transmission Co., a Colorado corporation to be
converted into a single-member Colorado limited liability
company, (ii) of all of NGPL's equity interest in NGPL-
Trailblazer Inc., a Delaware corporation to be converted into a
single-member Delaware limited liability company, and (iii) of
all of KN Gas' equity interest in Red Cedar Gathering Company, a
Colorado general partnership, in exchange for the issuance by the
Partnership to KMI, NGPL and KN Gas of an aggregate of 9,810,000
common units representing limited partnership units of the
Partnership.
D. Pursuant to the Contribution Agreement, the Partnership
has agreed to incur debt in such amount and on such terms as may
be acceptable to the Partnership (the "KMEP Debt") sufficient in
amount to allow the Partnership to use the proceeds of the KMEP
Debt to fund a distribution to KMI in the amount of $330,000,000
(the "Special Distribution") which shall be declared and paid to
KMI upon its contribution pursuant to the Contribution Agreement.
E. To effect the Special Distribution as contemplated by
the Contribution Agreement, it is necessary to amend the
Partnership Agreement as provided herein.
F. Section 15.1 of the Partnership Agreement provides that
the General Partner, as the general partner of Partnership, may
amend the Partnership Agreement without the consent of any
limited partner of the Partnership to reflect a change that, in
the sole discretion of the General Partner, does not adversely
affect the limited partners of the Partnership in any material
respect. In addition, Section 15.1 of the Partnership Agreement
provides that the General Partner, as the general partner of the
Partnership, may amend the Partnership Agreement without the
consent of any limited partner of the Partnership to reflect a
change that is required to effect the intent of the provisions of
the Partnership Agreement or is otherwise contemplated by the
Partnership Agreement.
G. The General Partner is authorized to execute and
deliver this Amendment on behalf of the limited partners pursuant
to Sections 15.1 and 1.4 of the Partnership Agreement.
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AGREEMENT
NOW, THEREFORE, the Partnership Agreement is hereby amended
as follows:
1. Article II. The reference to "Enron" in the definition
of "Conflicts and Audit Committee" in Article II of the
Partnership Agreement is eliminated and replaced with "the
General Partner."
2. Article II. The following sentence shall be added to
the end of the definition of "Record Holder" in Article II of the
Partnership Agreement:
Solely for purposes of the distribution of Available Cash
pursuant to Section 5.4 of this Agreement for the calendar
quarter ended December 31, 1999, the holders of Common Units
issued pursuant to the Contribution Agreement (as defined
herein) shall not be treated as Record Holders and shall not
be entitled to participate in such distribution.
3. Section 5.1(d)(iii). Section 5.1(d)(iii) of the
Partnership Agreement shall be deleted and replaced with the
following:
(iii) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value
of any property distributed (except cash or property
distributed pursuant to Section 14.3 or 14.4) to any Limited
Partner holding Common Units with respect to a taxable year
is greater (on a per Unit basis) than the amount of cash or
the Net Agreed Value of property distributed to the other
Limited Partners holding Common Units (on a per Unit basis),
then (1) each Limited Partner holding Common Units receiving
such greater cash or property distribution shall be
allocated gross income in an amount equal to the product of
(aa) the amount by which the distribution (on a per Unit
basis) to such Limited Partners holding Common Units exceeds
the distribution (on a per Unit basis) to the Limited
Partner holding Common Units receiving the smallest
distribution and (bb) the number of Units owned by the
Limited Partners holding Common Units receiving the greater
distribution; and (2) the General Partner shall be allocated
gross income in an aggregate amount equal to 1/99 of the sum
of the amounts allocated in clause (1) above.
(B) After the application of Section
5.1(d)(iii)(A), all or any portion of the remaining items of
Partnership gross income or gain for the taxable period, if
any, shall be allocated 100% to the General Partner, until
the aggregate amount of such items allocated to the General
Partner pursuant to this paragraph 5.1(d)(iii)(B) for the
current taxable period and all previous taxable periods is
equal to the cumulative amount of all Incentive
Distributions made to the General Partner (or its assignee)
from the Closing Date to a date 45 days after the end of the
current taxable period.
4. Section 5.9. A new Section 5.9 is hereby added to the
Partnership Agreement, to follow Section 5.8 and to read in full
as follows:
5.9 Special Distribution. Notwithstanding anything to
the contrary set forth in this Agreement, following the
contribution by Xxxxxx Xxxxxx, Inc., a Kansas corporation
("KMI"), of all of its equity interest in Xxxxxx Xxxxxx
Interstate Gas Transmission LLC, a Colorado limited
liability company, as contemplated by the Contribution
Agreement dated December 30, 1999 (the "Contribution
Agreement"), among KMI, Natural Gas Pipeline Company of
America, a Delaware corporation, KN Gas Gathering, Inc., a
Colorado corporation, the General Partner and the
Partnership, the Partnership shall distribute $330,000,000
in cash to KMI, without a corresponding distribution to the
General Partner or the Limited Partners, as provided for in
the Contribution Agreement. Notwithstanding anything to the
contrary set forth in this Agreement, KMI shall not receive
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an allocation of income (including gross income) or gain as
a result of the distribution provided for in the preceding
sentence.
5. Ratification. Except as expressly amended hereby, the
Partnership Agreement is hereby ratified and confirmed, and shall
continue in full force and effect.
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IN WITNESS WHEREOF, the General Partner has executed and
delivered this Amendment, in its individual capacity and as
attorney-in-fact for the limited partners of the Partnership, in
accordance with Section 15.1 of the Partnership Agreement, as of
the date first above written.
KINDER XXXXXX X.X., INC.,
as General Partner
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
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Name: Xxxxx X. Xxxxxxxxx, Xx.
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Title: Vice President
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KINDER XXXXXX X.X., INC.,
as Attorney-in-Fact for the limited partners
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
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Name: Xxxxx X. Xxxxxxxxx, Xx.
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Title: Vice President
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