GENERAL PARTNERSHIP AGREEMENT OF COLORADO INTERSTATE GAS COMPANY November 1, 2007
EXHIBIT
3.C
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TABLE
OF
CONTENTS
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Page
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ARTICLE
1
DEFINITIONS
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2
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Section
1.1
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Definitions
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2
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Section
1.2
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Construction
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11
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ARTICLE
2
ORGANIZATION
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12
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Section
2.1
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Formation
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12
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Section
2.2
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Name
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12
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Section
2.3
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Registered
Office; Registered Agent; Principal Office in the United States;Other
Offices
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12
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Section
2.4
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Purposes
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13
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Section
2.5
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Foreign
Qualification
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13
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Section
2.6
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Term
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13
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Section
2.7
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Business
Opportunities; No Implied Duty or Obligation
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13
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ARTICLE
3
PARTNERSHIP; DISPOSITIONS OF INTERESTS
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14
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Section
3.1
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Initial
Partners
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14
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Section
3.2
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Representations,
Warranties and Covenants
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14
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Section
3.3
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Dispositions
and Encumbrances of Partnership Interests
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14
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Section
3.4
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Partnership
Interests and Partnership Certificates
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17
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Section
3.5
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Creation
of
Additional Partnership Interests
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19
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Section
3.6
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Access
to
Information
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20
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Section
3.7
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Confidential
Information
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20
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Section
3.8
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Limitation
of
Liabilities of Partners
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23
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Section
3.9
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Use
of
Partners’ Names and Trademarks
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23
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ARTICLE
4
CAPITAL CONTRIBUTIONS
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23
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Section
4.1
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Capital
Contributions
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23
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Section
4.2
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Loans
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25
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Section
4.3
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No
Other
Contribution Obligations
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25
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Section
4.4
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Return
of
Contributions
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25
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Section
4.5
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Capital
Accounts
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25
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Section
4.6
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Failure
to
Make a Capital Contribution.
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26
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ARTICLE
5
DISTRIBUTIONS AND ALLOCATIONS
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28
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Section
5.1
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Distributions
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28
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Section
5.2
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Allocations
for Capital Account Purposes.
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29
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Section
5.3
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Allocations
for Tax Purposes
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30
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Section
5.4
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Varying
Interests
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31
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ARTICLE
6
MANAGEMENT
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31
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Section
6.1
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Generally
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31
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Section
6.2
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Management
Committee
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32
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Section
6.3
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Master
Services Agreement
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39
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Section
6.4
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Conflicts
of
Interest; Outside Activities
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39
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Section
6.5
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Indemnification
for Breach of Agreement
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41
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Section
6.6
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General
Regulatory Matters
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41
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Section
6.7
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Disclaimer
Of
Duties
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41
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Section
6.8
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Sole
Discretion
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41
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ARTICLE
7
TAXES
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42
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Section
7.1
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Tax
Returns
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42
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Section
7.2
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Tax
Elections
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42
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Section
7.3
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Tax
Matters
Partner
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43
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Section
7.4
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Amounts
Withheld
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44
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ARTICLE
8
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
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44
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Section
8.1
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Maintenance
of Books; Reports
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44
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Section
8.2
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Reports
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44
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Section
8.3
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Bank
Accounts
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44
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ARTICLE
9
WITHDRAWAL
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44
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Section
9.1
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No
Right of
Withdrawal
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44
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Section
9.2
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Deemed
Withdrawal
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44
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Section
9.3
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Effect
of
Withdrawal
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45
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ARTICLE
10
DISPUTE RESOLUTION
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46
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Section
10.1
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Disputes
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46
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Section
10.2
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Negotiation
to Resolve Disputes
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46
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Section
10.3
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Selection
of
Arbitrator
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47
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Section
10.4
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Conduct
of
Arbitration
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47
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Section
10.5
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Compliance
with Delaware Arbitration Act
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48
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ARTICLE
11
DISSOLUTION, WINDING UP AND TERMINATION
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48
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Section
11.1
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Dissolution
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48
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Section
11.2
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Winding
Up
and Termination
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49
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Section
11.3
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Deficit
Capital Accounts
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50
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Section
11.4
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Statement
of
Cancellation
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50
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ARTICLE
12
GENERAL PROVISIONS
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50
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Section
12.1
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Offset
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50
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Section
12.2
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Notices
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50
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Section
12.3
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Entire
Agreement; Superseding Effect
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51
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Section
12.4
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Effect
of
Waiver or Consent
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51
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Section
12.5
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Amendment
or
Restatement
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51
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Section
12.6
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Binding
Effect
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51
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Section
12.7
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Governing
Law; Severability
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51
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Section
12.8
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Further
Assurances
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52
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Section
12.9
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Waiver
of
Certain Rights
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52
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Section
12.10
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Counterparts
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52
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| ANNEX I | Partners, Percentage Interests, Representatives, Alternate Representatives and Parents |
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EXHIBIT
A
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Initial
Facilities
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SCHEDULE
A
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Partnership
Certificate
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OF
This
GENERAL
PARTNERSHIP AGREEMENT OF COLORADO INTERSTATE GAS COMPANY, dated as of November
1, 2007 (this “Agreement”), is adopted, executed and
agreed to, for good and valuable consideration, by El Paso Noric
Investments III, L.L.C., a Delaware limited liability company
(“EP Noric”), and EPPP CIG GP Holdings,
L.L.C., a Delaware limited liability company (“EPPP
CIG”), each as a general partner of the Partnership. Capitalized
terms used in this Agreement and not defined elsewhere have the meanings given
to them in Article 1 below.
RECITALS
WHEREAS,
Colorado
Interstate Gas Company, a Delaware corporation
(“CIGC”), owned and operated an interstate natural gas
pipeline system and, through its subsidiaries, conducted other businesses;
and
WHEREAS,
in
accordance with Section 266 of the Delaware General Corporation Law
(“DGCL”) and Section 15-901 of the Delaware Revised
Uniform Partnership Act (“DRUPA”), on the date hereof,
CIGC was converted (the “Conversion”) into a Delaware
general partnership upon the compliance by CIGC with the provisions of Section
266 of the DGCL and Section 15-901 of DRUPA and the filing with the
Secretary of State of Delaware in accordance with Section 15-901 of DRUPA
of a certificate of conversion to a Delaware general partnership and a statement
of partnership existence in accordance with DRUPA Section 15-303;
and
WHEREAS,
upon the
filing with the Secretary of State of Delaware of such certificate of conversion
to partnership and statement of partnership existence CIGC was converted into
the Partnership, with the Partnership’s existence deemed in accordance with
DRUPA Section 15-901(d) to have commenced on the date that CIGC commenced
its existence as a Delaware corporation; and
WHEREAS,
pursuant
to this Agreement and the Conversion, the stockholders of CIGC became general
partners of the Partnership, all of the issued and outstanding shares of capital
stock in CIGC were converted into Partnership Interests in the Partnership,
and
the stockholders of CIGC became the owners of all of the Partnership Interests
in the Partnership, each holding the Percentage Interest set forth opposite
its
name on Annex I hereto; and
WHEREAS,
this
Agreement, as it may be amended, modified, superseded or restated, is intended
to bind all Partners from time to time and the Partnership;
NOW
THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Partners agree as follows:
ARTICLE
1
DEFINITIONS
Section
1.1 Definitions.
As
used in this
Agreement, the following terms shall have the meanings set forth below or set
forth in the Sections referred to below:
“AAA”
shall have the meaning assigned to such term in Section
10.2(c).
“Acquisition
Proposal” shall have the meaning assigned to such term in
Section 3.3(a).
“Additional
Contributing Partners” shall have the meaning assigned to such
term in Section 4.6(a).
“Additional
Contribution” shall have the meaning assigned to such term in
Section 4.6(a).
“Adjusted
Capital Account” means, with respect to any
Partner, the balance, if any, in such Partner’s Capital Account as of the end of
the relevant fiscal year, after giving effect to the following
adjustments:
(i) Credit
to such
Capital Account any amounts which such Partner is obligated to restore pursuant
to any provision of this Agreement or pursuant to Treasury Regulation
§1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations §1.704-2(g)(1) and
§1.704-2(i)(5);
(ii) Debit
to such
Capital Account the items described in Treasury Regulation
§§1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).
The
foregoing
definition of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulations §1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
“Affiliate”
means, with respect to any Person, (a) each entity that such Person Controls;
(b) each Person that Controls such Person, including, in the case of a Partner,
the Partner’s Parent; and (c) each entity that is under common Control with the
Person, including, in the case of a Partner, each entity that is Controlled
by
the Partner’s Parent; provided, that with respect to any Partner, an
Affiliate shall include (y) a limited partnership or a Person Controlled by
a
limited partnership if a general partner of the limited partnership is
Controlled by the Partner’s Parent, or (z) a limited liability company or a
Person controlled by a limited liability company if the managing member of
the
limited liability company is Controlled by such Partner’s Parent; provided
further, for purposes of this Agreement the Partnership and its Subsidiaries
(if
any) shall not be an Affiliate of any Partner. For purposes of this
Agreement, none of Xcel Energy Inc., Public Service Company of Colorado, Xcel
Energy Wyco Inc. nor NC Enterprises, Inc. shall constitute an affiliate of
any
of the Partnership and its Subsidiaries.
“Affiliate’s
Outside Activities” shall have the meaning assigned to such term
in Section 6.4(d).
“Agreement”
shall have the meaning assigned to such term in the
preamble.
“Allocation
Regulations” shall mean Treasury Regulation
§§1.704-1(b), 1.704-2 and 1.704-3 (including any temporary
regulations) as such
regulations may be amended and in effect from time to time and any corresponding
provision of succeeding regulations.
“Alternate
Representative” shall have the meaning assigned to such term in
Section 6.2(a)(ii).
“Arbitration
Notice” shall have the meaning assigned to such term in Section
10.2(c).
“Arbitrator”
shall have the meaning assigned to such term in Section
10.3(a).
“Assignee”
means any Person that acquires a Partnership Interest or any portion of a
Partnership Interest through a Disposition; provided, however, that an
Assignee shall have no right to be admitted to the Partnership as a Partner
except with the prior written approval of the Management
Committee. The Assignee of a liquidated or wound up Partner is the
stockholder, partner, member or other equity owner or owners of the liquidated
or wound up Partner to which that Partner’s Partnership Interest is assigned by
the Person conducting the liquidation or winding up of that
Partner. The Assignee of a Bankrupt Partner is (a) the Person or
Persons (if any) to whom such Bankrupt Partner’s Partnership Interest is
assigned by order of the bankruptcy court or other Governmental Authority having
jurisdiction over such Bankruptcy, or (b) in the event of a general assignment
for the benefit of creditors, the creditor to which such Partnership Interest
is
assigned.
“Authorizations”
means licenses, certificates, permits, orders, approvals, determinations and
authorizations from Governmental Authorities having valid
jurisdiction.
“Available
Cash” means, with respect to any Quarter ending prior to the
Liquidation Date, the following, without duplication:
(a) the
sum of (i) all
cash and cash equivalents of the Partnership and its
Subsidiaries: (or the Partnership’s proportionate share of cash
and cash equivalents in the case of Subsidiaries that are not wholly owned)
on
hand at the end of such Quarter, and (ii) if the Management Committee so
determines, all or any portion of any additional cash and cash equivalents
of
the Partnership and its Subsidiaries (or the Partnership’s proportionate share
of cash and cash equivalents in the case of Subsidiaries that are not wholly
owned) on hand on the date of determination of Available Cash with respect
to
such Quarter resulting from Working Capital Borrowings made subsequent to the
end of such Quarter, less
(b) the
amount of any
cash reserves established by the Management Committee (or the Partnership’s
proportionate share of cash reserves in the case of Subsidiaries that are not
wholly owned) to (i) provide for the proper conduct of the business of the
Partnership and its Subsidiaries (including reserves for any of the following
of
the Partnership and its Subsidiaries: (A) future maintenance capital
expenditures, (B) anticipated future credit needs and (C) possible refunds
of
collected rates subject to refund or reasonably likely to be refunded as a
result of a settlement or hearing relating to FERC rate proceedings) subsequent
to such Quarter or (ii) comply with applicable Law or any loan agreement,
security agreement, mortgage, debt instrument or other agreement or obligation
to which the Partnership or any Subsidiary is a party or by which it is bound
or
its assets are subject;
provided,
however, that disbursements made by the Partnership or any Subsidiary or
cash reserves established, increased or reduced by the Partnership or any
Subsidiary after the end of such Quarter but on or before the date of the
determination of Available Cash with respect to such Quarter shall be deemed
to
have been made, established, increased or reduced, for purposes of determining
Available Cash, within such Quarter if the Management Committee so
determines.
Notwithstanding
the
foregoing, “Available Cash” with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
“Bankruptcy”
or “Bankrupt” means, with
respect to any Person, (a) that Person (i) makes a general assignment for
the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
becomes the subject of an order for relief or is declared insolvent in any
federal or state bankruptcy or insolvency proceedings; (iv) files a petition
or
answer seeking for that Person a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any Law; (v)
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against that Person in a proceeding of the
type
described in subclauses (i) through (iv) of this clause (a); or (vi) seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of that Person or of all or any substantial part of that Person’s
properties; or (b) against that Person, a proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law has been commenced and 120 Days have expired without
dismissal thereof or with respect to which, without that Person’s consent or
acquiescence, a trustee, receiver or liquidator of that Person or of all or
any
substantial part of that Person’s properties has been appointed and 90 Days have
expired without the appointment’s having been vacated or stayed, or 90 Days have
expired after the date of expiration of a stay, if the appointment has not
previously been vacated.
“Breaching
Partner” means a Partner that (i) has committed a failure or
breach of the type described in the definition of
“Default,” (ii) has received a notice of the type
described in the definition of “Default,” and (iii)
has not cured the failure or breach, but as to which the applicable cure period
set forth in the definition of “Default” has not yet
expired.
“Business
Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States or the State
of Colorado, New York or Texas shall not be regarded as a Business
Day.
“Capital
Account” means the capital account maintained by the Partnership
for each Partner in accordance with Section 4.5.
“Capital
Budget” means the annual capital budget for the Partnership that
is approved (or deemed approved) pursuant to Section
6.2(h)(ii)(C).
“Capital
Call” shall have the meaning assigned to such term in Section
4.1(a).
“Capital
Contribution” means any cash, cash equivalents or property that a
Partner contributes to the Partnership. Any reference in this Agreement to
the
Capital Contribution of a Partner shall include a Capital Contribution of its
predecessors in interest.
“Carrying
Value” means (a) with respect to property contributed to the
Partnership, the fair market value of such property at the time of contribution
reduced (but not below zero) by all depreciation, depletion (computed as a
separate item of deduction), amortization and cost recovery deductions charged
to the Partners’ Capital Accounts, (b) with respect to any property whose value
is adjusted pursuant to the Allocation Regulations, the adjusted value of such
property reduced (but not below zero) by all depreciation and cost recovery
deductions charged to the Partner’s Capital Accounts and (c) with respect to any
other Partnership property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination.
“Certificate”
shall have the meaning assigned to such term in Section
2.1.
“Claim”
means any and all losses, claims, damages, liabilities (joint or several),
expenses (including legal fees and expenses), judgments, penalties, interest,
settlements or other amounts arising from any and all claims, demands, actions,
suits or proceedings (whether civil, criminal, administrative or investigative),
deficiencies, levies, duties, imposts, remediation and cleanup costs and natural
resources damages.
“Closing
Date” means the date of the closing of the initial public offering
of common limited partner interests by the MLP.
“Code”
means the Internal Revenue Code of 1986, as amended and in effect from time
to
time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision
of
any successor law.
“Confidential
Information” means information and data (including all copies)
that is furnished or submitted by any of the Partners or their Affiliates,
whether oral, written or electronic, to the other Partners or their Affiliates
in connection with the operations of the Partnership. Notwithstanding
the foregoing, the term “Confidential Information”
shall not include any information that:
(a) is
in the public
domain at the time of its disclosure or thereafter, other than as a result
of a
disclosure directly or indirectly by a Partner or its Affiliates in
contravention of this Agreement;
(b) as
to any Partner
or its Affiliates, was in the possession of such Partner or its Affiliates
prior
to the execution of any confidentiality agreements related to the Facilities
or
this Agreement; or
(c) has
been
independently acquired or developed by a Partner or its Affiliates without
violating any of the obligations of that Partner or its Affiliates under any
applicable agreement.
“Contributing
Partner” shall have the meaning assigned to such term in
Section 4.6(a).
“Control”
means the possession, directly or indirectly, through one or more
intermediaries, of the following:
(a) (i)
in the case of
a corporation, 50% or more of the outstanding voting securities thereof; (ii)
in
the case of a limited liability company, general partnership or venture, the
right to 25% or more of the distributions therefrom (including liquidating
distributions); (iii) in the case of a trust or estate, including a business
or
statutory trust, 50% or more of the beneficial interest therein; and (iv) in
the
case of any other entity, 50% or more of the economic or beneficial interest
therein; provided, however, in the case of a limited partnership,
“Control” shall mean possession, directly or indirectly through one or more
intermediaries, of, (A) in the case where the general partner of such limited
partnership is a corporation, ownership of 50% or more of the outstanding voting
securities of such corporate general partner, (B) in the case where the general
partner of such limited partnership is a partnership, limited liability company
or other entity (other than a corporation or limited partnership), the right
to
25% or more of the distributions from such general partner entity, and (C)
in
the case where the general partner of such limited partnership is a limited
partnership, Control of the general partner of such general partner in the
manner described under clause (A) or (B), in each case, notwithstanding that
the
Person with respect to which Control is being determined does not possess,
directly or indirectly through one or more subsidiaries, the right to receive
at
least 25% of the distributions from such limited partnership; or
(b) in
the case of any
entity, the power or authority, through ownership of voting securities, by
contract or otherwise, to exercise predominant control over the management
of
the entity.
“Day”
means a calendar day; provided, however, that, if any period of Days
referred to in this Agreement shall end on a Day that is not a Business Day,
then the expiration of that period shall be automatically extended until the
end
of the first succeeding Business Day.
“Deemed
Tax Disposition” means any event or series of events that is
treated for federal income tax purposes as a sale or exchange of a Partner’s
Partnership Interest or portion thereof for purposes of Section 708(b)(1)(B)
of
the Code.
“Default”
means with respect to any Partner, the failure of a Partner to comply in any
material respect with any of its other agreements, covenants or obligations
under this Agreement (provided that the failure of a Partner to make a Capital
Contribution when required in response to a Capital Call shall not constitute
a
Default), or the failure of any representation or warranty made by a Partner
in
this Agreement to have been true and correct in all material respects at the
time it was made, in each case if the breach is not cured by the applicable
Partner on or before the 30th Day after its receiving written notice of such
breach from any other Partner (or, if such breach is not capable of being cured
within such 30-Day period, if such Partner fails to promptly commence
substantial efforts to cure such breach or to prosecute such curative efforts
to
completion with continuity and diligence). The Management Committee
may, but shall have no obligation to, extend the foregoing 30-Day
period.
“Default
Rate” means a rate per annum equal to the lesser of (a) a varying
rate per annum equal to the sum of (i) the prime rate as published in The
Wall Street Journal, with adjustments in that varying rate to be made on
the same date as any change in that rate is so published, plus (ii) 1% per
annum, and (b) the maximum rate permitted by Law.
“DGCL”
shall have the meaning assigned to such term in the Recitals.
“Dispose,”
“Disposing” or “Disposition” means, with respect to any asset, a
sale, assignment, transfer, conveyance, gift, exchange or other disposition
of
such asset, whether such disposition be voluntary, involuntary or by operation
of Law, including the following: (a) in the case of an asset owned by
a natural person, a transfer of such asset upon the death of its owner, whether
by will, intestate succession or otherwise; (b) in the case of an asset owned
by
an entity, (i) a merger or consolidation of such entity (other than where such
entity is the survivor thereof), (ii) a conversion of such entity into another
type of entity, or (iii) a distribution of such asset, including in connection
with the dissolution, liquidation, winding up or termination of such entity
(unless, in the case of dissolution, such entity’s business is continued without
the commencement of liquidation or winding up); and (c) a disposition in
connection with, or in lieu of, a foreclosure of an Encumbrance;
provided, however, that such terms shall not include
(i) the creation of an Encumbrance or (ii) the sale or other transfer
(directly or indirectly and whether by merger, consolidation, conversion, sale
of assets or otherwise) of all or any portion of the capital stock, member
interests or other equity interests of any Partner.
“Disposing
Partner” shall have the meaning assigned to such term in
Section 3.3(a).
“Dispute”
shall have the meaning assigned to such term in Section
10.1.
“Dispute
Notice” shall have the meaning assigned to such term in Section
10.2.
“Disputing
Partner” shall have the meaning assigned to such term in
Section 10.1.
“Dissolution
Event” shall have the meaning assigned to such term in Section
11.1.
“DRUPA”
means the Delaware Revised Uniform Partnership Act (6 Del.
C. §15-101, etseq.), as amended from time to
time. Any reference herein to a specific section or sections of DRUPA
shall be deemed to include a reference to any corresponding provision of any
successor law.
“Effective
Date” means the date of this Agreement as specified in the
preamble.
“Encumber,”
“Encumbering” or “Encumbrance” means the creation of a security
interest, lien, pledge, mortgage or other encumbrance, whether such encumbrance
be voluntary, involuntary or by operation of Law.
“Exercise
Period” shall have the meaning assigned to
such term in Section 3.3(a).
“Facilities”
means (a) the Initial Facilities, (b) any additions to or expansions or
extensions of existing Facilities that are approved by (i) the Management
Committee, (ii) one or more duly authorized Officer(s) pursuant to authorization
from the Management Committee (which may include blanket authority consistent
with rules and regulations of the FERC in effect from time to time) or (iii)
in
accordance with the terms of the Master Services Agreement.
“FERC”
means the Federal Energy Regulatory Commission or any Governmental Authority
succeeding to powers that, as of the date of this Agreement, are exercised
by
such Commission over the rates, terms and conditions of the
Partnership.
“Governmental
Authority” means a federal, state, local or foreign governmental
authority; a state, province, commonwealth, territory or district thereof;
a
county or parish; a city, town, township, village or other municipality; a
district, xxxx or other subdivision of any of the foregoing; any executive,
legislative or other governing body of any of the foregoing; any agency,
authority, board, department, system, service, office, commission, committee,
council or other administrative body of any of the foregoing, including the
FERC; any court or other judicial body; and any officer, official or other
representative of any of the foregoing.
“Initial
Facilities” means the interstate natural gas
pipeline system known as the Colorado Interstate Natural Gas Company interstate
pipeline system and related equipment and other infrastructure described on
Exhibit A.
“Law”
means any applicable constitutional provision, statute, act, code (including
the
Code), law, regulation, rule, ordinance, order, decree, ruling, proclamation,
notice, resolution, judgment, decision, declaration, policy statement or
interpretative or advisory opinion or letter of a Governmental Authority having
valid jurisdiction.
“Liquidation
Date” means in the case of any event giving rise to the
dissolution of the Partnership, the date on which such event
occurs.
“Liquidator”
means EP Noric or such other Person(s) selected by the Management
Committee to perform the functions described in Section 11.2 as
liquidating trustee of the Partnership and to wind up the business and affairs
of the Partnership within the meaning of DRUPA.
“Loan
Notice” shall have the meaning assigned to such term in Section
4.2(a).
“Majority
Interest” shall have the meaning assigned to such term in
Section 6.2(e)(i).
“Management
Committee” means the committee comprised of the individuals
designated by the Partners in accordance with Section 6.2 and all other
individuals designated by the Partners to serve as a representative on such
committee in accordance with Article 6; and references in this Agreement
to the Management Committee shall refer to such individuals collectively in
their capacity as representatives on such committee.
“Master
Services Agreement” means that certain Master Services Agreement,
dated as of ________________, 2007, to be entered into among the Partnership,
El
Paso Natural Gas Company, Tennessee Gas Pipeline Company, El Paso Corporation
and CIG Pipeline Services Company, L.L.C.
“MLP”
means El Paso Pipeline Partners, L.P., a Delaware limited
partnership.
“NGA”
means the Natural Gas Act of 1938, 15 U.S.C.A. §717 et. seq.
(1997). A reference herein to a specific section or sections of
the NGA shall be deemed to include a reference to any corresponding provision
of
any successor law.
“Non-Contributing
Partner” shall have the meaning assigned to such term in
Section 4.6(a).
“Officer”
means any Person designated as an officer of the Partnership as provided in
Section 6.2, but from and after the time any Person ceases to be an
officer of the Partnership the term “Officer” does not
include such Person who has ceased to be an officer of the
Partnership.
“Operating
Budget” means the annual operating budget established by the
Management Committee from time to time as the budget for the Partnership’s
operations for a calendar year, as same may be modified or amended by the
Management Committee.
“Parent”
means the Person that Controls a Partner, and shall be deemed to refer to any
successor (by merger, consolidation, conversion, sale of all or substantially
all of its assets or otherwise) to such Person. The Parent of each of
the Partners as of the date of this Agreement is specified in Annex
I. From and after the Closing Date, the Parent of EPPP CIG will
be the MLP, and Annex I will thereafter be modified to reflect such
change.
“Partner”
means any Person executing this Agreement as of the date of this Agreement
as a
partner or subsequently admitted to the Partnership as a partner as provided
in
this Agreement, each in such Person’s capacity as a partner of the Partnership,
but from and after the time any Person ceases to be a partner of the Partnership
such term does not include such Person that has ceased to be a partner in the
Partnership. Except as otherwise provided in accordance with
Section 3.4, for purposes of DRUPA, the Partners shall constitute a
single class or group of partners.
“Partnership”
means Colorado Interstate Gas Company, a
Delaware general partnership.
“Partnership
Certificate” shall have the meaning assigned to such term in
Section 3.4.
“Partnership
Interest” means with respect to any Partner, (a) that Partner’s
status as a Partner; (b) that Partner’s share of the income, gain, loss,
deduction and credits of, and the right to receive distributions from, the
Partnership; (c) any Priority Interest to which that Partner is entitled
pursuant to Section 4.6(b); (d) all other rights, benefits and privileges
enjoyed by that Partner (under the DRUPA, this Agreement or otherwise) in its
capacity as a Partner; and (e) all obligations, duties and liabilities imposed
on that Partner (under DRUPA, this Agreement or otherwise) in its capacity
as a
Partner, including any obligations to make Capital Contributions.
“Percentage
Interest” means, subject in each case to adjustments in accordance
with this Agreement or in connection with any Disposition of a Partnership
Interest, with respect to a Partner, the percentage set forth opposite such
Partner’s name in Annex I, provided, however, that the total of
all Percentage Interests shall always equal 100%.
“Permitted
Transferee” means any Person that is an Affiliate of a
Partner.
“Person”
shall have the meaning assigned to such term in Section 15-101(16) of DRUPA
and
also includes a Governmental Authority and any other entity.
“Priority
Interest” means the special distribution rights under Section
4.6(b) received by each Additional Contributing Partner, which rights
include the right to receive the return described in Section 4.6(b)(i)
and which form part of the Additional Contributing Partner’s Partnership
Interest.
“Priority
Interest Sharing Ratio” shall have the meaning assigned to such
term in Section 4.6(b)(i).
“Quarter”
means unless the context requires otherwise, a fiscal quarter of the
Partnership.
“Representative”
shall have the meaning assigned to such term in Section
6.2(a)(ii).
“ROFR
Acceptance” shall have the meaning assigned to
such term in Section 3.3(a).
“ROFR
Buyer” shall have the meaning assigned to such term in Section
3.3(a).
“Securities
Act” means the Securities Act of 1933, as amended, supplemented or
restated from time to time and any successor statute.
“Securities
Exchange Act” means the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time and any successor
statute.
“Services”
shall have the meaning assigned to such term in Section
6.3(a).
“Sole
Discretion” means the following: (a) in the applicable Person’s
sole and absolute discretion, (b) with or without cause, (c) subject to such
conditions as it may deem appropriate, and (d) to the fullest extent permitted
by law, without taking into account the interests of, and without incurring
liability to, the Partnership, any Partner, any member of the Management
Committee or any officer or employee of the Partnership.
“Statement”
shall have the meaning assigned to such term in Section 2.1.
“Subject
Interest” shall have the meaning assigned to such term in
Section 3.3(a).
“Subsidiary”
means, with respect to any Person, (a) a corporation of which more than 50%
of
the voting power of shares entitled (without regard to the occurrence of any
contingency) to vote in the election of directors or other governing body of
such corporation is owned, directly or indirectly, at the date of determination,
by such Person, by one or more Subsidiaries of such Person or a combination
thereof, (b) a partnership (whether general or limited) in which such Person
or
a Subsidiary of such Person is, at the date of determination, a general or
limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest
or
(ii) the power to elect or direct the election of a majority of the directors
or
other governing body of such Person.
“Tax
Matters Partner” shall have the meaning assigned to such term in
Section 7.3(a).
“Transfer
Notice” shall have the meaning assigned to such term in Section
3.3(a).
“Term”
shall have the meaning assigned to such term in Section 2.6.
“Treasury
Regulations” means the regulations (including temporary
regulations) promulgated by the United States Department of the Treasury
pursuant to and in respect of provisions of the Code. All references
herein to sections of the Treasury Regulations shall include any corresponding
provision or provisions of succeeding, similar or substitute, temporary or
final
Treasury Regulations.
“Withdraw,”
“Withdrawing” or “Withdrawal” means the disassociation of a
Partner from the Partnership as a partner. Such terms shall not include any
Dispositions of a Partnership Interest (which are governed by Sections
3.3(a) and (b)), even though the Partner
making a Disposition may cease to be a Partner as
a result of the Disposition.
“Withdrawn
Partner” shall have the meaning assigned to such term in
Section 9.3.
“Working
Capital Borrowings” means borrowings used
for working capital purposes or to pay distributions to Partners that are made
pursuant to a credit facility, commercial paper facility or other similar
financing arrangements.
Section
1.2 Construction. Unless
the context requires otherwise: (a) any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural, and vice-versa,
(b)
the gender (or lack of gender) of all words used in this Agreement includes
the
masculine, feminine and neuter; (c) references to Articles and Sections refer
to
Articles and Sections of this Agreement; (d) references to Exhibits or Annexes
refer to the Exhibits or Annexes attached to this Agreement, each of which
is
made a part hereof for all purposes; (e) references to Laws refer to such Laws
as they may be amended from time to time, and references to particular
provisions of a Law include any corresponding provisions of any succeeding
Law;
(f) the term “include”, “includes”, “including” or words of like report shall be
deemed to be followed by the words “without limitation”; (g) the terms “hereof”,
“herein” or “hereunder” refer to this Agreement as a whole and not to any
particular provision of this Agreement; and (h) references to money refer to
legal currency of the United States of America. The table of contents
and headings contained in this Agreement are for reference purposes only, and
shall not affect in any way the meaning or interpretation of this
Agreement.
ARTICLE
2
ORGANIZATION
Section
2.1 Formation. The
Partnership was formed upon the conversion of CIGC into the Partnership pursuant
to Section 266 of the DGCL and Section 15-901 of DRUPA upon the filing with
the
Secretary of State of Delaware of the Certificate of Conversion to Partnership
(the “Certificate”) pursuant to Section 15-901 of
DRUPA and a Statement of Partnership Existence (the
“Statement”) pursuant to Section 15-303 of
DRUPA. Effective as of the time of the Conversion, (i) the
certificate of incorporation of CIGC and the by-laws of CIGC, as in effect
immediately prior to the Conversion, are replaced and superseded in their
entirety by the Statement and this Agreement for all periods on and after the
Conversion, (ii) all of the shares of capital stock in CIGC held by the
stockholders of CIGC immediately prior to the Conversion are converted into
all
of the Partnership Interests in the Partnership, (iii) the stockholders of
CIGC
are automatically admitted to the Partnership as the partners of the
Partnership, each holding the Percentage Interest set forth opposite its name
on
Annex I hereto, (iv) all certificates evidencing shares of capital stock in
CIGC
issued by CIGC and outstanding immediately prior to the Conversion are hereby
cancelled and shall be surrendered to the Partnership, and (v) CIGC is being
continued without dissolution in the form of a Delaware general partnership
governed by this Agreement and DRUPA. In accordance with Section
15-901(d) of DRUPA, the Partnership’s existence shall be deemed to have
commenced on the date that CIGC was first incorporated as a Delaware corporation
under the DGCL.
Section
2.2 Name. The
name of the Partnership is “Colorado Interstate Gas Company”
and all Partnership business must be conducted
in that name,
unless and until the Partnership’s name is changed as provided
herein. The Partners may change the name of the Partnership at any
time and from time to time upon the requisite approval of the Management
Committee in accordance with Article 6 and the amendment of this
Agreement and the Statement. Xxxxxxxx X. Xxxxx is hereby designated
as an “authorized person” of the Partnership within the meaning of DRUPA, and
has executed, delivered and filed on behalf of the Partnership the Statement
and
the Certificate with the Secretary of State of the State of
Delaware. Upon the filing of the Statement and the Certificate with
the Secretary of State of the State of Delaware, his powers as an “authorized
person” of the Partnership ceased. From time to time a member of the
Management Committee or any duly authorized officer of the Partnership shall
be
an “authorized person” of the Partnership within the meaning of DRUPA to file on
behalf of the Partnership such further certificates, statements and amendments
or restatements thereof under DRUPA, or any other certificates, qualifications
to do business, fictitious name certificates or like filings in such
jurisdictions as may be necessary or appropriate in connection with the conduct
of the Partnership’s business or the ownership or operation of its
properties.
Section
2.3 Registered
Office; Registered Agent; Principal Office in the United States; Other
Offices. The
registered office of the Partnership required by DRUPA to be maintained in
the
State of Delaware shall be the office of the initial registered agent named
in
the Statement or such other office (which need not be a place of business of
the
Partnership) as the Management Committee may designate at any time or from
time
to time in the manner provided by Law, including by amending the
Statement. The registered agent of the Partnership in the State of
Delaware shall be the initial registered agent named in the Statement or such
other Person or Persons as the Management Committee may designate at any time
or
from time to time in the manner provided by Law, including by amending the
Statement. The principal office of the Partnership in the United
States shall be at such place as the Management Committee may designate at
any
time or from time to time, which need not be in the State of Delaware, and
the
Partnership shall maintain records there or such other place as the Management
Committee shall designate and shall keep the street address of such principal
office at the registered office of the Partnership in the State of
Delaware. The Partnership may have such other offices as the
Management Committee may designate.
Section
2.4 Purposes. The
purposes of the Partnership are (i) to own and operate the Facilities and such
other or replacement facilities as the Partnership may add thereto, (ii) to
own
member interests or shares or other equity interests in any existing or future
Subsidiary or Affiliate and (iii) to engage, directly or indirectly through
one or more Subsidiaries or Affiliates, in such other business activities as
may
be undertaken by a general partnership under DRUPA as the Management Committee
may from time to time determine; provided, however, that such
activity (a) generates “qualifying income” (as such term is defined pursuant to
Section 7704 of the Code) or (b) enhances the operations of an activity of
the
Partnership that generates “qualifying income” (as such term is defined pursuant
to Section 7704 of the Code).
Section
2.5 Foreign
Qualification. The
Management Committee shall cause the Partnership to comply, to the extent
procedures are available and those matters are reasonably within the control
of
the Management Committee, with all requirements necessary to qualify the
Partnership as a foreign partnership, or otherwise be authorized to conduct
business, in any jurisdiction other than Delaware in which the Partnership
may
conduct any business or own any properties or assets. At the request
of the Management Committee, each Partner shall execute, acknowledge, swear
to
and deliver all certificates and other instruments conforming with this
Agreement that are necessary or appropriate to qualify, continue and terminate
the Partnership as a foreign partnership in all such jurisdictions in which
the
Partnership may conduct business.
Section
2.6 Term. In
accordance with Section 15-901 of DRUPA, the existence of the Partnership (the
“Term”) is deemed
to
have commenced at such time as CIGC was incorporated as a corporation under
the
DGCL and shall end at such time as a statement of cancellation is filed with
the
Secretary of State of the State of Delaware in accordance with Section
11.4.
Section
2.7 Business
Opportunities; No Implied Duty or Obligation. Each
Partner, its Representative(s) and Affiliates may engage, directly or
indirectly, without the consent of the other Partner(s), the Partnership, the
Management Committee or any member of the Management Committee in other business
opportunities, transactions or other arrangements of any nature or description,
independently or with others, including any business of a nature that may
compete or be competitive with or the same as or similar to the business of
the
Partnership, regardless of the geographic location of such business, and without
any duty or obligation to account to the other Partner, the Partnership or
the
Management Committee in connection therewith.
ARTICLE
3
PARTNERSHIP;
DISPOSITIONS OF INTERESTS
Section
3.1 Initial
Partners. As
of
the date of this Agreement, EP Noric and EPPP CIG are the only Partners of
the
Partnership.
Section
3.2 Representations,
Warranties and Covenants. Each
Partner hereby represents, warrants and covenants to the Partnership and each
other Partner that the following statements are true and correct as of the
Effective Date and shall be true and correct at all times that such Person
remains a Partner of the Partnership:
(a) such
Partner is
duly incorporated, organized or formed (as applicable), validly existing, and
(if applicable) in good standing under the Law of the jurisdiction of its
incorporation, organization or formation; if required by applicable Law, such
Partner is duly qualified and in good standing in the jurisdiction of its
principal place of business, if different from its jurisdiction of
incorporation, organization or formation; and such Partner has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, and all necessary actions by the board of directors, stockholders,
managers, members, partners, trustees, beneficiaries, or other applicable
Persons necessary for the due authorization, execution, delivery and performance
of this Agreement by such Partner have been duly taken;
(b) such
Partner has
duly executed and delivered this Agreement and the other documents contemplated
herein, and this Agreement and such documents constitute the legal, valid and
binding obligation of such Partner enforceable against it in accordance with
their terms, except as may be limited by bankruptcy, insolvency or similar
Laws
of general application and by the effect of general principles of equity,
regardless of whether considered at law or in equity; and
(c) such
Partner’s
authorization, execution, delivery or performance of this Agreement does not
and
will not (i) conflict with, or result in a breach, default or violation of,
(A)
the organizational documents of that Partner, (B) any contract or agreement
to
which such Partner is a party or is otherwise subject, or (C) any Law, order,
judgment, decree, writ, injunction or arbitral award to which such Partner
is
subject; or (ii) require any consent, approval or authorization from, filing
or
registration with, or notice to, any Governmental Authority or other Person,
unless such requirement has already been satisfied.
Section
3.3 Dispositions
and Encumbrances of Partnership Interests.
(a) Except
to the
extent permitted by this Section 3.3, a Partner (the
“Disposing Partner”) may not Dispose
of all or any portion of its Partnership Interest (the
“Subject Interest”) to a Person who is not a
Permitted Transferee of such Partner unless and until (i) the other terms and
conditions set forth in this Section 3.3 have been satisfied and (ii)
such Disposition has been approved by the requisite approval of the Management
Committee. If any Disposing Partner intends to dispose of its
Partnership Interest pursuant to a bona fide offer
(“Acquisition Proposal”) from a
Person who is not a Permitted Transferee, such Disposing Partner shall notify
the Management Committee and the other Partners in writing
(“Transfer Notice”), which Transfer
Notice shall specify the identity of the proposed transferee and the terms
and
conditions (including the cash and a description of the non-cash consideration
constituting the purchase price) of the proposed Disposition and shall include
a
complete copy of the Acquisition Proposal. Except with respect to a
proposed Disposition to a Permitted Transferee, the Partners (other than the
Disposing Partner) shall have the right, at any time during the period (the
“Exercise Period”) that ends at 5:00
p.m. Houston, Texas time on the 30th day after receipt of the Transfer Notice
to
elect to purchase the Subject Interest at the price and on the terms and
conditions set forth in the Acquisition Proposal. Any Partner(s) who
elect to purchase the Subject Interest (each, a “ROFR
Buyer”) must furnish written notice (each, a
“ROFR Acceptance”) to
the Disposing
Partner prior to termination of the Exercise Period.
(b) The
Disposing
Partner shall not be bound to Dispose of any portion of the Subject Interest
to
any ROFR Buyer(s) unless all of such Subject Interest is accepted for purchase
by ROFR Buyers in accordance with this Section 3.3. If
there is more than one ROFR Buyer who timely delivers a ROFR Acceptance, each
such ROFR Buyer shall be entitled to purchase its pro rata portion of the
Subject Interest, based upon the ratio that each such ROFR Buyer’s Percentage
Interest bears to the total Percentage Interests of all such ROFR
Buyers. The ROFR Buyer(s) may substitute the cash equivalent for any
portion of the consideration specified in the Acquisition Proposal which was
other than cash or a promissory note payable in cash; provided,
however, that if the ROFR Buyer(s) desire to so substitute cash
for any
such non-cash consideration, and if the ROFR Buyer(s)’ determination of the fair
market value of such non-cash consideration is less than the fair market value
that was given for such consideration by the Disposing Partner in the Transfer
Notice, the ROFR Buyer(s) shall state their determination of such value in
the
ROFR Acceptance; and if the Disposing Partner and the ROFR Buyer(s) are unable
to mutually agree upon the fair market value of such non-cash consideration
within five Business Days after the delivery of the ROFR Acceptance, then the
Disposing Partner and the ROFR Buyer(s) shall promptly cause such value to
be
determined through appraisal in the manner provided in Section
3.3(e). Such appraisal procedure shall delay, if necessary, any
closing of the sale of the Subject Interest. Any delayed closing
shall occur, subject to the next sentence, within 15 days after delivery to
the
parties of the appraiser’s determination of the value of the non-cash
consideration. The cash equivalent of any such non-cash consideration
that is to be paid at the closing of the purchase and sale of the Subject
Interest shall in such event be the amount determined by the
appraisal.
(c) The
closing of the
Disposition of the Subject Interest pursuant to the exercise of the rights
of
first refusal granted in Section 3.3(a) shall be at 9:00 a.m. Houston,
Texas time on the 45th day following the end of the Exercise Period at the
Partnership’s principal office, or such other place as agreed by the Disposing
Partner and ROFR Buyer(s), subject to any delay in the closing provided for
below or in connection with any appraisal conducted as contemplated in
Section 3.3(e), unless the Disposing Partner and the ROFR Buyer(s)
otherwise agree. At the closing, the consideration to be paid by the
ROFR Buyer(s) shall be delivered by the ROFR Buyer(s) to the Disposing Partner
(by wire transfer in immediately available funds to the extent such
consideration is cash), and the Disposing Partner shall deliver to the ROFR
Buyer(s) an instrument of assignment of the Subject Interest accompanied by
the
Partnership Certificate evidencing same, free and clear of all liens,
encumbrances and adverse claims with respect thereto. The ROFR
Buyer(s) shall be entitled to pay for the Subject Interest in cash or with
cash
and a promissory note on substantially similar terms to that set forth in the
Transfer Notice. The Disposing Partner and the ROFR Buyer(s) shall
cooperate in good faith in obtaining all necessary governmental and other third
Person approvals, waivers and consents required for the closing. Any
such closing shall be delayed, to the extent required, until the next succeeding
Business Day following the obtaining of all necessary governmental approvals
or
the expiration of all government waiting periods; provided,
however, that in the case of such delay, the purchase price shall
be
increased by interest at the Default Rate from the date that the closing would
have otherwise occurred.
(d) If,
after
completion of the foregoing procedures under this Section 3.3, the
Partners (other than the Disposing Partner) fail to elect to purchase all of
the
Subject Interest, the Disposing Partner may, at any time within 120 days after
the expiration of the Exercise Period or after the decision of the appraisers,
if longer, Dispose of all (but not less than all) of the Subject Interest to
the
proposed acquirer under the Acquisition Proposal on terms no more favorable
to
such acquirer than those set forth in said Acquisition Proposal (and the
Transfer Notice) and offered to the Partners (other than the Disposing
Partners). After the expiration of such 120-day period, the Disposing
Partner may not Dispose of the Subject Interest described in the Transfer Notice
without complying again with the provisions of this Section 3.3 if and to
the extent then applicable.
(e) If
the Disposing
Partner and the ROFR Buyer(s) are unable to agree within 30 days after the
Transfer Notice is given upon one independent appraiser who will determine
the
value of any non-cash consideration proposed as all or part of the purchase
price for any Subject Interest, then within 30 days after the Transfer Notice
is
given, the Disposing Partner, on the one hand, and the ROFR Buyer(s),
collectively, on the other, shall each appoint an independent appraiser who
has
at least 10 years’ experience in valuing interstate pipeline business activities
similar to those conducted by the Partnership. If the two parties
each timely appoint an independent appraiser and such appraisers are unable
to
agree upon the value of any non-cash consideration proposed as all or part
of
the purchase price for the Subject Interest, then a third appraiser shall be
appointed by the two appraisers. The third appraiser shall value the
non-cash consideration proposed in the Acquisition Proposal for the Subject
Interest within 30 days of appointment. If such appraisal is less
than the lower of the two initial appraisers’ valuation of such consideration,
then the value shall equal the average of the lowest two of the three
appraisers’ valuations. If such appraisal exceeds the higher of the
two initial appraisers’ valuations of such consideration, then the value shall
equal the average of the two highest appraisers’ valuations. The
appraisers shall employ such persons and incur such expenses as are necessary
to
reach such determination. The Disposing Partner shall bear 50% of all
fees and expenses incurred by the appraisers in making such valuation
determination, and the ROFR Buyer(s), collectively, shall bear the other 50%
of
all such fees and expenses. The determination of the appraisers shall
be final and binding upon the parties.
(f) Except
for a
Disposition to a Permitted Transferee or a Disposition effect in accordance
with
and subject to the procedures in Sections 3.3(a)-(e) above, a Partner may
not Dispose of a Partnership Interest without the prior written approval of
the
Management Committee. Any attempted Disposition of a Partnership
Interest, other than in strict accordance with this Section 3.3, shall
be, and is hereby declared, null and void to the fullest extent permitted by
law. The rights and obligations constituting a Partnership Interest
may not be separated, divided, split off or otherwise separated from the other
attributes of a Partnership Interest except with the express prior written
approval of the Management Committee and as contemplated by the express
provisions of this Agreement. Notwithstanding the foregoing, a
Partner may not effect a Disposition (including a Deemed Tax Disposition) if
such Disposition, when added to the total of all other Dispositions (including
Deemed Tax Dispositions) within the preceding twelve months, results in the
Partnership being considered to have terminated within the meaning of
Section 708(b)(1)(B) of the Code, unless such Disposition has been approved
in accordance with Section 6.2(h)(i)(D).
(g) The
Partners agree
that a breach of the provisions of this Section 3.3 may cause irreparable
injury to the Partnership and to the other Partners for which monetary damages
(or other remedy at law) are inadequate in view of (i) the complexities and
uncertainties in measuring the actual damages that would be sustained by reason
of the failure of a Limited Partner to comply with such provision and (ii)
the
uniqueness of the Partnership business and the relationship among the Partners.
Accordingly, the Limited Partners agree that the provisions of this Section
3.3 may be enforced by specific performance in accordance with Section
10.4(b).
(h) Each
Partnership
Certificate shall bear a legend as specified in
Section 3.4(f).
(i) Notwithstanding
any
provision of this Agreement to the contrary, a Partner may pledge Partnership
Interests in accordance with the Amended and Restated Security Agreement dated
as of July 31, 2006 among El Paso Corporation, CIGC, El Paso Natural Gas
Company, Tennessee Gas Pipeline Company and the other parties thereto(as such
agreement may be amended, restated or otherwise modified from time to time),
without the prior written approval of the Management Committee.
Section
3.4 Partnership
Interests and Partnership Certificates.
(a) Each
Partnership
Interest shall constitute a “security” within the meaning of, and shall be
governed by, (i) Article 8 of the Uniform Commercial Code (including Section
8-102(a)(15) thereof) as in effect from time to time in the State of Delaware,
and (ii) Article 8 of the Uniform Commercial Code of any other applicable
jurisdiction that now or hereafter substantially includes the 1994 revisions
to
Article 8 thereof as adopted by the American Law Institute and the National
Conference of Commissioners on Uniform State Laws and approved by the American
Bar Association on February 14, 1995.
(b) Upon
the issuance
of Partnership Interests to any Partner in accordance with the provisions of
this Agreement, the Partnership may issue one or more Partnership Certificates
(as defined herein) in the name of such Partner. Each such
Partnership Certificate shall be denominated in terms of the percentage of
Partnership Interests evidenced by such Partnership Certificate and shall be
signed by an Officer on behalf of the Partnership. “Partnership
Certificate” means a certificate issued by the Company substantially in the form
of Schedule A hereto, which evidences the ownership of Partnership
Interests. Each Partnership Certificate shall bear, in effect, the
following legend: “Each partnership interest in the Partnership shall
constitute a “security” within the meaning of, and shall be governed by, (i)
Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15)
thereof) as in effect from time to time in the State of Delaware, and (ii)
Article 8 of the Uniform Commercial Code of any other applicable jurisdiction
that now or hereafter substantially includes the 1994 revisions to Article
8
thereof as adopted by the American Law Institute and the National Conference
of
Commissioners on Uniform State Laws and approved by the American Bar Association
on February 14, 1995.”
(c) Upon
a Partner’s
Disposition in accordance with the provisions of this Agreement, including
Section 3.3 hereof, of any or all Partnership Interests in the
Partnership represented by a Partnership Certificate, the transferee of such
Partnership Interests shall deliver such endorsed Partnership Certificate to
the
Partnership for cancellation, and the Partnership shall thereupon issue a new
Partnership Certificate to such transferee for the percentage of Partnership
Interests that is the subject of such Disposition and, if applicable, cause
to
be issued to such Partner a new Partnership Certificate for that percentage
of
Partnership Interests that were represented by the canceled Partnership
Certificate and that are not the subject of such Disposition.
(d) The
Partnership
shall maintain books for the purpose of registering the Disposition of
Partnership Interests. Notwithstanding any other provision of this
Agreement, a Disposition of Partnership Interests in the Partnership requires
delivery of an endorsed Partnership Certificate and shall be effective upon
registration of such Disposition in the books of the Partnership.
(e) The
Partnership
shall issue a new Partnership Certificate in place of any Partnership
Certificate previously issued if the holder of the Partnership Interests
represented by such Partnership Certificate, as reflected on the books and
records of the Partnership:
(i) makes
proof by
affidavit, in form and substance satisfactory to the Partnership, that such
previously issued Partnership Certificate has been lost, stolen or
destroyed;
(ii) requests
the
issuance of a new Partnership Certificate before the Partnership has notice
that
such previously issued Partnership Certificate has been acquired by a purchaser
for value in good faith and without notice of an adverse claim;
(iii) if
requested by the
Partnership, delivers to the Partnership a bond, in form and substance
satisfactory to the Partnership, with such surety or sureties as the Partnership
may direct, to indemnify the Partnership against any claim that may be made
on
account of the alleged loss, destruction or theft of the previously issued
Partnership Certificate; and
(iv) satisfies
any other
reasonable requirements imposed by the Partnership.
(f) In
addition to the
legend referred to in Section 3.4(b), each Partnership Certificate that
is issued shall bear the following legend:
“THE
TRANSFER OR
OTHER DISPOSITION OF THE PARTNERSHIP INTERESTS EVIDENCED HEREBY IS SUBJECT
TO
THE RESTRICTIONS ON TRANSFER SET FORTH IN THE AGREEMENT, INCLUDING THOSE IN
SECTION 3.3 THEREOF.”
(g) Notwithstanding
any provision of this Agreement to the contrary, to the extent that any
provision of this Agreement is inconsistent with any non-waivable provision
of
Article 8 of the Uniform Commercial Code as in effect in the State of Delaware
(6 Del. C.§ 8-101, etseq.) (the
“UCC”), such provision of Article
8 of the UCC shall
control.
Section
3.5 Creation
of Additional Partnership Interests. Additional
Partnership Interests may be created and issued to existing Partners or to
other
Persons, and such other Persons may be admitted to the Partnership as Partners,
only with the express prior approval of the Management Committee, and without
the consent of any Partner or any other Person being required, and, if so
approved, only on such terms and conditions as the Management Committee may
determine at the time of such approval or admission. The terms of
admission or issuance must specify the applicable Percentage Interests of the
new and existing Partners and may provide for the creation of different classes
or groups of Partners having different rights, powers and duties, including
rights, powers and duties that are senior in preference to existing
Partners. The Management Committee may determine the rights, classes
and duties of any such class or group of Partners without the vote or consent
of
any Partner or any other Person and may amend this Agreement as necessary to
reflect the rights, classes and duties of any such class or group of Partners
without the vote or consent of any Partner or any other Person. Any
such admission shall be effective only after the new Partner has executed and
delivered to each other Partner an instrument containing the notice address
of
the new Partner, the new Partner’s ratification of this Agreement and agreement
to be bound by it, and its confirmation that the representations and warranties
in Section 3.2 are true and correct with respect to it. The
provisions of this Section 3.5 shall not apply to Dispositions of
Partnership Interests or admissions of Assignees in connection therewith, such
matters being governed by Section 3.3.
Section
3.6 Access
to Information. Each
Partner, any former Partner and the agent(s) and attorney(s) of any Partner
or
former Partner shall, upon a request submitted to the Partnership in writing,
have access to the books and records of the Partnership and other information
concerning the Partnership’s business and affairs (including the books, records
and information maintained pursuant to Sections 8.1 or 8.2 upon
reasonable demand, for any purpose reasonably related to such Partner’s or
former Partner’s interest (or former interest in the case of a former Partner)
in the Partnership. In addition, each Partner shall be entitled, upon
a reasonable demand for any purpose reasonably related to such Partner’s or
former Partner’s interest (or former interest in the case of a former Partner)
in the Partnership, to receive any information that it may request concerning
the Partnership; provided, however, that this Section 3.6 shall
not obligate the Partnership, the Management Committee or any Officer to create
any information that does not already exist at the time of such request (other
than to convert existing information from one medium to another, such as
providing a printout of information that is stored in a computer
database). Each Partner shall also have the right, upon reasonable
notice for any purpose reasonably related to such Partner’s or former Partner’s
interest (or former interest in the case of a former Partner) in the
Partnership, and at all reasonable times during usual business hours to inspect
the properties of the Partnership and to audit, examine and make copies of
the
books of account and other records of the Partnership. This right may
be exercised through any agent or employee of a Partner designated in writing
by
it or by an independent public accountant, engineer, attorney or other
consultant so designated. The Partner making the request shall bear
all costs and expenses incurred in any inspection, examination or audit made
on
that Partner’s behalf. The Partners agree to cooperate reasonably,
and to cause their respective independent public accountants, engineers,
attorneys or other consultants to cooperate reasonably, in connection with
any
such request. The foregoing rights of access are intended to provide
rights of access (including the rights to examine and make extracts from books
and records and other information concerning the Partnership’s business and
affairs) that are at least as extensive as those contemplated in Section 15-403
of DRUPA and, to the extent the rights of access granted hereunder are more
restrictive than those provided in such Section 15-403, this provision shall
be
deemed amended to the extent necessary to accommodate the broader scope
contemplated thereby, subject to Section 8.5. Confidential Information
obtained under this Section 3.6 shall be subject to the provisions of
Section 3.7.
Section
3.7 Confidential
Information.
(a) Except
as permitted
by Section 3.7(b), (i) each Partner shall, and shall cause its Affiliates
to, keep confidential all Confidential Information and shall not disclose any
Confidential Information to any Person, including any of its Affiliates, and
(ii) each Partner shall use the Confidential Information only in connection
with
the Facilities and the Partnership.
(b) Notwithstanding
Section 3.7(a), but subject to the other provisions of this
Section 3.7, a Partner or, where applicable, its Affiliates, may
make the following disclosures and uses of Confidential
Information:
(i) disclosures
to
another Partner, the Management Committee or any other Person retained by the
Partnership in connection with the Partnership;
(ii) disclosures
and
uses that are approved by the Management Committee;
(iii) disclosures
that
may be required from time to time to obtain requisite Authorizations or
financing for projects related to the Facilities, if the projects are approved
by the Management Committee;
(iv) disclosures
to an
Affiliate of such Partner, including the directors, officers, employees, agents
and advisors of that Affiliate, if such Affiliate has agreed to abide by the
terms of this Section 3.7, and special care shall be taken to restrict
such disclosures in any case where that Affiliate is or may become a customer
of
the Facilities or a “Marketing Affiliate” (as defined
in the FERC’s Standards of Conduct for Transmission Providers, 18 C.F.R. Part
358;
(v) disclosures
to the
Parent of such Partner, including the directors, officers, employees, agents
and
advisors of such Parent, but such Parent shall be subject to the terms of this
Section 3.7;
(vi) disclosures
to a
Person that is not a Partner or an Affiliate of a Partner, if that Person has
been retained by a Partner or an Affiliate of a Partner to provide services
in
connection with the Partnership and has agreed to abide by the terms of this
Section 3.7;
(vii) disclosures
to a
bona-fide potential direct or indirect purchaser of that Partner’s Partnership
Interest, if that potential purchaser has agreed to abide by the terms of this
Section 3.7;
(viii) disclosures
required, with respect to a Partner or an Affiliate of a Partner, pursuant
to
(A) the Securities Act and the rules and regulations promulgated thereunder,
(B)
the Securities Exchange Act and the rules and regulations promulgated
thereunder, (C) any state securities Laws, (D) any national securities exchange
or automated quotation system or (E) any tax authority as such Partner deems
appropriate; and
(ix) disclosures
that a
Partner is legally compelled to make by deposition, interrogatory, request
for
documents, subpoena, civil investigative demand, order of a court of competent
jurisdiction or similar process or otherwise by Law or regulatory agency;
provided, however, that, prior to any such disclosure, such Partner
shall, to the extent legally permissible:
(A) provide
the
Management Committee with prompt notice of such requirements so that one or
more
of the Partners may seek a protective order or other appropriate remedy or
waive
compliance with the terms of this Section 3.7(b)(ix);
(B) consult
with the
Management Committee on the advisability of taking steps to resist or narrow
such disclosure; and
(C) cooperate
with the
Management Committee and with the other Partners in any attempt one or more
of
them may make to obtain a protective order or other appropriate remedy or
assurance that confidential treatment will be afforded the Confidential
Information; and in the event such protective order or other remedy is not
obtained, or the other Partners waive compliance with the provisions of this
Agreement, that Partner agrees (I) to furnish only that portion of the
Confidential Information that, in the opinion of the Partner’s counsel, the
Partner is legally required to disclose, and (II) to exercise all reasonable
efforts to obtain assurance that confidential treatment will be accorded the
Confidential Information.
(c) Each
Partner shall
take, and shall cause its Affiliates to take, such precautionary measures as
may
be required to ensure (and such Partner shall be responsible for) compliance
with this Section 3.7 by any of its Affiliates, and its and their
directors, officers, employees and agents, and other Persons to which it may
disclose Confidential Information in accordance with this Section
3.7.
(d) Promptly
after its
Withdrawal or Disposition of its entire Partnership Interest (other than to
an
Affiliate), such a Withdrawn Partner or Disposing Partner shall destroy (and
provide a certificate of destruction to the Partnership with respect to), or
return to the Partnership, all Confidential Information in its possession.
Notwithstanding the immediately preceding sentence, but subject to the other
provisions of this Section 3.7, a Withdrawn Partner or Disposing
Partner may retain for a stated period, but not disclose to any other Person,
Confidential Information for the limited purposes of (i) explaining that
Partner’s corporate decisions with respect to the Facilities or the
Partnership’s other direct or indirect business, operations, properties or
assets, or (ii) preparing such Partner’s tax returns and defending audits,
investigations and proceedings relating thereto; provided, however,
that the Withdrawn Partner must notify the Management Committee in advance
of
such retention and specify in such notice the stated period of such
retention. In addition, the Withdrawn Partner may retain copies of
the Confidential Information in its electronic archives provided it continues
to
maintain the confidentiality of such material for the term described in
Section 3.7(f) below.
(e) The
Partners agree
that no adequate remedy at law exists for a breach or threatened breach of
any
of the provisions of this Section 3.7, the continuation of which
unremedied will cause the Partnership and the other Partners to suffer
irreparable harm. Accordingly, the Partners agree that the Partnership and
the
other Partners shall be entitled, in addition to other remedies that may be
available to them, to seek immediate injunctive relief from any breach of any
of
the provisions of this Section 3.7 and to seek specific performance of
their rights hereunder, as well as to any other remedies available at law or
in
equity, pursuant to Section 10.4, and the other Partner(s) agree not
to object to such relief on the grounds that monetary damages constitute a
sufficient remedy.
(f) The
obligations of
the Partners under this Section 3.7 (including the obligations of any
Withdrawn Partners) shall continue to bind any Person that has ceased to be
a
Partner and shall terminate on the first anniversary of the end of the
Term.
Section
3.8 Limitation
of Liabilities of Partners.
(a) Except
as otherwise
provided by DRUPA, no Partner shall be liable to third persons for Partnership
losses, deficits, liabilities or obligations, except as otherwise expressly
agreed to in writing by such Partner, unless the assets of the Partnership
shall
have first been exhausted.
(b) After
the Effective
Date, the Management Committee shall, and shall cause the Officers to, use
their
respective reasonable efforts to prevent the Partnership from entering into
any
contract, lease, sublease, note, indebtedness, deed of trust or agreement or
document that creates any liability, indebtedness or other obligation unless
there is contained therein an appropriate provision expressly limiting the
claims of all parties to such instruments or agreements and other beneficiaries
thereunder to the assets of the Partnership and expressly waiving any rights
of
such parties and other beneficiaries to proceed against any Partners for any
such Partnership obligation, without the prior written consent of all
Partners. Notwithstanding the immediately preceding sentence, the
Partners agree that it shall not constitute a breach or violation of this
Section 3.8(b) if the Partnership enters into a service agreement(s) in
the form of a pro forma service agreement included in the FERC Gas
Tariff of CIGC.
Section
3.9 Use
of
Partners’ Names and Trademarks.
The Partnership,
the Partners and their Affiliates shall not use the name or trademark of any
Partner or its Affiliates in connection with public announcements regarding
the
Partnership, or marketing or financing activities of the Partnership, without
the prior consent of such Partners or Affiliate, which shall not be unreasonably
withheld.
ARTICLE
4
CAPITAL
CONTRIBUTIONS
Section
4.1 Capital
Contributions.
(a) Except
as otherwise
provided in the following provisions of this Section 4.1 or
Section 4.2, the Management Committee may issue or cause to be
issued a notice to each Partner for the making of Capital Contributions at
such
times and in such amounts as the Management Committee shall determine (a
“Capital Call”), such determination to be made in
accordance with Article 6. All amounts timely received by the
Partnership under this Section 4.1 shall be credited to the respective
Partner’s Capital Account as of the specified date.
(b) Each
Capital Call
shall contain the following information:
(i) The
total amount of
Capital Contributions required from all Partners;
(ii) The
amount of
Capital Contribution required from the Partner to which the notice is addressed,
which amount must equal that Partner’s Percentage Interest of the total Capital
Call;
(iii) The
purpose for
which the funds are to be applied in such reasonable detail as the Management
Committee shall direct; and
(iv) The
date on which
payments of the Capital Contribution shall be made (which date shall not be
earlier than the 30th Day following the date the Capital Call is given, unless
an earlier date is approved by the Management Committee) and the method of
payment, provided that the date and the method shall be the same for each of
the
Partners.
(c) Each
Partner agrees
that it shall make payments of its respective Capital Contributions in
accordance with Capital Calls issued as provided in this Section
4.1.
Section
4.2 Loans.
(a) Instead
of making a
Capital Call under Section 4.1, the Management Committee by notice in
writing (the “Loan Notice”) submitted to the Partners
may request the Partners to lend funds to the Partnership at such times, in
such
amounts and under such terms and conditions as the Management Committee shall
determine; provided, however, that the Management Committee shall not
issue any such Loan Notice to the extent that incurring any such loan would
breach or violate any financing or other agreement of the
Partnership.
(b) Each
Loan Notice
issued under Section 4.2(a) shall contain the following
information:
(i) The
total amount of
loans requested from the Partners;
(ii) The
amount of the
loan requested from the Partner to which the notice is addressed, which amount
must equal (A) that Partner’s Percentage Interest of the total amount of loans
requested in the Loan Notice;
(iii) The
purpose for
which the funds are to be applied in such reasonable detail as the Management
Committee shall direct;
(iv) The
date on which
the loans to the Partnership are to be made (which date shall not be earlier
than the 30th Day following the date the Loan Notice is given, unless an earlier
date is approved by the Management Committee) and the method of payment,
provided that the date and the method shall be the same for each of the
Partners; and
(v) All
terms
concerning the repayment of or otherwise relating to the loans, provided that
the terms shall be the same for each of the Partners.
(c) No
Partner shall be
obligated to make a loan or advance to the Partnership following its receipt
of
a Loan Notice unless all Partners agree to do so.
Section
4.3 No
Other Contribution Obligations. No
Partner shall be required or permitted to make any Capital Contributions or
loans to the Partnership except as provided in this
Article 4.
Section
4.4 Return
of Contributions. Except
as expressly provided in this Agreement, a Partner is not entitled to the return
of any part of its Capital Contributions or to be paid interest in respect
of
either its Capital Account or its Capital Contributions. An unrepaid
Capital Contribution is not a liability of the Partnership or of any
Partner. None of the Partners is required to contribute or to lend
any cash or property to the Partnership to enable the Partnership to return
any
Partner’s Capital Contributions.
Section
4.5 Capital
Accounts.
(a) The
Partnership
shall maintain for each Partner (or a beneficial owner of Partnership Interests
held by a nominee in any case in which the nominee has furnished the identity
of
such owner to the Partnership in accordance with Section 6031(c) of the Code
or
any other method acceptable to the Management Committee) owning a Partnership
Interest a separate Capital Account with respect to such Partnership Interest
in
accordance with the rules of Treasury Regulation
§1.704-1(b)(2)(iv). The aggregate amount in the Capital Accounts
existing as of the Effective Date hereof shall be based on the assets and
liabilities owned by the Partnership as of the Effective Date hereof and
allocated between the Partners in accordance with their Percentage
Interests. Each Partner’s Capital Account shall be increased by (i)
the amount of money contributed by that Partner to the Partnership, (ii) the
fair market value of property contributed by that Partner to the Partnership
(net of liabilities secured by such contributed property that the Partnership
is
considered to assume or take subject to under Section 752 of the Code), and
(iii) allocations to that Partner of Partnership income and gain (or items
thereof), including income and gain exempt from tax and income and gain
described in Treasury Regulation §1.704-1(b)(2)(iv)(g), but excluding income and
gain described in Treasury Regulation §1.704-1(b)(4)(i), and shall be decreased
by (iv) the amount of money distributed to that Partner by the Partnership,
(v)
the fair market value of property distributed to that Partner by the Partnership
(net of liabilities secured by such distributed property that such Partner
is
considered to assume or take subject to under Section 752 of the Code), (vi)
allocations to that Partner of expenditures of the Partnership described (or
treated as described) in Section 705(a)(2)(B) of the Code, and (vii)
allocations of Partnership loss and deduction (or items thereof), including
loss
and deduction described in Treasury Regulation §1.704-1(b)(2)(iv)(g), but
excluding items described in (vi) above and loss or deduction described in
Treasury Regulation §1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii). The
Partners’ Capital Accounts shall also be maintained and adjusted as permitted by
the provisions of Treasury Regulation §1.704-1(b)(2)(iv)(f) and as required by
the other provisions of Treasury Regulation §§1.704-1(b)(2)(iv) and
1.704-1(b)(4), including adjustments to reflect the allocations to the Partners
of depreciation, depletion, amortization, and gain or loss as computed for
book
purposes rather than the allocation of the corresponding items as computed
for
tax purposes, as required by Treasury Regulation
§1.704-1(b)(2)(iv)(g). Thus, the Partners’ Capital Accounts shall be
increased or decreased to reflect a revaluation of the Partnership’s property on
its books based on the fair market value of the Partnership’s property on the
date of adjustment (as determined pursuant to Section 4.5(b)),
immediately prior to (A) the contribution of money or other property to the
Partnership by a new or existing Partner as consideration for a Partnership
Interest or an increased Percentage Interest, (B) the distribution of money
or
other property by the Partnership to a Partner as consideration for a
Partnership Interest, or (C) the liquidation of the Partnership. A
Partner who has more than one Partnership Interest shall have a single Capital
Account that reflects all such Partnership Interests, regardless of the class
of
Partnership Interests owned by such Partner and regardless of the time or manner
in which such Partnership Interests were acquired. Upon the
Disposition of all or a portion of a Partnership Interest, the Capital Account
of the Disposing Partner that is attributable to that Partnership Interest
shall
carry over to the Assignee in accordance with the provisions of Treasury
Regulation §1.704-1(b)(2)(iv)(l). The Capital Accounts shall not be
deemed to be, nor have the same meaning as, the capital account of the
Partnership under the NGA.
(b) Whenever
the fair
market value of the Partnership’s property is required to be determined pursuant
to the third and fourth sentences of Section 4.5(a), the Management
Committee shall establish the fair market value in a notice to the
Partners.
Section
4.6 Failure
to Make a Capital Contribution.
(a) General.
If any Partner fails to make a Capital Contribution when required in a Capital
Call under Section 4.1 of this Agreement (each such Partner being a
“Non-Contributing Partner”), then, provided the
failure has not been cured, the Partners that have contributed their Capital
Contributions in response to such Capital Call (each, a
“Contributing Partner”) may (without limitation as to
other remedies that may be available) at any time following the 10th Day
following the date the Capital Contribution was due elect to pay the portion
of
the Capital Contribution owed and unpaid by the Non-Contributing Partner (the
“Additional Contribution”), in which event the
Contributing Partner(s) that elect to fund the Non-Contributing Partners’ share
(the
“Additional Contributing
Partners”) may treat the contribution as either: (i) a Capital
Contribution resulting in the Additional Contributing Partners receiving a
Priority Interest under Section 4.6(b), or (ii) a permanent capital
contribution that results in an adjustment of Partnership Interests under
Section 4.6(c), as determined by the Additional Contributing Partners as
set forth below.
No
Contributing
Partner shall be obligated to elect to take the actions specified in the
preceding paragraph of this Section 4.1(a). The decision of the
Contributing Partners to elect to take the action described in the preceding
paragraph shall be made by the determination of the Contributing Partners
holding the majority of the Percentage Interests of all Contributing Partners,
provided that such treatment may not be elected unless at such time of
determination there is one or more Additional Contributing
Partners. The decision of the Additional Contributing Partners to
elect the treatment described in the preceding paragraph of this
Section 4.1(a) shall be made by the determination of the Additional
Contributing Partners holding the majority of the Percentage Interests of all
Additional Contributing Partners. Unless and until such election is
made, payment of the Additional Contribution shall be treated as a Priority
Interest under Section 4.6(a)(i). If the Additional
Contributing Partners make the election under Section 4.6(a) to
treat the contribution as a contribution for which they receive a Priority
Interest under Section 4.6(b), then the Additional Contributing Partners
will have the option, exercisable at any time thereafter (by the election of
Additional Contributing Partners holding a majority of the Percentage Interests
of all Additional Contributing Partners) upon notice furnished to the other
Partners not less than 30 Days before the proposed effective time of the option
exercise, to change their election such that the amount of the payment of the
Non-Contributing Partner’s portion of the Capital Contribution (less any amounts
received by the Additional Contributing Partners as a payment of the applicable
Priority Interest (other than payment of the return amount forming a part
thereof)) shall be treated as an Additional Contribution as provided in
Section 4.6(c). In that event, the accrued and unpaid return
forming part of the Priority Interest shall not be treated as an Additional
Contribution but shall continue as a Priority Interest as provided in Section
4.6(b) below (with such amount to continue to compound return
thereon).
(b) Priority
Interest. If the Additional Contributing Partners elect to treat
the payment of an Additional Contribution as a contribution for which the
Additional Contributing Partners receive a Priority Interest, then the following
shall apply:
(i) Each
Additional
Contributing Partner shall receive a Priority Interest in the distributions
from
the Partnership that would otherwise be due and payable to the Non-Contributing
Partner(s). The Priority Interest received by each Additional
Contributing Partner shall be in the proportion that the amount of the
Additional Contribution paid by such Additional Contributing Partner bears
to
the amount of the Additional Contributions made by all Additional Contributing
Partners (each Additional Contributing Partner’s percentage share of the
Priority Interests shall be its “Priority Interest Sharing
Ratio”). All distributions from the Partnership that
would otherwise be due and payable to the Non-Contributing Partner(s) instead
shall be paid to the Additional Contributing Partners in accordance with their
respective Priority Interest Sharing Ratio and no distribution shall be made
from the Partnership to any Non-Contributing Partner until all Priority
Interests have terminated. The Priority Interest shall terminate with
respect to an Additional Contributing Partner when that Additional Contributing
Partner has received either through the distributions it receives in respect
of
its Priority Interest or through payment(s) to it by the Non-Contributing
Partner(s) (which payment(s) may be made by the Non-Contributing Partner(s)
at
any time) of an amount equal to the Additional Contribution made by such
Additional Contributing Partner, plus a return thereon of twelve percent (12%)
per annum (compounded quarterly on the outstanding balance). For
purposes of making this calculation, all amounts received by an Additional
Contributing Partner shall be deemed to be applied first against a return on,
and then to the amount of, the Additional Contribution. For purposes
of maintaining Capital Accounts, any amount paid by a Non-Contributing Partner
to a Contributing Partner to reduce and/or terminate a Priority Interest shall
be treated as though such amount were contributed by the Non-Contributing
Partner to the Partnership and thereafter distributed by the Partnership to
the
Contributing Partner with respect to its Priority Interest.
(ii) The
Priority
Interests shall not alter the Percentage Interests, nor shall the Priority
Interests alter any distributions to the Contributing Partners (in their
capacity as Contributing Partners, as opposed to their capacity as Additional
Contributing Partners) in accordance with their respective Percentage
Interests. Notwithstanding any provision in this Agreement to the
contrary, a Partner may not dispose of all or a portion of its Priority Interest
except to a Person to which it Disposes of all or the applicable pro rata
portion of its Partnership Interest after compliance with the requirements
of
this Agreement for the Disposition.
(iii) No
Partner that is
a Non-Contributing Partner may Dispose of its Partnership Interest unless,
at
the closing of such Disposition, either the Non-Contributing Partner or the
proposed Assignee pays the amount necessary to terminate the Priority Interest
arising from such Non-Contributing Partner’s failure to contribute. No such
transferee shall be admitted to the Partnership as a Partner until compliance
with this Section 4.6(b)(iii) has occurred.
(c) Permanent
Contribution. Subject to Section 4.6(a), if the
Additional Contributing Partners elect under Section 4.6(a) to have the
Additional Contribution treated as a permanent capital contribution, then each
Additional Contributing Partner that funds a portion of the Additional
Contribution shall have its Capital Account increased accordingly and the
Partners’ Partnership Interests and Percentage Interests will be automatically
adjusted to equal each Partner’s total Capital Contributions when expressed as a
percentage of all Partners’ Capital Contributions.
(d) Further
Assurance. In connection with this Section 4.6, each
Partner shall execute and deliver any additional documents and instruments
and
perform any additional acts that may be necessary or appropriate to effectuate
and perform the provisions of this Section 4.6.
ARTICLE
5
DISTRIBUTIONS
AND ALLOCATIONS
Section
5.1 Distributions.
(a) On
or before the
final Business Day of the calendar month immediately following the end of each
Quarter (commencing with the Quarter ending ________, 2007), the Management
Committee shall review and determine the amount of Available Cash with respect
to that Quarter, and, subject to the terms of Section 4.6(b), an amount
equal to 100% of Available Cash with respect to that Quarter shall be
distributed in accordance with this Article 5 to the Partners (other than
a Breaching Partner) in proportion to their respective Percentage Interests
(at
the time the amounts of such distributions are made); provided,
however, that the amount of Available Cash required to be distributed for
the Quarter in which the Effective Date occurs, shall be pro rated based upon
a
fraction, of which the numerator is the number of days in the period that
commences on the Effective Date and ends on December 31, 2007 and of which
the
denominator is 92.
(b) Notwithstanding
Section 5.1(a), in the event of the dissolution and winding up of the
Partnership, all receipts of the Partnership received during or after the
Quarter in which the Liquidation Date occurs shall be applied and distributed
solely in accordance with, and subject to the terms and conditions of Section
11.2(a)(iii)(C).
Section
5.2 Allocations
for Capital Account Purposes.
(a) For
purposes of
maintaining the Capital Accounts pursuant to Section 4.5, except as
provided in Section 5.2(b) and (c), each item of income, gain,
loss, expense, deduction and credit of the Partnership shall be allocated to
the
Partners in accordance with their respective Percentage Interests.
(b) With
respect to
each period during which a Priority Interest is outstanding, each Additional
Contributing Partner shall be allocated items of income and gain in an amount
equal to the return that accrues with respect to that Additional Contributing
Partner’s Additional Contribution pursuant to Section 4.6(b)(i), and
items of income and gain that would otherwise be allocable to the
Non-Contributing Partner(s) shall be correspondingly reduced.
(c) Notwithstanding
any
other provision of this Section 5.2, the following special allocations
shall be made in the following order:
(i) Minimum
Gain
Chargeback. Notwithstanding any other provision hereof to the
contrary, if there is a net decrease in Minimum Gain (as generally defined
under
Treasury Regulation Section §1.704-1 or §1.704-2) for a taxable year (or if
there was a net decrease in Minimum Gain for a prior taxable year and the
Partnership did not have sufficient amounts of income and gain during prior
years to allocate among the Partners under this Section 5.2(c)(i), then
items of income and gain shall be allocated to each Partner in an amount equal
to such Partner’s share of the net decrease in such Minimum Gain (as determined
pursuant to Treasury Regulation §1.704-2(g)(2)). It is the intent of
the Partners that any allocation pursuant to this Section 5.2(c)(i) shall
constitute a “minimum gain chargeback” under Treasury Regulations §1.704-2(f)
and shall be interpreted consistently therewith.
(ii) Partner
Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding any
other provision of this Article 5, except Section 5.2(c)(i), if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain (as generally
defined under Treasury Regulation §1.704-1 or §1.704-2), during any taxable
year, any Partner who has a share of the Partner Nonrecourse Debt Minimum Gain
shall be allocated such amount of income and gain for such year (and subsequent
years, if necessary) determined in the manner required by Treasury Regulation
§1.704-2(i)(4) as is necessary to meet the requirements for a chargeback of
Partner Nonrecourse Debt Minimum Gain.
(iii) Qualified
Income Offset. Except as provided in
Section 5.2(c)(i) and (ii) hereof, in the event any Partner
unexpectedly receives any adjustments, allocations or distributions described
in
Treasury Regulation §1.704-1(b)(2)(ii)(d)(4), §1.704-1(b)(2)(ii)(d)(5), or
§1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Allocation Regulations, the deficit
balance, if any, in its Adjusted Capital Account created by such adjustments,
allocations or distributions as quickly as possible.
(iv) Gross
Income
Allocations. In the event any Partner has a deficit balance in
its Adjusted Capital Account at the end of any Partnership taxable period in
excess of the sum of the amount such Partner is obligated to restore pursuant
to
any provision of this Agreement or pursuant to Treasury Regulation
§1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations §§1.704-2(g)(1) and 1.704-2(i)(5),
such Partner shall be specially allocated items of Partnership gross income
and
gain in the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 5.2(c)(iv) shall be made only if
and to the extent that such Partner would have a deficit balance in its Adjusted
Capital Account after all other allocations provided in this Section 5.2
have been tentatively made as if Section 5.2(c)(iv) were not in the
Agreement.
(v) Partnership
Nonrecourse Deductions. Partnership Nonrecourse Deductions (as
determined under Treasury Regulation §1.704-2(c)) for any fiscal year shall be
allocated among the Partners in proportion to their Percentage
Interests.
(vi) Partner
Nonrecourse Deductions. Any Partner Nonrecourse Deductions (as
defined under Treasury Regulation §1.704-2(i)(2)) shall be allocated pursuant to
Treasury Regulation Section 1.704-2(i) to the Partner who bears the economic
risk of loss with respect to the partner nonrecourse debt to which it is
attributable. Provided, however, that if more than
one Partner bears the economic risk of loss for such debt, the Partner
Nonrecourse Deductions attributable to such partner nonrecourse debt shall
be
allocated to and among the Partners in the same proportion that they bear the
economic risk of loss for such partner nonrecourse debt. This
Section 5.2(c)(vi) is intended to comply with the provision of Treasury
Regulation §1.704-2(i) and shall be interpreted consistently
therewith.
(vii) Code
Section
754 Adjustment. To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the
Code
is required, pursuant to the Allocation Regulations, to be taken into account
in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis), and such
item of gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to
be
adjusted pursuant to the Allocation Regulations.
(viii) Curative
Allocation. The special allocations set forth in
Sections 5.2(c)(i)-(vii) (the “Regulatory
Allocations”) are intended to comply with the Allocation
Regulations. Notwithstanding any other provisions of this
Section 5.2, the Regulatory Allocations shall be taken into account
in allocating items of income, gain, loss and deduction among the Partners
such
that, to the extent possible, the net amount of allocations of such items and
the Regulatory Allocations to each Partner shall be equal to the net amount
that
would have been allocated to each Partner if the Regulatory Allocations had
not
occurred.
Section
5.3 Allocations
for Tax Purposes.
(a) Except
as otherwise
provided herein, for federal income tax purposes each item of income, gain,
loss
and deduction shall be allocated among the Partners in the same manner as its
correlative item of “book” income, gain, loss and deduction is allocated
pursuant to Section 5.2.
(b) Notwithstanding
any
provisions contained herein to the contrary, for income tax purposes, income,
gain, loss, and deduction with respect to property contributed to the
Partnership by a Partner or revalued pursuant to Treasury Regulation
§1.704-1(b)(2)(iv)(f) shall be allocated among the Partners in a manner that
takes into account the variation between the adjusted tax basis of such property
and its Carrying Value, as required by Section 704(c) of the Code and Treasury
Regulation §1.704-1(b)(4)(i), using the remedial allocation method permitted by
Treasury Regulation §1.704-3(d).
Section
5.4 Varying
Interests. All
items of income, gain, loss, deduction or credit shall be allocated, and all
distributions shall be made, to the Persons shown on the records of the
Partnership to have been Partners as of the last calendar day of the period
for
which the allocation or distribution is to be made. Notwithstanding
the foregoing, if during any taxable year there is a change in any Partner’s
Percentage Interest, the Partners agree that their allocable shares of items
for
the taxable year shall be determined on any method determined by the Management
Committee to be permissible under Code Section 706 and the related Treasury
Regulations to take account of the Partners’ varying Percentage
Interests.
ARTICLE
6
MANAGEMENT
Section
6.1 Generally. The
management of the business and affairs of the Partnership is fully vested in
the
Partners. To facilitate the orderly and efficient management of the business
and
affairs of the Partnership, the Partners shall act (a) collectively as a
“committee of the whole” (such committee to be referred to as the Management
Committee) pursuant to Section 6.2, and (b) through the delegation
by the Management Committee of certain duties and authority to the
Officers. Subject to the express provisions of this Agreement, each
Partner agrees that it will not exercise any authority it may otherwise have
under DRUPA or otherwise to bind or commit the Partnership to agreements,
transactions or other arrangements, or to hold itself out as an agent of the
Partnership.
Section
6.2 Management
Committee. Decisions
or actions taken by the Management Committee in accordance with the provisions
of this Agreement shall constitute decisions or actions by the Partnership
and
shall be binding on each Partner, Representative, Officer and employee of the
Partnership. The Management Committee shall conduct its affairs in
accordance with the following provisions and the other provisions of this
Agreement:
(a) Representatives.
(i) Composition. The
Management Committee shall be composed of four Representatives designated as
provided below by the Partners. Each of EP Noric and EPPP CIG shall
be entitled to designate the number of Representatives and Alternate
Representatives set forth opposite such Partner’s name in Annex I under
the column entitled “Number of Representatives and Alternate
Representatives.”
(ii) Designation. To
facilitate the orderly and efficient conduct of Management Committee meetings,
each Partner shall notify the other Partners in writing, from time to time,
of
the identity of (A) one or more of its officers, employees or agents who will
represent it at meetings (each, a “Representative”),
such number of Persons so identified at any time not to exceed the number of
Representatives to be designated by such Partner in accordance with
Section 6.2(a)(i), and (B) one or more of its officers, employees or
agents who will represent it at any meeting that any one or more of
that Partner’s Representatives is unable to attend (each an
“Alternate Representative”; if an Alternative
Representative is to be an alternate for more than one Representative of a
Partner, the Partner’s notification shall specify same), such number of Persons
so identified at any time not to exceed the number of Alternate Representatives
to be designated by such Partner in accordance with
Section 6.2(a)(i). (The term
“Representative” shall also refer to
any Alternate Representative that is actually performing the duties of the
applicable Representative.). The initial Representatives and
Alternate Representatives designated by each Partner are set forth in Annex
I. A Partner may designate different Representatives or Alternate
Representatives for any meeting of the Management Committee by notifying each
of
the other Partners on or before the date scheduled for that meeting;
provided, however, that if giving that advance notice is not feasible,
then any new Representative or Alternate Representative shall present written
evidence of his or her authority at the commencement of such
meeting. Alternate Representatives may attend all Management
Committee meetings but shall have no vote at any such meeting attended except
in
the absence of the Representative for whom such Person is the Alternate
Representative. Upon the death, resignation or removal for any reason
of any Representative of a Partner, such Partner shall promptly designate a
successor as provided herein.
(iii) Authority. Each
Representative shall have the full authority to act on behalf of the Partner
that designated such Representative; the action of the Representative(s) at
a
meeting (or through a written consent) of the Management Committee shall bind
the Partner that designated that Representative(s); and the other Partner shall
be entitled to rely upon such action without further inquiry or investigation
as
to the actual authority (or lack thereof) of such
Representative(s). In addition, the act of an Alternate
Representative shall be deemed the act of the Representative for which that
Alternate Representative is acting, without the need to produce evidence of
the
absence or unavailability of such Representative.
(iv) DISCLAIMER
OF
DUTIES; INDEMNIFICATION. EACH REPRESENTATIVE SHALL BE AN AGENT
OF AND SHALL REPRESENT, AND, TO THE FULLEST EXTENT PERMITTED BY LAW, OWE DUTIES
TO, ONLY THE PARTNER THAT DESIGNATED THE REPRESENTATIVE (THE NATURE AND EXTENT
OF SUCH DUTIES BEING AN INTERNAL AFFAIR OF THE PARTNER), AND, TO THE EXTENT
PERMITTED BY LAW, SHALL NOT OWE ANY DUTY (FIDUCIARY OR OTHERWISE) TO THE
PARTNERSHIP, ANY OTHER PARTNER OR REPRESENTATIVE OR ANY OFFICER OR EMPLOYEE
OF
THE PARTNERSHIP. THE PROVISIONS OF SECTION 6.2(e)(ii) SHALL ALSO INURE TO
THE BENEFIT OF EACH PARTNER’S REPRESENTATIVE. THE PARTNERSHIP SHALL INDEMNIFY,
TO THE FULLEST EXTENT PERMITTED BY LAW, PROTECT, DEFEND, RELEASE AND HOLD
HARMLESS EACH REPRESENTATIVE FROM AND AGAINST ANY CLAIMS ASSERTED BY OR ON
BEHALF OF ANY PERSON (INCLUDING ANOTHER PARTNER), OTHER THAN THE PARTNER THAT
DESIGNATED THE REPRESENTATIVE, THAT ARISE OUT OF, RELATE TO OR ARE OTHERWISE
ATTRIBUTABLE TO, DIRECTLY OR INDIRECTLY, THE REPRESENTATIVE’S SERVICE ON THE
MANAGEMENT COMMITTEE.
(v) Attendance. Each
Partner shall use all reasonable efforts to cause its Representative(s) or
Alternate Representative(s) to attend each meeting of the Management Committee,
unless its Representative(s) is unable to do so because of a “force
majeure” event or other event beyond such Person’s reasonable control, in
which event such Partner shall use all reasonable efforts to cause its
Representative(s) or Alternate Representative to participate in the meeting
by
telephone or other electronic communication pursuant to
Section 6.2(g).
(b) Procedures.
The Management Committee shall maintain (or cause to be maintained) written
minutes of each of its meetings, which shall be submitted for approval within
a
reasonable period of time after each meeting. The Management
Committee may adopt such rules and procedures relating to its activities as
the
Management Committee may deem appropriate, provided that such rules and
procedures shall not be inconsistent with or violate the provisions of this
Agreement.
(c) Time
and Place of Meetings. The Management
Committee shall meet no less often than once each Quarter; provided,
however, that in lieu of any such meeting the Management Committee may
elect to act by written consent. The time, date and location of
meetings of the Management Committee, and the agenda for each such meeting,
shall be as determined by the Management Committee from time to
time. Special meetings of the Management Committee may be called at
such times, and in such manner, as any Representative or Partner determines
to
be necessary or appropriate. Any Representative or Partner calling
for any such special meeting shall notify all other Representatives and Partners
of the date and agenda for such meeting on or before the third Business Day
prior to the date of such meeting, provided that such three (3) Business Day
period may be waived by agreement of the other
Representatives. Attendance of a Partner’s Representative at a
meeting of the Management Committee shall constitute a waiver of notice of
that
meeting, except where the Representative attends the meeting for the express
purpose of objecting to the transaction of any business on the ground that
the
meeting was not properly called or convened in accordance with this
Agreement.
(d) Quorum. The
presence, in person, by telephone or by other form of two-way electronic
communication permitted by Section 6.2(g), of a majority of the
Representatives (including, in the absence of a Representative, the Alternative
Representative of such Person) shall constitute a quorum for the transaction
of
business at any meeting of the Management Committee, provided that such majority
includes at least one Representative (or Alternate Representative) of each
Partner.
(e) Voting.
(i) Voting;
Voting
Thresholds. Except as provided otherwise in this Agreement, each
Representative (or Alternate Representative, as the case may be) present and
acting at a meeting of the Management Committee shall be entitled to one vote
on
each matter submitted to the Management Committee for its approval, consent
or
determination. Except as otherwise provided in this Agreement, the
affirmative vote of a majority of the Representatives in attendance at a meeting
of the Management Committee at which a quorum is
present (a “Majority Interest”)
shall constitute the action of the Management Committee.
(ii) DISCLAIMER
OF
DUTIES. WITH RESPECT TO ANY VOTE, CONSENT OR
APPROVAL AT ANY MEETING OF THE MANAGEMENT COMMITTEE OR OTHERWISE UNDER THIS
AGREEMENT, EACH PARTNER OR ITS REPRESENTATIVE MAY GRANT OR WITHHOLD ITS VOTE,
CONSENT OR APPROVAL IN ITS SOLE DISCRETION, FREE FROM ANY DUTY, FIDUCIARY OR
OTHERWISE, TO THE PARTNERSHIP OR ANY PARTNER OTHER THAN THE DUTY TO ACT IN
GOOD
FAITH. THE PROVISIONS OF THIS SECTION 6.2(e)(ii) SHALL
APPLY NOTWITHSTANDING THE NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT,
STRICT LIABILITY OR OTHER FAULT OR RESPONSIBILITY OF A PARTNER OR ITS
REPRESENTATIVE.
(iii) Exclusion
of
Certain Partners and Their Sharing Ratios. With respect to any
vote, consent or approval, the Representative(s) of any Breaching Partner or
Withdrawn Partner shall be excluded from such decision (as contemplated by
Section 9.3(b)), and the requirement in Section 6.2(d) above
for the determination of a quorum shall be deemed to be modified
appropriately.
(f) Action
by Written Consent. Any action
required or permitted to be taken at a regular or special meeting of the
Management Committee may be taken without a meeting, without prior notice,
and
without a vote if a consent or consents in writing, setting forth the action
so
taken, is signed either by all of the Representatives (or if a Representative
is
unavailable, the Alternate Representative for that unavailable Representative)
or by all of the Partners.
(g) Meetings
by Telephone or Other Communications
Devices. Representatives (including any Alternate
Representative) may participate in and hold any meeting by means of conference
telephone, videoconference or similar communications equipment by means of
which
all persons participating in the meeting can communicate with and hear each
other. Participation in a meeting shall constitute presence in person at the
meeting, except where a Partner participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that
the
meeting is not lawfully called or convened.
(h) Matters
Requiring Management Committee Approval. Except as
expressly provided elsewhere in this Agreement, none of the following actions
may be taken by, or on behalf of the Partnership, without first obtaining the
vote of the Management Committee described below:
(i) Unanimous
Interest. The following actions shall require the approval of
all Representatives or Partners:
(A) to
the fullest
extent permitted by law, dissolution of the Partnership under Section
11.1(a);
(B) to
the fullest
extent permitted by law, causing or permitting the Partnership to become
Bankrupt (but this provision is not intended to require, nor shall it be
construed to require, any Partner to ensure the profitability or solvency of
the
Partnership);
(C) causing
the
Partnership to mortgage or pledge any of its properties or assets to secure
the
payment or performance of any obligation for the repayment of borrowed money
or
any guarantee of such repayment;
(D) the
commencement
before the FERC, or the resolution through settlement, stipulation or other
consensual means, in whole or in part, before the FERC (or before any United
States Court of Appeals on an appeal of an order of the FERC), of:
(i) any
NGA Section 4
(15 U.S.C. Section 717(c)) general rate case (provided that it shall not
constitute a breach of this Agreement if without the unanimous approval
specified herein the Partnership makes such filing(s) with the FERC as may
be
necessary or appropriate to commence any NGA Section 4 rate case to the extent
that failure to do so would breach or violate any existing rate settlement,
stipulation or other order of the FERC to which the Partnership is subject);
or
(ii) any
other
proceeding or controversy at the FERC or on an appeal of an order thereof,
the
outcome of which would cause either
a. the
Partnership’s
revenues to be reduced by, or
b. the
Partnership to
pay penalties, refunds or interest of,
a
total of $____ million or more;
or
(iii) to
agree to any
criminal penalty;
(E) any
amendment to
this Agreement (including any amendment to Section 5.1), other than an
amendment solely made to change the Partnership’s name;
(F) the
creation of any
additional Partnership Interests of any class in accordance with Section
3.4 and specifying the rights, class(es) and duties thereof, or the proposed
admission of any Person (other than a Permitted Transferee) as a partner of
the
Partnership, whether as a result of the Disposition by a Partner of all or
any
part of its Partnership Interest or otherwise, provided,
however, that the Disposition by a Partner of all or any part of
its
Partnership Interest to a Permitted Transferee shall not require the prior
approval of the Management Committee;
(G) any
proposal to
sell or otherwise Dispose of assets of the Partnership (excluding any agreement
to sell service using capacity on the Facilities), whether in a single
transaction or any series of transactions, outside the ordinary course of the
Partnership’s business with a value exceeding a total of $225 million in any
calendar year;
(H) the
Disposition or
abandonment of all or substantially all of the assets of the Partnership, and
any Disposition (including a Deemed Tax Disposition, if such Disposition, when
added to the total of all other Dispositions (including Deemed Tax Dispositions)
within the preceding twelve months, results in the Partnership being considered
to have terminated within the meaning of Section 708(b)(1)(B) of the
Code;
(I) causing
or
permitting the Partnership to merge with, or consolidate or convert into, any
other entity;
(J) entering
into,
conducting, or authorizing the Partnership to conduct, any new activity or
business that may cause the Partnership to generate income for federal income
tax purposes which will not constitute “qualifying income” (as such term is
defined pursuant to Section 7704 of the Code); or
(K) any
amendment to
the Master Services Agreement, other than any amendment that the Management
Committee determines would not materially adversely affect the
Partnership.
(ii) Majority
Interest. A Majority Interest shall be required to
approve:
(A) causing
the
Partnership to take any action under this Agreement that requires Management
Committee approval other than the actions specified in Section
6.2(h)(i);
(B) the
determination
of the amount of Available Cash with respect to each Quarter;
(C) approving,
modifying or amending the annual Capital Budget and Operating Budget for the
Partnership (with it being understood that the latest approved Capital Budget
or
Operating Budget shall be used, and deemed approved, for any subsequent period
until the new Capital Budget or Operating Budget (as applicable) for that period
is so approved), including the parameters under which the Officers are
authorized to expend Partnership funds without further Management Committee
approval;
(D) issuing
or causing
to be issued any Capital Call under Section 4.1 or Loan Notice under
Section 4.2;
(E) any
additions to
(by acquisition, development, construction or otherwise) or expansions or
extensions of the Facilities, provided that any additions, expansions or
extensions to the Facilities approved by either (I) any duly authorized
Officer(s) pursuant to authority delegated by the Management Committee or (II)
in accordance with the Master Services Agreement, shall be deemed approved
by
the Management Committee for purposes hereof and shall not require separate
approval;
(F) appointing
Officers
of the Partnership and determining their authority to act on behalf of the
Partnership;
(G) designating
Officers or employees to serve on the audit committee of the Partnership, if
one
shall be established by the Management Committee;
(H) any
change in the
Partnership’s name;
(I) causing
the
Partnership to enter into any short-term or long-term indebtedness, but Working
Capital Borrowings made from time-to-time under an agreement previously approved
as contemplated herein need not be further approved by the Management
Committee;
(J) except
for any
commencement or resolution that requires the unanimous approval of the
Management Committee pursuant to Section 6.2(i)(D) above, the
commencement before the FERC, or the resolution through settlement, stipulation
or other consensual means of any matter brought under the NGA Section 4 (15
U.S.C. Section 717(c)) or Section 5 (15 U.S.C. Section 717(d)); provided
that the Management Committee may delegate to any duly authorized Officer(s)
the
right(s) to commence or resolve any such proceeding involving (i) a reduction
of
not more than $____ million in the Partnership’s revenues for any 12-month
period; (ii) the composition of any liability or indebtedness exceeding $____
million in any 12-month period or $___ million in the aggregate or (iii) an
immaterial effect on the level of throughput in or capacity of the Facilities
subject to firm or interruptible contracts; or
(K) making
any tax
elections under the Code.
(i) Subcommittees. The
Management Committee shall have the power and authority to create such
subcommittees, and delegate to such subcommittees such authority and
responsibility, and rescind any such delegations, as it may deem
appropriate.
(j) Officers.
(A) The
Management
Committee shall have the power and authority to appoint one or more Persons
to
be Officers of the Partnership. Any Officers so designated shall have
such titles and, subject to the other provisions of this Agreement, have such
authority and perform such duties as the Management Committee may delegate
to
them and shall serve at the pleasure of the Management Committee and report
to
the Management Committee. Except as otherwise specifically provided
in this Agreement or by the Management Committee, the authority and functions
of
the Officers shall be identical to the authority and functions of the officers
of a corporation organized under the DGCL. The Management Committee
shall have full power and authority to direct the Officers to do all things
and
on such terms as it determines to be necessary or appropriate to conduct the
business of the Partnership. In addition, the Management Committee
shall have full power and authority to select and dismiss Officers, employees,
agents, outside attorneys, accountants, consultants and contractors and to
determine their compensation and other terms of employment or hire, create
and
operate employee benefit plans, employee programs and employee
practices.
(B) The
Officers may
include a Chief Executive Officer, a President and a Secretary, and may also
include a Chief Operating Officer, Chief Financial Officer, Treasurer, one
or
more Vice Presidents (who may be further classified by such descriptions as
“executive,” “senior,” “assistant” or otherwise, as the Management Committee
shall determine), one or more Assistant Secretaries and one or more Assistant
Treasurers. If Officers are appointed, each Officer shall hold office
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal. Any number of offices may be held by
the same Person. The compensation of Officers shall be fixed from
time to time by the Management Committee or by such Officers as may be
designated by the Management Committee.
(C) Any
Officer may
resign at any time upon written notice to the Partnership. Any
Officer may be removed by the Management Committee with or without cause at
any
time. The Management Committee may delegate the power of removal of
Officers to any Officer. Such removal shall be without prejudice to a
Person’s contract rights, if any, but the appointment of any Person as an
Officer shall not of itself create contract rights.
(D) Unless
otherwise
directed by the Management Committee or specified in an employment or other
agreement to which an Officer is a party, a Person appointed as an Officer
of
the Partnership shall be required to devote to the business affairs of the
Partnership only the portion of such Person’s full productive time as is
required to perform the duties delegated to such Person by the Management
Committee. In addition, it shall not constitute a breach or violation
of any duty owed to the Partnership or to any Partner by a Person appointed
as
an Officer for such Person to be a director, manager, officer or employee of
any
Affiliate of the Partnership provided that the Management Committee is advised
of such Person’s positions with such Affiliate(s) and does not object to same in
a timely manner.
(E) The
officers of
CIGC immediately prior to the Conversion shall continue as the Officers of
the
Partnership, with the titles and responsibilities of their offices immediately
prior to the Conversion.
Section
6.3 Master
Services Agreement. Effective
as of the date of the Conversion, the Partnership shall enter into the Master
Services Agreement.
Section
6.4 Conflicts
of Interest; Outside Activities.
(a) Each
Partner agrees
to the terms of Section 2.7.
(b) In
addition to the
rights set forth in Section 2.7, any Partner or Affiliate or Affiliates
of a Partner (including any Subsidiary of a Partner) shall have the right to
engage in businesses of every type and description and other activities for
profit and to engage in and possess an interest in other business ventures
of
any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by the Partnership or any Subsidiary, independently
or with others, including business interests and activities in direct
competition with the business and activities of the Partnership or any
Subsidiary, and none of the same shall constitute a breach of this Agreement
or
any duty otherwise existing at law, in equity or otherwise to the Partnership,
any Subsidiary or any Partner. None of the Partnership, any
Subsidiary or any other Person shall have any rights by virtue of this Agreement
or the partnership relationship established hereby in any business ventures
of
any Partner or any Affiliate of a Partner (including any Subsidiary of a
Partner).
(c) Notwithstanding
anything to the contrary in this Agreement, (i) the engaging in competitive
activities by any Person (including any Partner or any Subsidiary or other
Affiliate of a Partner) in accordance with the provisions of this Section
6.4 is hereby approved by the Partnership and all Partners, (ii) it shall
be
deemed not to be a breach of any Partner’s or any other Person’s duties to the
Partnership or any Partner or any other obligation of any type whatsoever of
a
Partner or any other Person to the Partnership or any Partner for any such
Person to engage in such business interests and activities in preference to
or
to the exclusion of the Partnership or any Subsidiary, (iii) none of the
Partners or any other Person shall have any obligation hereunder or as a result
of any duty otherwise existing at law, in equity or otherwise to present
business opportunities to the Partnership or any Subsidiary and (iv) the
doctrine of “corporate opportunity” or other analogous doctrine shall not apply
to any Partner or other Person.
(d) The
Partnership may
transact business with any Partner or Affiliate of a Partner, provided the
terms
of those transactions are approved by the Management Committee or expressly
contemplated by this Agreement or involve transportation agreements on the
Facilities with an Affiliate of a Partner incurred in the ordinary course of
the
Partnership’s business. Without limiting the generality of the
foregoing, the Partners recognize and agree that their respective Affiliates
currently, or in the future may, engage in various activities involving natural
gas marketing and trading (including futures, options, swaps, exchanges of
future positions for physical deliveries and commodity trading), transportation,
gathering, processing, storage, distribution, development and ownership, as
well
as other commercial activities related to natural gas and other hydrocarbons
and
that these and other activities by Partners’ Affiliates may be based on natural
gas that is transported in the Facilities or otherwise made possible or more
profitable by reason of the Partnership’s activities (herein referred to as
“Affiliate’s Outside Activities”). No
Affiliate of a Partner shall be restricted in its right to conduct, individually
or jointly with others, for its own account any Affiliate’s Outside Activities,
and no Partner or its Affiliates shall have any duty or obligation, express
or
implied, fiduciary or otherwise, to account to, or to share the results or
profits of such Affiliate’s Outside Activities with, the Partnership, any other
Partner or any Affiliate of any other Partner, by reason of such Affiliate’s
Outside Activities.
(e) To
the extent
permitted by Law, the provisions of this Agreement, including this Section
6.4 and Sections 6.2(a)(iv), 6.2(e)(ii), 6.7 and
6.8, constitute an agreement to modify or eliminate
fiduciary duties
pursuant to the provisions of Sections 15-404(b) and (c) and 15.103(f) of
DRUPA.
