Exhibit 10.5
 
 
 
FOURTH AMENDMENT
TO
GENERAL PARTNERSHIP AGREEMENT
OF
SOUTHERN NATURAL GAS COMPANY
November 19, 2010
 
 

 

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FOURTH AMENDMENT
TO
GENERAL PARTNERSHIP AGREEMENT
OF
SOUTHERN NATURAL GAS COMPANY
          This FOURTH AMENDMENT to GENERAL PARTNERSHIP AGREEMENT OF SOUTHERN
NATURAL GAS COMPANY (the “Amendment”), is made and entered into as of this 19th
day of November, 2010, by El Paso SNG Holding Company, L.L.C., a Delaware
limited liability company (“EP SNG”), and EPPP SNG GP Holdings, L.L.C., a
Delaware limited liability company (“EPPP SNG”), each as a general partner of
the Partnership (collectively, “the Partners”).
WITNESSETH:
          WHEREAS, Southern Natural Gas Company (“SNGC”), a Delaware
corporation, 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”), SNGC was converted (the “Conversion”) into a Delaware
general partnership (the “Partnership”), with the Partnership’s existence deemed
in accordance with DRUPA Section 15901(d) to have commenced on the date that
SNGC commenced its existence as a Delaware corporation; and
          WHEREAS, pursuant to the General Partnership Agreement of Southern
Natural Gas Company (the “Agreement”) and the Conversion, the stockholders of
SNGC, EP SNG and EPPP SNG, became general partners of the Partnership, all of
the issued and outstanding shares of capital stock in SNGC were converted into
Partnership Interests in the Partnership, and the stockholders of SNGC 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 to the Agreement;
and
          WHEREAS, pursuant to the Contribution and Exchange Agreement dated
September 17, 2008, the Agreement was amended on September 30, 2008 to reflect
the contribution, transfer and conveyance to EPPP SNG of a 15% Percentage
Interest in the Partnership such that EPPP SNG owned a 25% Partnership Interest
and EP SNG owned a 75% Partnership Interest; and
          WHEREAS, pursuant to the Contribution Agreement dated June 17, 2010,
and for good and valuable consideration, EP SNG agreed to contribute, transfer
and convey to EPPP SNG an additional 16% Partnership Interest in the Partnership
with a 90-day option to purchase an additional 4% Partnership Interest in the
Partnership; and

 

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          WHEREAS, on June 23, 2010, the Agreement was amended to reflect the
contribution, transfer and conveyance to EPPP SNG of the additional 16%
Percentage Interest in the Partnership such that EPPP SNG owned a 41%
Partnership Interest and EP SNG owned a 59% Partnership Interest; and
          WHEREAS, on June 28, 2010, the Board of Directors of El Paso Pipeline
GP Company, L.L.C. elected to exercise its option to acquire the additional 4%
Partnership Interest in the Partnership, and on June 30, 2010, the Agreement was
amended to reflect the contribution, transfer and conveyance to EPPP SNG of the
additional interest such that EPPP SNG owned a 45% Partnership Interest and EP
SNG owned a 55% Partnership Interest; and
          WHEREAS, pursuant to the Contribution Agreement dated November 12,
2010, and for good and valuable consideration, EP SNG agreed to contribute,
transfer and convey to EPPP SNG an additional 15% Partnership Interest in the
Partnership; and
          WHEREAS, in accordance with Section 3.4 of the Agreement, the Partners
and the Management Committee of SNGC have expressly approved and consented (and
do hereby expressly approve and consent) to the admission of El Paso Pipeline
Partners, L.P., a Delaware limited partnership, or its designee as a partner of
SNGC owning a 60% Partnership Interest and having all of the rights, privileges
and obligations relating thereto, including the right to vote on Partnership
matters.
          NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partners hereby agree:
          1. Section 6.2(h) of the Agreement shall be deleted in its entirety
and shall be replaced with the following new Section 6.2(h):

  (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 or Partners 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 with a value exceeding a total of $450 million to

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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 any proceeding or controversy, including any NGA Section 4 (15 U.S.C.
Section 717(c)) general rate case, or an appeal of any order thereof, the
outcome of which would cause either:
     (i) the Partnership’s revenues to be reduced by a total of $100 million or
more annually;
     (ii) the Partnership to pay penalties, refunds or interest of, a total of
$50 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
$450 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;

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     (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. Except for matters that are covered by
Section 6.2(h)(i) or matters that the law otherwise requires approval by a
greater percentage, a Majority Interest shall be required to approve any action
that requires approval of the Partners or the Representatives, including the
following matters:
     (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;

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     (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 $25 million or
less;
     (K) making any tax elections under the Code; or
     (L) except for any mortgage or pledge of any properties or assets that
requires the unanimous approval of the Management Committee pursuant to
Section 6.2(i)(C) above, 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.
          2. Annex I to the Agreement shall be deleted in its entirety and shall
be replaced with the attached Annex I.
          3. In accordance with Section 3.4 of the Agreement, the Partners and
the Management Committee of SNGC have expressly approved and consented (and do
hereby expressly approve and consent) to the admission of El Paso Pipeline
Partners, L.P., a Delaware limited partnership, or its designee as a partner of
SNGC owning a 60% Partnership Interest and having all of the rights, privileges
and obligations relating thereto, including the right to vote on Partnership
matters.

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          4. This Amendment shall be governed by and construed under the laws of
the State of Delaware (without regard to conflict of laws principles), all
rights and remedies being governed by said laws.

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          IN WITNESS WHEREOF, the Partners have executed this Amendment as of
the date first set forth above.

              PARTNERS:
 
            EL PASO SNG HOLDING COMPANY, L.L.C.
 
       
 
  By:   /s/ John J. Hopper
 
       
 
  Name:   John J. Hopper
 
  Title:   Vice President and Treasurer
 
            EPPP SNG GP HOLDINGS, L.L.C.
 
       
 
  By:   /s/ James C. Yardley
 
       
 
  Name:   James C. Yardley
 
  Title:   President

[Signature page to Fourth Amendment to Partnership Agreement of Southern Natural
Gas Company]

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ANNEX I

                              Number of                     Representatives    
  Identity of     Partner Identity   Percentage   and Alternative   Identity of
  Alternate     and Address   Interest   Representatives   Representatives  
Representatives   Parent
El Paso SNG Holding

  40%   1 Representative   Daniel B. Martin   William G. Cope   El Paso
Corporation
Company, L.L.C.

      and up to 1            
El Paso Building

      Alternate            
1001 Louisiana
Houston, Texas 77002
Attention:                     
                   
 
                   
EPPP SNG GP

  60%   3 Representatives   James C. Yardley                          El Paso
Pipeline
Holdings, L.L.C.

      and up to   Norman G. Holmes       Partners, L.P.
El Paso Building

      3 Alternates   Michael J. Varagona        
1001 Louisiana
Houston, Texas 77002
Attention: