AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF CORPUS CHRISTI LNG, L.P.

Exhibit 10.31

 

 

AMENDED AND RESTATED

 

LIMITED PARTNERSHIP AGREEMENT

 

OF

 

CORPUS CHRISTI LNG, L.P.

 

TABLE OF CONTENTS

 

 

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THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON DELIVERY TO THE PARTNERSHIP OF AN OPINION OF COUNSEL SATISFACTORY TO THE GENERAL PARTNER OF THE PARTNERSHIP THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE GENERAL PARTNER OF THE PARTNERSHIP OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE GENERAL PARTNER TO THE EFFECT THAT ANY SUCH TRANSFER OR SALE WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.

 

AMENDED AND RESTATED

 

LIMITED PARTNERSHIP AGREEMENT

 

OF

 

CORPUS CHRISTI LNG, L.P.

 

The original Limited Partnership Agreement of Corpus Christi LNG, L.P. (the “ Partnership ”) was entered into as of May 15, 2003 (the “ Effective Date ”), by and among Corpus Christi LNG-GP, Inc., a Delaware corporation, as the General Partner, BPU LNG, Inc., as a Limited Partner (“ BPU ”), and Cheniere LNG, Inc., a Delaware corporation, as a Limited Partner (“ Cheniere LNG ”). Effective as of December 20, 2004, Cheniere LNG converted to a limited partnership and changed its name to Cheniere FLNG, L.P. and, on December 23, 2004, distributed its 66.7% Interest to Cheniere LNG-LP Interests, LLC (“ Cheniere Interests ”). Effective as of February 8 2005, Cheniere Acquisition, LLC, a Delaware limited liability company, merged with and into BPU (the “ Merger ”), with BPU being the surviving company of the Merger, becoming a wholly-owned subsidiary of Cheniere LNG and changing its name to Corpus Christi LNG-LP, Inc. (the “ Minority Limited Partner ”). As a result of the Merger, the Minority Limited Partner retained the 33.3% Interest. Effective as of February 8, 2005, Cheniere Interests contributed its 66.7% Interest to Corpus Christi LNG-LP, LLC, a Delaware limited liability company (the “ Majority Limited Partner ”). Effective as of February 8, 2005, the General Partner, the Majority Limited Partner and the Minority Limited Partner adopted this Amended and Restated Limited Partnership Agreement.

 

ARTICLE I

Organizational Matters .

 

1.1 Formation of the Partnership . The Partners desire to form and have formed a limited partnership pursuant to the provisions of the Partnership Act. This Agreement constitutes the partnership agreement of such Partnership, effective upon the date of filing of the Partnership’s Certificate of Limited Partnership with the office of the Secretary of State of the State of Delaware. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Partnership Act.

1.2 Purpose and Business . The Partnership is being formed for the purpose of developing, building, owning and operating a liquefied natural gas receiving and regasification facility near Corpus Christi, Texas (the “ Project ”), and in connection therewith, all activities ancillary, incidental and related thereto that may be performed by a limited partnership organized under the Partnership Act including incurring secured or unsecured indebtedness or otherwise financing to facilitate any of the foregoing activities.

 

1.3 Name . The name of the Partnership is “Corpus Christi LNG, L.P.” The Partnership’s business may be conducted under such name or any other name or names deemed advisable by the General Partner. The General Partner will comply or cause the Partnership to comply with all applicable laws and other requirements relating to fictitious or assumed names.

 

1.4 Principal Place of Business . The principal office and place of business of the Partnership and the General Partner’s offices shall be 717 Texas Avenue, Suite 3100, Houston, Texas 77002, or such other place within or outside the State of Delaware, as the General Partner may from time to time determine. If the General Partner moves the Partnership’s offices, it shall file any certificates required under the Partnership Act and notify all other Partners of such change.

 

1.5 Filings . The General Partner shall, or shall cause the Partnership to, execute, swear to, acknowledge, deliver, file or record in public offices and publish all such certificates, notices, statements or other instruments, and take all such other actions, as may be required by law for the formation, reformation, qualification, registration, operation or continuation of the Partnership in any jurisdiction, to maintain the limited liability of the Limited Partners, to preserve the Partnership’s status as a partnership for tax purposes or otherwise to comply with applicable law. Upon request of the General Partner, each of the Limited Partners shall promptly execute all such certificates and other documents as may be necessary, in the judgment of the General Partner, in order for the General Partner to accomplish all such executions, swearings to, acknowledgments, deliveries, filings, recordings in public offices, publishings and other acts.

 

1.6 Power of Attorney . Each Limited Partner hereby irrevocably makes, constitutes and appoints the General Partner, with full power of substitution and resubstitution, as the true and lawful agent and attorney-in-fact of such Limited Partner, with full power and authority in the name, place and stead of such Limited Partner to execute, swear to, acknowledge, deliver, file or record in public offices and publish: (a) all certificates and other instruments (including counterparts thereof) that the General Partner deems necessary or appropriate to reflect any amendment, change or modification of or supplement to this Agreement in accordance with the terms of this Agreement; (b) all certificates and other instruments and all amendments thereto that the General Partner deems appropriate or necessary to form, qualify or continue the Partnership in the State of Delaware or any jurisdiction, to maintain the limited liability of the Limited Partners, to preserve the Partnership’s status as a partnership for tax purposes or otherwise to comply with applicable law; (c) all conveyances and other instruments or documents that the General Partner deems appropriate or necessary to reflect: (i) the transfers or assignments of interests in, to or under this Agreement or the Partnership; (ii) the dissolution,

 

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liquidation and termination of the Partnership, or (iii) the distribution of assets of the Partnership pursuant to the terms of this Agreement; and (d) any other instruments required by law or as may be deemed necessary or appropriate by the General Partner to carry out the provisions of this Agreement.

 

The power of attorney granted herein is hereby declared irrevocable and a power coupled with an interest, shall survive the death, disability, bankruptcy, dissolution or other termination of each Limited Partner and shall extend to and be binding upon each Limited Partner’s heirs, beneficiaries, executors, administrators, legal representatives, successors, assigns and vendees. Each Limited Partner hereby agrees to be bound by any representations made by the agent and attorney-in-fact acting in good faith pursuant to such power of attorney, and each Limited Partner hereby waives any and all defenses that may be available to contest, negate, or disaffirm any action of the agent and attorney-in-fact taken under such power of attorney.

 

1.7 Term . The term for which the Partnership is to exist as a limited partnership is from the date of first filing of the Certificate of Limited Partnership with the office of the Secretary of State of the State of Delaware through and until the termination of the Partnership in accordance with any provision of Article X .

 

1.8 Partner Information . The General Partner shall cause to be attached hereto as Exhibit C and updated from time to time a list showing the then current names and addresses of the Partners and the Interests held by each.

 

ARTICLE II

Definitions .

 

Whenever used in this Agreement, the following terms shall have the meanings assigned to them herein:

 

Acceptance Notice . See Section 8.3(a) .

 

Affiliate . When used with reference to a specific Person: (i) any Person directly or indirectly owning, controlling or holding the power to vote ten percent (10%) or more of any class of the voting securities of the specified Person; (ii) any Person that directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with the specified Person; or (iii) any person that is an officer or director of, general partner in, or manager or trustee of, or serves in a similar capacity with respect to, the specified Person or of which the specified Person is an officer or director, general partner, manager or trustee, or with respect to which the specified Person serves in a similar capacity.

 

Agreement . This Amended and Restated Limited Partnership Agreement of Corpus Christi LNG, L.P., as originally executed and as amended, supplemented, modified or further restated from time to time, as the context requires.

 

Assignee . A Person to whom Interests have been transferred by a Limited Partner in a manner expressly permitted under this Agreement, and who thereby shall have an interest in the Partnership equivalent to that of a Limited Partner, but (i) limited to the rights and obligations appurtenant to such Interest to share in the allocations and distributions, including liquidating

 

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distributions, of the Partnership, and (ii) otherwise subject to the limitations under this Agreement and the Partnership Act on the rights of an Assignee who has not been admitted as a Limited Partner.

 

Capital Account . See Section 3.6 .

 

Capital Contribution . The total amount or assets contributed to the Partnership by all Partners or any class of Partners or any one Partner, as the case may be.

 

Cash Available for Distribution . With respect to any calendar quarter, all Partnership cash, demand deposits and short-term marketable securities on hand as of the last day of such calendar quarter, after payment of all fees, debt service, and operating costs of the Partnership, and less such reserves as the General Partner, in its sole discretion, shall deem reasonable to retain in order to provide for the operation of the Partnership’s business.

 

Certificate of Limited Partnership . The Certificate of Limited Partnership filed by the Partnership with the Secretary of State of the State of Delaware as originally executed and as amended or further restated from time to time, as the context requires.

 

Code . The Internal Revenue Code of 1986, as amended and in effect from time to time.

 

Effective Date . The date as of which this Agreement was first entered into.

 

FERC . The Federal Energy Regulatory Commission.

 

General Partner . Corpus Christi LNG-GP, Inc., a Delaware corporation and any successor thereto selected pursuant to Section 9.2 .

 

Governmental Entity . Any United States (federal, state or local) or foreign government, governmental authority, regulatory or administrative agency, governmental commission, court or tribunal (or any department, bureau or division thereof).

 

Governmental Permits . All franchises, approvals, authorizations, permits, licenses, easements, registrations, qualifications, leases, variances and similar rights required by the Partnership, as the case may be, from any Governmental Entity for the Project.

 

Initial Notice . See Section 8.3(a) .

 

Interest . The ownership interest of a Partner in the Partnership (which shall be considered personal property for all purposes), consisting of (i) such Partner’s Percentage Interest in Taxable Income, Taxable Loss, allocations of other items of income, gain, deduction, and loss and distributions, (ii) such Partner’s right to vote or grant or withhold consents with respect to Partnership matters as provided herein or in the Partnership Act, and (iii) such Partner’s other rights and privileges as herein provided.

 

Interest Rate . The rate per annum equal to the lesser of (i) the prime rate as quoted in the money rates section of The Wall Street Journal , plus two percent (2%) and (ii) the maximum rate permitted by applicable law.

 

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Limited Partner . Each Person who acquires a Limited Partner Interest and is admitted to the Partnership as a Limited Partner pursuant to this Agreement. All references in this Agreement to a majority or specified percentage of the Limited Partners shall mean Limited Partners holding more than fifty percent (50%) or such specified percentage, respectively, of the aggregate number of Interests then held by Limited Partners.

 

Notice to Partners . See Section 8.3(a) .

 

Partner . Each of the General Partner and the Limited Partners.

 

Partnership . Corpus Christi LNG, L.P.

 

Partnership Act . The Delaware Revised Uniform Limited Partnership Act, as amended and in effect from time to time.

 

Percentage Interest . For each Partner, the percentage set forth opposite such Partner’s name on Exhibit A . The combined Percentage Interest of all Partners shall at all times equal one hundred percent (100%).

 

Person . Any individual, general or limited partnership, corporation, limited liability company, executor, administrator or estate, association, trustee or trust, or other entity.

 

Project . See Section 1.2 .

 

Regulations . The final, temporary or proposed income tax regulations promulgated by the United States Department of the Treasury, as amended and in effect from time to time.

 

Securities Act . The Securities Act of 1933, as amended and in effect from time to time.

 

Selling Limited Partner . See Section 8.3(a) .

 

Substituted Limited Partner . A Person who is admitted as a Limited Partner to the Partnership in place of and with all the rights of a Limited Partner pursuant to Section 8.3(a) , in such Person’s capacity as a Limited Partner of the Partnership.

 

Taxable Income . The net income of the Partnership for federal income tax purposes.

 

Taxable Loss . The net loss of the Partnership for federal income tax purposes.

 

ARTICLE III

Capital Contributions .

 

3.1 General Partner’s Capital Contribution . As of the Effective Date, the General Partner contributed to the Partnership the assets set forth on Exhibit A and received the Interest set forth next to its name on Exhibit C .

 

3.2 Limited Partners’ Capital Contributions . As of the Effective Date, BPU and Cheniere LNG contributed to the Partnership the assets set forth on Exhibit B and received a 33.3% and a 66.7% Interest, respectively, which were succeeded to by the Minority Limited Partner and the Majority Limited Partner, respectively, who hold the Interest set forth next to their respective names on Exhibit C .

 

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3.3 Loans by Partners . No Partner has any obligation to lend or advance any funds to the Partnership under any circumstances. If any Partner shall advance funds to the Partnership, such Partner shall receive interest in an amount equal to the Interest Rate on the balance of such loan outstanding from time to time. Notwithstanding anything contained in this Agreement to the contrary, all loans made by a Partner to the Partnership, together with accrued interest thereon, shall be paid in full before any distributions are made to the Partners.

 

3.4 No Other Contributions . No Partner shall have any obligation or right to make any contribution to the Partnership except as provided in Sections 3.1 and 3.2 unless all Partners otherwise agree.

 

3.5 Return of Capital Contributions . No Partner shall be entitled to have its Capital Contribution returned except in accordance with the express provisions of this Agreement.

 

3.6 Capital Accounts . A separate Capital Account will be established for each Partner. Each Partner’s Capital Account shall be determined and maintained in accordance with Regulation § 1.704-1(b)(2)(iv) as interpreted by the General Partner. The General Partner shall have complete discretion to make those determinations, valuations, adjustments and allocations with respect to each Partner’s Capital Account as it deems appropriate so that the allocations made pursuant to this Agreement will have substantial economic effect as such term is used in Regulation § 1.704-1(b).

 

3.7 Interest . No interest shall be paid by the Partners or the Partnership on any capital contributed to the Partnership by the Partners. As provided in Section 3.3 , interest will be paid on any loan from any Partner to the Partnership.

 

ARTICLE IV

Allocations and Distributions .

 

4.1 Allocations .

 

(a) Taxable Loss shall be allocated in proportion to the Partner’s positive capital account balances. If no Partner has a positive capital account balance, any remaining Taxable Loss shall be allocated to the General Partner.

 

(b) Taxable Income shall be allocated as follows:

 

(i) First, in the event that the General Partner’s capital account balance is negative, to the General Partner in an amount necessary to increase its capital account balance to zero.

 

(ii) Second, to the Partners to the extent and in the proportion they were allocated Taxable Loss under Section 4.1(a) .

 

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(iii) Third, to the Partners in proportion to their respective Percentage Interests.

 

4.2 Special Tax Allocations .

 

(a) Minimum Gain Chargeback . Notwithstanding Section 4.1 , if there is a net decrease in Partnership minimum gain (as defined in Regulation § 1.704-2(b)(2)) during any Partnership taxable year, each Partner shall be specifically allocated, before any other allocation is made, items of income and gain for such year (and, if necessary, subsequent years) equal to such Partner’s share of the net decrease in minimum gain (determined in accordance with Regulation § 1.704-2(g)). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to Partners. This provision shall be applied so that it will constitute a “minimum gain chargeback” within the meaning of Regulation § 1.704-2(f).

 

(b) Partner Minimum Gain Chargeback . Notwithstanding Section 4.1 , if there is a net decrease in Partner nonrecourse debt minimum gain (as defined in Regulation § 1.704-2(i)(2)) during any Partnership taxable year, each Partner with a share of that Partner nonrecourse debt minimum gain (determined under Regulation § 1.704-2(i)(5)) as of the beginning of the year shall be specifically allocated, before any other allocation is made, items of income and gain for such year (and if necessary, subsequent years) equal to that Partner’s share of the net decrease in the Partner’s nonrecourse debt minimum gain. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to the Partners. This provision shall be applied so that it will constitute a “chargeback of Partner nonrecourse debt minimum gain” as prescribed by Regulation § 1.704-2(i)(4).

 

(c) Deficit Account Chargeback and Qualified Income . If any Partner has an adjusted capital account deficit (as defined in Regulation § 1.704-1(b)(2)(ii)(d)) at the end of any year, including an adjusted capital account deficit at the end of any year, including an adjusted capital account deficit for such Partner caused or increased by an adjustment, allocation or distribution described in Regulation § 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner shall be allocated items of income and gain (consisting of a pro rata portion of each item of Partnership income, including gross income and gain) in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible. This Section 4.2(c) is intended to constitute a “qualified income offset” pursuant to Regulation § 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

(d) Partner Nonrecourse Deductions . Notwithstanding Section 4.1 , any Partner nonrecourse deductions (as defined in Regulation § 1.704-2(i)(1)) for any taxable year shall be specifically allocated to the Partner who bears the economic risk of loss with respect to the Partner nonrecourse debt to which such deductions are attributable in accordance with Regulation § 1.704-2(i)(1).

 

(e) Curative Allocations . If items of income, gain, loss or deduction are allocated under Section 4.2(a), (b), (c) or (d) , to the extent possible the allocation of any

 

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remaining items of income, gain, loss or deduction shall be allocated such that the net amount allocated to each Partner will be the same amount that would have been allocated if no items of income gain, loss or deduction had been allocated under Section 4.2(a), (b), (c) or (d) . Allocations shall be made hereunder only to the extent consistent with the economic arrangement between the Partners and shall be made in a manner that is likely to minimize the economic distortions.

 

4.3 Tax Distributions . To the extent funds are available to the Partnership, each April 11, June 11, September 11 and December 11 (or if any of such days is not a business day, on the next business day thereafter) the Partnership shall distribute to each Partner or its Assignee an amount equal to the net taxable income allocated or estimated to be allocable to such Partner or Assignee for the taxable year through the end of the applicable tax estimation period, respectively, multiplied by the highest stated federal and applicable state income tax rate for corporate taxpayers, minus all previous distributions made to such Partner or Assignee pursuant to this Section 4.3 with respect to such taxable year (each a “ Tax Distribution ”).

 

4.4 Distributions . Distributions shall be made every calendar quarter as set forth in this Section 4.4 , and in addition at such times as the General Partner may determine, in each case if, in the General Partner’s opinion, there is sufficient cash in the Partnership to make a distribution. Within 30 days after the last day of each calendar quarter, the General Partner shall determine the amount of Cash Available for Distribution with respect to such quarter, and except for distributions made in liquidation of the Partnership pursuant to Section 10.2 , shall distribute the Cash Available for Distribution to the Partners in proportion to their Percentage Interests.

 

4.5 Transfer of Interests . If during a year Interests are transferred or new Interests issued, allocations among the Partners shall be made in accordance with their interests in the Partnership from time to time during such year in accordance with Section 706 of the Code using the closing-of-the-books method.

 

4.6 Amounts Withheld . All amounts withheld pursuant to the Code or any provision of any state or local tax law with respect to any payment, distribution, or allocation to the Partnership, the General Partner or the Limited Partners shall be treated as amounts distributed to the General Partner and the Limited Partners pursuant to this Article IV for all purposes under this Agreement. The General Partner is authorized to withhold from distributions, or with respect to allocations, to the General Partner and Limited Partners and to pay over to any federal, state or local government any amounts required to be so withheld pursuant to the Code or any provisions of any other federal, state or local law, and shall allocate such amounts to the General Partner and Limited Partners with respect to which such amount was withheld.

 

ARTICLE V

Accounting and Financial Matters .

 

5.1 Fiscal Year . The fiscal year of the Partnership shall be the calendar year.

 

5.2 Accounting Elections . The Partnership shall keep its books in accordance with the following:

 

(a) In the event of the transfer of any or all of a Limited Partner’s Interest, the Partner who is a party to such transfer or distribution may request that the General Partner file on behalf of the Partnership an election in accordance with applicable Regulations to cause the basis of the Partnership property to be adjusted for federal income tax purposes as provided in Sections 734, 743 and 754 of the Code. The General Partner shall determine in its sole discretion whether such election shall be filed.

 

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(b) The Partnership shall elect: (i) with respect to expenses incurred before October 24, 2004, (A) to deduct expenses incurred in organizing the Partnership ratably over a 60 month period as provided in Section 709 of the Code and (B) to deduct qualified start-up expenditures over a 60 month period as provided in Section 195 of the Code; and (ii) with respect to qualifying expenses incurred on or after October 24, 2004, (A) to deduct expenses incurred in organizing the Partnership ratably over a 180 month period as provided in Section 709 of the Code and (B) to deduct qualified start-up expenditures over a 180 month period as provided in Section 195 of the Code.

 

(c) No election may or shall be made by the Partnership or any Partner or Assignee to be excluded from the application of any of the provisions of Subchapter K, Chapter 1 of Subtitle A of the Code, or any similar provisions of state tax laws.

 

5.3 Tax Controversies . The General Partner is designated as the “tax matters partner” (as defined in the Code) and is authorized, empowered and required to represent the Partnership (at the Partnership’s