Section
6.5 Indemnification
for Breach of Agreement. To
the
fullest extent permitted by Law, each Partner shall indemnify, protect, defend,
release and hold harmless each other Partner, its Affiliates, and its and their
respective directors, officers, trustees, employees and agents from and against
any Claims asserted by or on behalf of any Person (including another Partner)
that result from a breach by the indemnifying Partner of this Agreement;
provided, however, that this Section 6.5 shall not (a) apply to
any Claim or other matter for which a Partner has no liability or duty, or
is
indemnified or released, pursuant to Section 6.4 or (b) hold the
indemnified Person harmless from special, consequential or exemplary damages,
except in the case where the indemnified Person is legally obligated to pay
such
damages to another Person.
Section
6.6 General
Regulatory Matters. Each
Partner shall:
(a) cooperate
fully
with the Partnership and the Management Committee in securing appropriate
Authorizations for the development, construction and operation of the
Facilities, including supporting all applications submitted to the FERC by
or on
behalf of the Partnership, and in connection with any reports prescribed by
any
other Governmental Authority having jurisdiction over the
Partnership;
(b) join
in any eminent
domain takings by the Partnership, to the extent, if any, required by
Law;
(c) devote
such efforts
as shall be reasonable and necessary to develop and promote the Facilities
for
the benefit of the Partnership, taking into account the Partner’s Percentage
Interest, resources and expertise; and
(d) cooperate
fully
with the Partnership and the Management Committee to ensure compliance with
FERC
Standards of Conduct, if applicable.
Section
6.7 Disclaimer
Of Duties. WITH
RESPECT TO ANY ACTION, CONSENT OR APPROVAL, EACH PARTNER MAY TAKE OR NOT TAKE
THE ACTION, OR GRANT OR WITHHOLD CONSENT OR APPROVAL, IN ITS SOLE DISCRETION,
FREE FROM ANY DUTY, FIDUCIARY OR OTHERWISE, TO THE PARTNERSHIP OR ANY PARTNER
OTHER THAN THE DUTY TO ACT IN GOOD FAITH. THE PROVISIONS OF THIS
SECTION 6.7 SHALL APPLY NOTWITHSTANDING THE NEGLIGENCE, GROSS NEGLIGENCE,
WILLFUL MISCONDUCT, STRICT LIABILITY OR OTHER FAULT OR RESPONSIBILITY OF ANY
PARTNER.
Section
6.8 Sole
Discretion. To
the
fullest extent permitted by law and notwithstanding any other provision of
this
Agreement or in any other agreement contemplated herein or applicable provisions
of law or equity or otherwise, whenever in this Agreement any Person is
permitted or required to make a decision (a) in its Sole Discretion, such Person
shall be entitled to consider only such interests and factors as it desires,
including its own interests, and shall have no duty (including any fiduciary
duty) or obligation to give any consideration to any interest of or factors
affecting the Partnership or any other Person or (b) in its “good faith” or
under another express standard, such Person shall act under such express
standard and shall not be subject to any other or different
standard.
ARTICLE
7
TAXES
Section
7.1 Tax
Returns. The
Tax Matters Partner shall prepare and timely file (on behalf of the Partnership)
all federal, state and local tax returns required to be filed by the Partnership
and provide all Partners, upon request, access to accounting and tax information
and schedules as shall be necessary for the preparation of such Partner of
its
income tax returns and such Partner’s tax information reporting requirements,
and provide all Partners with a draft of the return for their review and comment
no later than February 15th of the year following. Each Partner shall
furnish to the Tax Matters Partner all pertinent information in its possession
relating to the Partnership’s operations that is necessary to enable the
Partnership’s tax returns to be timely prepared and filed. The
Partnership shall bear the costs of the preparation and filing of its
returns.
Section
7.2 Tax
Elections. The
Partnership shall make the following elections on the appropriate tax
returns:
(a) to
adopt as the
Partnership’s fiscal year the calendar year;
(b) to
adopt the
accrual method of accounting;
(c) to
elect, pursuant
to Section 754 of the Code in accordance with the applicable Treasury
Regulations thereunder, to adjust the basis of the Partnership’s
properties;
(d) to
elect to
amortize the organizational expenses of the Partnership ratably over the period
as permitted by Section 709(b) of the Code; and
(e) any
other election
the Management Committee may deem appropriate.
The
Partnership
intends to be classified as a partnership for federal income tax
purposes. Neither the Partnership nor any Partner shall make an
election for the Partnership to be excluded from the application of the
provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar
provisions of applicable state law and no provision of this Agreement shall
be
construed to sanction or approve such an election.
Section
7.3 Tax
Matters Partner.
(a) The
Management
Committee shall designate EP Noric to serve as the “tax matters partner” of the
Partnership pursuant to Section 6231(a)(7) of the Code (the “Tax
Matters Partner”). The Tax Matters Partner shall take
such action as may be necessary to cause to the extent possible each other
Partner to become a “notice partner” within the meaning of Section 6223 of
the Code. The Tax Matters Partner shall inform each other Partner of
all significant matters that may come to its attention in its capacity as Tax
Matters Partner by giving notice thereof on or before the fifth Business Day
after becoming aware thereof and, within that time, shall forward to each other
Partner copies of all significant written communications it may receive in
that
capacity.
(b) The
Tax Matters
Partner shall provide any Partner, upon request, access to accounting and tax
information and schedules as shall be necessary for the preparation by such
Partner of its income tax returns and such Partner’s tax information reporting
requirements.
(c) Any
cost or expense
incurred by the Tax Matters Partner in connection with its duties, including
the
preparation for or pursuance of administrative or judicial proceedings, shall
be
reimbursed by the Partnership.
(d) The
Tax Matters
Partner shall not bind any Partner to a settlement agreement without obtaining
the consent of such Partner. Any Partner that enters into a
settlement agreement with respect to any Partnership item (as described in
Code
Section 6231(a)(3)) shall notify the other Partners of the settlement
agreement and its terms on or before the 90th Day after the date of the
settlement.
(e) No
Partner shall
file a request pursuant to Code Section 6227 for an administrative adjustment
of
Partnership items for any taxable year without first notifying the other
Partners. If the Management Committee consents to the requested
adjustment, the Tax Matters Partner shall file the request for the
administrative adjustment on behalf of the Partners. If such consent
is not obtained on or before the 30th Day after such notice, or within the
period required to timely file the request for administrative adjustment, if
shorter, any Partner, including the Tax Matters Partner, may file a request
for
administrative adjustment on its own behalf. Any Partner intending to
file a petition under Code Sections 6226, 6228 or other Code Section with
respect to any item involving the Partnership shall notify the other Partners
of
such intention and the nature of the contemplated proceeding. In the
case where the Tax Matters Partner is the Partner intending to file such
petition on behalf of the Partnership, such notice shall be given within a
reasonable period of time to allow the other Partners to participate in the
selection of the forum in which such petition will be filed.
(f) If
any Partner
intends to file a notice of inconsistent treatment under Code
Section 6222(b), such Partner shall give reasonable notice under the
circumstances to the other Partners of such intent and the manner in which
the
Partner’s intended treatment of an item is (or may be) inconsistent with the
treatment of that item by the other Partners.
Section
7.4 Amounts
Withheld. All
amounts required to be withheld pursuant to federal, state, local, or foreign
tax laws shall be treated as amounts actually distributed to the affected
Partners for all purposes under this Agreement. The Management
Committee is hereby authorized to withhold from distributions, or with respect
to allocations, to the Partners and to pay over to any federal, state, local,
or
foreign government any amounts required to be so withheld pursuant to federal,
state, local or foreign law.
ARTICLE
8
BOOKS,
RECORDS, REPORTS, AND BANK ACCOUNTS
Section
8.1 Maintenance
of Books; Reports. The
Management Committee shall cause to be kept at the principal office of the
Partnership or at such other location approved by the Management Committee
complete and accurate books and records of the Partnership, including all books
and records necessary to provide to the Partners any information required to
be
provided pursuant to Section 8.2, supporting documentation of the
transactions with respect to the conduct of the Partnership’s business and
minutes of the proceedings of the Partners and the Management Committee, and
any
other books, records and information that are required to be maintained by
applicable Law, including Section 15-403(a) of DRUPA.
Section
8.2 Reports. With
respect to each calendar year, and within the time frame specified by the
Management Committee, the Management Committee or any duly authorized Officer(s)
shall cause to be prepared and delivered to each Partner such reports, financial
statements, forecasts, studies, budgets and other information as the Management
Committee may request from time to time.
Section
8.3 Bank
Accounts. Funds
of the Partnership shall be deposited in such banks or other depositories as
shall be designated from time to time by the Management Committee, which may
include the El Paso Corporation cash management program.
ARTICLE
9
WITHDRAWAL
Section
9.1 No
Right of Withdrawal. No
Partner shall voluntarily Withdraw from the Partnership.
Section
9.2 Deemed
Withdrawal. A
Partner is deemed to have Withdrawn from the Partnership upon the occurrence
of
any of the following events:
(a) there
occurs an
event that makes it unlawful for the Partner to continue to be a
Partner;
(b) the
Partner becomes
Bankrupt;
(c) the
Partner
commences liquidation or winding up;
(d) notice
from the
Management Committee if the Partner commits a Default and the Default has not
been cured; or
(e) as
otherwise
provided in Section 15-601(1) or (5) of DRUPA.
Section
9.3 Effect
of Withdrawal. A
Partner that is deemed to have Withdrawn under Section 9.2 (a
“Withdrawn Partner”), must comply with the
following requirements in connection with its Withdrawal:
(a) The
Withdrawn
Partner ceases to be a Partner immediately upon the occurrence of the applicable
Withdrawal event.
(b) The
Withdrawn
Partner shall not be entitled to receive any distributions from the Partnership
except as set forth in Section 9.3(e), and it shall not be entitled to
exercise any right of a Partner, including any voting or consent rights or
to
receive any further information (or access to information) from the
Partnership. The Percentage Interest of that Partner shall not be
taken into account in calculating the Percentage Interests of the Partners
for
any purposes. This Section 9.3(b) shall also apply to a
Breaching Partner; but if a Breaching Partner cures its breach during the
applicable cure period, then any distributions that were withheld from that
Partner shall be paid to it, without interest.
(c) The
Withdrawn
Partner must pay to the Partnership all amounts, if any, that it owes to the
Partnership.
(d) The
Withdrawn
Partner shall remain obligated for all liabilities it may have under this
Agreement or otherwise with respect to the Partnership that accrue prior to
the
Withdrawal.
(e) From
the date of
the Withdrawal to the date of the payment, the former Capital Account balance
of
the Withdrawn Partner shall be recorded as a contingent obligation of the
Partnership, and not as a Capital Account, until payment is made. The
rights of a Withdrawn Partner under this Section 9.3(e) shall (i) be
subordinate to the rights of any other creditor of the Partnership, (ii) not
include any right on the part of the Withdrawn Partner to receive any interest
(except as may otherwise be provided in the evidence of any indebtedness of
the
Partnership owed to such Withdrawn Partner) or other amounts with respect
thereto; (iii) not require the Partnership to make any distribution (the
Withdrawn Partner’s rights under this Section 9.3(e) being limited to
receiving such portion of distributions as the Management Committee may, in
its
Sole Discretion, decide to cause the Partnership to make); (iv) not require
any
Partner to make a Capital Contribution or a loan to permit the Partnership
to
make a distribution or otherwise to pay the Withdrawn Partner; and (v) be
treated as a liability of the Partnership for purposes of Section
12.2. Except as set forth in this Section 9.3(e), a
Withdrawn Partner shall not be entitled to receive any return of its Capital
Contributions or other payment from the Partnership in respect of its
Partnership Interest.
(f) The
Percentage
Interest of the Withdrawn Partner shall be allocated among the remaining
Partners in the proportion that each Partner’s Percentage Interest bears to the
total Percentage Interest of all remaining Partners, or in such other proportion
as the Partners may unanimously agree.
(g) Any
Representative(s) and Alternate Representative(s) of such Partner on the
Management Committee shall cease to be a member of the Management Committee
immediately upon the occurrence of the applicable Withdrawal event.
ARTICLE
10
DISPUTE
RESOLUTION
Section
10.1 Disputes. This
Article 10 shall apply to any dispute arising under or related to this
Agreement (whether arising in contract, tort or otherwise, and whether arising
at law or in equity), including (a) any dispute regarding the construction,
interpretation, performance, validity or enforceability of any provision of
this
Agreement or whether any Person is in compliance with, or breach of, any
provisions of this Agreement, and (b) the applicability of this Article
10 to a particular dispute. Notwithstanding the foregoing, this
Article 10 shall not apply to any matters that, pursuant to the
provisions of this Agreement, are to be resolved by a vote of the Partners
or a
determination by the Management Committee; provided, however, that (i)
any matter that is expressly stated herein to be determinable by arbitration
may
be so determined pursuant to this Article 10 and (ii) if a vote,
approval, consent, determination or other decision must, under the terms of
this
Agreement, be made (or withheld) in accordance with a standard other than Sole
Discretion (such as a reasonableness standard), then the issue of whether such
standard has been satisfied may be a dispute to which this Article 10
applies. Any dispute to which this Article 10 applies is
referred to herein as a “Dispute.” With
respect to a particular Dispute, each Partner that is a party to such Dispute
is
referred to herein as a“Disputing
Partner.” The provisions of this Article 10
shall be the exclusive method of resolving Disputes.
Section
10.2 Negotiation
to Resolve Disputes. If
a
Dispute arises, any Disputing Partner may initiate the dispute resolution
procedure under this Article 10 by notifying the other Disputing Partners
(a “Dispute Notice”), after which the Disputing
Partners shall attempt to resolve such Dispute through the following
procedure:
(a) first,
within 10
Days after receipt of the Dispute Notice, one representative selected by each
Disputing Partner shall meet (whether by phone or in person) in a good faith
attempt to resolve the Dispute;
(b) second,
if the
Dispute is still unresolved, then after the 20th Day following the commencement
of the efforts to resolve the matter described in Section 10.2(a) but in
no event later than the 30th Day after receipt of the Dispute Notice, the chief
executive officer (or his designee) of the Parent of each Disputing Partner
shall meet (whether by phone or in person) in a good faith attempt to resolve
the Dispute; and
(c) third,
if the
Dispute is still unresolved, then after the 10th Day following the commencement
of the efforts to resolve the matter described in Section 10.2(b), any
Disputing Party may submit the Dispute for resolution under the Federal
Arbitration Act by binding arbitration following the Commercial Arbitration
Rules of the American Arbitration Association (or, if that Association has
ceased to exist, its principal successor) (the
“AAA”) then in effect, including
its
evidentiary and procedural rules (excluding rules governing the payment of
arbitration, administrative or other fees or expenses to the Arbitrator(s)
or
the AAA), to the extent that such rules do not conflict with the terms of this
Agreement, by notifying the other Disputing Partners (an
“Arbitration Notice”) within the applicable limitation
period provided by law.
Section
10.3 Selection
of Arbitrator.
(a) For
any case in
which any claim, or combination of claims, is less than or equal to $1,000,000,
the arbitration shall be heard by a sole Arbitrator. Any case in
which any claim, or combination of claims,
exceeds $1,000,000 will be subject to the AAA’s Large,
Complex Case Procedures and decided by the majority of a panel of three neutral
Arbitrators. The Arbitrator(s) shall be selected in accordance with
this Section 10.3.
(b) For
arbitrations
conducted by a single Arbitrator, the Disputing Partner that submits a Dispute
to arbitration shall designate a proposed neutral sole Arbitrator in its
Arbitration Notice. If any other Disputing Partner objects to a
proposed sole Arbitrator, it may, on or before the tenth Day following delivery
of the Arbitration Notice, notify all of the other Disputing Partners of its
objection. All of the Disputing Partners shall attempt to agree upon
a mutually acceptable sole Arbitrator. If they have not done so, then
after the 20th Day following delivery of the notice described in the immediately
preceding sentence, any Disputing Partner may request the AAA to designate
the
sole Arbitrator. For arbitrations conducted by a panel of three
Arbitrators, the Disputing Partner initiating arbitration shall nominate one
Arbitrator at the time it initiates arbitration. The other Disputing
Partner(s) shall collectively nominate one Arbitrator on or before the 10th
Day
after receiving the Arbitration Notice. The two Arbitrators shall
appoint a third, neutral Arbitrator. All Arbitrators shall be
competent and experienced in matters involving the interstate natural gas
transportation business in the United States, with at least 10 years of legal,
engineering, or business experience in the gas transportation industry, and
shall be impartial and independent of the Partners (and the other Arbitrators,
in the case of arbitrations conducted by a panel of three arbitrators, except
for prior arbitrations). Each Disputing Partner shall pay for the
expenses incurred by the Arbitrator it appoints, if applicable, and the costs
of
the sole Arbitrator or the third Arbitrator shall be divided equally among
the
Disputing Partners. If any Arbitrator so chosen shall die, resign or
otherwise fail or becomes unable to serve as Arbitrator, a replacement
Arbitrator shall be chosen in accordance with this
Section 10.3.
Section
10.4 Conduct
of Arbitration. The
Arbitrator(s) shall expeditiously (and, if possible, on or before the 90th
Day
after the Arbitrator(s)’s selection) hear and decide all matters concerning the
Dispute. Any arbitration hearing shall be held in Houston, Texas or
such other location as the Disputing Partners may mutually
agree. Except as expressly provided to the contrary in this
Agreement, the Arbitrator(s) shall have the power (a) to gather such materials,
information, testimony and evidence as it deems relevant to the dispute before
it (and each Partner will provide such materials, information, testimony and
evidence requested by the Arbitrator(s), except to the extent any information so
requested is proprietary, subject to a third-party confidentiality restriction
or to an attorney-client or other privilege) and (b) to grant injunctive relief
and enforce specific performance. If they deem necessary, the
Arbitrator(s) may propose to the Disputing Partners that one or more other
experts be retained to assist it in resolving the Dispute. The
retention of such other experts shall require the unanimous consent of the
Disputing Partners, which shall not be unreasonably withheld. Each
Disputing Partner, the Arbitrator(s) and any proposed expert shall disclose
to
the other Disputing Partners any business, personal or other relationship or
affiliation that may exist or may have existed between the Disputing Partner
(or
the Arbitrator(s)) and the proposed expert; and any Disputing Partner may
disapprove of the proposed expert on the basis of that relationship or
affiliation. The decision of the Arbitrator(s) (which shall be
rendered in writing) shall be final, nonappealable and binding upon the
Disputing Partners and may be enforced in any court of competent jurisdiction;
provided, however, that the Partners agree that the Arbitrator(s) and
any court enforcing the award of the Arbitrator(s) shall not have the right
or
authority to award punitive, special, consequential, indirect, exemplary or
similar damages to any Disputing Partner. The responsibility for
paying the costs and expenses of the arbitration, including compensation to
any
experts retained by the Arbitrator(s), shall be divided equally among the
Disputing Partners. Each Disputing Partner shall be responsible for
the fees and expenses of its respective counsel, consultants and witnesses,
unless the Arbitrator(s) determines that compelling reasons exist for allocating
all or a portion of those costs and expenses to one or more other Disputing
Partners.
Section
10.5 Compliance
with Delaware Arbitration Act. This
Article 10 shall be construed to the maximum extent possible to comply
with the laws of the State of Delaware, including, to the extent applicable,
the
Uniform Arbitration Act (10 Del. C. Section 5701 etseq.)
(the “Delaware Arbitration Act”). If,
nevertheless, it shall be determined by a court of competent jurisdiction that
any provision or wording of this Article 10 shall be invalid or
unenforceable under the Delaware Arbitration Act, to the extent applicable,
or
other applicable law, such invalidity shall not invalidate all of this
Article 10. In that case, this Article 10 shall be
construed so as to limit any term or provision so as to make it valid or
enforceable within the requirements of the Delaware Arbitration Act or other
applicable law, and, in the event such term or provision cannot be so limited,
this Article 10 shall be construed to omit such invalid or unenforceable
provision.
ARTICLE
11
DISSOLUTION,
WINDING UP AND TERMINATION
Section
11.1 Dissolution. The
Partnership shall dissolve and its affairs shall be wound up on the first to
occur of the following events (each a “Dissolution
Event”):
(a) notice
from the
Management Committee to the Partners dissolving the Partnership;
(b) entry
of a decree
of judicial dissolution of the Partnership under Section 15-801 of
DRUPA;
(c) the
Disposition or
abandonment of all or substantially all of the Partnership’s business and
assets;
(d) an
event that makes
it unlawful for all or substantially all of the business or affairs of the
Partnership to be carried on; or
(e) a
determination by
the Court of Chancery that it is equitable to wind up the business or affairs
of
the Partnership in accordance with Section 15-801(6) of DRUPA.
Section
11.2 Winding
Up and Termination.
(a) On
the occurrence
of a Dissolution Event, the Liquidator shall, under the supervision of the
Management Committee, proceed diligently to wind up the affairs of the
Partnership and make final distributions as provided herein and in
DRUPA. The costs of winding up shall be borne as a Partnership
expense. Until final distribution, the liquidator shall continue to
operate the Partnership properties with all of the power and authority of the
Partners. The steps to be accomplished by the Liquidator are as
follows:
(i) as
promptly as
possible after dissolution and again after final winding up, the Liquidator
shall cause a proper accounting to be made by a recognized firm of independent
certified public accountants of the Partnership’s assets, liabilities and
operations through the last calendar day of the month in which the dissolution
occurs or the final winding up is completed, as applicable;
(ii) the
Liquidator
shall discharge from Partnership funds all of the indebtedness of the
Partnership and other debts, liabilities and obligations of the Partnership
(including all expenses incurred in winding up and any loans described in
Section 4.2) or otherwise make reasonable provision for payment and
discharge thereof (including the establishment of a cash escrow fund for
contingent liabilities in such amount and for such term as the liquidator may
reasonably determine); and
(iii) all
remaining
assets of the Partnership shall be distributed to the Partners as
follows:
(A) the
Liquidator may
sell any or all Partnership property, including to Partners, and any resulting
gain or loss from each sale shall be computed and allocated to the Capital
Accounts of the Partners in accordance with the provisions of Article
5;
(B) with
respect to all
Partnership property that has not been sold, the fair market value of that
property shall be determined and the Capital Accounts of the Partners shall
be
adjusted to reflect the manner in which the unrealized income, gain, loss and
deduction inherent in property that has not been reflected in the Capital
Accounts previously would be allocated among the Partners if there were a
taxable disposition of that property for the fair market value of that property
on the date of distribution; and
(C) all
Partnership
property and all cash in excess of that required to discharge liabilities or
obligations as provided in Section 11.2(a)(ii) shall be distributed
to the Partners in accordance with, and to the extent of, the positive balances
in their respective Capital Accounts, as determined after making all Capital
Account adjustments required herein. Distributions pursuant to this
Section 11.2(a)(iii)(C) shall be made by the end of the taxable year of
the Partnership during which the liquidation of the Partnership occurs (or,
if
later, the 90th Day after the date of the liquidation).
(b) The
distribution of
cash or property to a Partner in accordance with the provisions of this
Section 11.2 constitutes a complete return to the Partner of its Capital
Contributions and a complete distribution to the Partner of its Partnership
Interest and all the Partner’s property. To the extent that a Partner
returns funds to the Partnership, it has no claim against any other Partner
for
those funds.
(c) No
dissolution or
termination of the Partnership shall relieve a Partner from any obligation
to
the extent such obligation has accrued as of the date of such dissolution or
termination. Upon such termination, any books and records of the
Partnership that there is a reasonable basis for believing will ever be needed
again shall be furnished to the Liquidator, which shall keep such books and
records (subject to review by any Person that was a Partner at the time of
dissolution) for a period of at least three years. At such time as
the Liquidator no longer agrees to keep such books and records, it shall offer
the Persons who were Partners at the time of dissolution the opportunity to
take
over such custody, shall deliver such books and records to such Persons if
they
elect to take over such custody and may destroy such books and records if they
do not so elect. Any such custody by such Persons shall be on such
terms as they may agree upon among themselves.
Section
11.3 Deficit
Capital Accounts. Except
as may be required by Section 15-807 of DRUPA, no Partner will be required
to
pay to the Partnership, to any other Partner or to any third party any deficit
balance that may exist from time to time in another Partner’s Capital
Account.
Section
11.4 Statement
of Cancellation. On
completion of the winding up of the Partnership as provided herein and DRUPA,
the Partners (or such other Person or Persons as the Act may require or permit)
shall file a statement of cancellation with the Secretary of State of the State
of Delaware, cancel any other filings made pursuant to Section 2.5, and
take such other actions as may be necessary to terminate the existence of the
Partnership. Upon the filing of such statement of cancellation, the
existence of the Partnership shall terminate (and the Term shall end), except
as
may be otherwise provided by DRUPA or other applicable Law.
ARTICLE
12
GENERAL
PROVISIONS
Section
12.1 Offset. Whenever
the Partnership is to pay any sum to any Partner, any amounts that Partner
owes
the Partnership may be deducted from that sum before payment.
Section
12.2 Notices. Except
as expressly set forth to the contrary in this Agreement, all notices, requests
or consents provided for or permitted to be given under this Agreement must
be
in writing and must be delivered to the recipient in person, by courier, mail,
facsimile, email or other electronic transmission. A notice, request
or consent given under this Agreement is effective on receipt by the Partner
or
other Person to receive it; provided, however, that a facsimile or
other electronic transmission that is transmitted after the normal business
hours of the recipient shall be deemed effective on the next Business
Day. All notices, requests and consents to be sent to a Partner must
be sent to or made at the addresses given for that Partner on Annex I or
in the instrument described in Section 3.4, or such other address as that
Partner may specify by notice to the other Partners. Any notice,
request or consent to the Partnership must be given to all of the
Partners. Whenever any notice is required to be given by Law, the
Certificate or this Agreement, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall
be
deemed equivalent to the giving of such notice.
Section
12.3 Entire
Agreement; Superseding Effect. This
Agreement constitutes the entire agreement of the Partners and their Affiliates
relating to the Partnership and the transactions contemplated hereby and
supersede all provisions and concepts contained in all prior
agreements.
Section
12.4 Effect
of Waiver or Consent. Except
as otherwise provided in this Agreement, a waiver or consent, express or
implied, to or of any breach or default by any Partner in the performance by
that Partner of its obligations with respect to the Partnership is not a consent
or waiver to or of any other breach or default in the performance by that
Partner of the same or any other obligations of that Partner with respect to
the
Partnership. Except as otherwise provided in this Agreement, failure
on the part of a Partner to complain of any act of any Partner or to declare
any
Partner in default with respect to the Partnership, irrespective of how long
that failure continues, does not constitute a waiver by that Partner of its
rights with respect to that default until the applicable statute-of-limitations
period has run.
Section
12.5 Amendment
or Restatement. This
Agreement or the Statement may be amended or restated only by a written
instrument executed (or, in the case of the Statement, approved) by all
Partners.
Section
12.6 Binding
Effect. Subject
to the restrictions on Dispositions set forth in this Agreement, this Agreement
is binding on and shall inure to the benefit of the Partners and their
respective successors and permitted assigns.
Section
12.7 Governing
Law; Severability. THIS
AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE NGA
AND
THE RULES AND REGULATIONS OF THE FERC (TO THE EXTENT APPLICABLE) AND THE LAW
OF
THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT
MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW
OF
ANOTHER JURISDICTION; PROVIDED,
HOWEVER,
THAT, NOTWITHSTANDING THE FOREGOING, ANY MATTERS RELATING TO THE INTERNAL
AFFAIRS OF THE PARTNERSHIP (INCLUDING THE FORMATION, MANAGEMENT AND TERMINATION
OF THE COMPANY) SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. WITHOUT
LIMITING THE PROVISIONS OF ARTICLE 10
AND SUBJECT TO THE TERMS OF SECTION
10.4 REGARDING THE ENFORCEMENT OF ANY ARBITRATOR(S)’
DECISION IN ANY COURT OF COMPETENT JURISDICTION, A PARTNER
MAY BRING AN ACTION
ARISING UNDER OR RELATING TO THIS AGREEMENT, IF AT ALL, ONLY IN COURTS OF THE
STATE OF DELAWARE OR (IF IT HAS JURISDICTION) THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE. In the event of a direct
conflict between the provisions of this Agreement and any mandatory,
non-waivable provision of DRUPA such provision of DRUPA shall
control. If any provision of DRUPA provides that it may be varied or
superseded in a partnership agreement (or otherwise by agreement of the partners
of a partnership), that provision shall be deemed superseded and waived in
its
entirety if this Agreement contains a provision addressing the same issue or
subject matter. If any provision of this Agreement or the application
thereof to any Partner or circumstance is held invalid or unenforceable to
any
extent, (a) the remainder of this Agreement and the application of that
provision to other Partners or circumstances is not affected thereby, and (b)
the Partners shall negotiate in good faith to replace that provision with a
new
provision that is valid and enforceable and that puts the Partners in
substantially the same economic, business and legal position as they would
have
been in if the original provision had been valid and enforceable.
Section
12.8 Further
Assurances. In
connection with this Agreement and the transactions it contemplates, each
Partner shall execute and deliver any additional documents and instruments
and
perform any additional acts that may be necessary or appropriate to effectuate
and perform the provisions of this Agreement and those transactions;
provided, however, that this Section 12.8 shall not obligate a
Partner to furnish guarantees or other credit supports by such Partnership’s
Parent or other Affiliates.
Section
12.9 Waiver
of Certain Rights. To
the
fullest extent permitted by applicable Law, each Partner irrevocably waives
any
right it may have to maintain any action for dissolution of the Partnership
or
for partition of the property of the Partnership.
Section
12.10 Counterparts. This
Agreement may be executed in any number of counterparts with the same effect
as
if all signing parties had signed the same document. All counterparts
shall be construed together and constitute the same instrument.
[Signature
page
follows.]
IN
WITNESS WHEREOF,
the Partners have executed this Agreement as of the date first set forth
above.
|
PARTNERS:
|
|||
| EL PASO NORIC INVESTMENTS III, L.L.C. | |||
|
|
By:
|
||
| Name: | |||
| Title: | |||
| EPPP CIG GP HOLDINGS, L.L.C. | |||
|
|
By:
|
||
| Name: | |||
| Title: | |||
[Signature
page
to Partnership Agreement of Colorado Interstate Gas Company]
ANNEX
I
|
Partner
Identity
and
Address
|
Percentage
Interest
|
Number
of Representatives and Alternative
Representatives
|
Identity
of Representatives
|
Identity
of Alternate Representatives
|
Parent
|
|
El
Paso Noric
Investments III, L.L.C.
El
Paso
Building
0000
Xxxxxxxxx
Xxxxxxx,
Xxxxx 00000
Attention:
______
|
90%
|
3
Representatives and up to 3 Alternates
|
__________________
__________________
__________________
|
________________
________________
________________
|
El
Paso
Corporation
|
|
EPPP
CIG GP
Holdings, L.L.C.
El
Paso
Building
0000
Xxxxxxxxx
Xxxxxxx,
Xxxxx 00000
Attention:
______
|
10%
|
1
Representative
1
Alternate
|
__________________
|
________________
|
El
Paso
Corporation1
|
1From
and after the
Closing Date, El Paso Pipeline Partners, L.P. will be the Parent of EPPP CIG GP
Holdings, L.L.C.
Exhibit
A
DESCRIPTION
OF INITIAL FACILITIES
[Description
of
Colorado Interstate Gas Company interstate pipeline system to come]
Exhibit
A – Page
Schedule
A
PARTNERSHIP
CERTIFICATE FOR
[See
legend
on the reverse hereof]
Certificate
Number
_____ ___%
of Partnership Interests
Colorado
Interstate
Gas Company, a Delaware general partnership (the
“Partnership”), hereby certifies that
______________________ (the “Holder”) is the
registered owner of ______ % of the partnership interests in the Partnership
(the “Partnership Interests”). THE RIGHTS,
POWERS, PREFERENCES, RESTRICTIONS (INCLUDING TRANSFER RESTRICTIONS) AND
LIMITATIONS OF THE PARTNERSHIP INTERESTS ARE SET FORTH IN, AND THIS PARTNERSHIP
CERTIFICATE AND THE PARTNERSHIP INTERESTS REPRESENTED HEREBY ARE ISSUED AND
SHALL IN ALL RESPECTS BE SUBJECT TO THE TERMS AND PROVISIONS OF, THE GENERAL
PARTNERSHIP AGREEMENT OF THE PARTNERSHIP, DATED AS OF NOVEMBER __, 2007, AS
THE
SAME MAY BE AMENDED OR RESTATED FROM TIME TO TIME (THE
“AGREEMENT”). THE TRANSFER OF THIS
PARTNERSHIP CERTIFICATE AND THE PARTNERSHIP INTERESTS REPRESENTED HEREBY IS
RESTRICTED AS DESCRIBED IN THE AGREEMENT. By acceptance of this
Partnership Certificate, and as a condition to being entitled to any rights
and/or benefits with respect to the Partnership Interests evidenced hereby,
the
Holder is deemed to have agreed to comply with and be bound by all the terms
and
conditions of the Agreement. The Partnership will furnish a copy of
the Agreement to the Holder without charge upon written request to the
Partnership at its principal place of business. The Partnership
maintains books for the purpose of registering the transfer of Partnership
Interests.
Each
partnership
interest in the Partnership shall constitute a “security” within the meaning of,
and shall be governed by, (i) Article 8 of the Uniform Commercial Code
(including Section 8-102(a)(15) thereof) as in effect from time to time in
the
State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any
other applicable jurisdiction that now or hereafter substantially includes
the
1994 revisions to Article 8 thereof as adopted by the American Law Institute
and
the National Conference of Commissioners on Uniform State Laws and approved
by
the American Bar Association on February 14, 1995.
This
Partnership
Certificate shall be governed by and construed in accordance with the laws
of
the State of Delaware without regard to principles of conflict of
laws.
IN
WITNESS WHEREOF,
the Partnership has caused this Partnership Certificate to be executed by an
Officer on behalf of the Partnership as of the date set forth
below.
| Dated: ______________________ |
COLORADO INTERSTATE GAS COMPANY
|
|
|
|
Name:
Title:
|
Schedule
A – Page
(REVERSE
SIDE OF PARTNERSHIP CERTIFICATE
FOR
INTERESTS OF COLORADO INTERSTATE GAS COMPANY)
FOR
VALUE RECEIVED,
the undersigned hereby sells, assigns and transfers unto
_____________________________________________________ (print or typewrite name
of Transferee), __________________ (insert Social Security or other taxpayer
identification number of Transferee), the following specified percentage of
Partnership Interests: ______________ (identify the percentage of
Partnership Interests being transferred), and irrevocably constitutes and
appoints __________________________, as attorney-in-fact, to transfer the same
on the books and records of the Partnership, with full power of substitution
in
the premises.
|
Dated:
_____________________
|
Signature: _______________________
Transferor)
ddress:
|
THE
TRANSFER OR
OTHER DISPOSITION OF THE PARTNERSHIP INTERESTS EVIDENCED HEREBY IS SUBJECT
TO
THE RESTRICTIONS ON TRANSFER SET FORTH IN THE AGREEMENT, INCLUDING THOSE IN
SECTION 3.3 THEREOF.
Schedule
A – Page
